IEOs
In the previous module we dealt with the topic of STOs, giving examples and comparing them with ICOs. Now is the time to examine the phenomenon of IEOs and its traits, as well as to talk about how they differ from STOs.
Definition of IEO
IEO stands for “Initial Exchange Offering”, and allows crypto companies and startups to raise money by selling tokens directly to the public through a cryptocurrency exchange. IEOs represent the maturation of the ICO phenomenon through the inclusion of a crypto exchange within the fundraising process. This type of funding represents a certain type of guarantee for an investor, because it is managed and therefore regulated by an exchange. However, it comes at the expense of disintermediation. In a nutshell, the exchange acts as a middleman between the project and potential investors. The exchange reviews the project and its business plan and conducts due diligence to ensure the project is legitimate and potentially valuable.
Many people argue that IEOs are something in between ICOs and STOs, at least when it comes to the launch process. Indeed, the preparation process of IEO is very similar to that of an ICO, with the difference that each project undergoes scrutiny by a crypto exchange, which means an additional layer of security that brings it closer to an STO. Not to be misunderstood, STOs are still considered to be the most regulated and compliant form of fundraising. However, today, participating in an IEO through a historically reliable exchange represents at least a minimal form of guarantee, which did not exist with ICOs.
Gate.io Startup Program
Gate.io Startup is a fundraising platform for blockchain startups that allows users to find emerging projects and cryptocurrencies to be listed. Gate.io periodically launches airdrop activities in the Startup area as a way of rewarding its users. Users of Gate.io VIP may participate in Startup projects in exchange for airdrop tokens, for which users do not actually need to pay, but they must still have enough USDT in their spot accounts. After the subscription is made and the snapshot is taken, qualified participants will receive airdropped tokens.
The Gate.io crypto exchange is one of the oldest in the world, operating since 2013 and considered to be one of the most reliable in the crypto space. More than 500 projects have received funding thanks to its Startup program, and among them, several cryptocurrencies had their prices jump more than 100 times after being listed.
One of the most successful IEOs on this platform is GateToken (GT), which is the native asset of GateChain and the utility token of Gate.io. The value of GT is closely related to the development of Gate.io and the GateChain ecosystem. Owners of GT are entitled to a number of privileges, such as increasing their VIP status, voting on coin listings, paying transaction fees, taking part in many bonus activities, and more.
IEO vs STO
As we have already mentioned, IEO is a kind of evolution of ICO. The exchange needs to approve and specify the requirements that the project must achieve to access its users before an IEO project may be launched. Additionally, tasks have to go through a series of requirements established by the exchange to be listed on the portal. Furthermore, because an IEO is expected to issue utility tokens that are linked to a project/platform, they should not be subject to regulation by securities agencies, as is the case with STOs. Let’s not forget that tokens issued through STOs are considered securities, so they must be subject to greater scrutiny.
Based on this brief comparison, we can start analyzing some of the advantages and disadvantages that IEOs and STOs have with each other. Let’s look at them below:
PROS of the IEO compared to the STO
| CONS of the IEO compared to the STO
|
How to Develop an IEO
Here are some steps you can follow to develop an IEO:
Determine your goals: First and foremost, it’s crucial to determine how much money you need to raise and how you want to utilize it. This will enable you to choose the right offering size and structure.
Develop a plan: Any effective IEO must have a comprehensive business plan. This should contain a thorough explanation of your business, your products or services, your target market, and your sales and marketing plans.
Create a whitepaper: In-depth details regarding your IEO, such as the rationale for the offering, the conditions of the sale, and the intended use of the profits, are provided in a whitepaper. This will be used to identify potential investors, therefore it must be as detailed and transparent as possible.
Choose a crypto exchange: There are several exchanges that offer IEO services, and it is very important to choose one that is reputable and has a track record of successful IEOs.
Conduct due diligence: Before launching your IEO, it is important to review the terms of the offering to ensure that everything is aboveboard and in compliance with relevant regulations. This may involve engaging the services of a legal or financial advisor.
Develop your tokens: The process of developing tokens is done in order to list them on exchange platforms for investors. Determine how many tokens you’ll be issuing and a method for calculating their value before starting to develop your token.
Launch the IEO: Once you have completed the preparatory steps, you can launch your IEO. This involves working with the exchange investors to list your token and market the offering to potential customers.
It is worth noting that the process of developing and launching an IEO can be complex and time-consuming, and it is important to be prepared for the challenges and risks involved. It must be said again: choosing the right crypto exchange could save you time and money.
Highlights
An initial exchange offering (IEO) refers to a fundraising event organized and executed on a crypto exchange platform. An IEO allows the exchange users to purchase the utility token of a specific project and become holders of these new tokens.
Gate.io Startup platform allows users to find emerging projects and cryptocurrencies to be listed. One of the most successful IEOs on this platform is GateToken (GT), which is the native asset of GateChain and the utility token of Gate.io.
While IEOs are fundraising events in which a cryptocurrency project sells tokens through a cryptocurrency exchange, STOs are fundraising events in which tokens represent ownership of an asset. STOs are subject to regulation by securities agencies, while IEOs are generally not.
Conclusion
In this module, we have addressed the topic of IEOs and made the necessary comparisons with the more regulated STOs, in order to fully understand that, by now, the crypto fundraising world needs more guarantees than the initial ICO phenomenon. We also introduced the topic of utility and security tokens, which we will cover in the next module.
