What Is an Initial Exchange Offering IEO?

OK, Jumpstart uses a subscription and allotment model that is determined before the actual sale that limits the number of sales that can be conducted. Participants are allowed to purchase https://www.xcritical.com/ more of the IEO’s tokens if they have more OKB tokens held in their accounts. A total of 50 billion tokens were sold out in less than 15 minutes for a total value of over $7.1 million. There were two sessions in which users could participate; one for purchases using BNB tokens and the other using TRON tokens.

What Are Initial Exchange Offerings (IEOs)?

Most Initial Coin Offering “rules” are feasible with Initial Exchange Offerings, yet additionally the conditions and arrangements between tasks are for the most part not the same as each other. Exchanges expect engineers to put a hard top and a delicate top to their activities, for a more noteworthy consequence of the Initial Exchange Offering. On the off chance that there are such a large number of coins sold, the token economy is bound to fall flat from the begin. The IEO projects themselves have ieo meaning also learned not to have such extreme or uncapped funding rounds.

What Is an Initial Exchange Offering (IEO)? A Comprehensive Guide

Though not all projects are interested in being traded, many are and by doing an IEO, getting listed on a major exchange is an automatic process that happens after the IEO is completed. BitDegree aims to uncover, simplify & share Web3 & cryptocurrency education with the masses. Join millions, easily discover and understand cryptocurrencies, price charts, top crypto exchanges & wallets in one place.

The IEO: An Evolution of the ICO

ICOs were famous for their open participation model but suffered from numerous scams and regulatory issues, leading to a decline in their credibility. This necessitated a shift towards IEOs, which are hosted on established exchange platforms that vet projects and offer investors a layer of security and trust. An IEO is a collaboration between crypto projects and cryptocurrency exchanges, where the exchange conducts the token sale on behalf of the project and lists the tokens immediately after the sale. This setup not only helps ensure a smoother and more regulated transaction but also provides the projects with an immediate market presence. Most Initial Coin Offering “rules” are viable with Initial Exchange Offerings, but also the conditions and deals between projects are mostly different than one another.

• The RAID team had a major partnership that was canceled before the IEO event, so Bittrex decided to cancel the offering.
• Unlike its predecessors, the IEO introduces a new paradigm, blending the excitement of crypto investments with enhanced security and credibility.
• In general, if you believe that an exchange is trustworthy, there is a reason to believe that it will select projects that have some degree of trustworthiness or credibility.
• Though IEOs are more restricted than ICOs, it does not mean that they are safe from regulators completely.
• An IDO is a fundraising method in which a coin or token is issued via decentralized exchange (DEX).
• Attempting to get funding from venture capitalists (VCs) can be time-consuming, with little or no results to show for it.

This significantly reduces risks for investors and the time spent by investors on their own analysis of the proposal. Just because the IEO exists, it doesn’t mean that everyone should invest in these offerings. Doing your own due diligence is advised at all times, regardless of how companies and projects aim to raise funds. There are benefits to contributing funds to an IEO, but the risks cannot be overlooked either. There are thousands of cryptocurrency and blockchain projects in existence or under development. Most projects require some sort of financial incentive to keep developers and contributors engaged.

The main difference is that instead of taking place on a random website, sales of new tokens take place on a trusted site. Last but not least, a token that has been sold through an IEO is usually listed on the exchange shortly after the conclusion of the token sale, providing liquidity and easy access. With ICOs, the counter-party is the developer, however with IEOs — the counter-party is the exchange platform in subject. So in order for investors to participate in the Initial Exchange Offering, they need to create an account with the exchanges. Instead of contributing Bitcoin, Ether or other cryptocurrency to the Smart Contract of the Initial Coin Offering, investors need to send the currencies to their exchange account.

First, they get access to an exchange’s existing userbase and marketing capabilities. This is also beneficial for the users, as they don’t have to pass additional KYC/AML checks if they are already a verified user on the exchange. Huobi Global is one of the longest-running crypto-asset exchanges in the world having started in 2013. The limits of what participants are allowed to purchase during the IEO are also directly tied to how many HT they are holding for a certain period of time. If you are aware of what is IEO in cryptocurrency there are no concerns that IEOs bring a heightened level of security to the table.

The first major exchange to offer an initial exchange offering and popularise this practice was Binance with its IEO platform, Binance Launchpad. In January 2019, Binance launched its first IEO, the BitTorrent Tokens (BTT) sale, where tokens sold out in less than 18 minutes and raised over $7.1 million. A few days later, the new token was added to Binance’s listings and almost immediately showed a price increase of over eight-fold. BitTorrent’s successful token sale on the most popular cryptocurrency exchange set off a chain reaction. Other crypto exchanges also indicated their intent to host similar asset offerings and began to attract promising blockchain startups.

Peter’s main crypto interests are censorship-resistance, privacy and zero-knowledge tech, although he covers a broad range of crypto-related topics. He is also interested in NFTs as a unique digital medium, especially in the context of generative art. After reading all of this you are probably wondering, why are Initial Coin Offerings more popular than IEOs. These problems are mostly unsolved as of now and that’s why CEOs of top exchangesmostly decline doing IEOs. No exchange wants to undermine their credibility, because of a project’s IEO, apparently, exchanges have no power over the developers and if they will deliver on the product. For example, Binance requires participates to use Binance Coin, Huobi requires participants to hold Huobi Token for a certain amount of time, and OKEX requires OKB tokens to be held.

Once the offering is complete, tokens typically become available for trading on the exchange. As the name suggests, an Initial Exchange Offering (IEO) involves the use of a cryptocurrency exchange to raise funds for a new project. It is common to trade assets on these platforms, but that typically only happens after the developers raised money to kickstart their projects. This shift marked a significant development in how crypto projects raised funds, offering a safer investment environment​. The fundraising journey in the crypto space has evolved significantly over the years, moving from largely unregulated ICOs to more structured and secure IEOs.

The IEO tokens will be freely available for trade on the main Huobi exchange after the supply of tokens from the IEO get sold out, or three rounds of IEO trading are completed. For example, the effect of Bitcoin Cash getting listed on Coinbase and Bitcoin SV getting delisted from major exchanges had a profound impact on their prices. For example, during the Brave ICO, $35 million worth of Basic Attention Tokens (BAT) sold out in less than 30 seconds.

One of the primary concerns with IEOs is the heavy reliance on the exchange’s vetting process. While exchanges do conduct due diligence, their criteria and thoroughness can vary. This puts investors in a position where they must trust the exchange’s judgment, potentially overlooking their own research and risk assessment. The first major exchange to offer the IEO and popularize the practice was Binance through their IEO platform called Binance Launchpad.

It is likely that being on an exchange from the start will bring more types of investors who would not have normally participated if it involved a direct, smart contract interaction. The user experience of an exchange is far more familiar to most people than participating in a pure ICO. Many of the top exchanges who are hosting IEOs have different requirements that involve holding or using their own platform tokens in order to participate in the IEO.

When developers of a cryptocurrency project decide they want to organize an IEO, a complicated procedure must be followed before the first dollar can be raised. Because an IEO is facilitated by an exchange, the startups opting for this route have to be serious about their plan of action. In most cases, the IEO proposal is rigorously reviewed by the participating exchange.

The drawbacks of IEOs – gatekeeping, opaque vetting processes and listing fees – have attracted some projects to initial DEX offerings. IEOs are directly listed on the exchange, meaning that new projects have access to a large, highly liquid market. That allows the project selling the tokens to enjoy access to a rapt audience already interested in buying new tokens and enables the possibility for sales to be boosted by the marketing power of the exchange.