The cryptocurrency industry has seen great growth in the last few years, with the introduction of novel financing strategies and cutting-edge technology one of them is IEO. What is IEO? The Initial Exchange Offering (IEO) is a popular substitute for the more conventional Initial Coin Offering (ICO). Initial coin offerings (IEOs) could change how new and old businesses gather money in the crypto world.
A new coin goes live on an exchange and can be bought for the first time. This is called an initial exchange offering (IEO). IEOs are different from ICOs because they run through organized Bitcoin markets. This guide lets you learn everything you need to know about initial coin offerings (IEOs). We’ll cover how to find the best IEOs and how to buy them.
What is IEO?
One way to raise capital is via an IEO or Initial Exchange Offering. On behalf of a business, it is managed through a cryptocurrency exchange. With its recently released tokens, it hopes to raise money.
As its name suggests, the exchange actively checks the projects and research to ensure they are real. IEOs depend on cryptocurrency markets in a big way. They take an active role in the event rather than just hosting it.
Startups depend on them to get money. These startups ask the platforms to make new tokens. Before they do that, they carefully check out the tasks. Their due research makes sure that the projects are real.
IEOs are a way for startups to get money. They depend on cryptocurrency platforms to make new tokens available. These tokens help them get the money they need.
IEOs Explained
A new coin business can sell a share to the public with an IEO.
Buyers get the coin in an IEO through a controlled cryptocurrency market like Coinbase, Binance, or Kraken. To participate in an IEO, investors must first be members of the listing exchange.
The exchange handles trade and volume for the token sale and acts as a go-between. Also, exchanges usually research new projects before participating in an IEO, but they don’t have to.
The Project that made the new token sells its token through an Initial Coin Offering (ICO) to earn money in either cash or crypto. The development team can use these funds to do many different things, such as continuing to work on the Project and giving benefits to donors.
In crypto, an initial coin offering (IEO) is like a stock start or initial public offering (IPO). Some coins go straight to exchanges after their initial exchange offerings (IEOs), while others go through IEOs after their initial coin offerings (ICOs), also known as crypto presales.
How Do IEOs Work?
For a new crypto project to start an IEO, it must sign a deal with a controlled crypto exchange to sell its token. There is no requirement for crypto exchanges to list any new coin, but they often do so because having IEOs brings in more trade traffic, which makes the exchange money.
Before deciding to host an IEO, crypto platforms usually do their research on the projects. Exchanges want to ensure that investors won’t get ripped off or scammed, which could hurt the exchange’s image among crypto investors.
When an exchange likes a project, it and the exchange will decide on a date and time for the IEO. Not only that, but they will also decide how many coins are available and how much each one will cost. An advertising fee and a part of the money made from the IEO will usually go to the exchange. The remaining money will be used to pay for the new Project.
It is important to note that buyers can only participate in an IEO if they are already market members. In other words, IEOs are only open to people living in countries where the exchange works and buyers must pass a “Know Your Customer” (KYC) check.
Some markets might have more rules about who can buy in an IEO. For instance, big investors or investors holding a certain amount of the exchange’s token might get to use it before others. They might also only let buyers who had an exchange account when the IEO was announced join. This would make it harder for new customers to join the IEO.
In the US, it’s important to know that the SEC sees IEOs as sales of stocks. However, a court decision not long ago said that tokens sold on platforms are not stocks. The SEC is appealing this decision, so it is still unclear if IEO tokens are stocks.
Possible Risks of IEOs
IEOs are risky investments like any other in crypto, and you can’t be sure you’ll get your money back. After all, the value of many meme coins went through huge jumps after their initial coin offerings, only to drop quickly afterward, leaving some buyers with no money.
Some traders do think that IEOs are safer than ICOs, especially when they happen on well-known platforms. IEO projects have to undergo a very strict screening process before exchanges can accept them.
You can safely invest in both ICOs and IEOs as long as you do your research and know that there’s no promise of a return, just like with any other investment.
How to Find IEOs
When dealing in crypto IEOs, it can be challenging to find projects before they’re all taken. We’ll discuss some of the best ways to learn about IEOs.
Monitor Exchange Launchpads
It is a fact that IEOs only happen on controlled platforms. So, buyers can keep an eye on what the big markets say to learn about the newest IEOs and what they need to do to trade in them. For IEOs, each of the big markets has its website. It’s called Binance Launchpad at Binance. Huobi Prime is the name of it. Coinbase Ventures is part of Coinbase.
