Initial Exchange Offering : All about IEOs in Cryptocurrency World

What is Initial Exchange Offering (IEO)? Difference between IEO and ICO. All About IEO described here.

by Amit.Saha Updated: 04 May, 2022, 15:48 IST
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An Initial Exchange Offering is a fundraising event that is managed on a popular Crypto Exchange’s fundraising platform. Unlike Initial Coin Offering (ICO), where the fundraising is conducted by the project team, the Initial Exchange Offering (IEO) works differently and the users can buy tokens directly by using their own Crypto Exchange wallets. The fever of Initial Coin Offering in 2017 ended up being an extremely high-hazard environment for people needing to be involved in token releases of new blockchain projects, from sending funds to some incorrect wallet by mistake, or some undertaking groups fleeing with funds. Here we have discussed Initial Exchange Offering or IEO in brief.

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Advantages of IEO

Being trustworthy, secure, and easy to use, the Initial Exchange Offering (IEO) has many advantages. The reason they are popular is that they have great benefits.

IEOs are Trustworthy

One of the vital advantages of IEO is the way that they’ve accomplished with the assistance of a third party called the Cryptocurrency Exchange platforms. Each project is screened by the exchanges that want to launch an IEO on it’s platform. Exchanges need to keep a decent character and they pick token guarantors cautiously. That is the means by which they can dispose of potential trick projects from raising assets. That is the reason it implies that the supported projects are convincing, and financial backers can be certain that the platform did its due tirelessness prior to dispatching the IEO.

IEOs are Secure

The IEO smart contract is managed responsibly by the exchange platform, the token issuers don’t need to worry about the reliability of the crowd sale. The KYC/AML process is also handled by the Crypto exchanges and this is the reason that IEO is a much more secure substitute to ICOs.

Easy to use

A startup can take advantage of the processes exchange platforms, those looking to issue tokens. There will be no extra fee like the fundraising organizations pays and the marketing budget would be low for the startups like to launch an IEO.


Challenges of IEO

There are also some challenges we face while choosing IEO. With the advantages of the Initial Exchange Offering, it is also suggested to see the challenges you may face going with this new method.

Exchanges are Strict

The crypto exchange platforms when teamed up with projects, their standing is risked. Assuming the development team doesn't meet the expressed prerequisites or the task breakdown, it's the trade that takes the fundamental blow. That is the reason crypto exchanges generally do their due constancy prior to tolerating projects into their contributions. They check the item's whitepaper, screen its individuals, and guarantee that the undertaking objectives are sensible and feasible. They may retreat from an IEO whenever before it happens in the event that they discover anything obscure with regards to the project.

IEO is Expensive

The principal challenge of IEOs comes in the cost of listings. There's no denying that IEOs are a safer and more productive option in contrast to ICOs. However, the expense related to token sales can end up being very high for new companies. For instance, listing expenses can go as high as 20 BT and some exchange platforms might take even a 10% cut during the fundraising campaign. That is the reason new companies hoping to dispatch an IEO ought to know about its expense and count everything into their financial plans.

Minimum holdings

Note that IEOs have a lot higher least local token holding than ICOs. By building up a base, we deal with two issues. The first is that essentials will bar some potential possible investor groups. The next issue is that by building up a necessary least, exchanges may be blowing up the worth of the local token falsely by making a feeling of shortage.

Transparency

This is one of the main issues for a possible investor. The exchange risks its standing and likely income by dispatching an IEO, sure. In any case, as an investor, it's important that you comprehend the verifying system the stage utilizes and what sort of guidelines is set by the exchange itself.

Also read: How To Create an NFT for Free and Sell it?

Participation in an IEO?

IEOs are right now actually building some serious connections, so you can hope to observe them spread around various exchange platforms. That is the reason finding an IEO that requests you won't be hard.

  • When you find an interesting IEO project, check which trades are facilitating the crowd sale.

  • Next, you have to register by creating an account on the cryptocurrency exchange.

  • Normally, you should finish the KYC and AML confirmation processes.

  • When you complete them, it's an ideal opportunity to check the cryptocurrencies you can use to add to the IEO.

  • You would then be able to recharge your account with the coin which the crowd sale accepts and take a break until the IEO starts to begin purchasing your tokens.

Desirable characteristics of IEO platforms

A general question arises, which is the best IEO platform? To answer this question, we’ve included some key factors you can think of when choosing a platform

Ease of use: An IEO participation should be as frictionless as could really be expected. In contrast to ICOs, IEOs are intervened by the exchanges, so it is their obligation to make it open in any event, for beginner investors.

Exchange/platform reputation: The reputation and credibility of exchange are the most essential elements while picking an IEO stage. You have to trust exchanges completely since they vet all IEO projects. IEOs give worthwhile chances to the exchanges, and all IEO benefits come from anxious investors like you. Accordingly, you need to search for exchanges that are truly focused on the nature of the ventures rather than futile token sales.

