Perhaps the biggest fall from grace involving crypto involves EOS. Launched in 2018, the project was launched through an ICO that raised $4.1 billion. Back then, the token was valued at $14.64 and touted as the “Ethereum killer,” quickly gaining on its predecessor and threatening to take its place.
Two years later, though, the token has fallen to $6.86 at the moment of publishing and it has even fallen off the top 20 list. The problem wasn’t that EOS had technical flaws, but it had management problems. Rather than being a decentralized platform, the project was held by a few stakeholders in China.
Enter… the IEO
An ICO was a revolutionary idea that made it possible for entrepreneurs to raise money from the public without the hassle of an IPO, which would involve an underwriter, usually a bank or other financial firm. It was a swell idea, but the problem with this setup was that there was no one to vet a project to find out its true worth.
ICO scams became prevalent for this reason, luring unsuspecting investors with wild promises and little in the way of fulfilment. The most vivid example of this was OneCoin, which raised almost $4 billion before collapsing. The project received a lot of hype, but investors didn’t realize it was all smoke and mirrors.
What investors needed was something close to an IPO but not to be placed in the hands of Wall Street. An Initial Exchange Offering (IEO) was the answer. Compared to an ICO, an IEO is much closer to an IPO in that a crypto exchange holds the offering instead of leaving it completely decentralized.
Okay… but doesn’t that make it centralized?
Every crypto enthusiast hates the idea of a centralized blockchain, and understandably so. After all, the purpose of cryptocurrencies is to create a decentralized network. However, despite the seeming centralization of the IEO, there is one key difference to note.
The exchange would act as the underwriter in a typical IPO but would have no stake in the project whatsoever. When Wall Street underwrites an IPO, it’s usually in exchange for a sweetheart deal with the listed company, often a lower share price.
With IEOs, though, the crypto exchange gets little in return but the traffic it hopes to gain from the sale of the token, and the fees it will charge. In fact, the crypto exchange takes the most risk because its reputation is laid on the line should the project fail, as it has already listed the token on its platform.
To avoid any backlash, the exchange has to be extra careful about the IEOs it accepts to hold. Its experts carefully analyze the project whitepaper, enquire about the team behind a project, and gauge the worth of the token. Unlike individuals like you and me, these experts can spot a fake from a mile away, and scams are unlikely to fall through the cracks.
One of the popular IEO exchanges in the world is ExMarkets. It was launched in 2018 and since then it has held more than 60 IEOs. You might be thinking that is a low number, but consider this: 90% of ICOs ever launched have failed but none of the IEOs held by ExMarkets have.
What this could mean for your business
If you were to launch an ICO for your business today, chances are it won’t get much attention. According to ICO Marks, there are currently over 100 active ICOs and few are getting any attention. IEOs, on the other hand, have several benefits, especially when you pick a trusted exchange like ExMarkets.
First, since it’s the exchange that holds the IEO, the exchange’s reputation rubs off on you. ExMarkets, for instance, is already among the top 50 crypto exchanges and its listing your IEO is akin to a stamp of approval. Second, it takes the load off you so you won’t have to spend any money on advertising, publicity, etc. That leaves you free to focus on the work itself and improve upon it even more.
Finally, your project gets immediate attention. ExMarkets has an active trader community of over 200,000, and those eyeballs could be all over your project. The New York Times sells slightly over 400,000 copies per day, so it’s like getting half of that audience interested.
Okay… what’s the catch?
You’re a smart businessman, all right. And, yes, there’s always a catch; but, fortunately, it’s nothing compared to the upside. For the listing of an IEO, there are some upfront charges required and they vary depending on your specific needs. That said, it’s just the cost of business and still pales in comparison to what you get in return.