On these sites, investors can see what IEOs are coming up for example by continuously monitoring Binance you can find out about upcoming Binance IEO or new IEO Binance. Additionally, it is suggested that you pay close attention to social media sites, as this is where markets usually post news about new token listings. People who want to invest can also look at IEO hedge funds, which invest mostly in IEOs. These can help you determine which trades and sub-industries are currently popular.
First, our calendar tool shows all the coins listed soon, including ICOs and IEOs. Tier 1 and other well-known platforms can help investors find projects that are coming up soon. We also look at and rate IEO projects. Some of these can help you find tasks and secret gems that have slipped your mind. It’s not just up to crypto platforms to do due diligence for investors; they can also use reviews and scores to learn more about IEO cryptos.
Monitor Social Media
New crypto projects almost always use social media sites like Twitter, Discord, and Telegram. Joining a project’s social media pages is a great way to find out where and when it plans to list its coin. Investors can often talk to the project team directly to learn more about the IEO standards and why the Project decided to list with a certain exchange.
How to Pick High-Potential IEOs & Avoid Scams
Exchanges do some research on initial coin offerings (IEOs), but that doesn’t mean they catch all scam projects. Also, just because a token held an IEO on a big market doesn’t mean its value will increase. That means buyers must look around independently to find the best IEOs. When picking which IEOs to buy, here are some things to consider.
A white paper
The proposal of a crypto project is one of the best places to find information about an ICO. It should be very clear in the brief what the Project is about, what problem it solves, and how the token will be used.
A white paper that goes into more depth is better. Many fake crypto projects have short white papers that don’t give many details. On the other hand, well-thought-out projects will think about everything, from how the tokens will work to who the Project is meant for.
A IEO crypto proposal usually includes a plan for how the Project will grow. This includes information about when the IEO will happen, whether there will be more token releases, and when the community can use new features. Even though project roadmaps may be positive about how long things will take, they should still be honest.
Verification
Several crypto auditing services, including Certik and Coinsult, can help you check out new crypto projects. They look over a project’s code, including its smart contracts, to ensure there are no scams or bugs. For instance, an audit will ensure the whitepaper’s claim about the highest number of a project’s tokens is accurate.
One small but very important thing projects can do to show they care about investment safety is to get audits. The report results for the best IEO crypto projects are public so that potential funders can look at them.
Development Team Doxxing
Anonymous development teams have been linked to some of the biggest crypto scams in history. Anonymity makes it easy for project founders to pull the rug from under people and do other bad things.
Legitimate projects fight back by “doxxing” their creators, which means letting everyone know who they are. Investors can find out who is behind a project and what kind of experience they have this way. Then, investors can decide if they want to put money into the team based on how many good writers they have on it and how clear their goal for the future is.
Tokenomics
The tokenomics of a project should be in its proposal, but it’s still a good idea to discuss this topic in more depth. Whether a cryptocurrency is inflationary or deflationary, the number of tokens accessible during an IEO and the liquidity of IEO token for trade after launch are all determined by tokenomics.
When crypto companies figure out their tokenomics, there is no one “best” method they can use. Investors should think carefully about the tokenomics to make sure they make sense for the Project and offer chances for the price to go up.
How To Participate In IEO?
Here are the simple steps you must follow to participate in an IEO. The process is pretty much the same for all big cryptocurrency platforms, though it may be different for some IEOs because of their specific needs.
Step 1: Create an Exchange Account:
Investors must first make an account on the exchange that will show the token they want to buy. Buyers may want to have accounts at more than one crypto exchange because it’s not always easy to tell which exchange a token will list with.
Most crypto platforms will make new buyers go through the Know Your Customer (KYC) process. This means sharing a copy of the investor’s ID, taking a picture of them with their webcam, and ensuring their email address and phone number are correct.
Step 2: Deposit Funds
Traders can put money into an exchange account once they have one. You can put money into most markets using a debit card, credit card, bank transfer, or an e-wallet. Crypto investors can also move crypto from a wallet they already have.
Step 3: Find Available IEOs
You can see the lists of different exchange sites most important future IEOs. This will help you figure out what ads are coming up and when. Also, investors should find out if there are any requirements to join an IEO, like having the IEO token.
