IEO is a fundraising method that was established to overcome and replace the shortcomings of the ICO fundraising method. With IEO, investors or project teams do not need to worry about legal issues. To learn more about IEO, follow the article below:
What is IEO?
IEO (English term: Initial Exchange Offering) is a fundraising form using tokens of Blockchain technology projects through Crypto exchanges.
These IEO projects will have to pay Listing fees for tokens to the exchange plus a percentage of tokens sold.
To participate in IEO projects, investors only need an account on the exchange that allows buying and selling tokens of that IEO project.
Thanks to the partnership with the exchange, users can easily recognize, and the trading data helps eliminate unreliable projects, as the exchange has already conducted research and due diligence before allowing the IEO to proceed, thus reducing effort for researchers and increasing trust from investors.
Dedicated platform for IEO on exchanges
The world’s largest trading volume exchange Binance has launched a dedicated IEO platform – Binance Launchpad. The success came quickly beyond expectations with TRON – which acquired BitTorrent and sold this token on Binance Launchpad, in just under 15 minutes, netting $7.2 million USD in the Crowdsale. Second place is Fetch.Ai, which raised $6 million USD in less than 22 seconds on Binance.
This was followed by the launch of Initial Exchange Offering platforms by many other exchanges such as Kucoin Spotlight, Bitmax Launchpad, OK Jumpstart (OKEx), Huobi Prime.
Assessing the pros and cons of IEO compared to ICO
Advantages
Security
- Security is guaranteed optimally, all accounts participating in the IEO project need to verify KYC/AML. Crowdsale is also secured through smart contracts accompanying each IEO project.
Safety and credibility
- IEO has outstanding advantages in safety and credibility over ICO thanks to the exchange, as each crowdsale is scrutinized and thoroughly analyzed before being allowed on the exchange. This is how exchanges maintain credibility and protect investors’ safety.
- Therefore, scams through Initial Exchange Offering projects are almost nonexistent when approved by Crypto exchanges.
Example: Bittrex immediately terminated cooperation with RAID IEO just a few hours before the crowdsale. The reason was RAID had ended its partnership with OP.GG. Bittrex believed that the partnership was crucial, and RAID’s relationship ending made Bittrex think it was disadvantageous for users, leading to the last-minute cancellation of the IEO.
Easier participation
- Token projects launching IEO on exchanges are much easier than conducting an ICO independently.
- Moreover, ICO projects have to pay listing fees, a percentage of tokens for marketing, whereas IEO projects only need to spend significantly less on the exchange.
- With Initial Exchange Offerings, token issuers can leverage the stable user base of the exchange to gather feedback for improvement and development.
Token listing
- After the crowdsale ends, tokens are listed on the exchange conducting the IEO.
Disadvantages
Aside from the advantages, IEO also has some disadvantages compared to ICO:
- High fundraising cost, establishing such a system is not easy
- Low liquidity
- Investors have limited control during trading activities
How to participate in IEO?
Currently, Initial Exchange Offering is not widespread in the Crypto community, but finding a suitable IEO is not difficult.
Just look for Crypto exchanges that are hosting crowdsales for IEO. Then register an account on those exchanges, and verify your identity through KYC and AML.
Next, check the coin being offered in the IEO, deposit money into your account, wait for the IEO to start, and purchase tokens.
Which exchange should you choose for IEO investment?
First, follow some summaries of the following IEO platforms:
IEO has been launched since 2017, with Binance LaunchPad being the pioneer of this trend. Following are many exchanges like CoinSuper, Tokenman, CoinBene that adopted this trend.
However, currently only Binance LaunchPad’s IEO attracts widespread investor interest due to the following reasons:
- High liquidity
- Prestigious brand
- Coins in IEO projects listed on Binance tend to
