Good day, IEO! What's new on your end of the spectrum?
The crypto industry's trustless anarchy, exacerbated by the introduction of IEOs (initial exchange offerings), has prompted stakeholders in the ecosystem to devise a sophisticated alternative approach for establishing a new algorithm for fundraising activities. An initial exchange offering (IEO) is a ground-breaking approach to the crowd sale process that allows crypto businesses to raise funds directly on exchanges.
This token sale is akin to an ICO (initial coin offering) (ICO). An IEO allows investors and stakeholders to contribute funds to a project by allowing them to enter the bitcoin ecosystem through an exchange. The main distinction between the IEO and other token-sale cabinets or project websites is that the IEO uses cryptocurrency exchanges instead of token-sale cabinets or project websites. This strategy allows well-established exchanges to manage the investment contribution process and provide a higher level of security to stakeholders.
Projects and startups can use an IEO to approach cryptocurrency exchanges with information about their product, idea, token scheme, and requirement. After that, crypto exchanges conduct a due-diligence audit and thoroughly investigate the project's documentation to confirm its viability and legitimacy. Only potential initiatives with a well-stated, well-thought-out development strategy are eligible to participate in this process.
Is an IEO a Reasonable Alternative to an ICO?
Initial exchange offers, unlike ICOs, are supported by an exchange platform. Crypto exchanges serve as quality guarantors for all fundraising procedures. Under the pressure of "climate" conditions, the market is like the water, with a tendency to move steadily or in a volatile manner. After a period of rapid development in 2018, the ICO wave remained for a while; but, by the end of the year, it was progressively losing its market value. As a new degree of coin-offering revolution, the new IEO phenomena has emerged today.
According to an ICObench industry research, the number of ICOs has tended to decline by January 2019, with success rates and the overall average being lower than in prior months.
Market research by ICObench
The fundraising market has entered a recession, according to Diar Analytics, due to a steep drop in the crypto and token markets, as well as regulatory growth issues. In 2018, ICOs raised approximately $12.2 billion, accounting for over half of all capital raised.
Total funds raised through initial coin offerings in 2018
The following are some of the other factors that have contributed to the decline in token prices:
Uncertainty in the law
a large proportion of scam projects a weak framework for safeguarding stakeholders' rights
Financial authorities' actions have become more stringent.
With the emergence of the IEO phenomena, the market appears to have reached maturity. Exchanges play a critical role in reducing the hazards of deceptive practises and fraudulent schemes by acting as an intermediary platform. Let's take a look at the statistics for the last three months' first exchange offering.
IEO monthly total funding raised
Is this a passing fad or a more persistent pattern of fundraising activity? Cryptoauxilliary, a certified blockchain development firm, will be objective in its remarks based on the most recent updates and analysis from an insider's perspective, allowing you to assess and evaluate IEO attributes in the table below:
IEO, ICO, and STO vs. IEO, ICO, and STO
Unlike ICOs, where investors contribute directly to the founders' crypto wallets, IEO participants must register on a specific exchange and comply with KYC/AML requirements.
An initial exchange offering benefits everyone, not just a few companies (coin launch platform, tokenization platform). Let's take a look at the benefits that initial exchange offerings provide for each player in the crypto system.
Startups and Projects
The advantage for projects is straightforward: most project creators aren't cryptocurrency or token-launch experts. The start of a token sale event necessitates extensive experience and understanding. Projects can use the exchange's expertise to perform the token sale for them in the case of an IEO. There is no need to build and maintain expensive TGE cabinets or integrate KYC/AML modules because the exchange handles these tasks and ensures uptime and security. Furthermore, cryptocurrency exchanges promote tokens and engage in marketing operations in order to inform a large number of consumers about the project and its objectives.
