Initial Exchange Offerings Keep Rising, Surpass Half a Billion in Funds Raised for Blockchain Projects
- Initial Coin Offerings (ICOs) are no longer as popular due to the large number of scams associated with them and lack of regulatory clarity.
- The number of Initial Exchange Offerings (IEOs), an improved version of ICOs, have increased according to reports.
IEOs vs ICOs
Unlike ICO (Initial Coin Offering), IEOs is not open to the public. You’ll have to be a user of the hosting exchange to participate in the token sale. While ICO allows any contributors to buy the token for sale by sending funds into a specific address, IEO requires contributors/users to buy the token with the exchange’s accounts.
There are numerous advantages of IEOs. The problem with ICO was that it was not monitored by any third parties. Essentially, anyone can launch an ICO, as long as you have a whitepaper to convince investors to put funds to your company.
Not only will the exchange help the customers to review the projects and filter out scams, but it also provides better liquidity for trading afterward as a large user base is already guaranteed. The exchange will also offer a valuable platform for contributors to manage their funds as all assets can be stored in the exchange account instead of different wallet addresses.
As seen in the above graph, IEOs are a force to be reckoned with. They are catching up with the VC firms and ICOs, which is on the decline.
Although investors have to do their own research before participating in the IEO. Mati Greenspan, eToro Senior analyst at eToro says:
“People feel that since the exchange does not wish to be associated with a scam, they’re more likely to do their homework before becoming associated with any given project.”