What is Funding Payments?
Popular Examples of Funding Payments
Crypto miners: receive payment for completing the complex calculations required to validate transactions on a blockchain network. This reward typically takes the form of cryptocurrency, such as Bitcoin or Ethereum.
Initial Coin Offerings (ICOs): are another funding method used by some startups to raise capital in exchange for future access to their products and services. In this case, investors purchase tokens that will be released at a later date, using either fiat currency or cryptocurrency.
Decentralized Autonomous Organizations (DAOs): are digital organizations created through smart contracts that operate without a centralized authority. Investments made into DAOs are funded by digital tokens which can be exchanged for goods and services within the platform, or converted back into cryptocurrency.
Funding payments are like giving someone pocket money for doing a job. Imagine you have a little brother or sister and you want them to do some chores around the house, like cleaning their room or doing the dishes. You would give them some pocket money as a reward for doing the job. This is similar to funding payments. In finance, a funding payment is when a lender gives money to a borrower, usually in exchange for an interest rate or some other form of compensation. It's like giving someone money in advance to do a job, just like you give your little brother or sister pocket money to do chores.