Last year, an alternative version of ICO – Initial Exchange Offerings (IEO). Primary exchange offers are different in that non-project developers are looking for investors for new tokens, but a cryptocurrency exchange selects promising teams and promotes their coins among their users. This writes RBC Crypto .
The benefits and risks of IEO
Many investors who invested in ICO-projects did not wait for the tokens to come to the exchanges. After all, according to the rules, the listing of coins does not occur immediately, but several months after the completion of the tokensale. In the case of IEO, the exchange assumes obligations and issues coins in the very first days after they are sold to depositors.
In addition, the developers of the cryptocurrency platform evaluate the investment prospects and viability of the projects, and therefore are responsible for the crowdsale reputation. Many profitable ICOs were available only to a closed circle of large investors. Primary exchange offers, at least for the time being, are meant for a wider audience.
Another advantage that IEO developers are talking about is the eradication of the gas warrior. The main means of payment in the ICO was broadcast. To conduct transactions in the Ethereum network, it is necessary to pay a commission to miners so that they confirm the operations and enter them into the new unit. Since the cost of ETH cryptocurrency is constantly changing, the developers decided to simplify the task and introduced an additional unit of calculation – Gas. It, in turn, is divided into two components – the limit (gas limit) and the price (gas price) .
Each miner receives a commission, which is calculated in gas, and is paid on the air. The total cost of the commission is calculated by the sender, he sets the limit and the price of gas, and then multiplies one value by another. When ICO participants using the Ethereum blockchain tokensale competed to receive coins of new projects, they set high gas limits to increase the speed of transactions and first to acquire tokens.
In IEO, gas wars cannot arise due to the fact that the exchanges do not use ether, but their own cryptocurrency for Tokensales. Despite the advantages, there are also disadvantages to the primary exchange offer.
Investors are also risking their own funds. Even if we take into account the fact that the projects for crowdsales are selected by the developers of popular cryptocurrency platforms, no one guarantees investors a large profit. In addition, not many crowdsales have passed since 2018 so that the real benefits of the new sites can be determined.
Legal uncertainty is another stumbling block. Regulators in different countries have not yet found the optimal way to control the work of organizations implementing ICO or IEO. Therefore, no one is insured against risks.
Principles of work of IEO platforms
The exchange launches a special crowdsale platform. Then selects a promising project, tells about it to its users and names the date of the tokensale. To buy new coins, customers of the exchange must be owners of a certain cryptocurrency (usually these are tokens created by the exchange itself).
One of the most popular sale of tokens in IEO: “first come, first received”. The users who send the fastest applications for the purchase of new coins, and get them the very first.
Crowdsales are sometimes held in several rounds, while the cost of coins from round to round can go up. However, the developers of the exchanges have the right to invent new rules for issuing primary exchange offers. So, recently the creators of the Binance Exchange decided to hold a tokensail in the lottery format.
How to participate in IEO
Only verified exchange users can participate in crowdsales. Therefore, first you need to choose a suitable cryptocurrency platform and register on it.
Today we know about six exchanges that are already organizing or just launching tokensales :
- Binance (Binance Launchpad),
- Bitmax (Bitmax Launchpad),
- Bittrex (Bittrex IEO),
- Huobi (Huobi Prime),
- Kucoin (KuCpon Spotlight),
- Okex (OKEx IEO).
It is desirable for each investor to collect all available information about the new project in order to be convinced of the benefits of the proposed deposits. Then familiarize yourself with the rules of holding a crowdsale, replenish your digital wallet with the desired cryptocurrency and purchase coins.
To be in the forefront of investors, you need to follow the news of the stock exchanges through their official channels, and also to learn about the creation of new IEO platforms in thematic forums or in the Telegram channels.
Publication date 27.03.2019
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