IEOs
In the previous module we dealt with the topic of STOs, giving examples and comparing them with ICOs. Now is the time to examine the phenomenon of IEOs and its traits, as well as to talk about how they differ from STOs.
Definition of IEO
IEO stands for “Initial Exchange Offering”, and allows crypto companies and startups to raise money by selling tokens directly to the public through a cryptocurrency exchange. IEOs represent the maturation of the ICO phenomenon through the inclusion of a crypto exchange within the fundraising process. This type of funding represents a certain type of guarantee for an investor, because it is managed and therefore regulated by an exchange. However, it comes at the expense of disintermediation. In a nutshell, the exchange acts as a middleman between the project and potential investors. The exchange reviews the project and its business plan and conducts due diligence to ensure the project is legitimate and potentially valuable.
Many people argue that IEOs are something in between ICOs and STOs, at least when it comes to the launch process. Indeed, the preparation process of IEO is very similar to that of an ICO, with the difference that each project undergoes scrutiny by a crypto exchange, which means an additional layer of security that brings it closer to an STO. Not to be misunderstood, STOs are still considered to be the most regulated and compliant form of fundraising. However, today, participating in an IEO through a historically reliable exchange represents at least a minimal form of guarantee, which did not exist with ICOs.
Gate.io Startup Program
Gate.io Startup is a fundraising platform for blockchain startups that allows users to find emerging projects and cryptocurrencies to be listed. Gate.io periodically launches airdrop activities in the Startup area as a way of rewarding its users. Users of Gate.io VIP may participate in Startup projects in exchange for airdrop tokens, for which users do not actually need to pay, but they must still have enough USDT in their spot accounts. After the subscription is made and the snapshot is taken, qualified participants will receive airdropped tokens.
The Gate.io crypto exchange is one of the oldest in the world, operating since 2013 and considered to be one of the most reliable in the crypto space. More than 500 projects have received funding thanks to its Startup program, and among them, several cryptocurrencies had their prices jump more than 100 times after being listed.
One of the most successful IEOs on this platform is GateToken (GT), which is the native asset of GateChain and the utility token of Gate.io. The value of GT is closely related to the development of Gate.io and the GateChain ecosystem. Owners of GT are entitled to a number of privileges, such as increasing their VIP status, voting on coin listings, paying transaction fees, taking part in many bonus activities, and more.
IEO vs STO
As we have already mentioned, IEO is a kind of evolution of ICO. The exchange needs to approve and specify the requirements that the project must achieve to access its users before an IEO project may be launched. Additionally, tasks have to go through a series of requirements established by the exchange to be listed on the portal. Furthermore, because an IEO is expected to issue utility tokens that are linked to a project/platform, they should not be subject to regulation by securities agencies, as is the case with STOs. Let’s not forget that tokens issued through STOs are considered securities, so they must be subject to greater scrutiny.
Based on this brief comparison, we can start analyzing some of the advantages and disadvantages that IEOs and STOs have with each other. Let’s look at them below:
PROS of the IEO compared to the STO
| CONS of the IEO compared to the STO
|
How to Develop an IEO
Here are some steps you can follow to develop an IEO:
Determine your goals: First and foremost, it’s crucial to determine how much money you need to raise and how you want to utilize it. This will enable you to choose the right offering size and structure.
Develop a plan: Any effective IEO must have a comprehensive business plan. This should contain a thorough explanation of your business, your products or services, your target market, and your sales and marketing plans.
Create a whitepaper: In-depth details regarding your IEO, such as the rationale for the offering, the conditions of the sale, and the intended use of the profits, are provided in a whitepaper. This will be used to identify potential investors, therefore it must be as detailed and transparent as possible.
Choose a crypto exchange: There are several exchanges that offer IEO services, and it is very important to choose one that is reputable and has a track record of successful IEOs.
Conduct due diligence: Before launching your IEO, it is important to review the terms of the offering to ensure that everything is aboveboard and in compliance with relevant regulations. This may involve engaging the services of a legal or financial advisor.
Develop your tokens: The process of developing tokens is done in order to list them on exchange platforms for investors. Determine how many tokens you’ll be issuing and a method for calculating their value before starting to develop your token.
Launch the IEO: Once you have completed the preparatory steps, you can launch your IEO. This involves working with the exchange investors to list your token and market the offering to potential customers.
It is worth noting that the process of developing and launching an IEO can be complex and time-consuming, and it is important to be prepared for the challenges and risks involved. It must be said again: choosing the right crypto exchange could save you time and money.
Highlights
An initial exchange offering (IEO) refers to a fundraising event organized and executed on a crypto exchange platform. An IEO allows the exchange users to purchase the utility token of a specific project and become holders of these new tokens.
Gate.io Startup platform allows users to find emerging projects and cryptocurrencies to be listed. One of the most successful IEOs on this platform is GateToken (GT), which is the native asset of GateChain and the utility token of Gate.io.
While IEOs are fundraising events in which a cryptocurrency project sells tokens through a cryptocurrency exchange, STOs are fundraising events in which tokens represent ownership of an asset. STOs are subject to regulation by securities agencies, while IEOs are generally not.
Conclusion
In this module, we have addressed the topic of IEOs and made the necessary comparisons with the more regulated STOs, in order to fully understand that, by now, the crypto fundraising world needs more guarantees than the initial ICO phenomenon. We also introduced the topic of utility and security tokens, which we will cover in the next module.