Initial Coin Offering was the only method of fundraising until now. Unlike traditional fundraising mechanisms which majorly allows venture capital and investors, the decentralized ICO’s can participate in the early stage of crypto startups.
Anyway, several ICO’s have gone through scams that have caused the investors to lose trust.
Just similar to ICO’s, Initial Exchange Offering is also a crowd raising strategy program for early-stage startups. When it comes to IEO Development Services, both project developers and investors facilitate their transactions through a third-party reliable exchange.
What is IEO Initial Exchange Offering? Why traders go with the IEO Development Company?
The concept of IEO fundraising was stated by the popular crypto exchange called Binance. To make it clear, Initial Exchange Offering is not open to the public as ICO’s.
One needs to be a user of the hosting exchange to participate in the token sale. While an ICO allows the contributors to buy the token for sale by sending the funds to a specific address, and IEO requires contributors/users to buy the token by using the exchange’s accounts.
IEO vs ICO
To have a clear perception you need to know the difference between ICO vs IEO.
This tabular format will make you clear!
|Parameters||Initial Exchange Offering (IEO)||Initial Coin Offering (ICO)|
|Definition||Crowdfunding by issuing utility token or coin through a cryptocurrency exchange.||Crowdfunding by issuing utility token or coin.|
|Level of Difficulty to setup||Medium||Easy|
The biggest problem with ICO is that they are not monitored by third parties. Generally, anyone can launch ICO if contained white paper to convince investors to put funds into your company. Though crypto traders argue this as an old established idea, IEO developers across the globe make this happen as possible!
To conduct an IEO the project team should meet and comply with the exchange’s requirements in order to launch the token sales.
In most of the ways, IEO and ICO are similar. Both of the offerings allow companies to sell tokens to investors who are willing to finance the projects. On a compliment, ICO’s is the developer, but for the IEO’s startups are able to handle the fundraising process by themselves. They make this happen by relying on either one or multiple exchanges to complete the campaigns.
With ICO’s, it is up to the developer to make sure smart contracts are correct, everything goes to plan, and security is tight. But with Initial Exchange Offering, all these obligations can be handled by the exchange making it easy-going for developers involved. Both of the crowdfunding options are not perfect actually and each one will have flaws. However, many argue IEO Development Services is the better option.
How to Launch IEO?
Launching an IEO is going to be a simple task for now. Participating in Initial Exchange Offering is a safe and simple process depending on the digital currency exchange involved.
The cost of IEO to launch is also an easy task. Here are the steps involved in launching and participating in IEO.
- Right off the bat, investors need to check whether IEO will be issued for the project which they are looking to invest in. For most of the Blockchain-related projects, Initial Coin Offering is the most common way to source for the funds. Therefore it is important to make sure the project is truly conducting Initial Exchange Offering to avoid being misled, especially in the case of new investors.
- Next, anyone looking to participate in this strategy must find out about its specific details. This also includes knowing which and when exchanges will take place. Usually, IEO’s happen on several exchanges at once, but in a lot of cases, it is restricted just one. This step is essential for a couple of reasons. First of all, all the exchanges are not secure. Some of them have controversial topics with security and they are generally at risk t deal with lesser-known platforms. On the other hand, exchanges usually have an identification factor that ranges from hours to week, such that investors must sign up early and be prepared.
- Once you have researched the exchanges involved, including the security details, reliability, and verification process, it is time for sign up. Cryptocurrency exchanges usually require information such as name, email address, and password. In some cases, information such as Country will also be required along with supporting documents such as photographs, Government Identification cards and proof of residency is also required here.
- Usually, Ether is the medium of exchange for both Initial Exchange Offering and Initial Coin Offering. Since most newly launched projects are composed of decentralized applications built on Ethereum Blockchain because most transactions occur in Ether.
- After buying the transaction currency, investors should wait for IEO to begin. From that point, all which is left is to buy issuers token on the exchange similar to buying any other token.
Why Initial Exchange offering? Is this the best platform?
The blockchain scene is saturated with ICO’s. Crypto Traders argue, it seems to be a successful way to raise the funds, but anyway developers cannot ignore the apparent problems associated with the model. There is a lack of trust on the part of investors as a result of ICO scams, fraud, and money lending.
