When a token goes through the process of an ICO, there are various buyers, and those buyers would then receive the tokens in their Ethereum wallets.


How are tokens distributed during an ITO (Initial Token Offering)? Does the token owner(s) send them with the transfer function, or are there other methods that spend less gas? Ideally speaking, knowing what the common practices are and the benefits to each option is what I would like to know


ITOs usually require you to send Ethereum to a specific account, and then have a mechanism of sending to coins to either the account that sent Ethereum during the ICO, or a website that gets the input of which account should receive it, with some method of verifying you're the person sending the money to them. There are probably other methods, like sending the token to an exchange and people buying directly from there.

What I am not sure of is how these ICO's send the money to the buyers. Do they send them individually using the transfer function (like the one that exists with ERC20 tokens)? What are the most common practices and their benefits?

  • In my case I have created a LimitedCoinSale contract in which I transfer a certain amount of coins to. When someone transfers ETH to that contract I will calculate how much coin they get and update their balance of the custom coin. The is done until the LimitedCoinSale contract is out of coins or until the time specified.
    – pizzarob
    Commented Apr 4, 2018 at 14:58

2 Answers 2


An ICO is simply a smart contract on the Ethereum network. When an address (user) sends ether to this contract, the contract distributes an appropriate amount of tokens back to the user address (this amount is calculated from the rate specified by the ICO contract creator).

The ether which is sent to the contract by users who have purchased tokens is generally forwarded to a separate wallet address, owned by the ICO creators. This transaction happens every time a user sends ether and receives tokens.


I this blog might be helpful to you as i got a lot of clarity from it. https://blog.wetrust.io/how-do-token-crowdsales-work-b3b6e9e53800

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