Introduction of the new tool on cryptocurrency exchanges widely perceived with enthusiasm and ICO failure doesn’t stop investors. It has been replaced by new and more reliable tool to trade tokens - IEO. Let the next consider, what it represents and which the extent of its reliability is.
IEO is short for Initial Exchange Offering, which means start-up on exchange platform. It’s one of the ways to avoid investment in fraudulent and unattractive projects. There’s no guarantee of tokens profitability, but IEO exchanges are controlled more reliably than ICO.
Important! An in-depth qualitative analysis is necessary to determine the outlook of investment. But often traders don’t have enough time for this.
There is a need for an intermediary in such circumstances, who will assume start-ups verification and risks clarification. Crypto exchanges have naturally served the role as initially included in this process. They are in a key position to audit, to assess perspectives and projects expert analysis.
Thus, IEO is the instrument for a temporary transfer of tokens management from a start-up to an exchange, where trade starts. And the intermediary has a fund-raising on behalf of token issuers. When the process is completed, coins are going to the listing of the exchange platform.
In 2018 investors’ confidence in ICO was so low as it had predicted quickly disappearing. Developers often didn’t have enough time, persistence and knowledge for the launch of the well-functioning product. On this basis, fraudulent conditions have evolved and many took advantage.
19% of ICO start-ups have completely disappeared by the winter of 2018. Its websites and social media accounts were removed. Prices of 86% tokens have fallen in relation to the end date of the session.
IEO is based on the other tokens’ sale scheme - the exchange platform assumes to filter unreliable investing projects.
Start-ups developers transfer tokens to an exchange, which, for its part, makelisting. Purchased tokens are easily converted into cryptocurrency. Exchanges filter unreliable projects and prevent the rush. There is a commission for the intermediation.
IEO has advantages and disadvantages as any exchange trading tool and investor’s choice depends on its.
The benefits are:
1.A high-level of trust due to the exchange platform. Crowdsale exchanges allow viewing projects which are planned to launch on IEO website. Token issuers are carefully checked and questionable projects are filtered.
There are examples when IEO of projects were denied before crowdsale starts. It happened when Bittrex (cryptocurrency exchange) canceled IEO for the RAID project because of OP.GG company withdrawal. According to the exchange experts view, this company served as a guarantee of the start-up's value. Its withdrawal has made the RAID project unreliable.
As a result, marketing cost is decreasing for tokens issuers. At the same time, customer base of the cryptocurrenсy exchange becomes available. There is no need to take the time and costs for additional promoting of the project.
The IEO lifetime is long enough to identify its weaknesses. There are only 3 main downsides:
For tokens trading IEO exchange has to launch a relevant platform. IEO Binance Launchpad had started the process first, then Bitmax Launchpad, KuCoin Spotlight, Huobi PrimeBittrex IEO and OK Jumpstart (OKEx) followed its.
Important! Coineal exchange launched Coineal Labs business incubator, which promotes start-ups development in legal and technical issues and marketing. The seed funding is provided, which means highrisk of financing at the early stage.
From the list of cryptocurrency exchanges, IEO crowdsales aren’t so often. The search starts with the selection of interesting IEO. Next step is to know what exchanges are planned crowdsale to be placed on. Then there is a need to clarity exchange conditions and register on the platform after the KYC/AML verification processes.
Currencies used for IEO participation are bought beforehand. You need to know, that some exchanges impose additional requirements to tokensales participants, for example, a certain technical level or availability of exchange tokens. Then you should wait for IEO beginning and move rapidly - because there is no time to think at this stage.It would be better to select currency pairs beforehand.
Important! As the experience, a crowdsale may last about 5 minutes.
Should we expect another boom that would be similar to the ICO in 2017-2018? There is a different model attracting investors, and exchanges serve as regulators. On the one side, increased confidence level draws bidders, and the number of people wishing to participate is increasing. On the other side - they filter unreliable projects and there is no doubt in growth of popularity of IEO.
Ask a Question
Fill in the e-mail and ask a question: