Initial Exchange Offering (IEO) is the newest fundraising strategy for the blockchain startups where authentic Cryptocurrency exchanges govern the processes on behalf of the token issuers. Raising funds via IEO is nowadays the most trending and it is having the potential to change the way one looks at the token-based fundraising. Under an IEO, the tokens are released only on an exchange platform. In an ICO, you can pay the project owner directly by sending payment to their account or wallet address, while in IEO, you need to be a user of the exchange on which the project is launched and you need to buy tokens through their account.
IEOs are similar to STOs on certain aspects, but the biggest advantage of IEOs over STOs lies the better liquidity provided by the exchange for users trading right after the IEO as a large user base is already guaranteed. Technically, ICO and IEO are the same, it is the same type of token that you release through either of them. The difference is in the vehicle through which the tokens are purchased, in ICO, it is directly purchased from the projects owner. And in IEO, exchange works as an escrow.
Benefits of IEO
- As the project goes live after thorough screening by exchange platform providers, it brings more trust in the IEO project tokens for investors. More and more investors invest in the project, thereby making the companies raise more funds.
- It is not open for public sale and yet it draws a significant number of investors through the existing user-base of exchange.
- It is much easier for a project to be listed as an IEO an exchange as compared to driving an ICO campaign all by yourself.
- No need of doing following the traditional listing process