IEO (Initial Exchange Offering) means the first exchange offer. It is a fictitious investment method for capital collection that is intended to be carried out through cryptocurrency systems. The IEO implementation serves the same purpose as IPO. In other words, an application is the process of collecting investments by entrepreneurs and companies who want to create tokens or services to generate capital for their business ideas. What is IPO for more detailed information about IPO? you can read our article.
However, the workflow processes of IEO applications are different than those of IPO. We can put it this way; venture owners who can collect investments to generate capital in IPO applications can perform this process through the networks of cryptocurrencies they have determined. They can also trade the tokens they create and collect investments regardless of platform.
In IEO applications, however, investment transactions take place through a designated exchange rather than through a designated cryptocurrency network. Entrepreneurs who want to create capital for their project deal with a stock exchange and provide the public offering of tokens they create on the stock exchange. Users trading on the exchange can make investments by buying tokens created in exchange for specified cryptocurrencies. The project owners pay a certain percentage of the tokens that are made open to investment and sold in the stock market. However, the projects that want to produce cryptocurrencies first raise investment by offering their tokens to the public on the cryptocurrency exchange, and then begin to list the cryptocurrencies that emerge after the success of the project on the same exchange.
However, entrepreneurs who want to generate capital for their projects with IEO do not have to submit smart contracts to their users, as in the IPO application. People who want to invest need to be a member of the stock exchange where IEO tokens are listed.
What are the differences between IEO and IPO?
Although IEO and IPO process processes performed for the same purpose, there are differences between them. We can sort them as follows::
While the platform being airdropped is a stock exchange in IEOs, it can be the website of the token producers in ICOs.
The sales of IPOs are made by the developers of the project, while a cryptocurrency exchange performs the sales of IEOs.
It is the exchange where the token is listed in IEOs, while the party that manages the communication processes with the users related to the smart contracts issued for the use of tokens is the project owners who sell tokens in IPOs.
AML (Anti Money Laundering) that means money laundering and KYC (Know your Customer) that means identifying your customer there are also differences in the implementation of regulations. In IPO transactions, these procedures vary in different projects, I.E. to the decisions of the entrepreneurs who manage the projects.
In IEO applications, these procedures are not required to be specified by token administrators. The stock market can direct its users according to its own AML and KYC procedures.
IPOs may need big budgets to keep hold of the market and raise awareness. IPOs that want to succeed have to move forward by raising money and attracting public attention to the project. Otherwise there is a risk that the project will fail. However, in Ieos, these needs are relatively less. As a matter of fact, the fact that the stock market is already being traded allows tokens to be more advantageous at the point of awareness and potential customer need. Since tokens ‘ markets are already stock markets, they can get their earnings and investments more easily through this channel.
This is how we can summarize the technical differences between IPO and IEO. However, there are also differences that are evident in the eyes of potential investors as a result of their structural differences. First of all, the main reason for the emergence of the IEO is the Prohibition of IPOs in some countries. This method developed after the ban on IPOs in China reduced the risk of fraud. As a result of this, we can also list the more prominent features of IEO projects as follows::
Trust
IEOs are more trusted than IPO projects. The main reason for this is that IEO tokens are offered to the public on a certain stock market as a result of certain contracts. In this process, confidence in the project strengthens with confidence in the stock market where tokens are offered to the public. As a matter of fact, the stock markets do not want to approve projects that will damage their own reputations.
To give an example, the IEO project that the RAID company wanted to perform was cancelled a few hours before the start of the project by the exchange, which was agreed for the realization of the project. Raid as reason for cancellation of stock market $ 6 million funding supply OP.GG(the site is about the game called ‘League Of Legends’) he suggested that his partnership with his firm had ended. Here the stock market has taken such a decision to protect the interests of its users and its own reputation.
Security
They don’t have to worry about community safety, as the supply through ieos is run by cryptocurrency exchanges where smart contracts list tokens. As the process of regulating and implementing KYC and AML protocols is also managed by the stock markets, which already have a reputation in the markets, more high-level security projects are emerging. People who create membership in the stock exchange and trade for tokens may have more convenient access to information. This makes the supply with IEO more secure than the supply with IPO.
We can say that the points mentioned above are the factors that will make the users who want to invest in projects through tokens more positive in their view of IEO projects. In addition, if we look through the window of the projects that want to raise capital by performing an IPO, we can see differences between Ieos or IPOs and the projects realized.
Listing Of Cryptocurrencies
Cryptocurrencies for projects carried out with ieos are listed on the stock exchange after the successful completion of the project by the cryptocurrency exchange, where the IPO process is conducted, and can be traded by the users. We can say that there is a huge advantage in terms of projects conducting an IPO process through ieo to create cryptocurrency.
Marketing Advantage
Projects that supply their tokens to investors as a result of agreements with the cryptocurrency exchange pay a certain percentage of token sales to the exchange depending on the terms of the agreement. Even if this seems to increase the cost in the first place, cryptocurrency exchanges provide great marketing benefits for the sales that are being traded within their own bodies. This saves the projects some of the expenses that would have to be allocated for marketing if the process was carried out through the IPO. For this reason, Ieos for projects can be considered more reasonable than IPOs.
People who want to invest in promising projects through ieos wonder how they will be involved in this process. We can also list the following articles, which consist of several titles and which will carry the nature of a guide.:
1. You have to identify an IEO project that suits you and you will want to invest in. You can do this by doing a simple research on the internet.
2. You should then find out which stock market you are performing token supply through the IEO you have identified.
3. Create an account on the stock exchange and complete KYC and AML verification procedures with the requirements that the stock exchange requires of you.
4. Obtain the amount of investment you want to make from the accepted cryptocurrency so that you can receive the IEO tokens in the future.
5. Finally, make your investment by taking a token with the cryptocurrency in your balance.
We tried to explain all the points about IEO that were curious or need to be known.
Thank you for reading.
