What’s an IEO?

IEO

The crypto culture has been continuously progressing with the advent of better offering models such as Initial Exchange Offerings (IEOs), Security Token Offerings (STOs), and Restricted Token Offering (RTO) over the last few years. If you are keen to know about such a model that is Initial Exchange Offerings (IEO), then you are certainly at the right place.

What’s an IEO?

An Initial Exchange Offering, as the name suggests, is operated on a cryptocurrency exchange network. The IEO is operated on behalf of a start-up by a crypto exchange that seeks to raise funds with its afresh allotted tokens. Since the token selling is carried out on the website of the exchange, token issuers must pay a listing fee along with a portion of the tokens exchanged during the IEO. In return, the crypto startups’ tokens are distributed on the websites of the exchange, and their coins are displayed after the IEO is over.

How to get started with an IEO?

At present, IEOs are gathering unbelievable momentum which is why the market is flooded with these tokens and anyone associated with the crypto world is witnessing a significant number of coins across various websites. However, this unprecedented growth is also the reason why it is not going to be difficult to find a suitable exchange for your requirements. First of all, you need to verify which exchanges are hosting the crowd sale until you find an IEO that fits best for you. Your next move is to register an account to carry out this process on the cryptocurrency exchange. You might need to complete the procedures of KYC and AML authentication for this purpose. After this successful authentication, you have to search for the cryptocurrencies you want to add to the IEO. While procuring the cryptocurrencies, you should have clarity with the approval of your selected cryptocurrency in the crowd sale. At last, with all these mandates done, one is all set to participate in the overall process whenever the crowd sale starts.

Two sides of a coin

IEO platforms can help blockchain ventures raise money rapidly and has created a lot of excitement in the entire crypto ecosystem. For Instance, we can refer to the growth of BitTorrent, which managed to accumulate $7 million just a few minutes after its Binance Launchpad listing went live ( later acquired by Tron). With that said, IEOs have a lot more to offer than their actual drawbacks. Let’s understand both faces of the coin.

Pros

1. Investors feel more assertive when they see the selling of a digital asset token on a trusted crypto exchange as it provides credibility to a project.
2. It is highly likely that IEO ventures run smoothly as they provide better marketing and growth assistance in addition to managing the token offering.
3. They offer a user-friendly experience for initial exchange offering participants. It is easier to apply to blockchain projects as compared with ICOs, since IEO systems tend to be better developed.

Cons

1. Projects using IEOs have to pay listing fees. Start-ups would also have to include an exchange rate in the portion of the token as a form of fee.
2. A few exchanges for cryptocurrencies do cut corners. There are websites that do not have due diligence to a high degree because of the thriving initial exchange offering market. Before investing in an IEO, make sure that you do extensive research and analysis.
3. Dumps and pumps are also a prominent threat with IEOs. Some digital assets can grow in value extensively after a token sale and then decline sharply as an after effect which leads to huge losses.

Conclusion

Since the exchanges are running sales actively to engage in the fundraising process to increase its efficacy, IEOs have been able to develop an improved degree of trust between cryptocurrency ventures. IEOs thus have the potential to become the mainstream model for raising funds in the crypto space and maybe even establish the next surge in fundraising.