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IEO and how the benefit the crypto community
Should you be seriously considering taking part in IEO? Perhaps you should, but before you do, it is important to know what it is and what benefits it has for the entire crypto community at large. Essentially, it is a new crowd funding system introduced as an alternative to the well-known ICOs; technically it is a lot like ICOs but it has a few differences which will be highlighted in this article. List of actual IEO you can see oh the our website.
What is an IEO?
IEO directly translates to Initial Exchange Offering. It is a system where a crypto currency starts up can raise funds through crowd funding, with an exchange acting as the platform for the transaction. It is different from ICO because the transaction happens on an exchange rather than on the start-up website, resulting in higher regulation and security from scammers.
During an Initial Exchange Offering, a crypto start-up in need of crowd funding liaises with select exchanges where it will take place. After an agreement has been drawn between them, information about the exchange offering is marketed by the exchange and interested investors can open an account and deposit the accepted coin while they wait for the launch date. When it launches, deposited coin is traded for the token on the exchange.
Basically, the start-up is raising funds, interested investors are investing early and the exchange is standing as a mediator. This innovation was developed as a response to security and regulation challenges that surrounded coin offerings. So far it is conducted on centralised exchanges and has brought a couple of benefits to all the parties involved. The benefits are listed below.
Benefits to the crypto community
There is a good number of benefits that suggest an interesting future for exchange offerings. These benefits make exchange offerings a sought-after alternative to crowd funding. All three stakeholders involved all have a fair share of the benefits i.e. founders of start-ups, crypto investors and Exchange platforms.
Benefits to founders:
More trust worthy among potential investors: Following different scandals of scams surrounding ICOs, it became more difficult to inspire trust in investors and to meet crowd funding budget. With the involvement of Exchanges, it is easier for investors to trust a coin offering since there is now an exchange involved
Access to more investors — existing users of the exchange automatically become a market for the founders and can easily partake in any ongoing exchange offering.
Lower costs on the founders — The exchange(s) being used takes off some work load as well as budget allocation from the founders especially marketing costs. Unlike ICO where founders have to invest in marketing their coin offering in order to achieve success, now the bulk of the marketing is done by the exchange, hence it costs less.
Coins are automatically listed on the exchange without the need of any extra process — After the crowd funding on the exchange, founders do not have to be burdened by another routine of getting their cons listed on an exchange which might take up some time. Here, coins are naturally listed on the exchange following the offering without the need of an extra procedure.
Benefits to investors:
Less risky when compared to ICO — Coin offerings quickly became a breeding ground for scammers and making it risky for investors to participate, however, that risk is less as investors enjoy a level of security. The fear of a platform disappearing suddenly and investors losing all their crypto coin holdings is now less as exchanges involved must run a credibility check on any start-up before listing any exchange offering. This helps to keep off the scammers and provide a level of security for investors.
Participation is an easy and straight forward process even for crypto newbies — Investors do not have to be burdened by complicated procedures of handling different wallets. All they have to do is follow the standard process explained above; they have an account on an exchange with some coins in it, and when the time comes, they trade it for the new token. Because everything is carried out on one platform, it is easy to navigate and manage how much an investor wants to put in.
It is easier to hear information about early crypto investment through crowd funding: Newbies in the crypto space usually have a hard time hearing about investment opportunities early enough, and because early investment pays in crypto they may miss out on some opportunities otherwise accessible to veterans. Now it is easier for crypto amateurs to hear about offerings early enough and to participate in them as well. This system brings some equality to growth through access to information and ease of participation in the crowd funding.
An exchange being involved means less work for the investors: before, investors had to spend a lot of time running background checks on the start-up, their team, their white paper and so on. Now with an exchange in the picture, those checks will already be done by the exchange and investors can make decisions easier. Also, since the exchange reputation is linked to whatever happens on there, investors can use that as a guide or prediction as to which one to invest in; reputable Exchange may relate to credible Initial Exchange Offering.
Benefits to the exchange:
An exchange will get more subscribers — Interested investors must open an account on an exchange before they can participate, this means that the market for exchanges is opened to a new group of subscribers. Hence, a well marketed and trustworthy start-up can attract new subscribers and users to an exchange, who may later take part in other coins available on the exchange.
Financial gain for the exchange — Every crowd funding on an exchange brings financial benefits to it because the contract usually involves them being paid a sum for their services. This sum can be a lump sum or in a percentage of the amount raised. This provides huge financial gains for the exchange.
In conclusion, although a fairly new system, IEOs are getting a lot of users owing majorly to the benefits associated with it. These benefits spread across cryptocurrency investors, cryptocurrency founders and cryptocurrency exchanges, hence it has a wider reach than the prior ICO system. The major concern of coin offerings was security and this has been solved with the involvement of Exchanges, hence a higher participation is expected.