What is an IEO and how can you participate? =

With the IEO, we have added an upgraded version of the ICO to the crypto world, a kind of ICO 2.0. People are starting to wonder aloud if the IEOs can ensure that we have the same boom in raising money within the crypto economy as we did in 2016 and 2017 with ICOs. IEOs are a lot safer to participate in than an ICO and it also has a few advantages in terms of marketing.

Moreover, it can be financially very interesting to participate in an IEO. Projects such as BitTorrent, Matic Network and Harmony have already provided their investors with hefty profits (up to 14x your investment back).

What exactly an IEO is, how you can participate in it and how you can earn money with it, you can read all in this explanation!

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  • What is an IEO?
  • Differences between an IEO and an ICO
  • Benefits of an IEO
  • Examples IEOs and Binance
  • How can I join an IEO?
  • Conclusion

What is an IEO?

An IEO is similar to an ICO in many ways. Where ICO stands for an Initial Coin Offering, an IEO stands for an Initial Exchange Offering . Both an ICO and an IEO are a way for crypto startups to raise money so that they can build the cryptocurrency full time with their team. You can see this as a kind of crowdfunding , where you give money and in return you get the cryptocurrency they are building, which you hope will increase in value.

The major difference between an IEO and an ICO is the way the funds are raised. With an IEO this is done, as the name probably suggests, by an exchange. As a crypto company, you pay an exchange to launch your crowdfunding via their platform . The startup normally pays a fixed price for this plus a percentage of the number of tokens sold during the IEO. In return, they are not only allowed to sell the tokens through an IEO via the exchange, but the tokens also become immediately available for trading on the exchange after the IEO .

An IEO is also easier for investors to participate in than an ICO. with an ICO you have to send your Ethereum or Bitcoin to a smart contract and in return you get your tokens. You often also had to provide all kinds of documents to comply with the KYC.

This works slightly differently with an IEO. To participate, you create an account on an exchange (if you don’t already have one), put your cryptocurrencies on it and then use it to reserve the new tokens. To give a clearer picture of what distinguishes an IEO, we will discuss the main differences.

Differences between an ICO and an IEO

In the table below you will find a clear overview of the differences between an ICO and an IEO.

Feature

ICO

IEO

Way of collecting money

Through the website of the crypto startup that wants to raise money.

Through the platform of the crypto exchange .

Smart contract management

By the crypto startup that wants to raise money

By the crypto exchange

token listing

No , the crypto startup still needs to meet with exchanges to ensure that their token becomes tradable

Yes , the crypto exchange on which the IEO is done will automatically make the token available for crypto trading.

Marketing

Need a high budget for this . The project has to invest a lot to get to the attention of the public

Much lower budget needed . The exchange takes over a large part of the marketing.

Risk of fraud

High. Anyone can hold an ICO, including you.

Low . The exchange controls the startup, as their reputation is also at stake.

KYC rules

Yes, it differs per ICO what kind of data you have to leave before you can participate

No need , most exchanges already have KYC rules applied to their clients

Benefits of an IEO

As you have read, an IEO has many advantages over the ‘old’ way of raising money. These benefits can be divided into 4 main points:

  1. It’s safer
  2. The project immediately enjoys more publicity
  3. It’s a lot easier
  4. The token is immediately tradable

Safe

The main advantage of an Initial Exchange Offering is that it is a lot more secure than an Initial Coin Offering. With an IEO, it is particularly clear that you are investing in a startup that has already been audited by the exchange and this gives you a lot more certainty that you will not transfer your hard-earned savings to a bunch of scammers. It is super important for a crypto exchange that they embark on a serious project, because they do not want to risk their reputation. If you trust a crypto exchange, you can also quite easily trust the crypto startup that wants to launch an IEO here.

fame

There is little more important for a crypto start-up than gaining enough exposure. If no one knows about your project, no one will want to buy your cryptocurrencies and you will have no money to develop your project. This is one of the most common reasons why some crypto startups fail and go bankrupt.

This problem does not exist with an IEO. The crypto exchange takes over a very large part of the marketing for the project. First, the IEO is already enjoying an incredible amount of advertising as all of the exchange’s millions of users see an IEO being held. In addition, the exchange has huge budgets to push this even more. The exchange itself also benefits greatly from the fact that all tokens are sold, because they earn more tokens from this. Moreover, it is often the case that the more advertising is made for a coin, the more the price will rise. In this way, the tokens they have received are also worth more. Whether this is an ethical way of doing business is not discussed for now, but for both the crypto start-up and the participants in the IEO as well as the exchange, it is a great advantage that a lot of marketing is done in this way.

Simple

Holding an ICO is anything but easy. A crypto startup has to do everything itself. From marketing to drawing up smart contracts, from talking to exchanges for a listing to performing KYC.

With an IEO, all these things are taken care of. As we mentioned above, they don’t have to do any marketing, nor do they have to create cumbersome smart contracts for investors to invest safely. Moreover, they do not have to convince others that they are not scammers, because the exchange has already done that for them. They also do not have to apply KYC (Know Your Customer) rules, because the exchange will also take over this work for them.

In addition, it is also much easier for investors to participate in an IEO than in an ICO. Finding out whether a project can be trusted has largely already been done for you (it is always good to do your own research), you do not have to send your passport and you do not have to worry about sending the right cryptocurrency from your wallet to the Correct address.

