Initial Exchange Offering(IEO) — Top Fundraising Scheme In Crypto

At present, we can notice the rise of a new phenomenon, which has gripped the tech world and is changing the way in which startups raise capital, shifting away from initial crowd offerings (ICO), a new approach Initial Exchange Offering ( IEO) came as a hot trend of 2019.

Are you wondering what IEO is all about? Is this similar to ICO? How does it work? And many more questions might be striking your mind right now!!

Well, keep your eyes glued to the screen!!

On due diligence, I have gathered detailed information on IEO. Let’s get started…

Is this approach a good idea for traders? Well, a huge crowd in the crypto-world see the potential in this system and encourage others to get on-board.

What is IEO?

An Initial Exchange Offering ( IEO) is the crowdfunding strategy that enables crypto projects to fundraise directly on exchanges. IEO’s are similar to Initial Coin Offerings (ICOs) and are administered by a crypto exchange instead of the startup that seeks to raise funds with its newly issued tokens.

Basically, it is a new way of crypto-banking that is steadily attracting the interest of ICOs and traders across the globe. This approach contributes to a unique type of exchange where the exchange acts as middlemen between contributors and projects.

How Does An Initial Exchange Offering (IEO) Work?

Step 1: When a token sale is announced, instead of submitting contributions to a smart contract, IEO participants create an account on the respective exchange platform.

Step 2: They fund their coin exchange wallets and hire those funds to purchase the tokens of the start-up of the fundraising blockchain.

Step 3: In return, a listing fee and a percentage of the tokens are sold during the IEO.

Step 4: This whole mechanism is regulated by crypto exchange, along with the marketing process.

How To Participate In An IEO?

Initially, the first step to participating in an IEO is to check if the project you are planning to crowdfund is conducting an Initial Exchange Offering . Once you find a relevant project follow the below steps:

Step 1: First of all, by reviewing the start-up or development team’s website, you need to be sure whether an IEO can take place.

Step 2: You need to know about the exchange that the IEO is going to execute. You will move on to the next stage if you are already listed on the exchange and have a wallet. If not, to participate in the IEO, you need to build an account on the exchange.

Step 3: You will have to go through a sought-after verification process to decrease safety risks once you are registered with an exchange.

Step 4: You now have to find out which crypto alternative is available. The options for ETH Ethereum and BTC Bitcoin over the exchanges are usually open.

Step 5: Finally, you must wait until your IEO Initial Exchange Offering begins.

Exchanges Offering IEOs

Binance was the first IEO-conducting exchange which opened its token launchpad service in 2017. Bread ($6 million) and Gifto ($3.4 million) token sales were the first projects to jump off the launchpad. These were followed by BTT, Fetch.ai, and Celer Network token launches.

Basically, the exchange accepts its own BNB utility token as payments for IEO tokens. Also, there are many more projects to be added in the future. Various other exchanges also followed the suit. Bittrex exchange made an attempt to launch its first token in the mid of March 2019 but due to some unforeseen behavior, the Initial Exchange Offering got canceled.

Bitmax also launched its launchpad by presenting Decentralizes Oracle Service (DOS) to its investors. OKEx also announced its own program called OK Jumpstart. This is the one that aims to incubate high potential projects and support early entrepreneurs.

Furthermore, EXMO cryptocurrency platform launched an IEO in February 2019. They chose Paytomat as its first project partner. Other major launchpad projects that confirmed were the KuCoin Spotlight and Huobi Prime.

How Do Exchanges Benefit From IEO?

After you know about the exchanges offering IEOs, the next question that pops up is how can these exchanges benefit from IEO:

  • An exchange could request payment in the form of a token being sold or a listing fee in bitcoin or ethereum.
  • As the exchange will work closely with the marketing department of the project to sell tokens, the exchange will use this opportunity to sell its services to the public.
  • As the Initial Exchange Offering requires its investors to sign up on the exchange, it is possible for the exchanges to keep a record of the increased user registrations as well as trading volumes.

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