How to start IEO? This is a new strategy for crypto-finance and crowdfunding. This article explains how you can do that.
April 25, 2019, | AtoZ Markets - If you are interested in cryptocurrency, then you must have probably heard about Initial Exchange Offering, abbreviated as IEO. It emerged in 2018 as an alternative version of the popular fundraising platform, Initial Coin Offering (ICO). Since 2013, more than 1500 ICOs have taken place, however, ICO has experienced a downfall most recently, as it suffers from issues revolving around scams and security.
As the ICO platform gradually burns out, several other fundraising models like IEO have emerged and taken the center stage and it has awakened the minds of crypto investors.
What is an IEO?
This is a new fundraising strategy in Blockchain projects. With an IEO, a project relies on one or multiple crypto exchanges to make the crowdfunding, the smart contract and some of the marketing procedures. Unlike ICOs, where the counter-party is the developer, IEOs' counter-party is the crypto exchange. So in order for investors to participate in the Initial Exchange Offering, they need to create an account with the exchanges.
Rather than contributing Bitcoin, Ethereum or other cryptocurrencies to the Smart Contract of the ICO, investors are required to send the funds directly to the exchange account. Initial Exchange Offering offers more flexibility as it lets the contributor to be in charge of the spending. Thus, when it comes to IEO, both the exchange and the token issuer engage in token marketing.
So why is Initial Exchange Offering a good choice? If this is your question, we have an answer for you! Let's consider the Advantages of IEO.
Advantages of IEO
There are great advantages of IEO for projects that choose this new strategy and they are as follows:
Reduced risk of scam: While scams cannot be completely eradicated, this platform, however, ensures high-end security as tokens can only be purchased directly from the exchange. This makes it considerably difficult to scam investors.
Credibility: Projects composed with this strategy will have increased credibility because the exchange is partnering and putting its name on the line. Hence, there is a deeper level of scrutiny associated with the projects.
Liquidity: Unlike the traditional ICOs, IEOs provides better and immediate liquidity to any token or coin they promote as it is only natural for the coin to be listed by the exchange. This eliminates the hurdle experienced by most project teams before and after their crowdfunding campaigns.
More options for potential users: The crypto exchange taps its existing customers for contributions to the IEO. As a result, there is a built-in base for marketing, more freedom, greater transparency and more freedom to invest by account holders.
Despite the advantages of IEO we have just highlighted, it has not been all praise and roses as there are also quite a few disadvantages to the Initial Exchange Offer. Let's consider them.
Disadvantages of IEO
The following are the downsides of Initial Exchange Offering:
Price Manipulation: Bots are a huge concern when it comes to price. They can be programmed to beat out human investors trying to participate. An exchange can even alienate existing users who follow the rules only to be locked out in a few seconds.
Limited number of investors: It may only be deep pockets and institutional investors that reap the benefits of participating in the potentially lucrative IEOs.
Legal uncertainty: This is another downside as regulators in different parts of the have are yet find the optimal way to control the work of organizations implementing ICO or IEO. Therefore, no one is insured against risks.
That said, let's now proceed to how you can become part of an Initial Exchange Offerings.
How to participate in IEO?
Participating in IEO is no longer a daunting task. This step by step guide for participating in IEO will show you 6 easy ways to get involved:
- Confirm that the IEO will be issued: Most crypto projects tend to crowdfund with ICO’s. Therefore, the first is to ensure if the project chooses IEO.
- Research: You need to find out which exchanges will participate in an IEO, as some of them do not.
- Know your customer (KYC) procedures: Being KYC-approved is required for Initial Exchange Offerings. Signing up is, however, time-consuming.
- Sign up on the exchange: The next step is to sign up on the exchange as you need to have an account on the exchange to participate. So, if you don’t have an account on the exchange platform, create one by signing up.
- Which cryptocurrency will be accepted? In many cases, an IEO needs Etherium for investments, since there are a plethora of projects launched in the Etherum platform.
- IEO Initiation: Wait patiently for the crowdfunding to kick off and then proceed on buying the desired token you were looking for!
If you meet all the IEO’s requirements, congratulations! You are now qualified to be one of the whitelisted users for the IEO of your choice.
IEO vs. ICO - Which is better?
Before getting into the discussion on IEO VS. ICO, you need to know the major difference between both! The difference between IEO and ICO is immediate trading. IEO enables traders with spontaneous tradability.
Here is why one should choose IEO over ICO:
Fundraisers are now able to gain access to the existing user database of the audience.
Exchange listing will be more accessible to the audiences.
Scams can be completely eradicated since the tokens are purchased only from the exchange.
The future of IEO
Fundraising has been the most crucial way everyone is marching towards, so we can expect the interest and number of IEOs to continue to grow. This approach can bring a lot number of potential customers for your business which can boost the profits. Crypto exchanges are setting up a regular calendar of new launches.
At the moment, the stage is set for the IEO gold rush. Excited investors are looking to make a quick profit; willing to invest money without understanding the fundamentals. In addition, IEO might help to make cryptocurrencies and exchanges more appealing to the global market.
If you are looking to start your own project or need help with the existing one, please feel free to contact us: https://7marketz.com/contact/ or mailto:firstname.lastname@example.org and we will be happy to provide you with a consultation!