An IEO or Initial Exchange Offering is a fundraising project for crypto assets which is supervised by an exchange. In fact, an IEO relies on an exchange as the counterparty. Developers mint the tokens of the specified project and send them to the exchanges, which then sell those tokens to the individual contributors. As the token sale takes place on the platform of the exchange, the token issuers are required to pay a separate listing fee, along with a certain percentage of the tokens sold during the conduction of the IEO.
On the other hand, the crypto startups get to sell their tokens and do the listing of their coins after the IEO is completed. A percentage of these tokens which are sold by the startups are taken by the exchange, which is incentivized to help with the marketing operations of the token issuers. To send contributions, the IEO participants need to create an account on the exchange’s platform where the IEO has taken place. The exchange wallets are then funded with coins by the contributors and the funds are then used to buy tokens for the fundraising company.
How to Participate in an IEO?
The first step to participate in an IEO is to find out whether the project you intend to crowdfund is conducting an IEO or not. After that, you need to do the following.
Look for an ongoing IEO token sale
Find out which exchanges are hosting the IEO as there may be multiple of them hosting the IEO. This has become very easy now, given the fact that most of the crypto projects are abandoning the old ICO (initial coin offering) model.
Before engaging in any kind of investment, it is of utmost importance to do thorough research on the project, and the same rule applies to the crypto projects as well. You need to check things like the authenticity of the projects, be familiar with the project team with whom you will be working in the future, know the exchanges which will be the supporting the said IEO, and lastly, you need to check whether you can sign up on the exchange without any limitations whatsoever.
Fulfill The KYC Compliances
Comply with the KYC (Know your customer) and whitelisting procedures of the exchange and create an account on the exchange’s platform. Some exchanges have a very stringent KYC policy, so you need to check them too.
Register with the exchange
If you are satisfied with the exchange and also have checked with the cryptocurrency that will be accepted at the token sale, you can now create an account with the crypto exchange.
Fund Your Wallet
Fund your account appropriately by checking in the exact cryptocurrencies that will be accepted by the exchange.
Once you have completed all the above steps, now it is time to wait for the scheduled date of the IEO to start, and then you can participate in the IEO by purchasing the tokens.
Advantages of an IEO
The most striking advantage of an IEO lies in the fact that it is organized on reputable exchanges, and so there is zero chance of fraudulent involvements. Other benefits are discussed hereunder.
IEOs are easy
IEOs are easy to participate in. All you require to do is create an account on the platform of the exchange that is hosting the token sale, fund your wallet with the appropriate cryptocurrency that will be accepted at the token sale, and buy the tokens when the IEO goes live.
IEOs have a large user base
IEOs do not need extensive marketing and therefore, it benefits the token issuers to a manifold. Instead, the IEOs are conducted on already established exchanges that have a large user base. Therefore, the project team does not have to shed a hefty amount to reach users.
IEO model for crowdfunding, therefore, has a huge potential to help genuine token issuers to raise the required funds for their projects. However, to attain this, both the project team and the exchange need to work very hard to accomplish their goals.