What Is an Initial Exchange Offering (IEO) In Crypto?
Cryptocurrency is defined as a digital currency based on a distributed network. The increasing demand for cryptocurrencies and wide adoption by financial institutions and payment giants such as PayPal and Square reflects its undeniable ascent. While Bitcoin and crypto have had a somewhat rocky start, today BTC’s value is almost surpassing its all-time high again, and more cryptos are emerging to follow in its footsteps.
In general, you can purchase cryptocurrency during its initial release in the initial coin offerings (ICOs). But the ICO fever of 2017 proved to be a risky environment for investors. In contrast, an initial exchange offering (IEO) offers a more secure alternative for investors to purchase tokens with funds directly from their exchange wallets during the fundraising phase.
Source: learn.bybit.com
What Is an IEO?
An Initial Exchange Offering (IEO) is an alternative way for start-ups to raise capital by selling their utility tokens which give them preferred status with the company. Crypto exchanges help to oversee the ICO by making sure the project is vetted properly. The IEO originated in January 2019 when Binance launched the BitTorrent Token. The first offering sold out in just 15 minutes after its release, raising more than $7.2 million.
The IEO has become popular because it’s relatively easy to participate in. Instead of processing a chain of transactions across multiple blockchains, the IEO offers an alternative for users to assess the reliability of a project and to invest in funds exchange all under the same roof. At the same time that project developers get immediate exposure for their projects without having to spend millions of dollars on marketing, they can also benefit from the crypto exchange’s user base. So the ICO is a win-win situation for both users and developers, too.
Initial Exchange Offering (IEO)
An Initial Exchange Offered, commonly referred to as IEO, is a crowdfunding event that is administered by exchanges. ICOs are different from Initial Exchange Offerings (IEOs). An ICO involves raising funds by selling coins directly to investors, whereas an IEO involves raising funds through an exchange’s crowdfunding platform.
The ICO fever in 2018 was a very high-risk situation for individuals looking to invest in new blockchain projects. From accidentally sending funds to the incorrect wallet, or some project team absconding with funds, there were too many risks involved.
What are the Benefits of an IEO?
An IEO is easy for a user to participate in because they don’t need to use multiple wallets on different blockchains to perform on-chain transactions. Instead of having to create an account on the exchange, users only need an account on the exchange. They also need some funds in their account. And they can participate fully through the trusted website’s interfaces. Furthermore, the exchange is staked its reputation on the projects it lists on its platform, offering an even higher degree of trust behind these projects.
For a project looking to raise funds, an IEO offers the promise of an immediate userbase that can see their product, and depending on the size of the exchange’s audience, could mean that the project can reduce their outside marketing funnels for fundraising, allowing them to focus only on the development of their product.
If you intend to participate in an Initial Exchange Offering (IEO) on Binance Launchpad (BLP), it is recommended that you carefully review the Binance Research report for that specific token.
An Initial Exchange Offering (IEO) is a type of token sale that occurs through an exchange platform. Initial exchange offerings (IEOs) are conducted with the same objective as initial coin offerings (ICOs), but they’re done through a different conducting platform than ICOs.
What is the difference between an ICO and an IEO? ICOs are usually organized through a holding company’s own platform, whereas IEOs are conducted by cryptocurrency exchanges on behalf a company that is raising funding via token sales.
Cryptocurrency entrepreneurs and startups have come forward in recent times to prefer launching Initial Exchange Offerings (IEOs) for cryptocurrency fundraising amid the numerous cases involving fraudulent ICOs over the past several years. This led to the initial coin offering (ICO) industry losing the confidence and trust of investors, which pushed new companies to avoid using the ICO method for raising funds.
There are other alternatives besides IEO that have been proven effective, including ICOs and STOs. It’s not just IEO vs. Initial Coin ICO. These are security token offerings, initial token offerings, and initial decentralized exchange offerings.
How does IEO work?
The Initial Exchange Offering (IEO) process can be divided into four stages
Plan preparation- Your startup needs an idea with a feasibility check. Conduct a survey, prepare a marketing plan and budget, and determine the scope for the crypto exchange platforms.
Pre-IEO stage- Select the crypto exchange platforms to pitch your IEO project to.
IEO- Begin crypto token development; when tokens get minted, list them on the selected crypto exchange platform.
Post-IEO stage- Market your product.
Selling your new digital currency through an existing third-party exchange platform means that you can leverage investors’ trust in an already established exchange platform. You can also gain exposure to potential investors and users by using the right exchange platform.
