When an organization has a project looking for raising funds, an IEO (Initial Exchange Offering) offers the guarantee of an immediate client base where they can view their product. Relying upon the size of the trade’s audience, it could imply that the venture can lessen their outside advertising channels for raising funds, enabling them to concentrate just on the development of the product. As the name suggests, Initial Exchange Offering is directed on the cryptocurrency exchange platform. In contrary to ICOs (Initial Coin Offerings), an IEO is controlled by a crypto trade in the interest of the startup that looks for raising funds with its recently issued tokens.
History of IEOs
Even though IEOs have been introduced recently, the initial two IEOs were launched in November 2018 on the Binance Launchpad, and are regularly viewed as GIFTO and Bread. This comes as no surprise that Binance has been the essential power behind its recommencement.
Initial Exchange Offering (IEO)
IEO, (Initial Exchange Offering) is a fundraising event that is regulated by a trade. As opposed to an ICO (Initial Coin Offering) where the project team conducts the fundraising, an Initial Exchange Offering implies that the fundraising will be held on exchanges well-known fundraising platform like Binance Launchpad, where clients can buy tokens with their funds legitimately from their trade wallet.
- For a client, managing on-chain exchanges with various wallets on different blockchains is easy. Furthermore, a client needs an account in the trade and funds in their account where they can start participating through the website’s interface, which is trusted.
- Moreover, the exchange is securing its position behind the ventures on its platform, offering a higher level of trust behind the project, which implies the projects hosted by exchanges are more legitimate.
Why choose IEO
IEO includes the intermediary and centralized authority in the trading platform. This reinstallation of centralization brought trust among the financial specialists who are willing to invest resources into crypto resources safely.
- Listing the Tokens
In Initial Exchange Offering, it is the duty of the cryptocurrency exchange platform to list the token when the token deal is completed. Additionally, it is the real objective of each startup at that point of coin offering to list tokens on significant exchange platforms.
Token issuing new companies can profit by way of launching Initial Exchange Offerings. Moreover, the issuers of the token can benefit from the exchange tremendous client base to get more contributions to their ventures.
- Protected Legally
Trade platforms have an organized legitimate structure which protects new companies from any regulatory results. Furthermore, it will save cash for new companies to pay for legal resources.
Exchanges have been bringing the token deal to a close in a few minutes and a few cases, within a couple of seconds. Moreover, the speed of IEO trade platforms is better than some other platform or system used for crowdfunding.
ICO versus IEO
- Some choose ICOs because it is available to the public. On paper, it has more odds of raising assets. Regardless, speculators have begun to doubt about ICOs. Anyone who can persuade investors with their white paper can raise fund through ICOs. As a general rule, the technology associated with the business is not known. Additionally, no third party screens the ICOs. This opportunity is used by scammers to collect funds, which have not been delivered.
- The main advantage that works for IEOs is the exchange which launches it, screens the procedure as an organizer. Succinctly put, if an investor confides his trust in the trade, they can be guaranteed of the security of its IEO, which also implies that the reputation of the exchange is in question. If IEO goes down, it is probably going to bring down the exchange with it.
Does IEOs generate the next fundraising Boom
- Initial coin offering made a fundraising boom in the year 2017-2018 where scammers executed a significant level of the crypto projects. Considering the ICO bans, we can say this cannot be a useful fundraising model for crypto startups.
- Contrastingly, IEOs give an increased degree of trust among cryptocurrency ventures, because the trades facilitating the crowd sales effectively partake in the fundraising process, which improves the effectiveness of the crowdsale. Hence IEOs have the capability of becoming the standard model for fundraising in the crypto space, which may eventually lead to the next fundraising boom.