An ICO is an initial public offering, whereas an IEO is a first-time public offering for those who are acquainted with the cryptocurrency sector.
There are an increasing number of start-ups focused on Blockchain and cryptocurrency. Fundraising and recruiting developers and collaborators are two of the most important steps in any project’s beginning.
In order to raise money, there are a variety of options, including venture capitalists and pre-mining. However, not one of them is adequate.
In this article, we will find out the differences between ICO and IEO and how each of them plays a key role.
What is ICO Crypto?
In ICO crypto, a crypto currency platform serves as a broker between start-up businesses searching for crowd funding and investors interested in investing in these initiatives. Initial coin offerings (ICOs) may be characterised as a transaction that takes place using a well-known method of trading digital currency.
Even while ICO crypto is one of the quickest and most convenient methods to generate money via a public sale, it is also one of the least safe. However, after seeing a quick spike in popularity, ICO crypto lost its steam, which was caused due to the lack of regulations.
Regulators and law enforcement agencies have taken a closer look at ICOs because of a number of ICO frauds. Due to their hazardous and fraudulent character, ICOs have been fully outlawed in China and South Korea.
Due to the number of frauds, investors lost interest in making new investments and this led to the collapse of the cryptocurrencies in 2018.
What is Ieo Crypto?
IEOs and STOs, two new fundraising mechanisms, were developed in an effort to get investors back into the blockchain business.
An IEO (initial exchange offering) is a new and popular technique of raising money in the cryptocurrency world. As a result of a lack of confidence in initial coin offers (ICOs), IEOs are conducted with the same goal, but using a different platform.
Crypto-token sales are handled by an IEO, which handles the exchange of new cryptocurrencies in exchange of more established currencies like Bitcoin or Ethereum in order to raise capital and promote potential new businesses.
Instead of running the crowd-funding themselves as in an ICO, IEOs offer new crypto-tokens on their exchange platform and allow investors to acquire these tokens in order to raise funds.
Advantages of Ieo Crypto
In spite of the fact that IEOs resemble ICOs, they are more secure and trustworthy. ICOs have been phased out in favour of IEOs, which use an exchange platform to provide greater security and confidence in the crowdfund raising process. The ability to put your trust in IEO crypto is one of their best strengths.
On a cryptocurrency exchange platform, the exchange examines the whitepapers of the project that wants to create an IEO on their website to check if the project is viable enough. To keep their good reputation, exchanges accomplish this by thoroughly screening their tokenomics, marketing and product.
This means that fraud and suspicious projects can no longer raise funds using cryptocurrency exchange platforms, and it is far more difficult to swindle investors with IEO.
IEO’s smart contract is managed by the exchange, so token issuers don’t have to worry about crowdsale security. Following the creation of a crypto exchange account, most service providers conduct KYC/AML checks on their customers.
While the token issuers have to pay some fees and a portion of their tokens to be listed on the exchange, the exchange will assist them with marketing. As a result, firms launching IEOs require a lesser marketing investment than those launching ICOs. Furthermore, token issuers may take use of the exchange’s dependable client base to increase the amount of money they get for their initiatives.
Because token listings are “in the agreement,” it’s only logical that the crypto exchange where the IEO is hosted publishes the startup’s coin once the crowdsale is completed.
Difference between ICO and IEO Crypto
IEO Involves an Exchange
In contrast to an ICO, an IEO involves a crypto exchange acting as a middleman between the token issuer and buyers.
The exchange platform examines all aspects of IEO projects and selects those with aims that are both attainable and in line with market demand. The exchange is putting its credibility on the line, therefore it’s fair that they’re picky about which IEOs they host.
The tokens are offered on a cryptocurrency exchange platform, and buyers are limited to those who use that exchange. They can purchase tokens by financing their exchange platform wallet. The key distinction between IEO and ICO is that IEO includes a third party.
IEO is Transparent
Crypto exchanges need start-ups to perform a Due Diligence exercise as part of the IEO process. As a result, they must reveal every information about their project, including project members, corporate information, and so on. They must also complete the KYC procedure to authenticate their identity.
This makes it more difficult for scammers to use fundraising tactics.
