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What is an ISPO & what are the different types of ISPO?

ISPO is an acronym for Initial Stake Pool Offering. There are two main types but in both cases they enable projects that are building on Cardano to distribute their tokens to stake pool delegators. The tokens that are distributed generally have some sort of utility such as governance privileges in the project. The tokens can be held by the delegator for the utility or, if listed on one, can be traded on an exchange.

Community building ISPO

This type of ISPO uses the existing stake pool operator community to help raise awareness of and build a community around a project. A number of stake pools are selected to partner with the project and delegators of the partnered stake pools receive, or are able to claim, the project's token and also receive their regular staking rewards in ada. Stake pools are able to attract new delegators by being able to offer this extra incentive to join them. In an attempt to attract delegators, the stake pool operators would promote the project that they are partnered with, which would raise the profile of the project.

Fundraising ISPO

This type of ISPO is used to raise funds to finance the build and development of a project. In a fundraising ISPO, the project would run their own stake pools and set a high margin fee, sometimes 100%. The delegators would forfeit some or all of their normal staking rewards in ada in return for the promise of some of the project's tokens at a later date.