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Legitimate projects fight back against this by doxxing their developers—that is, revealing their identities. This allows investors to know who’s behind a project and what their experience is. Investors can then make a decision about whether to invest based on whether the https://www.xcritical.com/ team is made up of high-quality developers who have a strong vision for the future. While exchanges perform some due diligence on IEOs, there’s no guarantee that they filter out all scammy projects.
What Is an IEO? Complete Guide to Initial Exchange Offerings
Some examples include BitTorrent (BTT), Band Protocol (BAND), Axie Infinity (AXS), Alpha Finance Lab (ALPHA), and WazirX (WRX). Other exchanges have also set up their own IEO platforms, each with its benefits, requirements, and potential drawbacks. With an IEO, potential investors can buy these assets before they become available on the market. With initial exchange offering news the help of the exchange facilitating the token sale, registered users who provided their KYC information will be able to buy tokens before they start trading on the open market. Binance Launchpad is essentially a streamlined platform and process for new projects to launch their initial token offerings and then get subsequently listed on the Binance exchange. Binance Launchpad offers full advisory services for startups using its platform for an IEO.
What are the Best IEOs to Watch Now?
Having an exchange serve as a mediator between the token buyer and token seller should, ideally, cut down on the rampant fraud and scams that plagued ICOs in the past. Centralized exchange serves as a platform for a project’s initial sale of tokens. After the IEO, continue to promote your project to maintain momentum and attract more investors. Leverage social media platforms, distribute press releases, and provide regular updates on your project’s progress. Overall, while IEOs present certain risks that investors need to be aware of, they also offer significant opportunities, especially as the market matures and evolves.
The IEO: An Evolution of the ICO
As a result, crypto enthusiasts looking for a decentralized form of fundraising may be put off by this model. That’s where a nascent crypto project sells coins for its new blockchain or tokens to run on another one like Ethereum or BNB Chain. Securities and Exchange Commission chased after issuers for securities violations.
Lots of ICOs were scams, too, with developers abandoning their projects after raising funds, never to be seen again. IDOs are similar to ICOs and IEOs but are conducted on decentralized exchanges (DEXs). These offerings provide a more decentralized fundraising option, allowing projects to launch tokens on DEXs without needing a centralized exchange platform. An ICO, or initial coin offering, is a decentralized process whereby anyone can buy a crypto token directly from a project. An IEO, or initial exchange offering, enables members of a crypto exchange to buy a new token through the exchange as a middleman. In the world of cryptocurrency fundraising, Initial Exchange Offerings (IEOs) have emerged as a popular alternative to Initial Coin Offerings (ICOs).
Investors should also check whether there are requirements to join an IEO, such as owning the exchange’s token. Most exchanges accept deposits by credit card, debit card, bank transfer, or e-wallet. Audits are a small but very important step that projects can take to show they’re serious about investor safety. Top IEO projects make their audit results publicly available for prospective investors to review.
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.
Once you are registered, verified, and have the platform tokens, you are ready to purchase crypto assets through an Initial Exchange Offering. Binance allows users to purchase tokens on a “first-come, first-served” basis until the initial supply runs out. Huobi requires users to hold their Huobi Token (HT) for a certain amount of time so that the more HT you hold, then more IEO tokens you can purchase. Once the sale is over, you can freely trade your newly acquired tokens on the same exchange.
For blockchain projects that generate a lot of buzz, IEO platforms can help them raise capital quickly. Just look at BitTorrent, which managed to raise $7 million just 14 minutes after its listing on Binance Launchpad went live (it was later bought by Tron). That said, there are some marked differences from initial public offerings and IEOs you need to be aware of. This shift marked a significant development in how crypto projects raised funds, offering a safer investment environment.
- IEOs are directly listed on the exchange, meaning that new projects have access to a large, highly liquid market.
- An IEO is basically an ICO except that it is launched and managed by an existing exchange instead of the organization that created the token.
- This challenging set of demands eventually gave rise to Initial Exchange Offerings (IEOs).
- Many of which are competing to acquire potential investors through ICO or IEO events.
- A core difference between IEOs and IDOs is that an exchange’s permission is not required to conduct an IDO.
- Essentially, both the exchange platform and the IEO project are promoting each other in a way that wouldn’t have happened during a normal ICO.
Projects can raise funds with the help of the exchange’s customer base and launch trading for their token shortly after. An IEO is often conducted when a new crypto project wants to launch its cryptocurrency or blockchain product but requires significant investment capital to do so. The IEO projects themselves have also learned not to have such extreme or uncapped funding rounds.
The market needed a more secure mechanism to raise funds for tokens and tokens that directly traded on exchanges. So, in the place of the ICO arose the “initial exchange offering,” or IEO, and later, the initial decentralized exchange (DEX) offering, or IDO. What all these initial offerings have in common is that they create a set number of crypto assets in the form of a token or coin to sell to the public, usually at a fixed price.
For an IEO, crypto exchanges normally charge a listing fee that can be quite high. In addition, exchanges might take a commission on every token that’s sold during an IEO. So, new projects might earn a lot less cash that the total amount they raise through an IEO.
Most crypto exchanges will require new investors to go through the KYC process. This includes uploading a copy of the investor’s ID, taking a photo with their webcam, and verifying their phone number and email address. The process is similar for most major crypto exchanges and may vary depending on the requirements to join a particular IEO. While IEOs have some benefits, many crypto projects choose to make their tokens available to investors through an ICO instead. ICOs have several important advantages over IEOs that make them the distribution mechanism of choice for new cryptos. Another advantage to investing in an IEO is that centralized exchanges make it relatively easy for beginner crypto investors to buy new tokens.
As a result, regulators took notice and, although they have been painfully slow in rolling out guidelines, finally unveiled some decisive outlines on tokens and their legal status. A type of crowdfunding where crypto start-ups generate capital by listing through an exchange. Even as blockchain technology is rapidly developing in myriad fields, it has already radically transformed the way businesses and organizations can raise capital and fund projects.
The ICO or crowdfunding, in general, was the first use case for live blockchain networks that truly tested the networks’ capacities. Because most ICOs launched their initial sales or conducted their sales on the Ethereum platform, the Etheruem network was pushed to its maximum limits. Even now, Ethereum remains the platform on which most crypto projects are built on top of. ICOs were able to raise unprecedented amounts of money at their peak, which eclipsed both traditional venture capital funding and incumbent platforms such as Kickstarter.
A portion of the proceeds from the IEO will typically go to the exchange in addition to a listing fee. In this guide, we’ll explain everything crypto investors need to know about IEOs, including how to find top IEOs as well as how to invest in them. However, investors appear to be more discerning in the crypto markets now, which may be a significant contributor to the precipitous decline of the ICO.