What Is the Primary Risk Associated with Participating in an ICO?
The primary risk is project failure or outright fraud, often termed a 'scam.' Many ICOs fail to deliver a working product or disappear with the raised funds, resulting in a total loss for investors. Regulatory uncertainty is also a major risk, as future government action could render the token worthless.
High market volatility adds another layer of risk to the investment.
Glossar
Government Action
Intervention ⎊ Government action refers to decisions, policies, or regulations enacted by governmental bodies that impact the cryptocurrency and financial derivatives markets.
Regulatory Uncertainty
Constraint ⎊ : Ambiguous or rapidly changing rules regarding asset classification or leverage limits directly constrain the design space for crypto derivatives products.
Project Failure
Collapse ⎊ The designation "Project Failure" within cryptocurrency, options trading, and financial derivatives signifies the cessation of a planned endeavor, resulting in a demonstrable inability to achieve predetermined objectives.
Vesting Schedule
Schedule ⎊ Vesting Schedule is the predefined timeline dictating the rate and conditions under which allocated tokens are gradually released from lockup contracts to team members, advisors, or early investors over a set period.
High Market Volatility
Metric ⎊ High market volatility is a quantitative metric representing the rapid and significant fluctuation of an asset's price over a specified period, typically measured by statistical dispersion methods like standard deviation or implied volatility from options pricing.
Decentralized Exchanges
Access ⎊ These platforms offer permissionless entry to cryptocurrency and tokenized asset markets, democratizing capital deployment into novel financial structures.