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IEOs are viewed as a better alternative to ICOs, because many crypto investors are looking at it as a safer option to put their money in comparison to ICOs.
Since 2019, Initial Exchange Offerings (IEOs) have been shaking the crypto fundraising space to a point that it’s been attracting crypto enthusiasts across the world. Technically, IEO is another form of Initial Coin Offering (ICO). However, the two differ in how and where investors’ money is secured. That is, IEO enables people to participate in their project through a crypto exchange, while ICO incorporates people directly by offering their tokens in exchange for investors’ money. While an ICO will allow almost anyone to participate, an IEO confines participation to only members of the exchange platform in use. Unlike ICO hat follow specific steps of an ICO campaign, IEOs follow the procedures and rules set by the exchange in use. The latter standardizes the process of token offering.
IEO versus ICO: Why IEOs Are Better and Safer
Today, IEOs are viewed as a better alternative to ICOs, because many crypto investors are looking at it as a safer place to put their money than the ICOs. One of the assurance comes from the fact that an exchange will do due diligence before they present the token to users of their platform. The reason is that an exchange wouldn’t want to damage its reputation by listing a scam token. Also, the fact that most exchanges implement know-your-customer (KYC) and anti-money laundering (AML) checks adds some layers of security to investor protection.
How IEO Can Replace Seed-stage Capital
The continued success of IEOs has put pressure on investors to reconsider the traditional seed-stage capitalist funding model that has ruled the market for many years. There is an inherent similarity between IEOs and seed stage capital means of raising funds in terms of structure, as they both distribute some object as a representation of tangible assets. Seed capital money is raised for developing an idea for a business or a new product. These funds generally cover only the initial costs of developing the product or business.
One of the defining features of an IEO is that it is a rapid funding movement, as companies can reach a hard cap limit in a matter of weeks or months, which can fuel the development of the project faster. This is a departure from the seed capital funding process that involves some form of advisory handed down from investors. An IEO does not allow a few investors to have the kind of influence seed capitalists have on startups, hence maintaining the principle of decentralization that has been the hallmark of crypto and blockchain industry growth. This makes IEOs favorable for both mass investors and the project team. In the fullness of time, IEOs can replace seed capitalists as the world moves towards more decentralized and secure investments. IEO offers increased transparency and trust. Using an IEO now is the best way to raise money for a new project because it’s no longer a fad as many investors are looking for safer investment vehicles.
Where Can You Run IEO?
Many exchanges are offering IEOs services to their users. Binance, the world’s biggest crypto exchange by trading volume, is a favorite for many big projects for the obvious reasons of more access to potential investors. Others are KuCoin, nicknamed “the people exchange” because it targets the mass market, OKEx and ExMarkets are mong others.