What is IEO and how is it different from ICO
- Created: Friday, 05 April 2019 03:55
The rapid rise in the cost of cryptocurrency in 2017 is often attributed to ICO (initial coin offering) popularity among a large circle of people, but due to the lack of state control countless frankly fraudulent schemes under the guise of fundraising for ICO have been born. Actually, the massive disappointment of investors in ICO due to the loss of money in 2018 and served to the same sharp drop in the entire cryptocurrency market. Because The scheme of attracting investments through ICO is still attractive for start-up, so a new scheme for attracting investments, IEO (Initial Exchange Offer- initial exchange offer) was invented, where between the investor and the developers of startups an intermediary appears in the face of the cryptocurrency exchange, which takes all reputational risks, in other words, investors receive certain guarantees that the money collected in this way will indeed go towards fulfilling the data promises in the WhitePaper company.
IEO vs. ICO Differences
Actually the emergence of an intermediary who is engaged in the selection of projects worthy of placement on the stock exchange for the Initial Exchange Offerings, and is the main feature of IEO.
The ICO was mainly responsible for the project’s reputation as a development team, which in most cases consisted of little known people. The second main element of ICO was the use of smart contracts and ERC-20 tokens which rigidly fixed the distribution of tokens bought by investors.
With the advent of IEO, the famous team and the presence of ERC-20 tokens in the project faded into the background, which gave startups a greater field of activity and not limited to the blockchain capabilities of Ethereum, EOS, which provided the opportunity to issue smart contracts and tokens in their network.
Otherwise, IEO remains the same ICO with WhitePaper, road maps and promises to make the world a better place. But with one big advantage - the protection of investors from outspoken scammers and other poorly developed projects.
How to participate in IEO?
This is probably the next most popular question asked by novice investors in the cryptocurrency market.
As it is easy to guess to participate in the initial exchange offer, you need to register at the exchange where these IEOs actually pass. The first such exchange was the Binance exchange, which is popular all over the world, launching its Binance Launchpad platform at the end of 2017. The first IEO sales on this site had an incredible success, because all projects with IEO sold out in seconds. Therefore, to date, we already have several platforms for IEO from other well-known cryptoexchange.
A list of crypto exchanges where IEO is held:
- Binance - Binance Launchpad
- Huobi — Huobi Prime;
- KuCoin — KuCoin Spotlight;
- Bitforex - Turbo Starter
- Bittrex — Bittrex International IEO;
- BitMax —BitMax Launchpad;
- OKEx — OKEx IEO.
A year later, IEO continues to be as interested as it was at the dawn of their appearance, as hinted at by recent projects like Tron, VeriBlock collecting the necessary amounts of millions of dollars in a few seconds.
To gain access to all IEOs, you will have to register on all popular IEO sites, as usually only one site has exclusive rights to sell the tokens of a project. Exchange verification is also a prerequisite for participation in IEO. Due to the high investor interest in such events, most exchanges are also trying to increase the popularity of their own intra-exchange assets by selling tokens on IEO only for their own cryptocurrency. For example, on the Binance exchange, in order to participate in IEO, you must first buy the local currency of BNB, and then IEO tokens, which actually contributed to such a sharp increase in the price of BNB. Here, many crypto enthusiasts will be able to find more than one comparison with the events in 2017, when the value of Ethereum cryptocurrency also grew actively.
Due to the significantly higher demand from investors over the offer to sell IEO tokens, Binance went even further by introducing a lottery element into the process of buying tokens, distributing token buyers more evenly throughout the world, because Prior to this, investors located geographically closer to the servers of the exchange had a great advantage, while being able to place their orders a few milliseconds faster than the other participants.
Disadvantages of IEO.
Having undeniable advantages over ICO, Initial Exchange Offerings has its own drawbacks.
First of all, it is worth noting that to participate in IEO, the company must already have technical know-how for the project, which does require funds, and if you consider that placing your IEO on the exchange cannot be free either, so IEO already participates financially wealthy companies that need additional capitalization to speed up their plans for the development of the final product. Those. Beginning teams without sponsors or without prior fundraising with the help of ICO, to get on IEO in the popular exchange will be an impossible task.
For investors, participation in IEO also has limitations, since participation requires verification of the identity, which for many cryptoinvestors may become unacceptable.
Another disadvantage is the need to keep cryptocurrency on the accounts of the exchange at the time of IEO and until you decide to sell your investments. In ICO using smart contracts, you were the sole owner of your tokens without having to reveal your identity.
Conclusions on IEO:
Initial Exchange Offerings (IEO) can hardly be called the next stage in the development of the initial coin offering (ICO), since based on very different technical solutions adding centralization and openness to the process of collecting investments, which contradicts the ideas of the ICO, where there are no barriers between investors and companies entering the ICO.
If ICO has already managed to almost completely discredit itself because of what the form of collecting investments with the help of ICO is already prohibited at the level of legislation of some countries, then IEO still holds the level of legitimacy before the law due to the rigorous selection of applicants for leading crypto exchange. When IEO arrives on the second or third tier exchanges, IEO can repeat the fate of ICO, when both abbreviations are associated with deception and will be banned at the legislative level.
Today, IEO can be called the most progressive tool for ordinary investors in which restrictions are minimized, but there are already elements of protecting the interests of investors, which can play a big role in further promoting cryptocurrency in the world.