Stakeholders and investors
Token sales are typically held on a well-known exchange with a large number of users that trust its services. Investors and contributors should expect a transparent contract settlement and a simple contribution process. Investors can be assured that the project has completed due diligence research as long as the coin is listed on the market. There is no need to perform separate study on the project and its crew because its viability has been shown. Another benefit is the ease with which funds can be contributed, as it does not require sophisticated transaction processing across many wallets. Instead, the investor only needs to put dollars into the exchange account before purchasing tokens.
IEO procedure settlement benefits cryptocurrency platforms and exchanges, as they charge fees for the token to be listed. Fees range from a few BTC to more than 40 BTC. This is dependent on the exchange, its services, and its reputation in the market. Despite the fact that IEOs might be expensive in some situations, a token event can raise millions of dollars for project development while also covering listing costs.
Review of the IEO Process: How to Join
In general, there are no hard and fast guidelines for launching an IEO. Timelines, durations, and fees differ from one exchange to the next and are all negotiable. The exchange's rules and criteria are also influenced by it. However, there are some common standards and "must-haves" that projects must adhere to in order to prepare for an IEO launch.
Let's break down the entire process of listing an IEO on an exchange into two parts first:
Stage 1: Preparation
Stage 2: Cooperation with an Exchange
Before working with exchanges to perform an IEO, there are several important elements for a project to consider. This is the main benefit of initial exchange offering policies: competent due diligence is a requirement for any project. You'll want to be well prepared before embarking on the IEO route, as your efforts could be wasted if you don't have a well-thought-out strategy and a solid foundation. This is the rationale for the strict approach to project reviews in terms of exchanges. If their deceptive activities are exposed, their reputation is jeopardised, and the project is condemned to fail without a second chance to participate in the IEO.
We've worked with a number of exchanges, studied the mechanism of IEO listings in depth, and examined the most important project credibility criteria. So there you have it. For your project's success, we've created a comprehensive list. To be considered for the IEO, your proposal must include the following elements:
Model of the IEOToken
A full description of the token model, its features, and its long-term worth is a vital benchmark for any investor looking for a project. It's critical to decide which form of token the smart contract development firm will utilise, as well as the programmes and special features it will provide users. The value of a token must be determined by its relationship to real-world assets and functions.
The following are the most crucial aspects:
Conditions for Issuing Tokens
Definition and motivation for the crowdfunding model
Description of the token distribution model (must include total token amount and initial token price)
Funding allocation: description of the token-flow
Specifications for Tokens
standard for tokens
functional qualities of the token
Don't know how to correctly make all of these? Contact the Cryptoauxiliary consulting team for a clear model to use as a reference in the future.
Documentation that is accurate
All initiatives must appeal to investors by displaying their structure, roadmap, tokenomics, and other pertinent arguments. All of these elements must be included in the white paper, which includes technical project information as well as a full description of the architecture, present and future token distribution, financial project market, and accurate calculations. It is suggested that you contact a blockchain marketing agency to help you with this. There is also information about the project team, advisors, and partners. The one-pager, website, pitch decks, and other components comprise the primary source of project information for possible contributors and exchangers, allowing them to fully understand your goals and intentions.
Future Revenue Projections in the Business Plan
Your company's path to achieving particular goals and activities must be outlined in the business plan. The operating model and its monetization activities must be understood. As a result, the business model should include the following features:
important aspects of the business model financial model executing major financial projections, such as:
explanation based on the company model chosen
monetization model and revenue streams
Revenue streams and monetization model
A formidable team
Having a trustworthy team and a blockchain adviser on board can significantly improve your chances of being listed on an exchange. Technically challenging projects necessitate a knowledgeable, experienced staff with a track record of success. If you don't have any experience, hire a professional blockchain development business or a smart contract development company to help you through the process and build the road to your final goal. Cryptoauxiliary Blockchain Advisor Experts can map out your development points and push them in the right direction if you consider your project idea's execution needs a stronger basis.
