Starting from a base point, startups in early 2017s and subsequent years saw fundraising on the crypto platform to be very promising, and this was mainly done via smart contracts. However, it was soon transformed into a morass by nasty actors who were more focused towards quick money making via means of swindling and fraud. This led to the birth of IEO at the beginning of 2019, with Binance being one of the foremost players to adopt this technology over the Binance launchpad! So how does an IEO work exactly?
How Does an IEO Work
IEO refers to initial exchange offerings, which are used as a means of fundraising by startup companies and project teams. Read the step by step process as to how it is formulated and how an IEO works, to have a better understanding of this matter.
1. The startup first decides as to how much it would like to raise, and via which exchange it would like to raise the funds. The main criterion while deciding on an exchange is the associated fees that are charged by the exchange, the user base of the exchange and the reputation of the exchange.
2. The startup creates some tokens and digital tokens to be precise that it would like to roll over to crowdsale and prepares all necessary paperwork to be put forward before the exchange to pass the evaluation criteria. Many startups are using the services of third party consultants like executium.com for this purpose, to go confidently into the verification and vetting process.
3. The startup pays a listing fee on the exchange.
4. If the exchange is approved by the project team and has conducted the KYC, the project team and the exchange will enter into a formal agreement for the crowdsale and enter into the IEO.
5. The exchange conducts a crowdsale of this token.
6. Dependent upon the sale proceeds of this crowdsale, and upon the pre-agreed conditions of the contract, the startup pays some commission to the exchange.
7. Once the crowdsale is over, the exchange lists this token on its platform.
8. Investors are allowed to purchase these tokens, before or after a crowdsale, by registering over this particular exchange and also by paying in a mode that is allowed for this particular token.
9. All marketing and promotional activities, if required, are carried out by the exchange. However, there is no restriction upon the project team if they would like to carry on their own utilities to promote and attract prospective buyers to the exchange platform.
Analyzing the Process: How Does an IEO Work
It is a pretty simple process as to how an IEO works. However, we see many IEOs fail because they lack a proper roadmap. This is very important to make an IEO a success. A well-planned IEO usually requires experts like executium.com to be outlined and administered in the right manner. Remember that while a successful IEO can gather a lot of money for the project team, a failed one can ruin their entire career by blowing out their reputation once and for all!