Way back at the height of the cryptocurrency bull market in December 2017, Binance launched first ever Initial Exchange Offering (IEO), that have changed the crowdfunding landscape forever. Now everybody involved in Cryptocurrency must have heard about the IEO. IEO implicates the prosecution of project token sale on a crypto exchange or in other words it is similar to ICO in which one or another exchange acts as a guarantor and venue.
These token sales are proved to be beneficial to all the three participants in this process: Projects, Traders and of course, Exchanges themselves. Despite the fact that first notable IEO cases appeared in 2017 (the GIFTO project carried out its IEO on the Binance Platform), this method of attracting investment received serious attention in early 2019. The key role was played by Binance Exchange which has a special platform for holding token sales- Binance Launchpad.
Why are IEO’s Doing So Well?
We had started seeing IEOs growing in popularity similarly to ICOs in 2017, and the projects which can manage to qualify for an IEO are likely to raise money quickly and easily, as far as it looks now. The most important reason why IEOs are doing so well is that token sale through an exchange makes it much easier for people to participate. Also, exchanges provide a strong vote of confidence for any project they support. On top of that, IEOs have the advantage of guaranteeing immediate liquidity to any coin or token they support, since they will likely to get listed by the exchange.
More Exchanges Join The IEO Train
March 2019 has been a dynamic month for all these exchanges, as none of them wants to be forsaken by missing this opportunity to provide extra value to their users by letting them fundraise their favourite projects and the greater cryptocurrency.
IEOs provide an appealing alternative to traditional ICOs for any young project in the Blockchain Industry. The following factors are critical for any project looking to launch an IEO:
- PROGRESSIVE BUSINESS MODEL- The reality is that many ICOs have no business crowdfunding from knowledgeable investors. If the exchanges don’t see a clear path to success for a project, including a solid product/market fit, they would not associate themselves with it. So for the IEO launch, the business model should be solid and progressive.
- DEVELOPMENT UNDERWAY OR ALREADY HAVE A WORKING PROJECT- Considering the Binance’s IEOs, one thing that is noticeable is the projects had already made significant progress on their products. For instance, BitTorrent was already being used by 100M+ people before its IEO, while Bread had a functional and well-designed app with existing users before the launch. It is noteworthy that work that are under development have already started before approaching an exchange.
- MVP/PRODUCT PROTOTYPE- In the Crypto world, nowadays no one believes in bare ideas and concepts. An MVP is must for a project which can speak for itself than any words in a white paper.
- WHITE PAPER AND TOKENOMICS- Usually, most of the White Paper in the primary form, is written by the team and the founders of the project because no one knows your project better than you. But the biggest mistake is not to show or correct them with the market professionals after writing. Your materials including White Paper, Pitch Deck, One Pager, the website and everything that will be visible to the audience should be polished, easy to understand and as investment attractive as possible.
Here is the list of what you should especially pay attention to while working on White Paper (besides tech justification):
- Financial model of the project
- Description, use cases, advantages and usefulness of the created product/technology
- Potential project market
- Competitors and their cases
- Existing partners
- General correctly made structure
- LEGAL OPINION- Each exchange may have its own certain requirements for legal opinion and you will have to go through the procedure again but with the recommended/trusted legal company of the exchange.
The stronger the project is prepared, the better and more likely it is to agree on sales with a strong exchange, hence marketing is necessary.
- SMM+ COMMUNITY- It is better to step by step reveal the essence of the project, the active involvement of the team, the development of technical solutions, and product. It is important to engage with the community members and promptly answer questions.
- PR- By the time the IEO application is submitted to the exchange, it is necessary for publications to tell about the prospects and advantages of the project. It is recommended to make publications in prominent media where the project can generate interest and find its followers.
- COMMUNITY ENGAGEMENT- Attract users from thematic platforms and generate hype around the project on different forums like Telegram chats, Reddit threads, Medium blogs, Bitcointalk threads and so on. If you properly work with these platforms, they give you good results in terms of growth of the user base for the project.
IEO is actively developing and replacing ICO. A huge number of exchanges are preparing their decisions and rely on this method of attracting investment for projects. IEO has its own pros and cons. Like any phenomenon that shows super-results at the beginning, IEO will also have a recession sooner or later. Nevertheless, the exchanges that will build relationships with their users on trust and openness will actively and successfully use this method.