What is INITIAL EXCHANGE OFFERING (IEO)?

What is IEO?

The token sale that the cryptocurrency exchange supervises is termed as the initial exchange offering (IEO). The availability of IEOs is for the exchange users exclusively. However, several exchanges are there in which certain IEOs can take place. Similar to the ICOs, when funds are raised for the promising crypto projects, investors are allowed by IEOs to receive new tokens or cryptocurrencies. In crypto space, Initial exchange offerings or IEOs are also termed as a further step in the evolution of ICOs. While unregulations are there in ICOs on one hand, there are stifling regulations and expensive processes in STOs on the other. Therefore middle ground that helps in coping with both sides issues is taken by IEOs. 

It is the commencement of Binance Launchpad at 2019 end that has given traction to IEOs. Only the projects that are legit are attempted for promotion by IEOs since the credibility of exchange is kept by it at stake. However, more profoundness is there in the process of vetting. The accessibility of offerings from the exchange is more than that compared to STOs. In this, investment and participation are free for almost anyone and there are fewer sufferings from repercussions by team of token sale from regulators. 

Effectively, crowdfunding the several startups of cryptocurrency could also be done using IEOs as other methods while the role of the mediator is played by the exchange of cryptocurrency. There is considerably more interest, exposure and credibility received by the projects with crypto exchange help. The listing fee is paid by token issuers after thriving IEO along with tokens in the agreed amount for using the services of the IEO platform. Listing of tokens takes place on exchange when liquidity could be accessed instantly by the investors. 

Initial Exchange Offerings characteristics

The amount of coins is limited in the Initial exchange offerings similar to the ICOs. Fixed price is there for which these are offered, availability of limits on maximum and minimum tokens per individual user for purchase, devoted accepted cryptocurrencies, and hard cap, and soft cap.

However, the issue of IEO coins already takes place in front of crowdsale unlike tokens of ICO. Investors find it all the more convenient due to instant liquidity since exchanges are hit weeks or days after the IEO. Along with this, an intermediary platform is naturally involved in IEO process which has the trust of funds handling. However, the confidence of investors is also raised in the project by this that lacks by most ICOs. 

IEO benefits

The token sale that is more legitimated is assured for the projects as an exchange’s official backing is also there that determines whether due diligence has been done by them on project integrity. Tokens of the projects are also exposed and in the case of Binance, this is particularly true to vast investors audiences who are looking for profit new opportunities. 

The token listing advantage is afforded by investors on exchange with liquidity on an immediate basis and the ability for token payment using several methods in IEO including BTC, fiat, and certain other altcoins as well in different cases. 

However, the stick’s short end is once again left with the investors since most of the risk is faced by them in the scenario of IEO. As the industry intermediaries, investors remain to trust exchanges where the prevalence of maxim is there and when cryptocurrency exchanges track record is poor over the years. 

More comfort might be felt by the investors since they have the assurance that projects in which investment has been made by them using IEO are legitimate and not scams. There is a difference in policies of IEO between problems and exchanges and reminders must be served for approaching exchanges with care. 

Along with this, however, there is the beginning of the latest framework of SEC as well, the particular questions are not addressed by it having an impact on IEOs. It includes how effects are there on foreign startups or what is there in the wide category in terms of IEOs. 

Making crowdfunding more reliable and secure is the major idea behind IEO. The process of investment is monitored by the exchanges. This is the reason why there is no need of worrying about the corruption of the project by the team. 

It is believed by IEO supporters that it is a silver bullet for completely transforming a present situation. In general terms, the autonomous institutions are the exchanges that assure their reputation by themselves. 

Fast process of preparation – On account of the reliable status of an exchange platform, the time that it requires for getting more established and recognized is less. It is also a notable point that the project is promoted and supported by the exchange itself. 

New markets could be entered easily: an exchange platform makes market entry easier and also helps in IEO promotion. Its user base is active that makes the path inside a new market convenient and easier.

Trust – when compared to ICO, the major advantage of IEO is trust. High criteria are kept by exchanges for all fundings that are foreseen and only those are selected that can project goals feasibility assurance. 

AML/KYC process is handled by exchanges – legal regulations meeting process is time taking but the process could be expedited by exchange and all could be handled by it on its own. This offers time to focus on project execution. 

Marketing strategy part – bringing life to the project is an exchange’s goal so that the satisfaction of clients could be retrained. This is the reason why a marketing strategy part is created by the platform and help is offered in its promotion. The advantage of cost-saving is also given by this while facilitating faster entry of projects in the market. 

Security – Smart IEO contracts are managed by exchanges. No direct link is there between smart contracts and a team of the project. This offers protection from corruption, theft, and investments attack. 

Free and fast listing after trades starting and sale – protection of clients is the goal of exchange and this results in several advantages like free and quick listings after completion of the token sale.