Initial Coin Offering paved a new way for the entrepreneurs across the globe. Before the emergence of this method, business aspirants had to rely on venture capitalists, banks, NBFCs and angel investors for fund-raising. The decentralized method enabled them to reach every investor around the world.
However, this easily accessible instrument could not remain aloof from the hands of scamsters.
Due to this, a lot of people started doubting the credibility of cryptocurrency and blockchain technology. But, the technology showed its resilience and came up an all new concept which not just prevents the scams but also churns out benefits for every every participants in the campaign.
What is Initial Exchange Offering and why should you trust it?
For the first time, an IEO project was launched on the biggest crypto exchange platform Binance. The basic difference between ICO and IEO that the tokens available under the former are open to public while latter one’s is not.
Under an IEO, the tokens are released only on an exchange platform. In an ICO, you can pay the project owner directly by sending payment to their account or wallet address, while in IEO, you need to be a user of the exchange on which the project is launched and you need to buy tokens through their account.
Differences between IEO and ICO
ICOs are single-handedly managed by their owners which in IEO, there is an inclusion of exchange platforms which make the whole process more reliable for the investors. An ICO can be launched by anyone as it require any kind of verification through another body. An IEO however, is thoroughly checked by the exchange on which it is going to be launched.
For a project to be launched as full-fledged IEO, it has to meet all the requirements of the exchange. This process ensures that only those projects get launched which have a future prospect.
As far as the development process is concerned, there is no difference between ICO and IEO. Both of the instruments allow the project owners to put forward their business idea in front of investors and seek funds. The only difference is the medium they use for raising the funds. In ICO, token issuer has a free hand to drive the campaign the way he/she wants and in IEO, there are various terms on which exchange and issuer has to agree before launching tokens.
In an ICO, developer is solely responsible for the way smart contracts are executed and how robust is the security. In IEO, it is the exchange that handles all such issues and ensure the whole process of buying tokens is secure and easy for traders. Both of these instruments have their own pros and cons, but the number of people favoring IEO over ICO is growing higher steadily.
How to Launch IEO?
It is not a big task anymore since many exchanges are coming forward to launch IEOs. It is comparatively a safer process and also gives you greater reach on target audience.
In comparison to ICO, the cost also comes down and the entire process becomes hassle-free as you get a partner.
- From the very beginning, you need to ensure that you get associated with an exchange that could bring you closer to investor you are trying to approach. So far, ICO had been the most suited way for the blockchain-based projects, but their reputation is now on stake with various nefarious projects that duped several investors. Therefore, going with IEO has also become a smarter choice for all the entrepreneurs who want to ensure their business idea see the light of day.
- Second thing that you need to ensure is that the terms of the exchange are conducive for your project. An IEO can take place on different exchanges at the same time, but so far, it has happened on one platform at a time. You also need to be careful about the the exchange and when it starts the crowdsale. And most importantly, you need to check the authenticity of the exchange as well. Just like the ICO projects, there have been many exchanges as well which duped the customers or rendered the transactions very unsafe. You must the review the internal procedure of the exchange for ensuring the safety of its traders and clients. When you are satisfied with everything, then only you should proceed.
- Upon checking all the details regarding security and reliability, you need to proceed with the process of signing up. The basic details such as email and name are required for joining any exchange. Some exchanges may also ask you for other details like an identification proof, photograph, domicile certificates etc. In order to join the platform, it is mandatory to give all such details.
- For the most part, Ether has been the most preferred choice of token issuers. However, there are new protocols such as NEO that has created quite a buzz in the market. It is important to decide on which ecosystem you are going to build your decentralized application and then only, choose the token.
- Once you are done buying the transaction currency, then wait for the launch of IEO. The beginning of crowdsale gives issuers many options to make the process easy and it is done with the help of exchange.
Why Initial Exchange Offering is considered the best for fund-raising?
Undoubtedly, ICOs have blazed a trail for every entrepreneur in the world. It has been the reason of success for many pioneering projects, but there are loopholes in its mechanism which made it vulnerable to fraudsters. There are now many precedents which prove that the architecture of ICO can be easily by anyone with vile intentions.
This particular crowdfunding instrument has lost it credibility among investors and IEO has certainly emerged as a better method for fund-raising.
