An Initial Exchange Offerings, IEO or a Launchpad Flash Mob. A new trend that is about to replace the outdated Initial Coin Offering grabs hold on the Crypto World.
The Initial Exchange Offerings (IEO) is an initial exchange offer, a token sale, held at the exchange.
An IEO mainly differs from a traditional ICO by having an exchange that serves as a middleman. The platform assumes responsibility for conducting a due diligence and technical verification of the project and automatically becomes the main marketer of the partner project.
The token sale organizer issues tokens, sends them to the exchange, while the latter distributes the assets among interested users and investors. Earlier, in order to participate in an ICO, investors needed to pass KYC procedures, buy Ethereum, send crypto to a smart contract, wait for the token distribution and listing on the exchange. Now they are enough to be the exchange verified users, and to possess the exchange’s internal tokens.
Benefits for Projects
Most potential IEO participants are exchange users. This reduces the marketing costs and technical expenses, facilitates the token promotion, ensures listing of a coin at least on one exchange. It also improves liquidity, while investor confidence in the proposed product is increased.
Benefits for Trading Platforms
There are clear benefits for the exchanges. They profit on transaction fees, attracting new users, joint marketing and promotion, placement fees.
Benefits for Investors
The key advantage for investors, in addition to credibility of the exchange as a safe middleman, is listing on the exchange immediately after a token sale, since the exchange is a principle organizing partner of the token sale. The fact that the trading platform assumes reputational risks at the very least protects investors from scam token sales. The current excitement provides the opportunity to receive profit promptly after the project’s tokens are listed.
Binance can truly be called a founder of the Initial Exchange Offering. The platform introduced its Launchpad in August 2017. Binance Launchpad held an IEO token sale for BREAD ($ 6 million) and GIFTO ($ 3.4 million) in seconds. After a little break, the company held a new IEO for BitTorent that culminated in another wave of hype.
Other market participants picked up the IEO trend, and today we know at least five companies that have already announced the launch of their own fundraising platforms, including Bittrex, Kucoin, Huobi, Bitmax and Exmo.
We seem to be witnessing a new trend that can completely kill ICO and promote crypto exchange tokens.
Author: Vladimir Denisenko
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