The Initial Exchange Offering (IEO) is a method of raising funds for your business in the crypto market.
It is an alternative to ICO and STO and acts as an intermediary between projects and contributors. So, what actually is IEO?
How is it different from ICOs? And how to participate in it? You may have many questions. Read this article to get answered.
What is Initial Exchange Offering (IEO)?
IEO is an alternative or another form of ICO. An IEO enables token offering by partnering with an exchange platform, rather than directly distributing them among investors.
In IEO, only the members of that particular exchange platform can invest in tokens.
The project team can follow an IEO’s standard procedure for buying and storing tokens from that particular exchange and this standardizes the process of token offering as the exchange sets the terms of purchase.
In IEOs it’s the crypto exchanges that raise funds on behalf of startups.
How is it different from ICO?
When buying or selling coins through ICO, the users can avail themselves and trade them later on exchanges.
The tokens offered through an ICO were never listed on exchanges. Instead, when buying tokens through IEO, users rely on the fact that the given exchange has done some due diligence and is launching a coin believing it has a future and it’s in an exchange’s best interest to not damage its customer base by issuing dodgy tokens.
Thus the key difference of ICO and IEO is that the latter takes advantage of an exchange platform and allows only the users of the platform to acquire shares via tokens.
IEO is responsible for choosing potentially successful projects, o many people believe that IEOs are significantly safer than ICOs.
Advantages of using IEO
Among the zillions of advantages, some of the important ones are listed below.
- As IEOs are carried out by third parties, they maintain a good reputation. So they choose token issuers carefully.
- There are no scam token issuers in IEO, so they can eliminate scam projects from raising funds.
- The projects supported by IEOs are trustworthy and believable
- The smart contracts of IEO are handled by the exchange platforms. These platforms has KYC/AML processes that enable security.
- Requires a lower marketing budget for startups to launch IEO.
How to participate in IEO?
To participate in an IEO, firstly you have to find one that makes sense for you.
Check which exchanges are hosting the crowd sale in that IEO and register your own account in the cryptocurrency exchange it has.
For registering an account, you need to complete KYC and AML processes.
Now you can fund your account with the coin which is accepted in the crowd sale and wait until the IEO begins to start buying your tokens.
As IEOs are safer and more trustable platform than ICOs, it is more popular for crypto traders. But always do careful and detailed research before choosing and investing in an IEO.