What Does IEO mean?
Introduction
An Initial Exchange Offering (IEO) is not so well known and a varied crowdfunding tactic to Initial Coin Offerings (ICO). Since 2014, up to 2000 ICO have ensued and the crowdfunding tactic has occupied the main spot for the projects.
Through an ICO, it is reliant upon the developer to verify that the smart contract is right, highly secured and that everything goes as prescribed. With an IEO, these pledges must be implemented by the exchange platform.
Ultimately, no crowdfunding tactic is perfect, each comes with its very own limitations. The corresponding execution with ICOs and IEOs, both have differences, upsides, and downsides.
What is an IEO?
With an IEO, an undertaking depends on the multiple exchanges to make the crowdfunding, the smart contract in connection with the one created by development in subject, and a fragment of the stimulating strategies.
With ICOs, the counterparty is the developer, however, with IEOs the counterparty is the exchange platform in the business. In order for investors to contribute to the IEO, they must create an account with the exchanges. Instead of backing Bitcoin, Ether, or other Cryptocurrencies to the Smart Contract of the ICO, investors have to direct the currencies into their exchange account.
When the IEO starts, investors can buy the tokens from the exchange platform. These tokens are made or “minted” by the developers before the IEO and are directed to the exchange.
Each venture can place diverse terms, provisions, and conditions with the exchanges. The provisions and terms can be the amount for the trade, a level charge, displaying costs, more, or various conditions.
Maximum ICO “rules” are sustainable with IEO, but also the circumstances and transactions between projects are typically different from each other.
Developments can demand the tokens to be traded at a fixed price throughout the complete IEO process, they can claim for a token cap per investor to avoid whales, price manipulation, and much more to control the process. Exchanges need developers to place a hard and a soft cap on their projects, for a better result of the IEO.
How to link with Initial Exchange Offering?
Taking part in an IEO is actually simpler than taking part in an ICO. Below is the thing that you have to execute in a well ordered:
1. Check if an IEO will be issued: Most Cryptocurrencies picked to crowdfund with ICOs so the first step is to always check if the project is truly doing an IEO.
2. Check if an IEO will be issued: Study that exchanges will contribute and some of the times, only a single exchange will contribute to the IEO. You have to know this earlier because the exchanges know your customer’s (KYC) dealings. Signing up can consume more time; this is one of the main drawbacks of IEO.
3. Sign-in on the exchange: This is the next stage, the KYC procedures are not flexible to investors, because they need time. If you don’t have an account at the exchange the day before, the balances that you will be verified the next day are not huge.
4. Cryptocurrency accepted: Most of the time, IEO will need Ether for investments, because of the huge number of projects launched on the Ethereum network. But not every time, so you need to know this before you progress.
5. The Initial Exchange Offering Start: Wait for the crowdfunding event to initiate, then proceed on buying the desired token.
Most ICO “rules” are reasonable with IEO, however, also the conditions and arrangements between tasks are for the maximum part each other
What are the Advantages of an IEO?
The mainstream of projects selected an ICO for their token economy, IEO for another blog and will focus on the positives. Projects that chose to execute an IEO will take advantage of the following specialists:
1. Exchange listing: Negotiating a good deal with an exchange or multiple exchanges is maybe the toughest part of an IEO. However, if the project succeeds in negotiating the right deal, then listing on that exchange should be a piece of cake.
So naturally, if an exchange contributes to the project’s IEO, then it will assist with the listing because the project already passed the requirements.
2. The Exchange’s user base: Selecting an exchange for an IEO means that the project will use the exchange’s current users for their customers. This reduces marketing costs, which are the highest expenses that a new project has to face. This can verify to be both an excessive investment for the long term and a great return of investment.
3. Credibility: Plans that issue an IEO have increased credibility, because of the Exchange that has their backbones. With IEO, exchanges help developers in ensuring that everything is good. This way, you can be slightly sure that the exchange will not enable any scam activities, low security, or fraud attempts.
4. Fewer scams: Scams can’t be fully barred, but with IEOs you can be sure that the exchange will not scam you, that the security is of the highest excellence and that the smart contract you are transferring your money to will not be compromised. Being able to purchase the tokens only from exchanges leads to an increased sureness in the project.
5. Price manipulation: An IEO can be secured to some extent price manipulation. If you have contributed to ICO, you are perhaps familiar with the following scenario.
Conclusion
ICO concludes the token is programmed on an exchange and those that bought economical tokens in the pre-sale sell immediately for quick profits. These steps initiate an immediate drop, from which few recover.
