What is Initial Farm Offering (IFO)?

Initial Farm Offering (IFO) is a fundraising model for decentralized finance (DeFi) projects to raise capital using the farming feature. IFO acts as a successor to the initial coin offering (ICO) fundraising model, which is used to garner financial support for cryptocurrency development.

Investors participate in pre-sale events hosted by decentralized exchange platforms (DEXs) and raise capital for projects by investing in their native tokens. DEX teams carefully vet all potential participants and present a list with project proposals for the investors’ convenience.

The tokens acquired via an IFO campaign are in no way more advantageous than the ones raised using other fundraising models. Although the exchange platforms carefully audit each project, the token value may be affected by fluctuating market conditions.

Most IFO campaigns are hosted on PancakeSwap. The users of this platform are able to receive rewards from the fundraising campaigns. Project owners can benefit from the platform’s liquidity pool. Most of the tokens presented during IFOs are community-driven and decentralized.

There are two types of IFO campaigns:

• Basic sale: investors can stake a limited number of tokens without paying a participation fee;
• Unlimited sale: investors pay a predetermined fee and stake as many tokens are they are able to.

Users that wish to participate in an IFO campaign must first register on a DEX platform that hosts such projects. They then stake their tokens to participate in the IFO. Users are required to provide liquidity for the farming process and are rewarded with tokens at the end.

Some of the benefits to an IFO campaign include:

• There is no intermediary involved in the process. Peer-to-peer (P2P) transactions are enabled, which saves money;
• IFO helps users maximize the benefits of using a DEX platform to trade and invest;
• All transactions are transparent thanks to the decentralization;
• Users are guaranteed access to instant liquidity.

Investors are recommended to do their own research regarding the projects in the fundraising events. IFO campaigns are common among crypto newcomers who are looking into ways to quickly make profit. They can also serve as an opportunity to build a crypto portfolio and generate extra income.

ICOs and other fundraising models that were developed prior to IFOs relied heavily on investments from venture capitals. Such project fundings take longer and the gains cannot be reliably determined. The increasing amount of DeFi projects submitted for funding may lead to IFOs growing in popularity.