Public Relations and the Social Community
SMM specialists and PR managers attempt to make the approach as appealing to investors as feasible. Public relations can help you reach out to new people. It's also worth looking at connected media sites to see if your idea can generate interest and attract a relevant audience and following. It is critical to work on establishing a user base and creating buzz around your IEO on social media channels in order to promote it in the future (Telegram, facebook, Instagram, Reddit threads, Youtube, etc.). This will almost certainly result in measurable results in terms of attracting investment. If you believe you will be unable to complete this task on your own, get assistance from a blockchain marketing agency.
Exchanges will, of course, do professional due diligence on your project to assure its excellent quality. This will be done in accordance with the company's own reputation, which will be built on the expertise of top-tier specialists, business analysts, blockchain advisers, development teams, and lawyers. From the standpoint of an investor, this new sort of token issuance provides more assurance and trust.
Partnerships play an important part in the success of your project. Startups may need to represent trustworthy business concepts with an endorsement from a DeFi development company that can prove the legitimacy of your claims in order to finish and establish confidence with exchanges.
What is the significance of this? In order to avoid making the same mistakes as your ancestors, it's sometimes necessary to learn from their blunders. Let's take a look at what happened recently with the Raid project, which sought to launch its Initial Coin Offering (IEO) on Bittrex. Given Bittrex's cancellation of the RAID IEO owing to the loss of their strategic collaboration with OP.GG (the most exciting portion for users), we can safely conclude that exchanges are extremely sensitive to any nefarious behaviour and are aware of any indicators of mistrust.
Obtaining a legal opinion from a lawyer is just as significant as the IEO aspects we've already discussed as a regulatory requirement. For obtaining an IEO, there are a variety of legislative requirements and suggestions, including:
Documentation for operating and investing purposes is being prepared.
Risk evaluations for KYC procedures to avoid problems throughout the IEO process
Compliance with the Securities and Exchange Commission
It is vital to manage risk through regulatory compliance in order to protect projects and their investors. Legal professionals can help you create and build the financial and legal framework for your product.
Development & Audit of Smart-Contracts
Your smart contract must be completely safe, as even a little flaw might have catastrophic consequences and result in the loss of billions of dollars. Hire a smart contract audit business to analyse and audit your smart contract architecture and codebase ahead of time to detect risky places. First, our technical team examines the smart-contract design to determine business logic. We evaluate the code using automated tools, perform a manual end-to-end review, and deploy SC on the testnet. The following are the deliverables:
a thorough initial smart-contract review creation of a checklist with a full assessment of susceptible regions recommendations for smart-contract semantics enhancements report/description of work completed
Do you want our blockchain developers to make accurate, high-level recommendations? Check out our current offer for certifying your smart contract and avoiding getting hacked.
Even before the product is developed, the marketing strategy should be defined. A certified blockchain marketing agency can assist you in identifying the right audience for your product and creating buzz around it by drawing attention to it and attracting investments. Exchanges are interested in handling the marketing campaign for an IEO because the company pays fees and a percentage of the tokens sold goes to the exchange account. As a result, compared to the significant financial costs associated with ICOs, firms can now save money on marketing.
Another intriguing aspect is the current positive audience climate, which results in a higher contribution rate for the project due to the exchange's existing customer base. However, the other half of your success is determined by your own marketing strategy and design.
MVP (Minimum Viable Product)/Product Prototype
In contrast to ICOs, in which well-designed project concepts (usually published in white papers) reveal the primary motivations and points of confidence for investors, an IEO is a completely different paradigm, down to the finer points of product development progress described throughout the project roadmap.
People no longer trust basic concepts because of the huge number of scam ICOs. This element is advantageous when approaching an exchange, even if project development is underway (for example, the Fetch.AI project, which has established an internally functioning test network that has been operational since September 2018).
BitTorrent, which had 100 million users before its IEO launch, is an excellent example of a minimal viable product.
