Initial Exchange Offering: Its Advantages In The Cryptoecosystem

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Hello fam,

It is your favourite blogger @mato445 and I am happy to make this interesting post in this community today.

Today we shall be learning about a very interesting topic in the cryptospace.

We must have heard about Initial coin offering, which is a fundraising strategy used by project developers to raise funds for a particular project.

Well, we are not discussing about Initial coin offering, rather we will be discussing about Initial exchange offering.

It is known to be a fund-raising techniques, but this time it is being hosted on an exchange.

That being the case, let's learn about the advantages of Initial exchange offering.

ADVANTAGES OF INITIAL EXCHANGE OFFERING

• TRUST AND CREDIBILITY:

One of the key advantages of Initial exchange offering is the credibility and trust that is involved when cryptocurrency exchange are brought into the picture.

These exchanges function as intermediaries, conducting the needed diligence on token project before allowing for the launch of IEO.

This vetting process plays a huge role in filtering out unreliable and fraudulent projects, instilling a certain level of confidence on the Investors in the originality of tokens being issued.

• BROADER INVESTOR BASE:

Another advantage of IEO is that the involvement of cryptocurrency exchange, contributes to a broader investor base.

There is usually a lager user base with the involvement of exchanges, and they help to provide project with exposure of a wide range of Investors.

This enhanced visibility is very important if the token sale is to be successful, as it gives project the opportunity to tap into the existing user base of the exchange, and in turn gets the attention of investors who might have not come across the project.

• STREAMLINED TOKEN SALE PROCESS:

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Another advantage of IEO is its contribution to a streamlined token sale process.

For an ICO to be conducted, it most oftentimes have to do with the management of the whole fundraising process, which includes security measures, marketing and smart contracts development.

While IEO makes good use of the security measures and the infrastructure being used by the cryptocurrency exchange hosting the project, thus reducing any workload on the project team.

This simplification results to a faster execution and cost savings , making it very attractive for projects that seeks efficiency in fundraising.

• INVESTOR PROTECTION:

Another advantage of IEO is that it takes the protection of investors very seriously.

The exchange takes the responsibility of verifying the genuinety of the project, this protection also covers the handling of funds.

In the traditional ICO, funds are sent directly by investors to the project smart contract.

In contrast, IEO involves the direct depositing of funds to the wallet of the exchange, providing an extra layer of security.

This structure plays a huge role in reducing the mismanagement of funds and the risk of scams, enhancing a more secured investment environment.

• LIQUIDITY FACTOR:

Liquidity factor is another advantage of IEO, we can say that IEO contributes to the liquidity in the cryptomarket.

The tokens that are issued during the process of IEO are most times listed on the exchange immediately after the token sale.

This liquidity thus gives investors the opportunity to trade their token on the exchange platform, which in turn provides a seamless transition from a fundraising phase to a secondary market trading.

Whereas ICO is often faced with the challenge of getting it's token listed, and this often result in liquidity issues for the investors.

• REGULATORY COMPLIANCE:

Regulatory compliance is another area in which IEO offers advantage.

With the pressing scrutiny of the cryptoecosystem by the regulators, the cryptocurrency exchanges are forced to confirm that any project they are about to host comply with regulatory standards.

This commitment to compliance can eliminate concerns for projects and investors, thus providing a more secure fundraising avenue.

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CONCLUSION

Initial exchange offering has offered lots of advantages which contributes to the global adoption of cryptocurrency.

The streamlined process, investor protection, enhanced credibility, immediate liquidity are all factors that makes IEO an attractive fundraising model.