IEO’s have replaced ICOs very quickly, and the reason is obvious! They offer a lot more in terms of trust and security, and they are valuable to all the three stakeholders involved, namely the project team, the exchange and the investors. The year 2019 is being called the year of IEOs and it has helped entrepreneurs raise millions of dollars all across the geography. IEOs, in the easiest way, are crowdsales of newly launched crypto tokens, which are conducted over some reputable cryptocurrency exchange, and open to the general public. All this is done with a motive for fundraising by companies launching these new tokens. However, there are varied uses as to why such launches are made, and who they would use and IEO. Let us go into this in a bit more detail.
Who Would Use an IEO
There are three main stakeholders that come into play when we try to see as to who would use an IEO.
1. Project Team: This is where it originates. It is some totally new startup, or some pre-existing business trying to expand its scope for which it needs money. Sometimes, the company is just trying to setup a payment mechanism which is in sync with digital cash. As such, it launches its own crypto tokens over a third party exchange and tries to gather investors who would like to invest in the company’s project buying its crypto tokens for other digital tokens or cash.
2. The Investors: This is the party on which the entire game is focused. Crypto investors usually invest in multiple crypto tokens at some given point in time. Now when they find some IEO lucrative, they tend to invest in that as well, in the hope that their investments will be worth manifolds in the future as compared to what they are making today in these newly launched tokens. This speculation of profitability depends upon two things: the credibility of the project and the reputation of the involved exchange.
3. The Crypto Exchange: Last but not the least, the cryptocurrency exchange where the crowdsale is conducted, is the actual stakeholder that bears all the burden of vetting the other two stakeholders, vetting the viability of the project, conducting the AMLs and the KYCs on the investors and the token projects, bearing the marketing efforts, and doing all that is required to make the IEO a success. In turn, they would use an IEO by charging both the project team and the investors, and making a lot of money out of this.
Things to Remember
Conclusively, we can say that it is all the three parties that use the IEOs to their advantage, using it in different manners and capitalizing on the time utility of money. There are endless ways as to how these stakeholders can gain out of an IEO, some direct and some indirect. Like the exchange also benefits as it gets a chance to amplify its user base through this process, very conveniently!