Those who have heard about ICO, might get a little idea that it could have something to do with crowdfunding or cryptocurrency. It’s true, but the way these two work is entirely different. To begin with, IEO stands for Initial Exchange Offering which clearly indicates its inclination towards crypto exchange rather than token or coin.
What makes IEO different from ICO is that the tokens listed issued under the former get listed directly over the exchange platforms. While in ICO, they were made available to the buyers on the project’s website for sale. More importantly, it may sound new, but it is not untried yet, when the first such project was launched, it received very positive responses from all the major participants of the process.
The project owner, investor and the exchange, all of them registered profits. Considering that there are limitations on each one of them, it is the best option which helps all of them succeed. For the project owners, it assures that they will have the stipulated amount raised without investing excessively on marketing campaigns.
Read More: Why are Entrepreneurs Drifting Towards IEO for Raising Funds?
Traders get the opportunity to purchase tokens which they can either HODL or strategically sell later at a profitable rate. And for exchanges, it is the easiest way to get new traders without making much efforts for marketing. They get enhanced traffic from investors who will be purchasing tokens for the other projects. In the process, chances of selling their own tokens are also increased.
Despite the effectiveness of this innovative method, IEO actually took a little longer to bloom. You may be surprised to know that the first IEO was introduced in the 2017 on the Binance platform. But it took two more years for it to gain traction in the market and it finally happened in 2019. Needless to mention, Binance played a pivotal role in it, which is also the biggest platform for buying and selling of crypto tokens.
The project that created awareness about this instrument was the BitTorrent project which managed to collect nearly $7.2 million within 15 minutes. Another astounding success was the Fetch.AI project that accumulated about $6 million only in 22 seconds using the same platform. The next project was Celer which too was successful but it attracted so many participants that the biggest platform reported technical issues in handling all of them. However, the project eventually sold all its tokens in just few minutes.
There have been instances when a large number of people missed out on public trade happening on exchange and they resort to secondary markets to buy the leftover. The recent example of this is the TOP token that took place on Huobi exchange. The profit acquired by the project reached 250% within the first round which hardly lasted for 7 seconds.
Because of IEO, Binance registered a huge success and it is later emulated by the other exchanges too. Huobi Prime, Bittrex IEO, KuCoin Spotlight, OKEX Jumpstart and many others are in the list. It only means that the market sentiment changed towards this method of fund-raising and it got widely accepted. And it is not limited to only the big exchanges, even the smaller ones are doing a great job in launching IEOs. You will find a list with information of exchanges and their projects down below.
You may wonder what it takes for a project to get listed as an IEO. Let’s see what exactly you need to do enlisting your project.
Generic Advice
The basics of IEO is same as ICO and structure followed is the same in both of them. They both follow same code of conduct as far as the functionality is concerned.
- However, there are a few notable things:
- Project and Funders Reputation
- Progressive Business Model
- Breakthrough Technologies
- Strong Team
These are the most salient characteristics a project must have in its portfolio. Then only, it would be proven as a potential investment for everyone.
Product Prototype/ MVP
For any project to become worthy of investment, it is essential to show its viability to the investors. Therefore, MVP (Minimum Viable Product) is a concept which is much more trustworthy than anything else mentioned in the whitepaper.
Reasonable Hard Cap
It is very impractical to expect that your project will be able to raise millions of dollars even within a few months. Therefore, keeping a hard cap which is achievable is recommended.
In most of the cases, the successful IEO projects have barely managed to exceed $5 million threshold. And the increasing number of projects will most likely bring this figure further down. Whether it is soft cap or hard cap, you need to keep the limits logical. Furthermore, the sale of tokens take place in various rounds and a fixed lot is dedicated for IEO, the rest is sold in different phases of crowdsale such as public and private. They are all calculated and shown in the ‘token allocation’ segment of the project.
Whitepaper and Tokenomics
Whitepaper is an essential part of any crowdfunding project. Most of the times, it is drafted by the founders of the project or the core team. As they are the ones who are most familiar with the project, it also seems a reasonable thing to do. However, it is a big mistake if you do not consult the preliminary draft with a professional whitepaper writer. You certainly know your project better than anyone else but this particular document is a business proposal which needs to be presented in a way. You need to make it presentable for the investors.
Keeping all the technical information in place, you need to give this document an all-embracing approach. Things such as project disclosure calculations, tokenomics, general structure, positioning and many other things have to shown with accuracy. All these things are published to the public for review and hence, they need to to polished. It requires a mix of technical information and craft to make your project convincing to investors.
