ICO (Initial Coin Offering) is well-known as a funding method using cryptocurrency, but recently, new methods have appeared and become a topic. That is the procurement method called IEO (Initial Exchange Offering) . In this article, I will explain the characteristics of IEO, the differences with ICO, and the actual situation.
What is IEO (Initial Exchange Offering)?
IEO is an ICO that is represented on behalf of a cryptocurrency exchange .
The project team implementing the IEO issues tokens and sends them to the exchange. The exchange announces the token received on behalf of the project team and sells it to the investor. Investors need an Exchange account to buy tokens through the exchange.
By selling tokens on the secondary market, when will you be listed on the exchange in the traditional ICO? There will be no such thing.
Difference with ICO
In conventional ICO, there are many cases in which a project runs away after raising funds with ETH.
This has been a problem because raising funds has eliminated the project’s incentives for development.
IEO is the most different from ICO in that the organizer of token sale is different. We are currently drawing attention that this difference may solve various problems of ICO.
Each feature of IEO is explained in detail in the next section.
Feature of IEO
IEO has some features not found in ICO. Here we will explain each feature.
Direct appeal to exchange users
It is different if it is led by a large company, but since ICO has to appeal to investors from almost 0, it is necessary to spend a lot of effort here.
On the other hand, IEO places the project on the exchange, so it can directly appeal to users who are already using the exchange. For example, Binance has more than 10 million active users, and IEO on the exchange can reach this 10 million.
I can divert the funds needed by ICO to others
As explained above, ICO needs to spend a lot of effort and money in the stage of appealing to investors. Specifically, it is possible to hit an advertisement to make more investors aware of the project.
Although IEO incurs fees to be paid to the exchange, it does not require the above-mentioned effort and expenditure, so it can be used for project development and management system strengthening.
The exchange examines the project
The exchange will review the contents after receiving the application for IEO from the project team. For example, Binance’s Launchpad review process seems to emphasize items such as a promised team, practical products, and a large audience.
Projects that are not content will be repelled at this stage, as they will only be posted on the exchange as IEO after passing these assessments.
It is easy to be listed on the exchange after IEO
There were a number of situations where ICOs were not listed on any exchange after the end of the token sale, or were listed only on minor exchanges.
Since IEO is often conducted on a large cryptocurrency exchange, and is likely to be listed on that exchange after the token sale is over, it is more reliable than ICO in terms of future prospects.
It can prevent fraud and carry away of funds
In IEO, a well-funded and reliable exchange can be used as an intermediary between the project team and the investors, so that strict money management can be performed and risk such as carry-over can be significantly reduced.
Even if the exchange side has funds and so on, the trust will drop at a stretch, so we have carefully implemented measures.
Example of IEO
Already, IEO is taking place in various exchanges and there are several successful examples. Here are some representative examples.
Binance previously released Binance Launchpad, a platform for performing ICO, but was abandoned after listing several projects. In 2019, Binance announced the resumption of service, and decided to carry out IEO one by one each month.
The first round, BitTorrent, sold out in the first 18 minutes of the token sale and raised about ¥ 77 billion. The news was a big topic, and the second part, Fetch. AI, sold out in just 22 seconds.
It can be said that the Launchpad conducted by Binance was a good start and triggered the IEO boom of each exchange.
By the way, the token sold on Binance Launchpad has risen to several times its selling price after the listing, and it can be said that it has achieved great success.
Huobi operates the IEO platform Huobi Prime, and held the TOP Network ($ TOP) IEO as the first launch in March of this year.
According to the official announcement, the number of users participating in IEO has risen to 130,000 worldwide, of which 3764 have purchased tokens. As with Binance’s IEO, all rounds ended in an instant, and it seems to have appeared the battle aspect.
The price of $ TOP went up to 0.014 HT after listing and recorded 19 times the token sale price.
The project called MultiVAC ($ MTV) has been selected for KuCoin’s first IEO. MultiVAC is developed to solve the three problems of decentralization, scalability and security that are considered to be problems in blockchains and virtual currencies.
A token sale was held on April 3, and after listing, it became a topic of rising to three times the selling price. Currently, the second stage announcement is just waiting for.
