ICO pools allow a group of investors to benefit from special deals on token sales by raising more collectively than they could individually.

Before diving deeper into ICO pools let’s look at the ICO process as a whole.

What is an ICO?

 

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An ICO (Initial Coin Offering) is a method of fundraising that works by issuing digital assets (called tokens) in exchange for cryptocurrencies during the start-up phase of a project.

 

ICO’s typically have three phases: private sale, presale, and crowd sale. However, there are no set rules how ICO’s are structured. Some may elect to skip the private sale phase because they want a wider public sale and others reach the hard cap at the second phase, so they do not even go public.

 

During the private sale and pre-sale phase, tokens are sold in bulk at the lowest price.

What are the three phases of an ICO?

First phase: ICO private sale
The first phase of an ICO is kept confidential; there is no public announcement. Private sales are selective and are reserved to a narrow circle of insider investors. During this phase tokens are sold in bulk, discounts are offered depending on the size of the contribution.  Investors who buy tokens early benefit from lower prices and bonuses since chances the project will fail are higher at this stage meaning that investing early in a project represents higher risk taking.

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Second phase: ICO presale
The presale is a token sale phase that comes before the public sale. A presale is publicly promoted but investors need to get on a whitelist to be able to contribute. Discounts are offered on a first come first serve basis and vary depending on the size of the contribution.
Third phase: ICO crowdsale
The crowdsale is public, it is widely promoted, and everyone can participate in it.

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ICO pools intervene mostly during the first two phases and sometimes during the crowdsale. The first interest in pooling funds for the investors is to increase their chances to get in the crypto token sales by bringing a large contribution and using a high gas price to speed the transaction up.

Furthermore, by pooling their funds together investors benefit from significant discounts. As mentioned earlier, the bigger the contribution is, the bigger the discounts are.

What are the advantages of an ICO pool?

  • Access to private sales and presales thanks to the administrator awareness and network
  • Access to bonuses
  • Contributors can purchase tokens before they are sold out, some of the ICOs reach the hard cap in a few minutes.
  • Avoiding gas wars: thanks to ICO pools there is less competition between contributors who raise the gas price to accelerate a transaction
  • The administrator does a screening and shares his research with the rest of the pool, handles the negotiation and management, making the entire process consume less time and making it less energy intensive for the rest of the investors

What is the risk of participating in an ICO pool?

The admins of the pool manage all the cryptocurrency the investors contribute to the pool. One cannot fully prevent the pool admins from mismanaging the pool’s funds.  You should only participate in pools managed by individuals you trust.

How does an ICO pool work?

When a community of investors wants to participate in an ICO presale or private sale, the leader contacts the ICO team, negotiates the terms of the token purchase (including the discount) and does the KYC process.
There are two ways for the leader to collect the funds from contributors:
Old Method
The contributors send cryptocurrency to the leaders’ crypto wallet while he notes each contribution in an excel sheet. Once the leader collects enough cryptocurrency, he can transfer the funds to the ICO team from this wallet, and once he gets the ICO tokens back, he sends the corresponding share of tokens to each contributor.

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What are the Issues with this method?
1. The manual process is time-consuming and conducive to errors.

2. If the pool leader wants to keep the funds for himself he can.

3. Security issues. There have been many cases of online wallets hacked. In June $10 million was stolen from a cryptocurrency wallet of a Japanese syndicate. Instead of using a secure solution, the pool managed their ether and tokens manually in an online cryptocurrency wallet. 👉 Read the article

New method (Smart contracts)
Investors pool funds on a blockchain platform using smart contracts such as PrimaBlock. The contributors send funds to the smart contract. Once the pool collects enough cryptocurrency, the pool admin can transfer the funds to the ICO team. Once the tokens have been delivered to PrimaBlock’s smart contract, everyone in the pool will be able to collect their share of the tokens.

What are the advantages of using PrimaBlock to pool funds?

  1. Safety: The PrimaBlock smart contract is battle tested and flexible enough to handle a variety of different failure scenarios. PrimaBlock’s entire tech stack has been audited externally multiple times by security experts. 👉Read the article “Why your funds are safe with PrimaBlock”.
  2. Excellent tech support.
  3. Convenience: If you create an account on PrimaBlock you will be able to keep track of all the pools you have created and participated in.
  4. Notifications: You can receive email and/or telegram notifications about important pool events (e.g. tokens have arrived in the pool and are ready for you to collect).
  5. Security: If you create a pool and your wallet is compromised the attacker will not be able to manipulate your pool unless they also have access to your PrimaBlock account. If you have 2FA enabled on your PrimaBlock account then the attacker would need to compromise 3 factors of authentication (your phone, your PrimaBlock login, and your wallet address) in order to manipulate your pools.

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How to find ICO pools?

If want to participate in ICO pools but you do not know how, go out there and make connections: you can meet other cryptocurrency investors by attending events such as conventions, conferences, and meetups.

 

If you are more of a “behind the screen” person, you can join groups and conversations on forums like Bitcointalk, Reddit, Telegram, Facebook chats and create connections by joining online communities.

 

A piece of advice: do not try to get something out of contacts you make, always ask yourself first, what you could bring to them 😉

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