Will IEOs Replace ICOs As A Tool For Raising Capital?

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Initial Coin Offerings (ICOs) gave the crypto sector the much-needed recognition and boost two years ago

Initial Coin Offerings (ICOs) gave the crypto sector the much-needed recognition and boost two years ago. Fundraising for various blockchain-related projects was made easy and with enormous success.

Despite the hype around ICOs, their popularity shrunk amid a bearish trend within Q3 and Q4 of 2018.

Now, a new way of raising money emerges — Initial Exchange Offerings or IEO.

IEOs are a new way to grasp the power of global cryptocurrency exchanges. IEO issuers develop the coins, but exchanges help the coin offering reach higher customer base. Issuers transfer the minted tokens to the exchange for a sellout.

The benefits of an IEO vs. the traditional ICO are many, including the chance for IEO issuers to benefit from the already-created exchange user base, and fewer scam concerns, as users can participate in an IEO only with an account on the exchange, that is selling it. Other benefits include buying tokens or coins from an IEO as a way of voting confidence in the exchange, and coin/token inclusion on the exchange once the IEO is over.

The number of IEOs launched in 2019 already surpasses 50, with more to be announced.

IEOs are submitted via the so-called launchpads — a place for investors and retail customers to buy tokens or coins when an offering is being made.

ICOBench data shows that more than 50 IEOs have been launched through various launchpads, including Exmarkets (11), Probit (10), Binance, Huobi, Kucoin, Bittrex, and others.

The IEO market is still rather small, but with more and more projects taking their business models a step further into the crypto sector, the IEO niche will continue expanding. Projects like the GTEX gaming platform released their IEOs with massive success. Even big players like BitTorrent and FETCH.AI released IEOS through Binance`s launchpad, raising $7 million and $6 million, respectively.

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