Is an initial exchange offering the next big thing in the crypto space? In this post, we explain what an initial exchange offering is, and why you should adopt this new fundraising model.
What is an Initial Exchange Offering?
Initial exchange offering (IEO) is a new fundraising model in which a cryptocurrency exchange acts as counterparty and raises funds on the behalf of a blockchain startup. In essence, the exchange provides a platform where you can conduct your token sale. You can then sell your tokens to individual investors in exchange for fiat or any other cryptocurrency.
The initial exchange offering approach is strikingly similar to the ICO crowdfunding model. However, in IEO, the exchange facilitates the token sale rather than the startup doing it themselves. For this reason, many startups have begun to recognize the benefits that IEO offer.
According to InWara’s Initial Exchange Offering Report, IEO projects around the world have collectively raised a whopping $1.67 billion. Of these, almost 84% were raised in 2019 alone. BitTorrent, for example, managed to raise $7.2 million in just 15 minutes through IEO while Fetch.AI raised $6 million in just 6 seconds! IEO projects are in-demand among investors due to the strict vetting process that exchanges undertake.
BitTorrent conducted its IEO on the Binance exchange launchpad. Since then, several exchanges have started their own IEO launchpads. Currently, LATOKEN is the most popular launchpad. Binance, Probit, GBX, and ExMarket follow in that order.
What are the benefits of IEO?
When you partner with an exchange to issue an IEO, you get to benefit from listing, marketing, and investor verification services they provide. In addition, the IEO platform manages all smart contract transactions. This ensures better security for both the token insurer and investors. With an initial exchange offering, you can raise funds from an existing and stable user base. IEO also saves you from having to invest a fortune in marketing or issuing tokens. This gives you better visibility among investors. On the other hand, token holders enjoy easy liquidity since the exchange is offering to list the token.
What steps are involved in launching IEO?
To launch IEO, you need to seek authorization from the exchange to have your token listed. The exchange usually conducts very strict verification and only highly vetted projects get listed. After the verification process is complete, the exchange will list your token. Many exchanges charge a listing fee before listing your token, but there are a few others that you only pay after a successful token sale.
Lastly, it is important to have your tokens listed on a reputable exchange to ensure transparency, security and fundraising success.
Launch your Initial Exchange Offering
Initial exchange offering can help you save on costs and also reduce the tasks on hand by assigning them to the exchange. TokenMinds has partnerships with the top crypto exchanges, and as part of our collaborative efforts, we submit vetted projects for IEO to these exchanges. Thus, we can help you with listing your project on popular exchanges so you can raise funds quickly through initial exchange offering (IEO).
Talk to us today and we will help launch IEO and successfully achieve your project financing obligations.