The first round of the IEO project, TOP Network, took place just two days ago, on March 26, within which all 300 million tokens were sold out in just 7 seconds. What is the reason for the phenomenal success of the new format for the sale of digital assets? We will try to understand it today.
IEO – Initial Exchange Offering is the initial exchange offer. Unlike the ICO format, which was already popular, but already had to compromise itself, the main feature of IEO is that the sale of tokens is strictly linked to a specific stock exchange, which studies the project before listing, determines its reliability and viability and only after that allows investors to purchase digital assets.
An important difference from the ICO is that the initial exchange offer has a long-awaited regulation. A contract is concluded with the project managers in one form or another, where all the main parameters of the transaction are stated – the estimated price of the token, the maximum issue volume, softcap, hardcap, and the details of the distribution of the investment received.
Watching the cryptocurrency market in the last year, it was hard not to notice that trust in the ICO dropped sharply. The reason for this was the huge number of scam projects that flooded the market in 2018. This led to the fact that even potentially successful startups sold their tokens in a closed mode only for large investors.
IEO will make it possible to make the sale of digital assets more democratic, to attract ordinary investors again, providing them with transparent analytics of the project and certain guarantees.
It should be noted that the IEO procedure may be temporary, but at the moment the best way to organize the sale of tokens for a new project. For example, the exchange is interested in listing the largest possible number of high-quality and liquid coins, since each transaction with them brings it a profit in the form of a commission.
From the minuses of the IEO procedure, it can be noted only that the acquired tokens are not sent to the investor’s smart contract, but are stored on his account on the issuer’s stock exchange. Exchange, in contrast to digital assets based on the blockchain, is usually centralized, which increases the risk of loss of assets in the event of a hacker attack or any other fraudulent actions.
Nevertheless, we must admit that Initial Exchange Offering is a timely solution for both investors and projects selling their digital assets, and for the cryptocurrency market as a whole. Since August last year, I regularly wrote that the main reason for the collapse of the market is the loss of trust and the absence of any regulator determining the rules of the game for all participants.
At that time, until national laws on the turnover of digital assets are adopted, it is IEO that is the main way to attract investment for promising projects in the cryptocurrency market.