How Is An IEO Different From An ICO?

Jump to page contents

How Is An IEO Different From An ICO?

Initial Exchange Offering (IEO) is the process by which a token offering is carried out through an exchange instead of directly to the investor. The exchange agrees to check the financial and legal aspects of the token, and, if approved, launches the sale directly on its platform. IEO is, technically, a type of ICO, however, it is much safer, whilst also limiting the number of potential users to those registered with the particular exchange.

Intermediary

While an ICO is normally free of intermediaries and therefore more aligned with the philosophy of the creator of cryptocurrencies, an IEO relies on dedicated exchanges, such as Binance IEO, to be the intermediary between issuer and investor. This platform carries out due diligence, ensuring that the blockchain startup is duly registered, has the necessary documentation and is in a sound financial position, amongst many other criteria.

Once an investor buys tokens launched under an IEO, the funds are transferred to a particular wallet under the management of the exchange. Funds are then split amongst several tranches, such as the development of an MVP, marketing, and product development. The exchange oversees that the startup uses the funds for each tranche appropriately. In various scenarios where the exchange is not satisfied with the startup’s performance, it can choose to return the remaining funds back to the investors.

Safety

As a result of having an intermediary, an IEO is distinctly safer than an ICO. The industry has been scarred by numerous ICO scams, which create distrust amongst investors. To date, there have been no reports of IEO scams, and start-ups who launch tokens through IEOs have a higher success rate than those that launched ICOs. This safety factor encourages external investment, and could also encourage financial agencies to support IEOs in the future.

KuCoin’s IEOs, for example, are generally always given between good to excellent ratings by investors, confirming their satisfaction of the entire process and result. Such exchanges also alleviate some of the research which investors would otherwise need to do when investing in ICOs. The fact that an exchange has approved a particular IEO is, within itself, a vote of confidence for the coin.

Transparency

When launching ICOs, depending on the jurisdiction, businesses do not need to divulge extensive information about the company and its owners. In fact, quite a number of ICO launches consists mainly of a website, a whitepaper and a fundraising platform. Perhaps inevitably, this has led to millions of dollars worth of fraudulent offerings. On the other hand, an IEO requires businesses to be extremely open and transparent with the cryptocurrency. 

A reputable cryptocurrency exchange, such as OKCoin, would be extremely cautious before accepting any coin offering which could damage its reputation. Apart from carrying out due diligence, both issuers and investors go through verification processes which confirm their identity and allow the exchange to comply with money laundering and terrorist financing regulation.

Recently Similar Guides

casinoin-promotion etoro-promotion

Latest Guides

Exchange Platforms,Forex,Trading

What are Pips in Trading?

What is a Pip? A Pip is the smallest price movement between two assets being traded on an exchange. Pips are traditionally used in foreign exchange markets where trading pairs are expressed to the fourth decimal place. The word is short for ‘Percentage in Point’ or ‘Price Interest Point’.  One Pip is the equivalent of […]

25 March, 2020
CFD Trading Platform,eToro,Investment

What is Copy Trading?

Market trading was once a financial investment option which was limited to high net worth individuals and institutional investors. Over time, markets started opening up and began attracting smaller, non-professional investors. The introduction of online trading made this type of investment an option for a greater global audience, thanks, in part, to the significant reduction […]

23 March, 2020
Cryptocurrency,Stablecoin,Trading

What are Stablecoins Used for?

If you’re following what’s been happening in the bitcoin trading scene for the last couple of years, you’ve probably heard about the term ‘stablecoins’. It seems that the trend of creating this type of cryptocurrency has been on the rise lately, as many analysts agree, they indeed seem like a step forward in crypto research. […]

4 February, 2020
Cryptocurrency,Gambling,Gaming

Is Cryptocurrency Changing The Online Gambling Industry?

The gambling industry is just one of many that the internet has radically transformed. Gambling is no longer just for the elites in exclusive clubs, it’s something the everyman can do on his phone from the comfort of his own home. Nowadays, gambling is in the midst of another transition, brought on by the rise […]

14 January, 2020
Beginner,Cryptocurrency,Investment

Top 5 Cryptocurrencies To Invest In 2020

It has been another eventful year for cryptocurrency, with significant price movements amongst the top 10 tokens and plenty of heated discussion on the future of the technology. One of the year’s biggest news was Facebook’s Project Libra, which promised to bring about mainstream adoption of digital currencies. Notwithstanding all good intentions, this and other […]

24 December, 2019
Cryptocurrency,eToro,Intermediate,Trading

Trading Crypto On eToro

Set up in 2007, eToro became a leading trading platform across the world. Offering investors access to several markets and asset classes, the platform attracts a mix of novice and experienced users, eager to generate a return from their individual strategies. Cryptocurrencies are one of the latest tradeable markets to be added to the platform. […]

23 December, 2019
Beginner,Bitcoin,eToro

Trading Bitcoin On eToro

Bitcoin is the world’s leading cryptocurrency, with a market cap of over $134 billion and a daily trading volume averaging $21 billion. Millions of people around the world want to get their hands on the first and largest cryptographic currency, but choosing the right place can be tricky. The web has thousands of cryptocurrency exchanges […]

22 December, 2019
Beginner,Ethereum,eToro,Trading

Trading Ethereum On eToro

eToro is one of the largest online trading platforms in the world, supporting a variety of markets and financial instruments. Along with a useful trading app and one of the most comprehensive lists of payment methods, the platform gives you access to buy and trade numerous cryptocurrencies, amongst which Ether, more commonly known as Ethereum. […]

17 December, 2019