Initial Exchange Offering

November 21, 2023 - Around 2 mins mins to read

Understanding the Concept of Initial Exchange Offering (IEO)

An Initial Exchange Offering (IEO) is a fundraising event that enables cryptocurrency start-ups to raise funds through a trading platform. Unlike an initial coin offering (ICO), where the company itself tries to generate interest on its own website, IEOs are conducted on a crypto exchange on behalf of the company launching new tokens.

In 2017, China imposed a ban on ICOs, which led to the exploration of alternative funding solutions for new businesses in the crypto world.

During an IEO, start-ups pay a fee and allocate a certain proportion of tokens sold to raise funds on the exchange. Once the IEO is successfully concluded, the tokens are listed on the exchange, thereby enhancing the company’s visibility to potential investors.

Unlike ICOs, where contributions are sent to smart contracts, participants in IEOs make their contributions through the hosting platform. This has contributed to the growing popularity of IEOs among major cryptocurrency exchanges.

Binance Launchpad was one of the pioneering IEO platforms in the industry, and many other exchanges quickly followed suit.

The primary advantage of IEOs lies in the increased transparency and trust they offer. Since the token sale is conducted by a regulated cryptocurrency exchange, the risk of fraudulent activity and scams is significantly lower compared to ICOs. Reputable platforms also conduct thorough due diligence on projects before offering them to users.

Under an IEO, token issuers are relieved of the responsibility of managing the crowdsale security themselves. They can also leverage the exchange’s extensive client base to attract more investors. Additionally, the exchange takes care of the Know Your Customer (KYC) and Anti Money Laundering (AML) processes, and often provides assistance with marketing the businesses.

Although IEOs are generally considered more credible than ICOs, they can involve high costs for start-ups in exchange for the benefits of increased safety and visibility.

Glossary

Initial Exchange Offering

Understanding the Concept of Initial Exchange Offering (IEO)

In 2017, China imposed a ban on ICOs, which led to the exploration of alternative funding solutions for new businesses in the crypto world.

Binance Launchpad was one of the pioneering IEO platforms in the industry, and many other exchanges quickly followed suit.

Although IEOs are generally considered more credible than ICOs, they can involve high costs for start-ups in exchange for the benefits of increased safety and visibility.

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