Lets go through the list of all the necessary items that you need to include in whitepaper:
- Potential Project Market
- A well-planned structure
- Financial model of the project
- Board Members & Team
- Advantages of the project/description/Use Cases
- Tokenomics
- Cases of competitors
There are many projects getting ready to be launched as an IEO, the first thing for all of them to do is create a whitepaper and other basic things. Even with the sale of all tokens, it is essential to forge a mechanism which could satisfy the demand for tokens. This could be considered a rule of thumb for any tokensale event. It is the best strategy for any project and works on every aspect of operations, it functions really well on exchange as well. And when it comes to project, the purchase of tokens can be done seamlessly.
Legal Aspect
Taking the legal opinion is also important because it impacts the outcome of the project in many cases. Moreover, exchanges have their own set of legal requirements to be fulfilled and adhere to the procedure as well. With a trusted legal consultant, exchanges proceed their operations and also make the most out of every situation.
It is now possible for any project to get listed as an ICO on any exchange. But you need to follow a process to gain traction through the markets. You also need to apply for a project review later to be open about the feedbacks. Alongwith all this, you also need to focus on driving a marketing campaign additionally, when the rest of the things are done.
Exchanges for IEO
There are now many exchanges for enlisting IEOs and each one of them have their different set of conditions. These conditions change as per projects and their dispositions. And it also impacts the amount of tokens and their prices available for sale alongwith the listing fee. It is generally done within peculiar conditions that create an environment for executing transactions and payment of fee.
According to the standard listing procedure of any exchange, the partners and agencies of projects can also approach the exchanges and work out a deal. Although, they may not decide every single thing, it gives a chance to get feedbacks from exchanges and their representatives. These feedbacks are very important so that you can understand if there are any changes you need to make internally. Otherwise, you can go ahead with your terms and choose the right exchange platform for launching the IEO.
See the list of exchanges that allow you to launch IEOs:
- Binance Launchpad
- ProBit
- OK Jumpstart
- ICOHost
- Huobi Prime
- CoinBene
- Bittrex IEO
- KuCoin Spotlight
- Exmarkets Launchpad
- IDAX
- Bitmeta
- Coineal
- Liquid
- Coinis
- CoinTiger
You must know the different between platforms the support IEO and the ones that come up with their own launchpad. It happens on weekly basis.
Marketing
When it comes to marketing, exchanges have an ambiguous stand. Many platforms take the responsibility of driving the entire campaign (in collaboration with project owner), while many take care of launch. And there are some who just do a preliminary marketing before launching the IEO. However, as the number of exchange platforms is also increasing, their participation in the marketing process is more likely to be increased. It would surely be a selling point for the exchanges.
All in all, marketing is something projects cannot neglect and there are few media that they must use:
Community Management & SMM
Social media has become an essential part of marketing today and in case of IEO, it is better that you start early. On various communities and social media platforms, you need to share updates time to time about your project. You need to start building a campaign by sharing the details such as the product and technical solutions offered through it. And it is also important that you take it seriously and become active on all such channels. You can use all the dominant social media platforms such as Facebook, Twitter, Instagram, Telegram and LinkedIn as well.
Public Relations
From the very initial stage you need to start building stronger public relations in the domain where your project is going to perform. You need to start talking about the solutions and the technology that makes it possible. This particular channel is driven in a way that your project must get a plenty of mouth publicity by the time it is ready for launch. The effort must be on creating awareness around the project and making it known in its sphere.
It is recommended to publicise the project on the channels which are expected to give out better results. With media technology, it has now become very easy for projects to gain potential momentum and generate interest in its followers.
Platform Engagement
This basically means indulging in different platforms and attracting users towards your project. It includes every kind platforms whether it is used for chatting, blogging or querying. You may find it surprising but many projects have got excellent results after driving their IEO campaign on different platforms. And they help the projects even after the fund-raising is done, they help them further build the organization stronger.
You may need to spend 1-2 months on such a campaign which is reasonable considering the results are very effective. But before engage with advanced level of marketing, make sure the basics are taken care of.
Conclusion
IEO development is becoming a prominent method of crowdfunding and is being adapted by a large number of entrepreneurs. A great number of exchanges is also joining this fast-evolving instrument. It does have its own benefits and drawbacks, but it is benefitting a great number of exchanges, project owners and investors. And that makes it a preferred choice of every participants in such a campaign.
As technology evolves, there could be changes in this method too, if it happens, we would be able to give you all updates about it. It is definitely a great step which which gives many opportunities to everyone. Currently, it is a preferred way to run a crowdfunding campaign and as a result business aspirant are more inclined towards IEO than ICO. Unless some better technology replaces IEO, it would keep benefitting all its contributors.
