The cryptocurrency market is growing at a pace faster than anyone would have imagined until a few years back.
Both traditional investors and common people are investing their money in crypto tokens with the hope to get huge returns.
They are all amazed by the massive success of bitcoin and other digital currencies after that.
However, the industry has changed a lot over the past years. Many new terms such as ICO (Initial coin offering), ITO (Initial token offering), and IEO (Initial Exchange Offering) have emerged, all of which represent the methods of raising funds for a crypto-based project.
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Until a few years ago, ICOs were the common choice of every company that wanted to raise funds for their blockchain projects, however, the increasing use of ICOs for fraudulent purposes has now started discouraging people from investing in them.
This is also the reason why alternatives such as ITO, STO and IEO came into existence.
IEO is the most common and popular of these alternative crypto fundraising options.
Let’s get started with some basic questions.
What is an Initial Exchange Offering (IEO)?
An Initial Exchange Offering, or IEO, is a token sale conducted through an established cryptocurrency exchange.
So, the basic difference between an ICO and IEO is the conducting platform. While ICOs are conducted directly by the holding company on its platform, IEOs are managed by crypto exchanges on behalf of a company that wants to raise funds by selling tokens.
An IEO is conducted for the same purpose as an ICO or any other type of token sale, but the medium and process are completely different.
The benefit of selling your new tokens through a third-party exchange is that the potential investors will have no problem trusting the platform. Moreover, you get access to a ready-made collection of investors and potential users.
Binance was the first crypto exchange to introduce and support the idea of using an IEO for raising funds.
Why are Startups/Entrepreneurs Launching IEOs for raising funds?
Over the past couple of years, many cases of fraudulent ICOs have come to the notice of investors and institutions, putting a ‘spam’ tab on the ICO industry altogether.
So, new companies and startups are now afraid of using the same old ICO for fundraising purposes.
During the past year or two, a number of new options have emerged, including ITO (Initial Token Offering), STO (Security Token Offering), and IEO (Initial Exchange Offering), most of which have proven to be better options than ICOs.
However, IEO has proven itself as the best option for raising funds in exchange for crypto-tokens. Here’s why.
- IEOs are conducted in a controlled environment by third-party exchanges which hold the responsibility of trust and reliability.
- Since IEOs must be regulated according to the specific rules of the exchange, the probability of fraud is practically nil.
- IEOs are not open to the general public and only the existing members of the exchange platform can participate in it.
- The investor/contributor has to send payment to the exchange (escrow) account first, which will verify the payment and process it once the purchased tokens are delivered to the buyer.
- The process of registering an IEO with an exchange is not as easy as ICO registration. In order to register as an IEO, the basic eligibility requirements of the particular exchange must be fulfilled.
- IEOs are more secure, as the complete process is managed by a third party instead of the holding company itself.
- Another major benefit of an IEO is that the token will surely be listed on the exchange platform once the sale ends.
These are some of the reasons why both startups and crypto investors choose IEOs over ICOs.
How to launch a successful IEO?
If you’re considering selling your newly launched tokens via an IEO, let me say that you have made the right choice.
With IEOs, all you have to worry about is creating the best token (project) in order to attract the maximum investment, while the rest of everything is managed by the exchange itself.
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In order to attract the maximum investment, the rest of everything is managed by the exchange itself.
Thanks to Binance and several other crypto exchange networks who are now offering their reliable platforms for launching new token sales, it is now easier than ever to launch an IEO.
Here’s a step-by-step process for launching your own IEO via one of the popular exchange platforms.
The process of preparing a project for the IEO launch is more or less the same as an ICO. Here are some of the mandatory requirements:
- A realistic business model
- Cutting-edge technologies
- A minimal viable product (MVP)
- A Token
- A strong team backing the project
- A reasonable hard cap
- Initial investors’ buzz
- A project website for marketing purposes (optional but recommended)
All of these things can be described in the project whitepaper, a key document considered by exchanges to approve an IEO.
Tips For Writing A Best Whitepaper For A Successful IEO 2019
So, make sure that your project whitepaper is impressive enough and clearly explains everything that a potential investor must know before buying your token.
Finding the right cryptocurrency exchange For Your IEO Launch
In order to accept your IEO on their platform, a crypto exchange will usually have a standard set of conditions, including the listing fees and other details.
Now, it is possible that your token or project may not adhere to all the conditions of a particular platform or you may simply not like their fee/interest structure. Whatever the reason, it is always beneficial to have multiple options to choose from.
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Thankfully, there are a number of exchanges that support IEOs on their respective platforms. You can choose from the list below.
- Binance Launchpad
- KuCoin Spotlight
- Huobi Prime
- Bitmax Launchpad
- Bittrex IEO
- OK Jumpstart
Make sure to read the listing terms of each exchange platform in order to find the best match for your project.
Good research is needed before choosing an exchange for your IEO launch.
Registering and approval on the exchange For IEO
The third and last step is registration on the exchange platform. Let’s understand the process by the example of Binance.
In order to register your IEO on Binance, the following steps must be followed:
Step 1: Registering on Exchange
Visit the application form page. Then provide the details such as your email address, your position with the company, about the project, token type, details and purpose, and other things.
As you can see, the form consists of 8 pages. This is going to be a complex and time-consuming process.
You can hire SAG IPL for the job, as we will help with the registration and approval of your IEO on Binance and many other exchanges.
Once you complete the form, submit it for review by the team.
Here is the example of news after you registered on the exchange:
Step 2: Review by the Exchange team
After successful registration, your project will be added to the list of new IEOs to be reviewed by the Binance team.
The team will then review your project based on the information provided by you during registration and according to a number of factors, including project development stage, token readiness for sale, future scope, the team, potential to succeed, etc.
Be sure to provide complete details about your project to avoid getting rejected on the basis of incomplete information.
Step 3: Listing Payment
Most of the IEO listing exchanges out there charge an up-front fee for listing on the platform, in addition to a commission/interest from the recurring profits. At this stage, you will have to make the payment of the one-time or annual membership fee to the platform.
A crypto exchange development company can help you negotiate the price and get the best deal through our experience with these platforms.
Moreover, we will manage all the paperwork, Whitepaper submission and related requirements for listing your IEO on the exchange.
Related: Have you ever wondered how blockchain or cryptocurrency works, Check out how does blockchain works?
Final Words on How To Launch
Cryptocurrency has been an ever-evolving industry. Yesterday, it was ICO; today, it is IEO; and tomorrow, it will be something else. One thing is, however, sure that cryptocurrencies (and blockchain) are here to stay.
So, if you are looking to leverage this crypto trend by creating and launching your own IEO (initial exchange offering) for raising funds for a new project/startup, this is the best guide for the purpose.
If you are planning to outsource the entire IEO development and launch services from an experienced IEO agency, we, at SAG IPL, will be more than delighted to help you. Get your queries sorted by a professional.
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