What is the primary exchange proposal (IEO) and how it differs from ICO?
In 2018, an ICO alternative appeared – primary exchange offers (Initial Exchange Offerings, IEO). The main difference between these methods of attracting investments lies in the key role of the exchange, which is engaged in the selection of promising and viable, in its opinion, projects.
With ICO, leaflets on the exchange can not be carried out immediately, but a few months after the completion of tokensil. In the case of IEO, the exchange is initially a key partner of the organizer of alternative tokensil. So, the latter produces tokens and sends them to the exchange. She, in turn, spreads digital assets among interested investors who are verified users of the trading platform.
Instead of the usual ICO investor of sending funds to a https://gagarin.news/news/well-known-programmers-and-scientists-have-joined-crypto-antagonists-in-the-usa/ smart contract, a participant IEO needs to register (and, as a rule, verify) on the exchange, transfer funds to the account and after the start of tokensil to purchase coins from the exchange directly.
The agreement between the exchange and the organizer of IEO may contain various conditions: the maximum volume of sales of tokens per investor, a predetermined price of asset, chicks and software, the percentage of sales and a fixed amount of funds for the trading platform, distribution of marketing costs, etc. D.
Why do I need IEO if there is ICO?
The sphere of primary proposals of coins (ICO) has rapidly developed over the past few years, but by the end of 2018 it has practically exhausted itself. The reasons for this are legal uncertainty, the emergence of many dummy projects, fraud of the organizers of tokens, the lack of mechanisms for protecting investors’ rights and tightening measures from financial regulators.
It is possible that the improved method of raising funds will become a logical result of the evolution of primary proposals of coins, will repeat their success, restoring confidence in tokensyiles.
What is attractive to IEO for investors?
The exchange takes on Due Diligence of projects, evaluating their investment attractiveness, the viability of the products developed, risks, financial condition, market position, etc. D. The fact that the trading platform takes on reputation risks increases the level of confidence in investors.
Increasingly, ICOs began to replace private coin offers available mainly only to large investors. IEO democrates the investment process in digital assets, making it available for a wide range of participants.
If the exchange on which the IEO is centralized, then the probability of the emergence of the so -called “gas wars” is excluded. We are talking about a situation where tokensile participants send to Ethereum compete, setting high gas limits. This is done to increase the speed of transactions and first acquire the treasured tokens.
What are the advantages of IEO for exchanges and organizers?
The main advantage of this approach for the organizers is the finished base of potential participants of IEO from a huge number of exchange users. This reduces marketing costs.
In addition, not only the exchange is engaged in marketing, but also the organizers of IEO. This approach not only saves funds, but also creates the effect of synergy, which increases the effectiveness of promoting tokens to the market.
The main source of income of exchanges is trading commissions. More users and coins in listing – more transactions and, accordingly, higher income from commissions. IEO on its own platform gives the exchange the opportunity to attract new users and offer, sometimes, exclusive coins that are not at other sites. All this increases trade turnover and, therefore, income.
In the case of ICO, listing on the exchange is the next logical step after the completion of tokensil. The listing procedure is often associated with large costs and temporary costs. At the same time, there are no guarantees that the coin will quickly be on a popular exchange and will become liquid.
IEO, in fact, optimizes the process of token to the trading platform. The asset almost immediately after the end of the campaign becomes more or less liquid, since it turns out to be in the leaflet, as a rule, of a large exchange.
This method of raising funds is mutual beneficial for both exchanges and tokens issuers. Despite the seemingly significant costs for the organizers, IEO increase the chances of the success of projects in the long run.
What are the disadvantages in IEO?
There is nothing free in the world – tokens issuers in any case will have to pay considerable amounts for listing, which may differ on various exchanges. Also, the trading platform may require a certain percentage of the total amount of funds raised.
The main marketing costs fall on the shoulders of startups that distribute tokens through IEO. These expenses are considerable, their total amount can easily reach $ 100 thousand or more.
The exchange staff must consist of qualified and technically savvy analysts who can competently and systematically evaluate the long-term potential of projects and the viability of their business models. This may imply high labor costs. In the case of the failure of the campaign, the exchange carries significant reputational risks.
Only the owner of a verified account on the exchange can participate in IEO, and not anyone. In addition, most exchanges are centralized sites. Users have to trust their blockchain assets to a third party, which is associated with risks of failures and hacker attacks.
In general, some experts are confident that against the background of widespread legal uncertainty, the IEO model is only a temporary ICO alternative.
How to become a member of IEO?
First you need to make sure that this or that project is really conducted by IEO, not ICO. After that, you should find out on which exchanges IEO are held.
Having selected a suitable exchange, you should create an account on it and go through the KYC procedures (“Know your client”).
It is also necessary to find out what cryptocurrencies the IEO project accepts and add them to your exchange account. Then it remains only to wait for the start of tokensil and, finally, to purchase new assets right on the exchange.
What trading platforms are IEO?
It has recently been known that the largest cryptocurrency exchange of Binance restarts the Launchpad tokens for tokens. This platform was originally launched in August 2017. On its base, in seconds, IEO-Tokens Bread ($ 6 million) and Gifto ($ 3.4 million) were held.
Now Launchpad is preparing to launch Bittorrent and Fetch project tokens.AI. In general, Binance promises to spend at least one IEO monthly in 2019.
In addition, they plan to hold IEO Paraguay authorities together with the South Korean company Commons Foundation. Funds are involved in the construction of the “largest in the world” Data Center for mining cryptocurrencies. Commons Foundation promises investors to pay 30% profit from mining and 70% of the daily profit from the crypto carrier in Microbitcoin tokens.