Initial Exchange Offering: the new way to raise money

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Initial Exchange Offering

We have seen plenty of alterations of the ICO process. One of the newest is an Initial Exchange Offering. Let’s look into how an IEO is different from an ICO, and why it might become a popular alternative.

What is an Initial Exchange Offering?

An Initial Exchange Offering, or IEO, is an improvement of the ICO concept which enables investors to enter the crypto system, while allowing the issuing company to make some of the necessary operations external. Notably, an IEO operates just like any other public offering that seeks to raise funds for certain projects. Unlike ICOs, IEOs operate through cryptocurrency exchanges, who are responsible of administrating the fundraising process.

So, this means the exchanges are selling the tokens once they are listed. They are doing all of the marketing and advertising, which is an extremely expensive process and is hardly do-able with any startup cash. Also, you are sure that your money is safe, since the exchanges are big entities with a certain reputation, and the transaction is taking place in a secure internet environment, the exchange website, which processes tons of transactions. For the developers, it is also easier to do an IEO due to the fact that they don’t have to take the AML/KYC measures that are normally necessary, since the exchange platform is doing it.

Unfortunately, the immediate disadvantages are the fact that you have to pay the commissions charged by said exchanges. Moreover, this process is quite new, so it is not quite yet regulated.

Exchange platforms for Initial Exchange Offerings

Exchange companies have started to design special platforms for IEOs. For example, Binance’s platform is Binance Launchpad. There are plenty other notable ones, that you can see here.

I believe that these exchange platforms make crypto startup fundraising a lot easier. To prove this, I will tell you some facts.

Raising the hard cap can prove to be a challenge, which takes a lot of time. There are a few IEOs who have proven us how easy this process can be. BitTorrent did an IEO through Binance Launchpad this January, and was able to raise a little over $7 million in under 15 minutes. Do you thing this is very fast? Well, someone has gone even further. Many ICOs dream of these performances, but the second IEO on Binance Launchpad, Fetch.AI, was able to raise $6 million in 22 seconds.

This shows that we are entering a new era of crypto fundraising. A year or two ago, we were fascinated by companies that were able to raise millions of dollars in a few hours, days, weeks on the internet. Now, exchange companies and startups in need of money are taking the process to a whole new level.

Possible effects on the market

The spread of IEOs might be a catalyst for the next crypto boom. Together with other good things happening on the market, Initial Exchange Offerings might be the new way to raise millions of dollars in minutes. This bring increased trust from the public, smaller marketing costs of startups and a big part of the legal hustle removed.

Think about the past. ICOs created the crypto boom of 2017-2018. This period was full of scammers and such people who had only a bad effect on the market. This new fundraising process might remove this problem. I am not saying that this system cannot be having a single flaw, that is only something time will tell us. But it is certainly a big step in the right direction. So look towards a new crypto rally in the near future!

Conclusions

We should all be looking forward to how IEOs, together with the innovations of the market, might bring the next crypto boom. This time, things are being a lot more serious than last time. And that is a good thing. It means this space is becoming safer for the public, as it should be. If you are willing to invest in an Initial Exchange Offering, you can now do it with a lot more safety than before.

Anyhow, if you want to add something, feel free to leave a comment below. If you want to get in touch with me personally, use this link.

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