You’ve heard of Initial Coin Offerings (ICOs), but have you heard of an Initial Exchange Offering (IEO)? If not, don’t worry—today we’re taking a closer look at IEO.
What Exactly is an Initial Exchange Offering?
An Initial Exchange Offering and an Initial Coin Offering have the same goal—to raise funds. The key differentiating factor is that while an ICO is launched by a startup on an ICO platform, an IEO is conducted by an exchange on behalf of the token issuer.
An Initial Exchange Offering is every startups’ best friend. Why? Imagine you are burdened with the task of marketing your tokens, issuing them, and finally hoping that you reach the right investors. Now, with IEOs, you will be able to sit back, relax, and watch capital flow in, unceasingly.
Startups that partner with cryptocurrency exchanges benefit from the listing and marketing services that they provide. An IEO gives token issuers better visibility among investors and liquidity of products.
With the setbacks that ICOs are currently facing, entrepreneurs are turning to IEOs to fulfill their fundraising obligations. The exchange platform not only acts as an intermediary between issuers and investors but also creates a friendly environment for the former and a secure space for the latter.
What are the Steps Involved?
Obtaining authorization to list tokens on an exchange is no careless procedure. The exchange performs intense verification tests, KYC/AML, and more. This is crucial as an occurrence of scam could cost the cryptocurrency exchange its reputation.
After the process of authorization is complete, the exchange lists the tokens. Exchanges usually charge a listing fee before listing the tokens. But some exchanges benefit the entrepreneurs by expecting payment only on the success of a token sale.
The popularity of the exchange is an important determinant that aids in providing the token with a larger audience and increased opportunities. After listing, the exchange proceeds to promote the tokens actively.
Are IEOs Here to Stay?
As of late, IEOs are earning recognition at a rapid rate. Investors can provide funds without reluctance as projects are verified by a reputed exchange. A token issuer or startup can save on costs and also reduce the tasks on hand by assigning them to the exchange.
In conclusion, an IEO is a win-win for all parties involved, even the exchanges. It is evidence of the constant progress and dynamism of blockchain, a technology that is way ahead of our times.