The Initial Exchange Offering (IEO) is the coming-of-age of the “traditional” ICO to crypto-banking that is slowly catching the interest of ICOs and traders across the world. It bolsters trust and security for investors and blockchain projects.
So, what exactly is an IEO?
The chief medium of fundraising for blockchain projects has been the Initial Coin Offering (ICO). As blockchain continues to evolve, so do the mechanisms used for fundraising new projects and the new concept replacing ICO is Initial Exchange Offering (IEO). This latest approach provides exchanges to supervise and launch new blockchain projects themselves. IEO is a smart and quick way to launch a blockchain-based project and place your token on the exchange without taking the risks associated with a traditional ICO or STO.
An IEO depends on having an exchange function as a counterparty. Developers mint the tokens of the project and send them to the exchange, which then sells the tokens to the contributors for Ether. An IEO is a fundraising strategy that implies collaborating with a crypto exchange as a counterpart. The project doesn’t sell tokens to the investors but it sends them to the exchange, which in turn would sell the tokens to individuals.
Why do an IEO over ICO?
While it was not called an exchange offering then, 2019 has seen a new wave of IEOs (Initial Exchange Offerings) springing up. On the 28th of January 2019, TRON launched the Bittorrent ICO through Binance launchpad making it the first IEO of 2019 and raising as much as $7 million within 20 minutes. I thought that rang a responding bell. Looks like the glorious years are back again. We have since seen Binance launch another for Fetch.AI team and many other exchanges such as Huobi, Bittrex, Okex, Kraken, BITMAX etc. racing to announce their soon to launch IEO.
What are the benefits of an IEO?
There is no risk of ‘Gas War’ between the contributors in IEO.
Since the investors know that the exchange Is the only place where tokens can be bought the risk of third-party fraud is also eliminated.
An IEO makes it easier for the token to hit the exchange since it is already there. You don’t need to worry about the transaction fees, token distribution, etc. KYC/AML (Know Your Client / Anti-Money Laundering) is not required if the exchange has its own KYC/AML procedure.
Transactions are undertaken on the exchange, not between individuals and projects so it is secure and reliable.
What is the future of IEO?
The Initial Exchange Offering is still a quite new phenomenon but there is no doubt that this will continue to grow with time. An IEO is completely different from ICO as the exchange is a tangible execution model, rather than an idea in a technical document. Hence, the chances of it performing in the long term are greater. With time, the IEO may change the face of crypto banking for the better for it might help to make crypto-currencies and exchanges more appealing to the wider market.
We hope that this new service will allow our loyal members to partake in token sales in a more user-friendly, secure and safe environment.