The first ICO's was done in 2013 and many others followed over the years. In my opinion the days of the ICO is counted, and the days of the IEO is something good to watch if you are in Crypto.
The fairly new funding method was introduced by the worlds leading exchange Binance, when they introduced Binance Launchpad in 2017. It went fairly quite after that, but ever since we have seen the downturn in the crypto investment market they made a return with two very successful IEO's in early 2019.
What is an IEO?
An initial Exchange offering relies on having an crypto currency exchange acting as an intermediary between the buyers of the IEO token and the sellers of the token (the project). The project developers mine the appropriate tokens on the blockchain and transfer these tokens to the exchange. The exchange then sells these tokens on behalf of the project to the various interested buying parties. The exciting part is that the same rules which applied to ICO's now apply in the IEO, with the difference that the exchange already have the required KYC and checks and balances in place to verify the participants in the IEO. All participants must have a verified account on the exchange, which is very exciting as this will ensure that most of the dodgy and fraudulent projects will not make it to the fundraising stage.
Why will projects do an IEO instead of an ICO?
In my opinion, IEO's is much better in various aspects than the traditional ICO approach, of which the most important aspect is that we will have less fraudulent projects making it to fundraising stage.
Exchanges will act as a filter to projects as they put the exchange put their reputation on the line. We will see much less fraudulent projects. Exchanges will do their own due diligence on the projects before they give them their vote of confidence.
Exchanges have an existing user base which can be tapped into by the project. This is a massive win for any crypto project as it is very difficult to get the attention of the appropriate audience.
The end of the IEO will automatically mean that the coin is listed on an exchange, which yet again gives investors great comfort that their investment is safe and they can get out of their investment by selling the token.
Exchange coins will gain tremendous value
I am still a believer that one of the most significant aspects which gave ETH it's value, is that most ICO's was done on the Ethereum network as they were geared for the ICO process. Anybody could create smart contracts and execute their ICO on the platform. This generated huge demand for the Ethereum and theur ETH token.
The worlds leading exhanges all have their own coin and they are creating whole new use cases for their platforms and tokens as these coins are used to facilitate the process of IEO's.
Lets look at Binance Launchpad which has done two very successful IEO's in 2019:
Bittorrent sold out there sale in a matter of minutes
The second Binance Launchpad sale raised $6million in only 22 seconds. [Read more here] (https://cointelegraph.com/news/token-sale-on-binance-launchpad-raises-6-million-within-22-seconds)
In my opinion exchanges have indeed found a new use case for the exchange platform, as it is more secure, more verifiable and definitely less risky to invest in an IEO as an ICO as the product has already been verified and vetted by the exchange.
Happy Steeming!
Exchanges are the house, and the coins are the gamblers. The house always wins in the end. IEO are a great opportunity. IMO.
Fully agree and thanks for your comment @konelectric
the new hype of 2019 exchanges know how to go a level up ;)
They do indeed and in my opinion it is a very good way to get rid of all the scams to a certain extend in any case.