A type of crowdfunding where crypto start-ups generate capital by listing through an exchange.
China banned ICOs at the end of 2017, and left the crypto world scrambling to find other solutions to fund new businesses.
Start-ups are charged a fee, as well as a certain proportion of tokens sold, in order to fundraise on the exchange.
The tokens are then listed on the exchange upon completion of the IEO — helping to raise the company’s profile in the eyes of investors.
IEOs have risen in popularity among key cryptocurrency exchanges.
Binance Launchpad was one of the first few IEO platforms to be launched in the industry, with many rival exchanges quickly following suit.
The biggest advantage of IEOs is increased transparency and trust.
As the token sale is conducted by a regulated cryptocurrency exchange, the chances of fraudulent activity and scams are less likely than through ICOs — with reputable platforms performing their own due diligence into a project before offering it to users.
Token issuers are not tasked with managing the crowdsale security under an IEO, and they can also benefit from the exchange’s extensive client base to solicit greater investor interest.
Although deemed more credible than ICOs, IEOs can involve high costs for start-ups in return for increased safety and visibility.
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