28 February 2020
In the Cryptoworld, ICO (Initial Coin Offering) is a fundraising mechanism that supports the start-ups. Similarly, IEO (Initial Exchange Offering) is another mechanism that helps the new business enthusiasts, both of them have the same goal but they walk on different paths to reach the destination. Many individuals often get confused between them and use them inversely.
ICO v/s IEO
ICO is a token sale in which the developer team themselves conducts the fundraising, collects the denominated contributions either in Ether or other cryptocurrencies and issue the minted token. The entire ICO procedure is governed by a smart contract. On the other hand, IEO is a token sale in which the fundraising is conducted on an exchange (Binance and Bittrex), project developers mint the token and send them to the exchange. In IEO, each participant has to create an account with the exchange and send ETH to this account. When the IEO commences the tokens can be purchased from the exchange. In contrast, the ICO participant has to send ETH to a specified address and the developer sends the token.
How is IEO launched?
Before an IEO token sale, the exchange team performs the analysis of the project through their audits, technical analysis, the potential of the token in addition to managing the sale directly on their platform throughout the entire process and the sale parameters like fixing token price, its supply to be distributed is decided. If the exchange team is impressed and comfortable with the project an agreement will be signed between both parties and the date with token price will be released.
How to participate in an IEO?
If you wish in becoming a contributor in IEO, you can follow these steps before investing:
Search for the exchanges hosting the IEO
Select the exchange on the basis of their experience and reviews
Create an account in the exchange and get yourself whitelisted by completing Know Your Customer (KYC) screening.
Fund your account appropriately by checking the cryptocurrencies accepted
Once done with all the procedures you can participate and purchase your tokens!
Benefits of IEO
User-friendly: Users do not have to maintain the on-chain transactions but they just need to Sign-up on the exchange, fund their wallet with appropriate cryptocurrency and through the website, interface participate in IEO.
Trustworthy: The exchange is backing the project and staking its earned reputation so the highest degree of trust is offered that eliminates the spam.
No loss: As exchange act as mediators investors will get to lower the chances of losing their funds to scammers.
The Exchange’s user base: The exchange backing the ICO gives the developer the full advantage of using their existing user base thereby cutting down the marketing cost.
High Liquidity: Token listed through exchange offers immediate and highest liquidity to the investor with the ability to pay for token through various methods like fiat, BTC, or even other altcoins in some cases.
Every change is better!!!! Developing an IEO project is not a tedious task and can definitely be a fruitful venture for every business enthusiast and investor. Just a little knowledge and a simple procedure to be followed. Let’s spread this work and help to raise the new start-ups in the cryptoworld.