The Ultimate Guide to Initial Exchange Offerings IEOs

It could also be argued that the regulators and extreme market conditions had stopped the initial ICO craze too early when in reality there was still underlying demand that was simply being suppressed. Only 3% of the total 130,000 participants wound up being able to buy the TOP tokens. Like many of the other IEO platforms, there what is an ieo has been concern about bots that prevent many investors from being able to participate. A total of 50 billion tokens were sold out in less than 15 minutes for a total value of over $7.1 million. There were two sessions in which users could participate; one for purchases using BNB tokens and the other using TRON tokens. Though not all projects are interested in being traded, many are and by doing an IEO, getting listed on a major exchange is an automatic process that happens after the IEO is completed.

The risks and opportunities of an IEO

ICOs were famous for their open participation model but suffered from numerous scams https://www.xcritical.com/ and regulatory issues, leading to a decline in their credibility. This necessitated a shift towards IEOs, which are hosted on established exchange platforms that vet projects and offer investors a layer of security and trust. A growing number of projects are simultaneously launching IDOs on multiple blockchain launchpads and releasing tokens on a combination of different smart contract platforms. IEOs were first introduced in early 2019 and have since become a hugely popular way to launch new crypto projects. Like an ICO, an IEO involves the distribution of new crypto tokens to either a set of investors or the broader public.

What Is an Initial Exchange Offering (IEO)? A Comprehensive Guide

However, in an IEO the organization trying to raise funds has to partner with a cryptocurrency exchange, which acts as the facilitator for the actual token sale and distribution. Initial Coin Offerings (ICOs) and Initial Exchange Offerings (IEOs) are both forms of crowdfunding that use crypto assets. In more traditional fundraising such as venture capital, a small number of people would provide large amounts of money.

The Ultimate Guide to Initial Exchange Offerings (IEOs)

• There are thousands of cryptocurrency and blockchain projects in existence or under development.
• The exchanges benefit in that they receive new interest from those people who want to invest in the IEO, but were not already on their platform.
• Once these decisions are made, it is time to choose an exchange platform for the IEO.
• Only 3% of the total 130,000 participants wound up being able to buy the TOP tokens.
• Dishonest projects or teams with little business sense will not be able to conduct a successful IEO either, due to the very strict requirements.
• Because an IEO is facilitated by an exchange, the startups opting for this route have to be serious about their plan of action.

We publish guides, reviews and news on tech, cryptocurrency, Bitcoin, blockchain & privacy. Our content is updated regularly to keep our privacy-minded readers safe, informed & up to date. When this article was written in 2019 we were witnessing the height of the IEO boom.

Other Fundraising Methods in the Crypto Space

Organizing an IEO is akin to stating that they are committed to the long-term success of the project. When developers of a cryptocurrency project decide they want to organize an IEO, a complicated procedure must be followed before the first dollar can be raised. Alternatively, availability and circulation may have been limited by the organization behind the project. For example, a coin may have already been minable but was then only available to miners. ICOs can also be public (open to anyone) or private (open to select investors, etc.).

What is an Initial Exchange Offering?

The vast majority of value generated by ICOs has been built on the Ethereum network. For investors, this makes it easier to exit their position, should they feel the need to do so. Additionally, they need to determine if their Initial Exchange Offering will have a hard or soft cap. A hard cap ensures that no more than a certain amount of money can be invested.

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That doesn’t mean they make for a good investment or a better one than an ICO. Before investing in a new token, you should make sure to do your own research. Decentralized exchanges tend to be a lot smaller than centralized exchanges, meaning that the traffic that a new project receives might be substantially smaller than the traffic on an IDO. Remember that investing in IEOs, like any investment in the cryptocurrency space, carries risks. Conduct thorough research and consider your risk tolerance before participating in any IEO. The first major exchange to offer the IEO and popularize the practice was Binance through their IEO platform called Binance Launchpad.

The IEO is unique because the sale of these initial tokens is managed by an existing crypto asset exchange instead of directly by the project team. In the world of cryptocurrency fundraising, Initial Exchange Offerings (IEOs) have emerged as a popular alternative to Initial Coin Offerings (ICOs). IEOs provide a more secure and trustworthy platform for startups to raise capital and for investors to participate in token sales. The fundraising journey in the crypto space has evolved significantly over the years, moving from largely unregulated ICOs to more structured and secure IEOs.

Lessons Learned from Unsuccessful IEOs

Ki Chong first discovered Bitcoin in 2013 and has been hooked on the decentralized dream ever since. Originally from Los Angeles, he spent 4 years in Cambodia as the founder of the first 3D printing business in the country. Since leaving his business, he has devoted himself fulltime to blockchain technology in general and Ethereum in particular. Is this type of more restrained, orderly, curated, and serviced crowdfunding the next standard in the blockchain industry? Perhaps the idealism of the very early crypto adopters was too extreme, and the resistance to centralization is softening in order to accommodate more mainstream users, adopters, and builders.

A type of crowdfunding where crypto start-ups generate capital by listing through an exchange. The lower frequency of IEOs has helped weed out some of the less savory projects in the cryptocurrency and blockchain space. However, no method is foolproof, but it appears that IEOs are at least on the right track. Being able to buy upcoming tokens early while knowing that they are to be listed on markets with good liquidity can create some opportunities. For projects looking to raise money with the help of an exchange, an IEO is a reliable option.

Even many of the ICOs that legitimately tried to build real products were either not able to deliver or saw their asset prices plummet from their original ICO prices. In the summer of 2017, during the peak of the ICO craze, the amount of money raised by ICOs surpassed angel and seed VC funding for the first time. The ICO was a completely new innovation in that anyone could participate in a sale that was like a combination of an IPO and a venture capitalist funding round.

IEOs are directly listed on the exchange, meaning that new projects have access to a large, highly liquid market. That allows the project selling the tokens to enjoy access to a rapt audience already interested in buying new tokens and enables the possibility for sales to be boosted by the marketing power of the exchange. In addition, some IEOs, like those on Binance Launchpad, let users buy new tokens with funds they already hold on the exchange, making it very easy for users to invest in new projects. IEO’s allow for startups to participate in large scale investments opportunities with the introduction of their business to a large investment ecosystem. Just because the IEO exists, it doesn’t mean that everyone should invest in these offerings.

The high demand, limited supply, and rapidly closing sales times are being repeated on the Initial Exchange Offerings that we are seeing today, but without the network-wide slowdown effects. When you ‘invest’ in a platform like kickstarter you only get some benefits in the form of early access to products, promotional gifts or other benefits. This means that they really are not good investments, but more of a vote of confidence in a products development. We put together this in-depth guide to explain what Initial Exchange Offerings (IEOs) are and how they differ to ICOs.