Initial Exchange Offering (IEO) is basically one of the methods that companies use to issue tokens and raise capital. The developers of the project, the team members need financial incentives at some point and try to provide the capital they need through IEOs. In addition, IEO’s Turkish expansion is known as the first stock exchange offering .
How to Participate in IEO
1.Find an IEO you want to invest in.
2.You need to register on the exchange and verify your account by passing the KYC/AML procedure. 3. Check the cryptocurrencies you can use to participate in the IEO and deposit them into your account.
3.Wait for the IEO to start and purchase the tokens.
The terms of participation of an IEO may vary depending on the participating cryptocurrency exchange. Often, the KYC protocol needs to be provided for the purpose of verifying the identity and position of potential investors. Since IEO is prohibited in some countries, investors residing in that country cannot participate in the IEO. In addition, some exchanges require their users who want to participate in the IEO to keep the exchange’s own cryptocurrencies in their wallets and give sweepstakes rights to their users who meet this requirement. After the latest draw, users who are entitled to invest can deposit certain amounts of funds. Keep in mind that every IEO tends to run out pretty quickly, so be quick and ready when the time comes. Below we will talk about how much IEOs are collected in how many seconds.
What are the Features of IEO (Initial Exchange Offering)?
IEOs try to support only projects that are legitimate and reliable, have a good team, and involve experts in the field, as they jeopardize the credibility of the exchange. Therefore, the review process is deeper. After a project passes all verifications, tokens are put up for sale through the crypto money exchange and investors can buy and sell the project’s tokens without having to go through additional processes. With the help of exchanges that support IEO, projects manage to gain considerable interest and credibility. It allows investors to purchase the tokens and raise the funds that the project developers need.
There are important conditions that the project must meet before the IEO. It has to provide conditions such as a solid business model, experienced team members and a solid, secure technological infrastructure. Every cryptocurrency project must present a convincing whitepaper. It should also be determined and explained in advance whether the maximum capital that can be collected in the IEO will be limited or flexible capital.
Pros and Cons of IEO
IEOs are advantageous because of the following:
- Investor confidence increases. Investors are not directly interested in the IEO project team, but in the stock market, which makes it more reliable and safe in case things go wrong.
- A security opportunity for both project owners and investors. Token issuers also benefit as IEO platforms manage everything related to regulations, such as mandatory KYC/AML controls for each participant.
- Guaranteed listing on the stock exchange. IEO tokens are listed on the IEO exchange immediately after the IEO.
- Prevention of fraudulent activities. IEO project teams are neither anonymous nor fake, so they don’t disappear once you’ve collected your money. You are under the security of the stock market.
- Only to trade IEO tokens do new investors register on the exchange, which is also advantageous for exchanges.
- Exchanges that accept IEOs may require IEOs to keep exchange tokens in their wallets to increase the value of exchange tokens (such as BNB, if any) and aim to increase the value of these tokens
However, IEOs are also the subject of the following risks and concerns:
- There are vague regulations and restrictions. Many countries have issued restrictions or banned ICOs altogether due to the use of bad intentions for ICOs, which unfortunately can reflect badly on IEOs.
- Market manipulation is possible. Most IEO tokens are pre-minted, so you should always check the terms of token distribution and distribution before investing. Both the project team and an IEO exchange can keep an unreasonably large portion of the tokens to themselves, which can then lead to a collision in prices. But in such a case, it is very unlikely that the reputation of the stock market may be contaminated. Still, it’s worth paying attention.
- Limited number of investors. There are many complaints from investors that not everyone manages to buy tokens during IEOs. Here, it comes to mind that the IEO projects of the stock exchanges or the project team cannot do their marketing work well.
- Trade bots. There is a concern about bots that could be programmed to participate in IEOs and subdue investors. One item is that the limited number of investors we mentioned above may have something to do with bots.
- FOMO (Fear of Missing Out). Take your time. Don’t forget to do your own research and study the projects and the purpose of the project. Both IEO project managers and IEO platforms have an incentive to create as much excitement as possible to sell all tokens. Be sure to check the technical review of the project, its idea.
IEO Coins
The first large-scale IEO was the famous BitTorrent, launched by TRON through an International exchange in January 2019. Within minutes, almost 60 billion BTT tokens were sold and about 7.2 million USD was raised.
After observing the success of international stock exchange IEOs, more important exchanges began to copy the model. Another important IEO was launched through a major international exchange. Veriblock (VBK) raised $7 million in under 10.4 seconds. Later, this record was exceeded by a Blockcloud IEO conducted through another international exchange that sold $2.5 million worth of BLOC tokens in one second. xDai (STAKE), the annual rate of return of the coin whose IEO took place in 2020 is set at about 44x, giving its investors the most profit. IEO coini was. Elrond (EGLD), which was also IEO in 2020, was first released as ERD, then converted to 1EGLD = 1000 ERD and the annual rate of return of the coin, which took its current form, was determined as approximately 30x. Another example of an IEO, RUNE reached a market capitalization of over $100 million in its IEO, and the annual rate of return in 2020 is set at about 23x.
IEO and ICO Difference
The novelty of this system is that, unlike the ICO, it uses exchanges that already exist. Basically, the difference between IEO and ICO is that in ICOs, investors have to send their investments to a smart contract or website, while in IEOs, IEOs are much more reliable than ICOs because they make investments in the project through their wallets on the crypto money exchange. Not all projects that go into ICOs are viable, or in some cases even innovative. IEO projects that have undergone certain validations by exchanges attract more attention from conscious investors because these are projects that will actually be executed, solve a specific problem or are innovative and increase their chances of success.