Security and stability: IEOs draw in numerous investors from different foundations, so the IEO stage should be strong and secure. Nobody needs to risk losing their assets to an awkward trade, which is inclined to a wide range of cyberattacks, specialized errors, or terrible execution.

Liquidity: A strong IEO platform ought to have a bounty of investors ready to exchange the token. An IEO token is recorded on its exchange very quickly after the IEO, so you need to be certain that you have no issues when selling it later.

Multi-coin support: IEOs is an undeniably famous way for exchanges to expand the worth of their local token. Most investors would rather not be restricted to a couple of coins when contributing, so having numerous choices certainly makes a difference.

Popular Initial Exchange Offering (IEO) Platforms

There are more than 32 Initial Exchange Offering platforms. All of the platforms are different, and some of the platforms are better than others. Here we have listed few popular IEO platforms-

  • Binance Launchpad

  • Bittrex IEO

  • KuCoin Spotlight

  • OK Jumpstart

  • Gate.io Startup

  • Huobi Prime

How IEO differs from ICO

IEOs are considered to be safer than ICOs. Before getting into IEOs, there are some differences that people want to clear. Some differences are pointed as given below.

Initial Exchange Offering (IEO)
  • Fundraising is conducted at the platform of the exchange.

  • A cryptocurrency exchange is the crowd sale country party.

  • Smart contract managed by the cryptocurrency exchange.

  • Not necessarily the exchange conducts AML/KYC on its users.

  • With the relatively low market budget needed for fundraising companies, the exchange actively markets the token of the startups.

  • The exchange screens the company before it allows it to raise funds on its platform.

  • The exchange where the IEO is conducted, lists the automatic token after crowd sale.

Initial Coin Offering (ICO)
  • The token issuer's website conducts the fundraising.

  • The project's developers are the crowd sale country party.

  • The startup conducting the token sale also managed the smart contract.

  • The AML/KYC can vary between the different projects

  • With the significantly high market budget needed for fundraising companies, the project will have to invest many resources in order to get the attention of the public

  • Anyone can launch an ICO in a country where it is legal.

  • The startup has to reach out to exchange to list its tokens.

Will IEOs create the next fundraising boom?

In 2017 and 2018, ICOs made a raising money blast. In any case, a huge level of the crypto projects was worked by con scammers or were questionable. Along these lines, it can be concluded that for cryptocurrency startups, ICO is not a successful fundraising model. An increased extent of trust is provided by IEOs among cryptocurrency projects, as the exchanges, organizing the crowd sales engage in the fundraising operation, which upgrades the adaptability of the crowd sale. Therefore, IEOs could be the next fundraising boom because it has the ability to become the quality model for fundraising in the crypto space.

IEOs are less inclined to fail as compared to ICOs. Since they're more secure than ICOs, it doesn't mean they're impenetrable. That is the reason you really want to settle on a cautious decision when putting funds into an IEO. Whether the exchange platform has reviewed the project and has facilitated effective IEOs before, it's requisite that you get your research too.

FAQs on IEOs
Is the IEO platform a securities exchange?

Assuming that the IEO includes protections, the online exchange platform on which the IEO is being offered may have to register independently with the SEC as a public protection trade or work according to an exclusion, like a registered broker-dealer such as alternative trading system (ATS).

Is the IEO and federal securities laws in conformity?

Noncompliance with the government protections laws implies the IEO as well as the exchange platform might be working unlawfully and the market protections and investors and remedies these laws are planned to give might be missing. Carefully consider whether the organization and the exchanging stage associated with the IEO has followed government protections laws.

Is the IEOs securities offering?

There are significant issues that the investors ought to know about prior to their investment into an IEO. As on account of ICOs, if you depend upon current realities and conditions of the offering, the contribution might include the deal and offer of securities. This implies the IEO might be dependent upon enlistment necessities that apply to offerings under the government protections laws.

Is this a broker-dealer platform?

The online exchanging platform associated with an IEO may likewise be going about as an intermediary or seller that is needed to enroll with the SEC and become an individual from a self-administrative association, normally FINRA. The broker-dealers registered with the SEC are dependent upon lawful and administrative prerequisites that administer their lead and give significant shields to the investors, that includes representing a way predictable with the SEC's client insurance principles.

Can I go for an overseas IEO to invest?

Due to the expected applicability of the government protection laws to an IEO, numerous IEOs that you might find out about might be presented by offshore entities or people. In any case, the IEO is being proposed to an individual in the United States, for example, through an online trading platform website that is based overseas, then, at that point, the government protections laws actually may apply.

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IEO, these opportunities are only available to global crypto exchanges, if India going to ban foreign exchange it’s really hard. 
bdw very informative on bro.

Deal Cadet Deal Cadet
Best_Deal_Hunter wrote:

IEO, these opportunities are only available to global crypto exchanges, if India going to ban foreign exchange it’s really hard. 
bdw very informative on bro.

Yes they are so stricted to technologies that’s why companies and talents are going outside India
&
Don’t know why Indian government following China and Pakistan as their inspiration

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