What is Initial Exchange Offering (IEO)?
Let's find out Initial Exchange Offering (IEO) meaning, definition in crypto, what is Initial Exchange Offering (IEO), and all other detailed facts.
IEO is a type of crowdfunding in which cryptocurrency start-ups raise money through a trading platform. It is the opposite of the initial coin offering (ICO) which is when businesses attempt to raise interest in their projects on their own websites (it was banned in China in 2017). Binance Launchpad was one of the first IEO platforms to start in the sector, and many competitors rapidly followed.
IEOs take place on a cryptocurrency exchange on behalf of the company issuing new tokens. To fundraise on the exchange, start-ups are charged a fee and a certain amount of sold tokens. Following the completion of the IEO, the tokens are placed on the exchange, which helps to increase the company’s visibility in the eyes of investors. Participants send donations through the platform that hosts the IEO, as opposed to ICOs, where contributions are delivered to smart contracts.
Transparency and trust are the biggest advantages of IEOs. Scams and potential fraud is less likely to happen with IEOs than it is with ICOs because the token sale is conducted by a regulated cryptocurrency exchange.
Under an IEO, token issuers are not responsible for managing the crowdsale security, and they may take advantage of the exchange's large client base to attract more investors. In addition, Know Your Customer and Anti-Money Laundering processes are also conducted by the exchange rather than by the token issuer.
However, even though IEOs are more credible than ICOs, they might involve high expenses in exchange for enhanced safety and visibility.