Interaction with Exchanges in Steps
It's time to enter into direct involvement with exchanges once the preparation stage has been completed, taking into account all of the above-mentioned factors:
To negotiate future actions on the exchange, team founders contact listing support managers.
A member of the team makes a request for further information on the project (smart-contract address, white paper, team members, MVP, business plan, all relevant documentation, data about token distribution, related links to software resources, etc.)
Founders must agree on listing fees before launching an IEO.
Direct communication with project founders and partners to check the team's and the project's authenticity. When dealing with exchanges, factors like as MVPs, product prototypes, previous product development success, public announcements, and technical and business maturity are crucial.
Signing a letter of engagement and agreeing on a listing fee.
Exchanges create investing policy constraints, according to legal documents approved by a legal blockchain expert. Anyone can invest in an IEO, with the exception of the United States, North Korea, China, New Zealand, and Venezuela, which are prohibited from owning digital assets. To be authenticated on the site, each investor must go through the KYC procedure. It's worth emphasising Binance's collaboration with IdentityMind, a risk management organisation, to improve KYC/AML compliance measures using IdentityMind products.
The smart contract development company creates tokens using the ERC20 standard or any other ERC-compatible standard accepted by a certain exchange, then sends them to the exchange account according to mutual agreement.
Users on the platform can see these tokens and use them to make transactions. The platform makes public statements on its media platforms after the monies have been transferred.
The exchange sets a maximum investment limit as well as contributor limits.
For major trades, the sale procedure can take many minutes or hours. It can last a few days for small children.
Are You IEO-Ready? Prepare for your project's due diligence ahead of time.
Crypto exchanges currently provide a suitable atmosphere for coin launch platforms. That isn't to say that in order to be endorsed by the exchange, entrepreneurs shouldn't pay close attention to the criteria. To break into this new crypto niche, they'll need to meet all of the standards and, ideally, hire a blockchain adviser and smart contract auditing firm. You can be 100 percent confident that you are ready to conquer the IEO path with all "weapons" in your armoury ready to go (see our must-haves, listed above), and after completing due-diligence assessment and auditing. As an intermediary platform, the exchange is in charge of maintaining project legitimacy for stakeholders.
“Entering the IEO market is a particularly time-sensitive and developing crypto-industry niche. You'll want to do it all at once, so make sure you're well prepared,”
Here's how Cryptoauxiliary can help you with your IEO:
Initial IEO evaluation and validation at a high level
Introduce yourself to a legal blockchain counsel to see if you're in compliance with the law.
Business analysts conduct an in-depth evaluation of the IEO documents.
Vulnerabilities should be identified, project maturity should be assessed, and the existing status should be evaluated.
Creating a list of upgrades that should be considered
If your project is ready to go following our evaluation, we will connect with an exchange.
As an added bonus, we provide a list of use cases that are relevant to your startup.
Cryptoauxiliary, as a seasoned blockchain development firm, can thoroughly evaluate industry trends and test various scenarios to determine the best solutions for your IEO's long-term success.
Which IEO Platform Should You Pick?
The effectiveness of an IEO as a fundraising mechanism is still debatable; nevertheless, given Binance's speedy and successful token sales, it could spawn a new crowdsale boom. On the Binance Launchpad platform, the Bittorrent public sale raised $7.2 million in less than 18 minutes. Another, Fetch.ai, smashed Binance's previous predecessor's indicators by raising $6 million in 22 seconds.
IEO projects must examine the following factors before deciding on an exchange:
Location. What is the location of the exchange?
Targeting. What is the primary audience for this discussion?
Features. What characteristics distinguish this exchange from the rest?
Niche. There are specialised exchanges that focus on specific topics, such as technology,
gaming, and large cryptos. As a result, the exchange's market niche is quite crucial. The DeFi
development agency can assist you in making the best decision.
IEOs are being held by a large number of exchanges, including industry titans like Binance Launchpad, Bittrex, and Huobi. They've had a lot of success.