In addition, “gas-wars” are avoided. A gas war is the name for the situation that arises when an ICO is incredibly popular. Due to its popularity, there is a good chance that there will not be enough tokens for all the people who want to participate. Because of this, people are afraid that their Ethereum will not arrive in time in the wallet of the crypto start-up, so that they piss next to the pot and therefore do not receive tokens. To avoid this, they pay an incredible amount of Ether (gas) to the miners so that they get priority processing the transaction and thus secure their tokens. This often resulted in people paying 2x more for a token than it was worth. As a result, not everyone had equal opportunities to participate in the ICO.

listing

If a token is not listed on an exchange, no one will be able to buy or sell it and therefore there will be very little demand. So it is very important for every crypto startup to be on at least one good exchange.

Examples IEOs and Binance

The IEO was created by the exchange Binance with their “Binance Launchpad”. The first IEO they launched on this was the BitTorrent Token in January 2019. This was an immediate success, because no less than $ 7.2 million was raised within 15 minutes. The second IEO immediately smashed this record completely by raising 6 million dollars in 25 seconds (!).
It therefore did not take long for other exchanges to launch their own IEO platform. These include Bittrex IEO, KuCoin Spotlight, Huobi Prime, OK Jumpsart (OKEX), and Bitmax Launchpad.

So far, the tokens launched as IEO also appear to be very successful when you look at the ROI of these coins. In particular, the coins that come from the Binance Launchpad have brought their investors quite large profits. The image below from @CriptoDiffer gives a nice overview of this.

IMG

 

These are incredibly beautiful achievements. However, this is not the only thing you could have made a lot of money with. To participate in Binance’s IEOs, you must own BNB coins. You invest with this coin to participate. Moreover, it is now the case that the more BNB coins you own, the greater the chance that you will be allowed to participate in an IEO. Because of the crowds, they turned this into a lottery. All these IEO have a clear effect on the price of BNB, as you can see in the turkana image below:

IMG

How can I join an IEO?

Now, of course, the most important question is how to participate in an IEO yourself. We will first explain it to you in short steps and then we will go into more detail about what you need to do at each step. We take Binance as an example, but the steps are about the same for other exchanges.

  1. Create an account on Binance for free via this link.
  2. Make sure your account is verified.
  3. Select personal as verification type and go through the steps.
  4. Make sure you have more than 50 BNB in your account.
  5. Choose the IEO you want to invest in.
  6. Secure your lottery tickets so you can enter.
  7. Win the lottery (otherwise you have little influence).
  8. Buy the number of tokens you want.
  9. Finished!

Make sure your account is verified

You do not need to verify your account to be able to trade on Binance, but if you want to participate in IEOs this is necessary. It may take a few days for Binance to approve your verification, so you’d better do it right away. This way you will not be faced with unpleasant surprises if you want to participate in an IEO immediately. Below are the steps on how to do this:

  1. Go to your profile, click on your email address and then on “Submit verification documents” (see image). IMG
  2. Click on “Personal”
  3. Enter your details and click on “Begin Verification”
  4. Upload your passport, driver’s license or ID
  5. Take a picture of yourself with a note with the date on it
  6. Download the Binance app from the Play Store for your phone
  7. Log in to the app
  8. Go to Account > Scan
  9. Scan the barcode and follow the steps in the app
  10. Go back to Binance and click on “ I have completed the verification process on my phone
  11. Finished! IMG

After this, it will take about 2 to 3 days for Binance to look at it and approve it. You will receive an email about this. Until then you cannot participate in the IEO.

When everything is approved, you can be on the Binance Launchpad which further requirements are needed to participate in an IEO. If you have a green check mark everywhere like in the image below, you are all set to invest.

IMG

There is only one catch these days at Binance. Because IEOs have become so incredibly popular, not everyone can participate at the same time. This means that only a limited group gets the chance to invest and this group is determined on the basis of a lottery. The more Binance coins you have, the greater the chance that you can participate. Below you can see how many coins you need for how many tickets. Each ticket is one chance to participate in the IEO. Ultimately, no one can ever have more than 5 tickets to enter.

Minimum amount of BNB tokens you must have for at least 20 days

Number of lottery tickets

Between 50 and 200 BNB Tokens

1

Between 200 and 300 BNB Tokens

2

Between 300 and 400 BNB Tokens

3

Between 400 and 500 BNB Tokens

4

More than 500 BNB tokens

5

Choose the IEO you want to participate in.

The Binance Launchpad page lists all IEOs that are coming or have already been held. You can select the one you want to participate in here.

IMG

After this you can indicate exactly how many tokens you want to buy. In the example below, we chose CELR at the time and it was very easy to indicate how much we wanted to invest.

IMG

 

And you did it!

Conclusion

In 2016 and 2017 there was a huge hype for ICOs. It was the way to raise money and the early days ensured that people made incredibly big profits. After this initial hype, the ICOs seemed to die out a bit, but in 2017 the craziness was complete and staggering profits were made by investors again.

The same is expected to happen with the IEO. The special thing about this way of collecting money is that it is many times safer and the hype is actually already present in advance. Huge profits are being made with IEOs, especially at large exchanges such as Binance, and for now it seems that what happened with ICOs in 2016/2017 is happening with IEOs right now. The future will tell if this hype will last, but the IEO is definitely a trend to watch.
 

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