To the contrary, token issuers are not required to reveal full corporate information during an ICO. They merely set up a website and distribute a whitepaper. They may then open their ICO site and begin selling tokens to the public.
You can view the issue here. Anyone may start an ICO and raise funds. What if fraudsters and scammers try to take advantage of the ICO to gain a lot of money and then vanish? Perhaps you now see why IEO was created.
IEO Pushes towards Centralization
The IEO processes are controlled by crypto exchanges, and the tokensale takes place on their platforms. This implies that if their user base grows, they will be able to hold more IEOs since they will be able to generate more funds than the others.
Furthermore, individuals are more likely to trust trades with a good reputation. Those with a significant user base and are well-known.
This might lead to the creation of a centralised market. Only a few exchanges would be IEO hosts after a period, and they will dominate the economy.
This is similar to our current centralised banking system. The flow of money is controlled by central banks.
This is not possible for ICOs because they are not managed by a third party.
Gas Vs. Lottery
In most ICOs and IEOs, the token sale takes place in a fairly short period of time. It might be over in a matter of minutes. As a result, many people who wish to participate in the tokensale may be unable to do so.
The ICO and IEO have distinct approaches to dealing with this problem.
The concept of “Gas Wars” was devised by ICO. “Gas” refers to fees that are overvalued by investors.
They do so in order to be one of the first investors, which allows them to take advantage of a discount.
The size of the discount is determined by how early they join the initiative.
IEO employs a superior alternative to handle this problem, namely a lottery. Those who win a ticket at random can purchase tokens from the first bidders.
Leading Crypto Exchanges for IEO’s
1. Binance Launchpad –
Binance Launchpad is a token launch platform developed by Binance, one of the world’s biggest cryptocurrency exchanges, that focuses on giving blockchain start-ups with the information, networking, and everything else needed to raise capital via an IEO.
2. OKEx –
OKEx announced the upcoming launch of a brand-new IEO (initial exchange offering) platform. The new platform, called “OK Jumpstart,” intends to incubate high-potential ventures and encourage early entrepreneurs. Since the introduction of the OKNodes platform in July 2018, OKEx has been doing research on various token launch strategies. The IEO approach is seen to be a great way to kick-start high-quality ideas and early entrepreneurs. Project teams will be able to concentrate on project development and community management since they will save time and money on being listed on exchanges.
3. Huobi Prime –
It goes without saying that Initial Exchange Offerings (IEO) are catching up. Following the popularity of Binance’s Launchpad platform, other exchanges have joined on board, establishing their own variable solutions. Huobi Global was no different.
Huobi Prime is Huobi’s own token listing platform, and it claims to be distinct from Binance Launchpad and other options.
4. Bittrex International –
Bittrex International is a token launch platform operated by the Bittrex exchange.
Each applicant for an IEO on Bittrex International is subjected to an IEO approval procedure, which ensures that only the highest-quality, most creative token projects conduct IEOs on Bittrex International.
5. Kucoin –
The KuCoin platform was created for all sorts of investors, offering 24/7 world-class services in your favourite channel and language.
The Cryowar (CWAR) project will be the 15th IEO sale on KuCoin Spotlight on November 10, 2021, according to the Kucoin exchange. A proportionate distribution methodology will be used for the CWAR token sales round (PDM).
6. Coineal –
A large exchange with a daily trading volume of almost $700 million and a foothold in Southeast Asian markets with investors from China, Japan, Korea, and Vietnam.
7. Exmarkets Launchpad –
One of the race’s newest aggressive exchanges. The platform includes nine completed IEOs, four current IEOs, and three planned IEOs.
IEO is a safer and more stable investment mechanism than an ICO, but keep in mind that IEOs are not without danger.
The reason for this is because, while exchanges do Due Diligence, this does not guarantee that all scammers will be detected.
So, if the project turns out to be a fraud, they don’t promise to refund your money.
You also don’t have to overlook the vulnerability of crypto exchange platforms to hacker assaults.
Despite the fact that the Initial Exchange Offering (IEO) is a new fundraising strategy, it is quickly displacing the Initial Coin Offering (ICO).
It will undoubtedly be the finest fundraising approach that alters crypto banking in the long term.
Quick Read: ICO Bounty Marketing: Learning about the role of Bounty Programs