What Is an Initial Exchange Offering (IEO)? Is It the New ICO?
The Initial Exchange Offering(IEO) has been making headlines while catching the attention of investors, traders, exchanges, and project teams following Bitcoin value decline and the ICO fad cool off in 2018.
In 2019, already 32 of the 47 IEOs listed on ICObench have launched while the completed IEOs having raised over $159 million.
Currently, some of the best cryptocurrency exchanges platforms such as Binance, OKEx, Bitmax, Huobi, KuCoin, and Bittrex have already conducted their own IEOs.
And after launching, the majority of these IEO’s have shown much promise after being listed on the exchanges.
What Is an Initial Exchange Offering (IEO)
An initial Exchange Offering is an improvement of the ICO concept that is conducted on a cryptocurrency ecosystem.
Different from ICO, the cryptocurrency exchange administers the IEO on behalf of the token issuer looking to raise capital with its new tokens. These tokens are later listed on the cryptocurrency exchanges.
Unlike the ICO where the investor deals directly with the startups, in IEO, the risk of transactions are transferred from the investors to the exchanges.
This innovation helps to eradicate the chances of phishing, and DDoS among other malicious attacks.
The startup or the token issuer agrees with the cryptocurrency exchange on terms such as fees, and issuance volume and price among other factors.
Investors are then allowed to buy the tokens directly from the cryptocurrency exchanges after completing the KYC procedures.
What are the advantages of IEOs?
A successful IEO has the potential to raise millions for token issuers, investors, and trading platforms. Here a few advantages of IEOs.
Trust is one of the major advantages of IEOs. Usually, the crowd sales are conducted on the crypto exchange platforms while the counterparty seeks to screens all the projects looking to be launched on its website.
According to cryptocurrency exchanges, these steps are essential in maintaining a good reputation. Therefore, IEOs can help to eradicate major threats such as scams and dubious projects from raising capital.
Security is of paramount importance, especially when dealing with money. With IEO, the safety of both the investors and the issuers is prioritized.
When it comes to crowdsale security, the exchange manages the IEO’s smart contracts as well as the KYC/AML processes. In most cases, services providers do KYC/AML on their clients after creating their accounts.
Token issuers do not have to worry about crowdsale security as the exchange is managing the IEO’s smart contract.
The KYC/AML process is also handled by the crypto exchange as most service providers do KYC/AML checks on their participants.
Besides that, investors’ security is not compromised since the exchanges get rid of all ineligible projects that potentially pose risks to investors.
Therefore, a secure investment ecosystem is guaranteed to large extent..
● Frictionless process
Regardless of your knowledge in the cryptocurrency industry, you can freely contribute and participate in the IEO platform.
● Guaranteed Exchange Listing
IEO tokens on the exchanges enjoy near-instant listing soon after the launch.
Cryptocurrency exchanges carefully get all their token issuers to guarantee the quality of their offerings. To maintain their reputation, exchanges can only list credible startups.
This means that these startups have to undergo intense diligence which highly reduces the chances of startups being unveiled as scams.
Upcoming and recent IEOs
A number of IEO tokens launch have already taken place, and still, there are other ongoing and upcoming IEOs in the market.
In fact, only time can tell how far the IEO fad will go. You will note that each of these projects focuses on unique offerings.
● Matic Network
Matic Network is designed to solve the problem of scalability on today’s Blockchain network applications. It launched on Binance exchange recently.
For instance, scalability is said to limit the ability of developers to optimize their dApps(decentralized applications) fully. This will help and encourage developers to earn cryptocurrency with dapps.
Besides improving the scalability of cryptocurrency platforms such as Ethereum, Matic network aims at improving the speed of block confirmations which will in return reduce gas fees.
The network is further designed to help simplify and make the user experience of the Blockchain network user-friendly.
Here are a few of the Upcoming IEOs in the market today.
According to the traceto.io developers, this project is aimed at building a solution on the KYC segment in the crypto market.
The traceto.io team plans to make use of a combination of smart contracts and artificial intelligence to come up with a solution that will streamline the KYC process.
Evedo project is aimed at leveraging the technology in event organizing. In other words, Evedo is designed to bring together all the users that make up the event organizing ecosystem.
How to participate in an IEO?
Currently, IEOs are relatively rare in the market unlike the number of cryptocurrencies on the economy.
However, it’s not difficult to find the right one. So, the first step at participating in an IEO is identifying the IEO of your choice.
Secondly, identify the cryptocurrency exchange platforms that are hosting the crowdsale. Note that, there can be more than one exchange, but you only have to choose the exchange that fits your needs.
After identifying the exchange of your choice, sign up for an account. You will go through their whitelisting and Know Your Customer-KYC procedures.
Additionally, since IEO uses cryptocurrencies to raise funds, check the cryptocurrencies that the exchange accepts and fund your account appropriately.
You can use trading bots to buy the allowed cryptocurrencies if you aren’t familiar with the crypto industry.
Lastly, wait for the IEO to launch for you to purchase your token. Most exchanges allow you to use various cryptocurrencies such as Bitcoin, Ethereum, and Dash among others.
Below are some exchanges that have already launched their IEOs.
Initial Exchange Offerings might to the solution to many ICO failures, scams, and sub-optimal projects offerings.
Binance, together with other cryptocurrency exchanges are aiming at using the IEOs to guarantee a safer working environment for both issuers and investors.
IEOs will also increase the growth of cryptocurrencies for global financial market by expanding the market scope and the level of trust.
Indeed, IEOs have the capabilities of becoming a standard model for future startup fundraising while encouraging the development of quality projects.