So far, Initial Coin Offering (ICO) has been the most dominant method of raising funds for entrepreneurs. With induction of cryptocurrency and widespread reach, this peculiar method become very popular for establishing startups across the globe.
However, ICO has its own share of infamy as it was used by many miscreants as well for fraudulent purposes.
This was the reason alternatives had to be sought and Initial Exchange Offering (IEO) was evolved with the same objective but with a different modus operandi. In terms of medium and functionality, IEO is entirely different from ICO. While ICO seeked direct fund from investors through various, under IEO, you can do it only through a third-party exchange.
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Why IEO is better than ICO?
The idea of raising funds through IEO was propounded by the popular crypto exchange Binance. If you want to understand it in easy words, IEO is not as open for public as ICOs are.
You cannot purchase tokens and participate in a crowdfunding campaign through an IEO listing website unless you are a user of a hosting exchange platform. ICOs allow users to make direct payment to a specific address whereas IEO requires the contributor/user to do it through the exchange’s account.
The Major Differences
The biggest loophole that gives room for fraud is the absence of third party. The party launching the ICO campaign solely controls it and can easily pretend to be a genuine project with a crafty whitepaper. Although, the advocates of ICO have said that this could be done with IEO as well.
But there’s a change in the very structure through which IEO is conducted and that prevents forgers from launching their project using this medium. Anyone who is willing to launch the token sales through this medium will have to first fulfill the exchange’s requirements.
Technically, ICO and IEO are the same, it is the same type of token that you release through either of them. The difference is in the vehicle through which the tokens are purchased, in ICO, it is directly purchased from the projects owner. And in IEO, exchange works as an escrow.
When it comes to security, IEO is definitely a better option than ICO. Because in the latter, only the developer is responsible for the compact implementation of smart contracts. As a results, there are many loose ends that remain unattended. And in case of the former, you have a third party exchange which takes care of everything. By involving a third party, you get ensured if there is any flaw in the architecture, it would surely be highlighted.
What is the process of launching an IEO?
It has become a lot easier now, to launch an Initial Exchange Offering, the first thing you need to do is to partner with a cryptocurrency exchange.
It is also not a very costly affair, you can also launch your IEO following these easy steps:-
From the very beginning, investors need to ensure that they are getting the project they want to invest in. It is important for you to ensure that the project is listed in an exchange so it could be easily launched as an Initial Exchange Offering.
The next thing you should be looking for is the specific details of the strategy. When we talk about specific details, it means the exchanges taking part in the offering. Most of the times, IEOs take place on several exchanges, but it could also be restricted to one platform. There are few reasons behind the adaption of this strategy. First, you cannot trust every exchange as they have not been untouched by malicious practices.
Once you are done choosing the exchanges you’ll deal with, it is time to go ahead with verification process and reliability. Exchanges do not proceed without some of the basic information such as email address, name and password. For some exchanges, the process is more stringent and they go on to require government identification cards, photographs and proof of residency as well.
Ether has become a universal token for crowdfunding and it is the same for IEO as well. Just ensure that you register with an exchange that deals with Ethereum.
Once you have decided which transaction currency you will go with, you need to wait for the IEO to begin.
What makes IEO better?
For the most part, IEO’s functioning is better than its counterpart. Crypto users might disagree on that, but, it has been the most effective method for raising fund. With ICO, there is a lot of risk as there have been several incidents of frauds. Moreover, there is no authority or regulation that stops could ensure a healthy environment for ICO projects.
There are many other benefits that you can ensure when you get associated with blockchain. These projects give you a lot of exposure and help you come up with new ideas. As your project gets launched on an exchange, there are chances of getting more customers.
It emerges to be a win-win deal for project owners and exchanges both. They both get benefitted with a feasible model which encourages more users to get associated with the projects and for the project, more users will start using the exchange as well.
Are there platforms for launching IEO?
A few platforms have been launched to make it easy for the entrepreneurs. Besides Binance, there are other exchanges such as KuCoin which has registered trade volumes to the tune of $10 every single day. It has announced a platform which would be dedicated to IEO and will be called Spotlight.
There are many big players associated with this evolving medium of crowdfunding. It make the future of IEO rather bright. There are various exchanges that are bringing new coins into this domain. Alongwith Ether, Ripple could also be added in future as that is also emerging as a big alternative for crypto users.
Conclusion
More methods are being introduced to make crypto better and more accessible to people. IEO development services are now becoming more commonplace and different companies are offering it. With skilled and experienced developers, Technoloader gives you an easy chance to make your startup vision real. With this particular crowdfunding media, you can make anything possible and we will help you make it possible.
