Initial Exchange Offerings in 120 seconds: How relevant are they?

The Initial Exchange Offering has been a widely discussed topic within the last couple of weeks. Will they replace ICOs?

IEOs: Existing infrastructure, proven stability?

What are IEOs?

IEOs are nothing more than an Initial Coin Offering organised through an exchange. Instead of deploying an own investor portal, the project uses the infrastructure of an exchange. Hence, people registered on the exchange can directly buy the tokens with their existing account through the exchange.

What are the advantages of IEOs?

IEOs have very relevant advantages for projects selling utility tokens:

  • Using existing infrastructure (efforts for developing an own investor management platform can be saved)
  • Access to already verified investors (Ensuring Compliance through KYC and AML may be cheaper)
  • Access to liquidity (investor pool of the exchange)
  • Reputation (exchange might have an existing reputation that new projects don’t)

Examples of funding rounds through IEOs

Indeed, there are some examples of fast funding rounds through IEOs. A fast funding round apparently is independent from the realization of the project:

  • VeriBlock raised 7 million USD within 10 seconds through Bittrex
  • Fetch.AI raised 6 million USD within 22 seconds through Binance
  • MultiVAC raised 3,44 million USD within 7 seconds through KuCoin

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Will IEOs replace ICOs?

IEOs are very new and answering this question therefore is difficult. However, the advantages provided by IEOs are huge and done correctly by exchanges, they could outperform most of the existing Whitelabeling solutions for ICO platforms, apart from the uniquely developed investor portals.

Nevertheless, the time will show how well IEOs can be integrated with the infrastructure of the market. Exchanges shall follow an open-minded approach in terms of the (de-)centralization trade-off. Otherwise, the benefits of tokens on a blockchain would vanish: e.g. interoperability, global customer pool, decentralized exchanges.

This is no financial or legal advice. Do your own research.

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