A huge number of scam-ICOs forced the community to look for a new tool for funds attraction. One of those tools is an initial exchange offering (IEO) in which the reputation of a cryptocurrency exchange acts as a guarantor of funds protection.

A start of an IEO is an act of an exchange itself, so the exchange becomes the general partner of the mastermind behind the tokensale. The organizer releases the tokens and transfers them to the platform which distributes them between the clients who underwent the verification.

Pros

A trading platform estimates a working capacity, a resilience, a financial status, a situation in the market, risks and general investment attractiveness of a project before a listing of tokens. The reputation of the exchange is a guarantee of safety for investors, and it increases the credibility of the project.

Private offerings available to a limited number of investors become more and more popular lately. Thanks to an IEO, there is an opportunity to place digital assets safely for a bigger number of interested persons.

A centralized cryptoexchange excludes a possibility of a gas competition, typical for Ethereum network when investors set the high limits of gas. The reason to do so is an increase in the transaction speed and to buy tokens as soon as possible.

Cons

Only the verified clients can buy tokens during an IEO. Centralized platforms are the most common on the market, and in accordance to their requirements, the clients should create deposits which is unsafe since the exchanges suffer from hacking and losses.

What is required for participation in IEO

It is necessary to make sure that the startup starts not an ICO, but an IEO.

It is necessary to specify what platforms support the IEO.

Having stopped the choice on a platform, it is necessary to create the account and to undergo the procedure KYC (Know your customer).

Besides, it is necessary to clarify which of the digital assets are accepted by the IEO and to create a deposit at the exchange and to wait for the start of the initial exchange offering to buy the new assets.

Total

Many experts of cryptocommunity consider that IEO is nothing but the temporary tool to secure the investments and, as more effective legislative base forms, it will be completely abolished. But anyway, it is one of the most effective tools for the protection of the investments now.