Initial Coin Offerings was once most preferred currency exchange of crypto investors, but now due to the rising skepticism newer initial exchange offerings (IEOs) are all set to replace the ICO.
It basically provided a platform to the crypto enthusiasts who wanted to earn a huge amount of money in a short span of time.
The ICO model soon became favorite of all the companies who intended to make a large amount of money.
Every company which launched its token between the years 2017 and 2019 adopted this model.
In 2018, however, the cryptocurrency crash proved to be disastrous for the fate of the model as the amount raised by ICO was massively reduced due to large selloffs, loss of purchaser confidence, and increased regulatory pushback. Hence, IEOs came as a rescue for all the industries who were seeking ways to earn money.
Also, ICOs are confined to the public. Companies don’t market new currency to people; rather companies are now using crypto exchanges to preview projects and offer tokens to their customers.
The project team and the exchange work in collaboration, the team fulfill the requirement of exchange, and in return, the exchange protects the contributors of the project. This reduces the chances of the model getting scammed. With that, the retail investors are coming back to token offerings. According to a Bloomberg report in a span of two months, about $180 million has been raised in 23 different exchange offerings.
The model is capable of becoming larger than ICOs of 2017 as reported by Bill Shihara, chief executive officer of Seattle-based exchange Bittrex. Both users and exchange token demand the exchange.
In March, Bitrex was all set to offer its first IEO, but there was a last minute cancellation. Binance is the initiator of IEO model. Also, an IEO was launched by a Malta based company and had a renowned software for file sharing called BitTorrent. It made $7 million in less than 15 minutes and made a record of its own.
Cryptocurrency is supposed to make sure that the IEOs are more appealing for the investors mentioned Aaron Bron, who is an investor and Bloomberg Opinion writer, he further suggested that IEOS need more persistence and clarity.
He added that the process involves more assuring investors that the coins will trade and do not take into consideration the value of the project. Due to this state, the buyers pass on the risk to the next buyer, at a profit.