Issuance is a term used in the cryptocurrency industry to refer to the process of creating new units of digital currency. It involves both the creation and distribution of new coins, tokens, or other forms of digital money.
The issuance process typically begins with an Initial Coin Offering (ICO), where a company offers its coin or token for sale to investors in exchange for traditional currencies such as US dollars or euros. Through this offering, investors can purchase newly created coins at a discount compared to their future market value. The proceeds from these sales are then used by the issuing company to fund development and operations related to its project.
Once an ICO has been completed, it will usually enter into circulation on one or more exchanges where users can buy and sell cryptocurrencies directly against each other without having to go through a broker. This is known as decentralized trading and helps ensure that prices remain fair and transparent based on supply and demand forces within the markets themselves rather than being influenced by external factors like central banks or governments.
In addition, some projects may also issue their own coins through additional events called “airdrops”. This is when companies give away free tokens in order to promote awareness about their project among potential users who have not yet heard about it before – similar to how companies give out samples in supermarkets! These tokens may be given away indiscriminately but they often come with certain stipulations such as requiring users hold them until specific conditions are met before they can actually use them on the network itself (e.g., waiting 6 months).
Finally, after all coins have been issued either through an ICO or an Airdrop event, most projects will continue distributing new units periodically over time via what’s known as “inflationary issuance” which basically means that more coins will be created every year according inflation rate set by that particular network protocol – for example Bitcoin’s current inflation rate is around 4% annually whereas Ethereum’s has recently been cut down from 14-15% yearly down 8%. Inflationary issuance serves two main purposes: firstly it allows networks with limited resources (such as blockchains) increase throughput capacity; secondly it incentivizes continuous participation from validators/miners/stakers who receive rewards for helping secure transactions on said networks.