How exactly Initial Exchange Offering sort out all the issues in Blockchain?
The answer could be simply explained:
- Every project is a new idea and it is propounded before the people for the very first time. This limits the extent of the project as it has to establish it user-base anew through different channels and platforms. Through IEO, you launch your amidst an established user-base and it is backed by their reliable exchange. It makes your project a lot more convincing and for everyone.
- The payment of gas is a bone of contention for every investor, every investor has to pay for it for better performance in the execution of transactions. With exchange as an overseer of your project, all the investors get equal amount of gas resulting in equal speed for everyone.
- Exchanges become an exclusive medium for the investors to buy the tokens. This method saves the latter to become a victim of phishing attempts which happen otherwise in case of ICO crowdfunding with multiple modes of payment.
- If a project gets launched on an exchange, it means that has met all criteria of being a secure project and credible enough for the investors.
- The accountability of launching the token is equally distributed among the token issuer and exchange platforms.
What are the advantages of IEO?
The best thing about IEO is it is beneficial for every participants. It is not just a better vehicle for projects owner, but gives many advantages to the exchanges and investors. While the projects get established user-base which makes selling tokens easier, it also gives a chance to the exchange to get associated with more innovative project and come into limelight.
By hosting such projects, exchanges also increase the traffic and get more users on their platforms. Through transaction fee and various other aspects of the deal, exchanges can make huge benefits out of every single purchase of token.
Therefore, it is win-win situation for both the project owners and exchanges. By listing new projects, they can make a plenty of profits and this can be done while keeping all the needs met of both the parties. There are exchanges who also as for operation fee, listing and a particular share of profit made by the token sale.
Here are the salient benefits of launching an IEO:
- It is much easier for a project to be listed as an IEO an exchange as compared to driving an ICO campaign all by yourself.
- For investors, purchasing tokens under an IEO is always a safer option as the tokens are verified and listed by the exchange platform. In case, the projects owners vanish, you still the tokens secured by the platforms which could be sold.
- It is not open for public sale and yet it draws a significant number of investors through the existing user-base of exchange.
- Apart from the security perspective, the process of purchasing is also much easier when it is done through exchange. The reliability factor does a great job and evokes confidence among the investors about their purchase.
- It makes the job of scamsters very difficult as simply cannot prove the viability of their fake offerings.
- Alongside investors, it also establishes confidence among the entire market that a particular project live up to their expectations.
What are the updates in IEO?
There are various exchanges who have decided to introduce dedicated platforms only for the launching of IEO. Exchanges such as KuCoin has already announced the name of this new platform, it would be called ‘Spotlight’. The renowned crypto trading platform handles a stupendous volume of transactions which are worth $10 million.
Other than the name, no potential details were made available about this platform at the time of announcement by KuCoin CEO Michael Gen.
Bittrex is another crypto trading giant which is joining the IEO marathon. It has also made a formal announcement of first IEO project which would be based on gaming data blockchain network. Bittrex also boasts of huge number of daily transactions on it platform which are estimated to be $77 million.
The CEO of Bittrex, Bill Shihara said, “Our international users will now be able to gain access blockchain projects without the fear of losing their money. The operations of Bittrex are regulated in Malta and the company is very excited about the prospect of launching IEO on its platform”.
The exchange is all set to launch its first IEO which would have a hard cap of 17 billion XRD. If the hard cap is met, it would represent 17 percent of the total income and would also elevate the supply to $6 million.
Future of IEO
Going by the trends, IEO seems to have an undeterred growth in future, it has become one of the most reliable instruments for investment in the crypto domain. Alongwith major exchanges, many investors around the world are also becoming a part of this blockchain upheaval.
There are positive reactions about this new instrument from everywhere. The measures which are being taken to execute IEO have also impressed the investors and project owners as well. It is an efficient and cost-effective deal for every participant.
Conclusion
Crypto domain is going through many changes and IEO is one them. It has brought many benefits into the the process of fund-raising and made execution of transactions better than any with the involvement of exchanges. With this technology, there are expectations that have risen across the globe.
It has given a new hope to the entrepreneurs as well, an IEO development company can make it possible for you as well. We hope that this article has cleared your doubts about Initial Exchange Offering.
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