What is an IEO in Crypto and How Does it Differ From ICO&
The growing demand for cryptocurrencies and the development of the crypto industry are reflected in the appearance of dozens and hundreds of new projects. To get a good profit, many investors buy new coins during their initial release. But as the ICO fever of 2017 has shown, this can be very risky. Thus, a few alternatives are now gaining popularity, and the IEO crypto model is one of the most popular. In this article, we will tell you what is an IEO and what benefits it has.
What is IEO in Cryptocurrency?
So, what is IEO crypto fundraising? IEO means Initial Exchange Offering. In an IEO crypto scheme, a new project sells a portion of its tokens to investors in exchange for major cryptocurrency coins like Bitcoin or Ethereum. The project then uses the funds to finance its development and launch its product. As well as ICOs, IEO crypto methods have a certain quantity of coins available at a defined price, soft and hard cap, and a defined accepted currency.
IEOs have become a popular method of fundraising for cryptocurrency projects as they provide a way to raise large sums of money quickly. In an IEO crypto listing, a cryptocurrency exchange acts as the intermediary between the project and the investors. The exchange vets the project and lists it on its platform, where investors can purchase tokens with a certain currency.
Because IEO is supported by an exchange, startups that choose this path must be prepared to comply with regulations the exchange has in place and have their action plan. An IEO cryptocurrency proposal is usually thoroughly examined by the exchange. Exchanges, in a sense, risk their reputation with each IEO they decide to conduct. As such, crypto investors often view IEOs as more trustworthy and less risky than ICOs.
The Main Benefits of IEO Crypto
Now, when you know, what is IEO in cryptocurrency, let’s look at its main benefits. IEO crypto model has some advantages over other cryptocurrency fundraising models such as ICOs. Let’s take a look at them:
It provides greater trust and legitimacy for new projects. When a project is listed on a well-known exchange, this means that it has undergone due diligence and has been approved by a reputable institution. This can help to attract more investors and build confidence.
It increases the visibility of a project. Listing on a popular exchange can give a project exposure to a wider audience and help it to raise awareness.
IEOs provide more liquidity for projects as they are able to list their tokens on the exchange immediately after the fundraising phase. So, it ensures that there is a ready market for the token when it launches.
It improves the price discovery process. IEO cryptocurrency schemes help to create a more efficient market where the initial price of a token is better aligned with its true value.
Overall, IEO is one of the most secure and regulated ways for investors to purchase tokens during a project’s fundraising phase. However, there are still some risks involved, and investors need to be careful when choosing an IEO to support.
Difference Between IEO and ICO
The ICO and the IEO crypto models are both ways for projects to raise funds. However, there are several key differences between ICO vs IEO.
An IEO is conducted by a cryptocurrency exchange on behalf of the project, while an ICO is usually conducted by the project development team itself.
In an ICO, investors send coins to a smart contract, which then allocates an equivalent value of the project’s native tokens to the investor’s wallet. For an IEO, on the other hand, investors purchase the project’s tokens directly from the exchange with the currency listed on the exchange.
In the case of an IEO, the project must undergo a rigorous vetting process by the exchange before being listed, while an ICO can be conducted by anyone with a whitepaper and a website.
What is most important, IEO in cryptocurrency tends to have a higher success rate than ICOs, due to the increased trust between the investor and the project. This is because a reliable exchange acts as an intermediary, and it, to some extent, becomes a guarantor of security for participants.
How to Participate in an IEO Crypto Fundraising?
If you compare the IEO crypto model and ICO, IEO is much more straightforward for the average user to participate. You don't have to submit crypto to a smart contract or ensure that the transaction has enough gas or commission to be processed in a time. All you have to do now is to find an IEO list and follow a few steps.
First of all, you need to determine a prospective project with an experienced team and a solid roadmap. Find the exchange where the initial release of coins will be conducted and create an account there. After that, deposit funds into your account, and once the IEO period begins, you will be able to purchase the project's tokens with the funds in your account.
It is important to note that exchanges may restrict users from some countries from participating in IEO cryptocurrency fundraising schemes. This is usually due to regulatory reasons. As such, it is important to check whether the exchange allows users from your country to participate in IEOs. Also, please note that you will not be able to withdraw your tokens immediately after purchasing them. Instead, they will be locked up until the end of the IEO period. This is done to prevent investors from dumping their tokens as soon as they are listed on an exchange. After the end of the IEO crypto period, the tokens will be released and can be traded on the best IEO exchanges like any other cryptocurrency.