Without the trust of investors, the chances of raising the funds through the crowdfunding method reduce to a greater extent.
So, how can Initial Exchange Offering solve all these problems associated with the Blockchain team?
The answer remains to be simple:
- Most of the project is new, and which means that they do not have a vast amount of users yet. As a result of this, it is more difficult for them to appear credible enough to win the trust of investors. IEO’s, on the other hand, allows these projects to tap into both existing and current user base of the exchange involved.
- IEO’s prevent gas wars in which users boost their speed and performance of the transactions by paying more gas. Since the exchange handles all the transactions, a single-speed is uniform on their end.
- When a project lists the cryptocurrencies on an exchange during the offering, it means that investors can buy it only from those exchanges. This makes them harder for them to become a victim of online phishing scams.
- IEO’s acts as a vote of confidence from the exchange to the project and this can boost the credibility as well.
- After the IEO, the project will be automatically listed on the exchange without any further stress from the part of the issuer.
So, What Are the Advantages of IEO?
There are a plethora of Benefits of IEO associated in the crypto industry. Exchanges profit from exposure when joining forces with this kind of project. The project’s team will also market the exchange, which in turn brings more customers to the exchange.
These additional customers will then increase the volume on the exchange since trading fees are involved here. The exchange will then accept money deposits from investors and new users, turning some into regulars as well.
Eventually, exchanges will then make money while listing new tokens and improving projects. Even though all exchanges have different types of requirements, they will all be benefited. Some exchanges may ask for a listing fee, operation fees, or a percentage of the profit from the sale of the tokens.
Here we have listed a few additional benefits to make you clear:
- It is easier for the project to be listed on the exchange.
- IEO adds in the manner of speaking a sort of protective layer for the investor since the token is already listed on its exchange. So if in case the founders decide to disappear, there is still a chance for investors to sell out the tokens!
- Through this new strategy is not open to the public, the exchange likely has an existing database that more readily supports the offering.
- When it comes to the view of a purchaser, initially they must register with the exchange and derive some comfort that the offering has the backing of the exchange and the transactions are simple to execute.
- Moreover, this strategy has made more difficult for scam purchasers since the new token can only purchase from the exchange.
- Termed to be a tool of confidence from the exchange and sponsor, which has to conduct its own diligence on the developer’s project.
Are there any latest updates on IEO?
There are a couple of platforms that have decided to launch their IEO platforms newly. Popular crypto exchange KuCoin which handles around $10 million every single day in trade volumes has announced its new platform in IEO called Spotlight. Former week, KuCoin CEO Michael Gen unveiled on the same.
However, no additional details were included regarding the launch of this neoteric platform on the availability to the public at this moment.
Yet another popular exchange Bittrex which owns a trading volume over $77 million on a daily trade basis has now joined IEO Bandwagon. The first IEO project on Bittrex will be RAID which is an international gaming data blockchain network.
According to Bill Shihara, CEO of Bittrex conveyed, “ Now our international users have direct access to blockchain projects with the peace of mind that comes from Bittrex International regulated in Malta. We are excited about this IEO and look forward to helping similarly innovative teams connect with users to build their platforms for the future”.
In accordance with their news conveyed, It was launched on March 15 with a hard cap of 17 billion XRD. Once the hard cap is reached, the 17 billion coins will represent 17 percent of XRD’s total income and supply with raising the company roughly $6 million.
Future of IEO in Crypto Capital
To discuss the future of Initial Coin Offering will raise the credibility in the market which literally means lowering out the rate of scams happening in the crypto capital. Moreover, popular exchanges only accept and hold credible projects.
It is also predicted that there can be a decrease in price manipulation. Fierce measures against price manipulators might also be affected and this may lead to lowering the number of firms and individuals who are willing to play around with the prices!
Crypto Market is fast-paced with rapid price changes and technological developments in the industry. This doesn’t mean that the market is perfect since it faces new threats and challenges every single day. However, Hire IEO developers have a keen knowledge and global expertise to boost your business to the next phase.
In addition to the developers, hiring the best IEO Development Company could also bring high-end benefits to your business which cannot be denied!
Hope you found this article interesting!!