Is IEO actually done?
Binance’s Launchpad, introduced above, was a big topic. It may be natural to attract the interest of many investors from the number of users of Binance, but one of the major reasons is that the time to sell out was fast.
Especially in the first BitTorrent, there were few users who could buy, and did some really sell among some? It was about that the rumor came out.
In addition, even if it is actually being carried out, the number of people who have actually been able to make a purchase compared to the number of investors participating in the token sale is frequently taken up, which is a concern of the IEO.
In response to this, Binance Launchpad announced that it would change IEO’s system from first-come, first-served to lottery . Similar measures are expected at each exchange in the future.
Binance Launchpad Announces Plan to Choose Next Buyer’s Token Buyer by Lottery-CRYPTO TIMES
Is the project to be taken up a VC exit?
At present, IEO implemented at major exchanges has many projects that have been discussed since May 2018.
Although the market deteriorated in 2018, there were many projects that received investment from VC but waited for without ICO.
The Celer Network, which conducted IEO at Binance, and Top Network, which conducted IEO at Huobi Prime, are the best examples.
VCs that have invested in projects that were said to be promising in 2018 have been waiting for the tokens they have invested to date to go public. Therefore, it is common to want to exit by selling the tokens that you have invested early.
Currently, there are hardly any projects that have split the IEO price after listing, but in the future, it may come that the price splits sharply when VCs thinking of the exit sell tokens at a stretch.
Is IEO not Decentralized?
The ICO, which was conducted through Ethereum’s smart contract, could easily find out from which wallet and how much it could be purchased by accessing the smart contract.
Therefore, it was also very easy to track the flow of funds collected by the project.
However, in the exchange IEO, only the actual results are produced. Therefore, is the IEO actually raised at the top even in the upper part? It is understood only by the exchange.
In that sense, it can be said that IEO, in which the exchange is in control, is not a decentralized mechanism.
How to join IEO
In order to participate in IEO, an account of each exchange is required. In addition, security such as KYC (identification of identity) and 2-step certification is included in the conditions for participation.
The method of participation differs depending on the exchange, but here we will use the Binance Launchpad as an example.
First, log in to Binance and select ” My Account ” from the humanoid icon in the upper right.
Then click ” Submit Verification Documents ” under Lv.2 at the top of My Page.
The individual chooses Personal as it asks if the owner of the account is an individual or a corporation.
The screen above will be displayed. Enter the information in the following order.
- Middle name (empty if not present)
- Last name
- Street address
- Postal code
After completing the entry, click ” Begin Verification ” to proceed. The ID certification process is started, so click Start to begin.
Select the country of issue of the ID card and select the documents to be uploaded. Japanese ID cards correspond to passports, licenses, and insurance cards.
When you upload a photo of your ID card, you will be asked to upload a self-portrait photo. Write Binance and today’s date on paper, shoot along with your face and upload.
Once this is done, you will be asked for face recognition on the app as the final process. Download the Binance app and load the displayed QR code to complete the authentication.
This completes the series of certification processes. After that, go to the project page of the IEO you want to participate during the reception period, and press ” Claim Tickets ” to get tickets for participation in the lottery.
IEO is attracting attention as a new fund raising law to replace ICO because it prevents frauds and carryovers that have occurred frequently in ICO, and because it has been reviewed in advance.
However, there are also problems due to the large number of users of the exchange. IEO has just emerged as a new method, and solutions and updates will be implemented in the future.
Author: kaz 【Coin Desk News】 – Source Post: https://crypto-times.jp/what-is-ieo/
Disclaimer: CoinNewsDesk.com is a crypto news portal, financial discussion forum, and content curator / aggregator. Articles on Coin News Desk are provided provided for entertainment and informational purposes only.
Please check the articles which have not been reviewed and verified all articles posted on CoinNewsDesk.com. Please independently research and verify any information found here before relying on facts. It is also important to do proper due diligence and analysis, including involving disciplines No content on Coin News Desk makes up a recommendation to enter in any type of investment or any investment in any investment strategy presented on this website. before making any decision regarding investments or your personal finances.