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What Is an Initial Exchange Offering (IEO) In Crypto?

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Cryptocurrency is defined as a digital currency based on a distributed network. The increasing demand for cryptocurrencies and wide adoption by financial institutions and payment giants such as PayPal and Square reflects its undeniable ascent. While Bitcoin and crypto have had a somewhat rocky start, today BTC’s value is almost surpassing its all-time high again, and more cryptos are emerging to follow in its footsteps .

In general, you can purchase cryptocurrency during its initial release in the initial coin offerings (ICOs). But the ICO fever of 2017 proved to be a risky environment for investors. In contrast, an initial exchange offering (IEO) offers a more secure alternative for investors to purchase tokens with funds directly from their exchange wallets during the fundraising phase. 

An initial exchange offering (IEO) is a way for start-up companies to raise capital by selling utility tokens which confer preferred status with the company through a cryptocurrency exchange platform. In short, crypto exchanges help to oversee the token sale by making sure the project vetting process is scrutinized. The IEO originated in January 2019 when Binance Launchpad launched the BitTorrent Token (BTT). The initial offering sold out within 15 minutes of release, raising funds of more than $7.1 million.

The IEO has gained popularity mainly because it’s easy to participate in. Instead of processing on-chain transactions across multiple blockchains and wallets, the IEO offers a solution for users to assess the reliability of a project and to participate in funds exchange all under one roof. At the same time, project developers get immediate exposure to the crypto exchange’s user base without needing to fork out millions of dollars to formulate and execute their marketing strategies. Thus the IEO is a win-win for both users and developers .An IEO is used by start-up companies to obtain crowdfunding for their enterprises. Thes e companies raise funds by working directly with a cryptocurrency trading platform to commence a token marketing to interested investors. The key highlight of IEO is the exchange platforms will carry out their due diligence to perform a profusion of assessments before the sales .The IEO process to assessing these blockchain projects work like this :For companies interested in raising funds, IEOs are usually preferred to ICOs. Understanding why can help you to make the best choice for your investment activities .A reliable white paper should possess a few criteria, but generally, is to educate the potential investors with regards to the project prospects. To bare minimum for a good white paper should disclose detailed information about the project architecture, the team behind the project, a project roadmap, the facts and technical explanations with credible diagrams and statistics that appeal to technically-focused individuals or interested buyers .

Overall, the white paper should clearly inform the potential investors of the project’s vision, mission, overall growth, and how does the token translates its value to the holder. For example, BitDAO’s white paper provides full transparency of the project.

ICOs were the first method used by cryptocurrency companies to raise money. According to Forbes, the very first ICO was launched by a company called Mastercoin in 2013. Ethereum followed suit in năm trước, raising about $ 18.3 million. Its blockchain project was based on what’s known as a charitable foundation Model, in which investors make donations to back the project .IEOs offer some important advantages over ICOs, as described below .IEOs are comprehensively vetted for compliance with legal regulations and safety by the cryptocurrency platforms on which they’re sold. Thes e platforms evaluate the IEOs for viability and to eliminate any possibility of fraudulent activity and market manipulation. This process can significantly improve investors ’ confidence in the security of their financial outlays. ICOs, by contrast, don’t undergo the same degree of scrutiny and are thus considered to be a riskier investment by most financial authorities .ICOs allow anyone to purchase tokens. IEOs, however, require that investors be part of the platform that offers the IEO in order to make these financial investments. This reduces the probability that unverified individuals will purchase tokens. ICOs, by contrast, require investors to “ go it alone, ” purchasing directly from the company issuing these tokens. This not only reduces visibility for the issuer but can result in fewer protections for the investor .Cost for token sales

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