INITIAL EXCHANGE OFFERING (IEO)
Initial Exchange Offerings (IEO) is a form of blockchain crowdfunding in which a crypto exchange provides blockchain startups with a platform to issue tokens and raise funds from investors. In this way, IEOs allow companies to raise capital by selling utility tokens on an exchange. An IEO provides additional protection for investors, since IEOs are subject to verification by the crypto exchange.
The initial exchange offering (IEO) approach is strikingly similar to the initial coin offering (ICO) crowdfunding model, except that in an IEO, the exchange facilitates the sale of tokens rather than the startup doing it on its own.
| ICO | IEO | |
|---|---|---|
 Fundraising takes place at | Website of token issuers | Exchange platform |
 Crowdsale counterparty | Project developer | Crypto exchange |
 Smart contract is managed | Startup conducting the sale of tokens | Crypto exchange |
 AML/KYC required by token issuer | Yes, this may vary between different projects. | Not necessarily – the exchange conducts AML / KYC in relation to its users |
 Marketing budget required for fundraising companies | Much higher, the project will have to invest a lot of resources to attract the attention of the public | Relatively low – the exchange actively sells startup tokens |
 Validation is required before a startup can launch a crowdsale | No – anyone can launch an ICO (in a country where it is legal) | Yes, the exchange vets a company before allowing it to raise funds on its platform |
 Automatic listing of tokens after the crowdsale | No – anyone can launch an ICO (in a country where it is legal) | Yes – exchanges provide automatically |
The main stages of the implementation of the IEO project
1 STAGE
BUSINESS PLAN PREPARATION
Development of the idea, verification of its feasibility, conducting a survey of market needs and position, analysis of the budget and investment plan for the launch of the IEO. This whole process requires proper planning and experience in the relevant project niche. Moreover, consulting with field and market experts can help to better analyze the scope of application.
2 STAGE
PRE-IEO STAGE
Choosing a crypto exchange platform to submit an IEO project. Creating a detailed and detailed presentation will increase the chances of being selected by a crypto exchange. After choosing an exchange platform, it is necessary to draw up a proposal document in order to submit it to investors. This document should contain everything from purpose to market overview, statistics and figures to development strategy, road map to investment overview, budget to future scope.
3 STAGE
IEO
Creation of a paper copy of financing for investors. Once the token is minted, the next step is to list that token on your chosen crypto exchange platform. If this exchange chooses your project idea and you pass the KYC and AML stages, your tokens will be listed on the exchange platforms.
4 STAGE
POST-IEO stage
At this stage, your tokens are listed on the exchange. At this step, the promotion of the product in the market is very important, namely the use of marketing strategies.
Marketing strategies for a successful IEO
СCreate a highly optimized, mobile-friendly website
Your website is your first impression. A good first impression can attract the attention of the crypto community.
Marketing in the field of mass media
Social media marketing is a great way to start your IEO development from scratch. It allows you to reach your target audience when interacting through social networks allows you to interact with investors around the world.
Public relations for IEO
Relations with journalists and media organizations can also help in creating traditional press PR. Of course, paid press release services can also help increase the awareness and visibility needed to develop your IEO.
Influencer marketing
Influencer marketing plays a big role in promoting IEO startups further. The crypto community is a niche group of well-connected people. By building successful relationships within that community, you can determine where maximum participation is possible.
Listing on several stock exchanges
Choosing the right platform to list your IEO is very important. This gives the project the best chance of fundraising. Listing on leading exchanges will automatically demonstrate to the community that your IEO development is trustworthy.
Advantages of IEOs
IEOs are considered more reliable than ICOs. This is because exchanges must thoroughly vet a potential project before allowing the project to go live. Supporting a questionable project will negatively affect the trust in the exchange that they have already established with their customers.
Another plus of using an IEO to launch digital tokens is that the token is available for trading earlier than an ICO. With an ICO, there is a possibility that the token may not even make it to the exchange. But with the IEO, the project’s tokens are available for trading within a week.
In addition, the exchange promotes the project, thereby presenting it to many potential investors. This significantly increases post-launch volume and lowers start-up costs.
When you partner with an exchange to issue an IEO, you benefit from the listing, marketing and investor vetting services they provide. In addition, the IEO platform (exchange) manages all smart contract transactions, providing the best security for both the token insurer and investors.
Moreover, users do not need to go through additional KYC procedures as they have already been verified by their exchange.
| Factors for comparison | IEO | ICO |
|---|---|---|
| Speed of trade | Trading is fast. | It takes a lot of time, because it is necessary to analyze the project |
| Token reliability | The exchange guarantees the reliability of the token and the issuer. | The investor must ensure the reliability of the token. |
| Promotion | The exchange will take care of advertising activities. A company can also promote an IEO by listing on private exchanges or sharing links to exchanges. | It is necessary to reach a large number of people, spending a lot of time and effort. |
| Security | Higher security as the exchange verifies the project, otherwise the reputation of the exchange will be affected. | The investor must make sure of the security himself. |
| Risk | The exchange checks the validity and relevance of the project to protect the reputation of the exchange. | The investment is a bit risky as the project may be fraudulent or without any legal backing. |
| Liquidity | Higher liquidity as exchanges confirm the project by reviewing the white paper and this will attract investors. | Less liquidity as investors need to invest additional time and effort. |
| Transparency | A higher level of transparency, as the company must provide a technical document with a detailed description of all information related to the project. | Less transparency. The company provides the least number of documents. |
