Since the end of 2017 and mainly during 2018, the cryptocurrency market suffered a slight fall and this was largely due to the distrust caused by some scams towards investors with the use of some ICO (Initial Coin Offering), it is for that the IEO (Initial Exchange Offering) began to gain popularity as a more transparent means of raising capital for the financing of projects, which generated greater confidence in investors.
Defining the IEO
An IEO (Initial Exchange Offering for its acronym in English) is an Initial Exchange Offer that seeks to raise funds to finance certain projects, has its base of operation on cryptographic platforms, that is, it is the cryptographic exchange platforms that are responsible for the administration of the entire fundraising process.
How does an IEO work?
The first step in this type of fundraising method is that the team that is presenting the project should approach the cryptocurrency platform and present their idea, then this platform is responsible for doing a study, which will determine the feasibility of the project, will ensure that it is real and that it can benefit investors.
Another verification that cryptographic platforms do has to do with the risk that the investment could represent and how this could affect its reputation in the event of a failure. In the case of cryptographic platforms of global reach, trust and credibility is their main asset and it is something that they must protect thoroughly.
What is the difference with ICOs?
Basically an IEO is an improvement of the concept of the ICO (Initial Coin Offering), one of the main differences has to do with respect to the sale of tokens since the IEO hold only responsible the exchange platforms when they are already on the list, unlike the ICOs where the issuer is responsible.
When it comes to marketing and advertising, in an IEO it is the cryptocurrency exchange platforms that are responsible for the entire process, while in the ICO this issue is in charge of the teams that are presenting the project. For transactions in an IEO, investors only need to have an account on the cryptocurrency exchange platform, while with ICOs they make their investment directly with the token issuer.
The charges and regulations
With regard to charges, there is a marked difference between IEOs and ICOs. The IEOs include fees, charges and fees charged by the exchange platform for each transaction that is made, while in the case of ICOs there is no charge for any additional charges.
What do you think about this topic? Do you know more differences between IEO and ICO?
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