An Initial Exchange Offerings is a fundraising technique like ICO, but the difference between an ICO and IEO is that IEO relies on the exchange for the whole fundraising process. In IEO, the tokens after the legalization process get listed directly into a top-rated exchange.
Listing tokens in exchanges don't require separate marketing of tokens as the exchanges already have a notable amount of traders. The exchanges take up the response for whole IEO process and even fundraising takes place in the exchange sites.
Thus in IEO, the exchanges take up the process of holding and selling the tokens instead of project team or startups.
Why Business Individuals prefer IEO than ICO?
As the ICO ban in China made crypto startups to find alternative solutions for fundraising for their business and projects. This paved a way for this new trend of crowdfunding called as IEO. As this IEO allows for fearless fundraising over laws and authorities made them visible all around the globe.
Every business individuals drift towards IEO for fundraising as it proved to be an effective method over ICO. The concept of IEO was first introduced by Binance in 2017. But it took two years to reach high market attention and by 2019 it managed to collect nearly $7.2 million within 15 minutes. There are many successful IEO projects over the year and this attracted massive Entrepreneurs to choose IEO for fundraising than ICO.
Benefits of IEO over ICO :
There are lot of benefits and advantages in IEO process which are explained as follows :
Centralized - Boost Trust :
One of the key benefits of IEO is that here the crowdsale is conducted on an exchange which
becomes like a middle man and counterparty that monitors every project processes. Exchanges basically screen the IEO projects process to maintain their good reputations. This reuse of centralization can be seen as a counter to the basic idea that created Bitcoin and open blockchains in the first place, which was to be a completely P2P network.
Marketing Strategy - Makes IEOs more Easier :
The main advantage of IEO over ICO is that exchanges will have an existing community of audience which IEO can make use of. The exchange’s existing resources for marketing make it easier for a new project to get discovered by a larger investor and thus launch its token offering with great success.
Legal Protection - Increases Security :
Token creators need not have to worry about fundraising security as the exchange will manage the whole IEO process through smart contracts.
Exchanges will have a well-organized legal structure which makes them regulatory and provides protections for new start-ups who normally processes IEO in it. Some Well-developed exchanges offer legal advice and access to a full legal team to help new startups travel through the hazards in the blockchain industry.
Some of the IEO platforms that are supported by popular exchanges are as follows :
Will IEO make a Boom Fundraising?
ICO created a fundraising boom over the past two years ( 2017-2018 ).Even though there is some notable percentage of ICOs operated by scammers which leads to the ban of ICO in some countries.
On the other hand, IEOs furnishes an increased level of trust in crowdfunding, because the exchanges hosting the crowd sales actively participate, which in turns improve the efficiency of the crowdfunding.
Therefore, IEOs have the potential of creating the next fundraising boom and also be the best crowdfunding technique until the evolution of the next new method of fundraising to replace it.
To know how to participate in an IEO , read the article : What is Initial Exchange Offerings ( IEO ) ?
