The primary mechanism of fundraising has been the Initial Coin Offering. Following the stagnation of ICO in the year 2018, this mechanism has given rise to yet another fundraising strategy called “Initial Exchange Offerings”.
So, What is IEO?
An Initial Exchange Offering relies on a cryptocurrency exchange to perform the token sales process. The IEO is based on the general concept of ICO but with certain differences that are aimed at increasing the reliability of the offerings.
Unlike ICOs where anyone with a crypto wallet can avail, IEOs are exchange-specific ones. This means that users should need to register/ or be a member of the exchange platform to buy the tokens.
Moreover, the tokens are not just limited to be listed on one specific exchange. Startups can list their token on one or more exchanges. These exchanges assist the startups with raising the funds by listing and marketing their tokens.
The emergence of IEOs
Initial Coin Offerings were too good in 2017 by making around $6.2 billion. But the preceding years weren’t good as expected. The major reason why investors started coming out from Initial Coin Offerings is due to the factor of scams it has encountered. With ICOs, startups usually sell a number of cryptocurrencies either in terms of coins or tokens. Since they aren’t regulated, most of the ICO projects have failed. Therefore, most of the countries like China, South Korea have banned ICOs.
While in IEOs, the project team must comply with the exchange’s requirements to launch their tokens. Once the requirements are met, exchange lists their tokens and hence traders can easily buy or sell the tokens.
Why Initial Exchange Offering?
In light of extending exchange competition and decreasing speculators wanting for ICOs, cryptographic cash exchanges and advanced money financed undertakings have begun to collaborate. Through participation, these new interests might want to improve their capacity to raise resources and exchanges intend to improve trading volumes and attract new customers.
One more thing is since IEO uses an existing user base, there can be a large number of investors who can automatically be your potential investors!
Yet another thing for investors is, apart from being able to trust the crypto exchange as a secure intermediary platform, is the simultaneous listing of the coin since the exchange act as a kind of partner organization.
|Here are the primary reasons behind the success of Initial Exchange Offerings:
How to Launch IEO?
You can start investing in Initial Exchange Offering by a quick account creation in exchange. Anyways, you need to pass Know Your Customers screening to kick-start! Yet another thing is, you should not be from a restricted country!
Once you are done with this, you can initiate the IEO process. Moreover, Initial Exchanges are more user-friendly than ICO’s. Therefore, create an account for your token sales, fund your wallet and purchases when the token goes live!!
What are the potential features of IEO?
- Direct Appeal to exchange users
Since IEO places the project on an exchange, so it can directly appeal to users who are making use of the exchange platform.
For instance, if you consider Binance, it has 10 million active users. Therefore IEO can be done by 10 million people without any denial!
- Exchange examines the project
The exchange can review the content once they receive the application form from the IEO project team. If you take Binance Launchpad, it would encompass a lot of features such as the promised team, practical products, large audiences, etc.
If the project’s content is not repelled, they will be posted only after passing IEO assessments.
With Initial Exchange Offering, you will be free from carrying away funds! In IEO, a well-funded and reliable exchange can be used as an intermediary between the project team and investors.
- Instant Exchange Listing
Initial Exchange Offerings bring forth high liquidity and hence list a great number of tokens. With high liquidity, there are chances that your tokens will be easily sold. Hence getting the expected revenue for the project!
- KYC/AML feature
As the tokens are listed on exchanges, these trading platforms will usually require the complete verification of the user by collecting their personal details. Hence the security is more powerful.
The success of IEOs:
Initial Exchange Offering 2019 have gained potential attention in the crowd. The latest report by Coinschedule states that IEO’s have a footprinted high range of sales in the month of March with raising more than $50 million!
For the present year 2019, there have been huge success stories IEOs have come across. According to the Bloomberg report, about $180 million have been raised through 23 different countries it seems!
One of the popular cryptocurrency exchanges Binance has initiated IEOs by launching Binance launchpad. The first project was Matic Network which managed to raise $5,000,000 for its project.
Following the launch of Binance Launchpad, other famous crypto exchanges such as OKEx, Huobi Prime launched their own IEOs helping the startups to raise the funds.
|Upcoming Initial Exchange Offerings in the Crypto Market
Future of Initial Exchange Offerings
IEO’s are the perfect alternative for Initial Coin Offerings without any doubts! With a higher degree of credibility and reliable factor, they remain to be the strategy that would stand out from the crowd!
The future of Initial Exchange Offerings highly depend on the success of major companies and projects, as well as the popular countries such as U.S. China will provide an additional influx of capital, boosting the liquidity of the markets.
In terms of security and efficiency, IEOs will remain to overtake ICOs in the crypto space. They are intended to solve all the problems with ICOs and would remain to be a profitable way to fundraise the projects.
This new mechanism’s benefits are too good to be ignored! With the adoption of Initial Exchange Offerings for all the types of sectors, we can expect a good number of IEO Development Company venturing into it! Thus it is beneficial to get started with launching Initial Exchange Offering which could get rid of scams and other fraudulent activities in the cryptocurrency market.