Initial Exchange Offerings (IEO)- the evolutionary crowdfunding model-MLM Software company malaysia
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What is IEO?
IEO, Initial Exchange Offering is an evolutionary crowdfunding model. IEO’s emerged as a secure fundraising system, where ICO’s failed to succeed. There is a main difference between ICO and IEO. In the case of ICO’s, the company directly approaches investors to raise funds whereas, in IEO, the company approaches a cryptocurrency exchange.
The exchange lists the project after a deep evaluation of the project. The exchange further proceeds with promotional activities to make the IEO public.
How IEO works?
The company or startup approaches a crypto public exchange with the project. The details about the project will be detailed in the white paper.The exchange will evaluate the project in order to ensure authenticity. Otherwise, it will affect the reputation of the exchange. After whitepaper screening, the exchange and the company mutually make an agreement.
The projects are then listed and launched in the exchange ensuring no scam is involved. The exchange will take the responsibility to launch and move with promotional activities. The project team will also make necessary contributions in the marketing side inorder to make fundraising process successful.
The company or the project team has to pay a fee to the exchange, one at the time of listing and when a certain number of coins are exchanged. At the same time, the project team can save marketing or promotional expenses as most of the marketing is done by the exchanges itself.
The ICO: An Evolution of Crowdfunding
The Initial Coin Offering (ICO) was a leap forward in terms of access. Anyone in the world who had an internet connection and some crypto asset was able to participate in an ICO.
Participants in an ICO were able to own a share of a crypto network, which was basically a startup in a completely new technological arena with very high potential returns if the token appreciated in value. These coins or tokens were also provably rare, could be owned and exchanged without restriction, and could be tied to how that network functioned.
In the past, investing in a startup was limited to only venture capitalists that had a strong network and enough capital to participate in venture capital funding rounds. Furthermore, being the first to own an exchangeable share of a business meant participating in Initial Public Offering (IPO), which is an initial sale for a company on the stock market. IPOs are limited to certified investors in certain jurisdictions.
The ICO was a completely new innovation in that anyone could participate in a sale that was like a combination of an IPO and a venture capitalist funding round.
Benefites of IEO
A very less time needed for token sales as the exchange makes the token public and promote it.
The exchange conducts an easy KYC/AML process and it will help the company as well as the investors.
The exchange conducts due diligence on the company and ensure the authenticity of the project.
When tokens are listed in a popular crypto exchange, a large number of users will have access and the fund can be easily raised.
An investor will find it easy to invest in an IEO as he/she just needs to start an account on the exchange and undergo a KYC process.
The company will go through a due diligence process and hence the investor need not have to worry about the security.
The company will get access to a large user base of the exchange platform and it helps in a good token sale.
Exchange can get access to a new range of coins and thereby expects an increase in the revenue.
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