Step 4: Invest
When buyers find an IEO they want to join, they can put their names on a list to be notified when the IEO happens. After that, buyers will be asked to use the money they have already put into the market to buy tokens at the IEO price.
We’ve already said that many buyers would rather put their money into ICOs than IEOs. A coin’s price can often go through the roof just a few minutes after it goes live.
This means you might have to wait too long to buy the coin and pay more than you should have. You can lock in tokens at a low price during the ICO and then try to sell them if the price goes up after the IEO.
IEOs on exchange platforms
More and more coin platforms are starting to accept IEOs. And Binance was one of the first to do it. It launched its IEO tool, Binance Launchpad. After being bought by TRON, BitTorrent held a token sale on Binance Launchpad in January 2019. The sale raised $7.2 million in less than 15 minutes, which was the hard cap for the crowd sale.
It’s great for a crypto company that all their tokens are sold in 15 minutes, but a token seller on the Binance Launchpad sets an even higher standard. On the coin exchange site, the second IEO, Fetch.AI, reached its hard cap of $6 million in just 22 seconds.
After seeing how well Binance Launchpad did, other well-known exchanges revealed the start of their initial public offerings (IEO) platforms. These are some IEO platforms: Huobi Prime, Bitmax Launchpad, OK Jumpstart (OKEx), KuCoin Spotlight, and Bittrex IEO.
Advantages and disadvantages of investing in IEO
After reading about the IEO coin, I realized that many people will likely want to invest in this way of raising money online. You need to know the Project’s pros and cons to get the most out of each mobilization. Some specific examples of IEOs’ pros and cons are given below.
Pros
Initial Exchange Offering has three good points that make it a good way to raise money online, just like other online donations.
High trust
Before a project gets public funding, the exchange will choose it and check its trustworthiness. This is done to ensure the Project is real and stop scams. This means buyers can feel safer when participating in IEO deals.
High security
IEO has a high level of protection, so buyers can do KYC for the Project without worrying. The information used is kept secret in the beginning stages of the deal. So, you can feel safe calling and putting money into the environment.
Easy Token Buying and Selling
In IEO’s market, users will improve how things are bought and sold. It will cost investors a certain amount of Tokens and a marketing fee. Next, the trade site will help the project market and set up the IEO to get the money it needs.
One more thing that the Project can do is use the customer base on the exchange and get user files added to the system.
Cons
Besides the pros, buyers should also be aware of the following 4 cons of Initial Exchange Offering. The knowledge in the next part of BHO Network will help you answer the IEO’s weak points.
Relatively high cost
The list price is the biggest problem with IEO. There’s no doubt that an IEO is a suitable and safe option. The cost of the method is high, though, which is a big issue for new businesses.
For example, the selling fee can be as high as 20 BT, and some exchanges can take as much as 10% off the sold tokens. This is why companies want to start IEOs and plan their budgets around the cost of the platform.
Required to own the minimum amount of Original Token
The minimum amount of Original tokens is much higher in the IEO than in the ICO. This gives the person who made the cryptocurrency two problems.
First, the minimum amount will likely keep away some possible buyers. Second, the exchange can make the local token more valuable by making it harder for users to get by setting a minimum.
Limited User Base
IEO is only for people who use the exchange. Players cannot play if their country does not have a certain exchange. Some countries follow the rule that financial buyers are not allowed to buy or sell IEO Tokens to keep the currency moving.
China, Korea, Thailand, Venezuela, Iran, Yemen, Burundi, and other places are among those that have bans in place.
Strict exchange process
Investors need to have a good image on the online trade site. Because of this, the system will be affected if the development team doesn’t meet the standards or the Project fails. To ensure real goals can be reached, many electronic markets add extra steps like due diligence, checking white papers, and member screening.
FAQs
Conclusion
Initial Exchange Offerings (IEOs) are a big step forward in raising cryptocurrencies. They are a safer and more controlled option than initial coin offerings (ICOs).
Initial Coin Offerings (IEOs) like BitTorrent Token (BTT) and Veriblock (VBK) have shown that this way of raising money can work by using the reputation and reach of well-known markets. With clear rules in places like the US, Singapore, and Japan, initial coin offerings (IEOs) help projects get more marketing, reputation, and publicity. They also help exchanges by getting new users and making local tokens more useful.
