Benefits of IEO Versus ICO and How Crypto Exchanges Choose Coins for Listing
The ICO market seems to be on the decline, with IEOs gradually taking its place, as projects enjoy the benefits of the latter. In this article, we talk about how the global crypto exchanges are choosing the assets for listing.
As Tokoin is preparing for yet another exchange listing that will be live in the coming weeks, we believe it is important to remember the key facts about the process of listing on exchanges.
Let us dive into the key methods of crypto project funding, their advantages and disadvantages, and the latest trends. In this article, we would also like to talk about the main points that are being considered by cryptocurrency exchanges when choosing a coin for listing.
We live in the era of digital finance, and even though many would still claim that cash is king, new ground-breaking innovations are slowly and steadily taking over the world. In this regard, the realm of decentralization is being the center of global attention.
IEO Vs ICO: Market Dictates Its Will
When blockchain appeared back in 2008 thanks to Satoshi Nakamoto, the world has become a completely different place, where thousands of hundreds of new digital projects are coming to life every day. Some of them stuck around for good, bringing something useful to our world, while others failed.
With the rise of blockchain, ICOs, STOs, and IEOs became popular, with the latter taking the center stage at the beginning of 2019. On the contrary, the ICO market has experienced a drastic decline in popularity – according to research from a cryptocurrency exchange BitMex, the initial coin offerings market is down 97% on a year-on-year basis.
In Q1 2019, the global ICO market made $40 million, while the newly-favored IEOs managed to nearly reach that figure, with $38.9M in their pocket.
Why are we seeing such a drastic change? The part of the answer to this question lies in the undeniable benefits of the IEOs.
What are the benefits of IEOs?
In fact, IEOs, or the Initial Exchange Offerings, as opposed to Initial Coin Offerings, have a number of advantages.
For projects, an IEO is a sure-fire way to attract the necessary capital for development and growth. As an IEO involves the launch of the coin on a particular platform, the exchange itself is doing a great job at spreading the word about an upcoming token project. Therefore, modern digital projects more and more often are looking to introduce their tokens through IEO, being attracted by the benefits this method offers.
IEOs are also beneficial for exchanges, as the launch of a new coin always attracts a ton of attention, which quickly converts to a ton of new customers. For that reason, exchanges also favor IEOs – who does not like an increase in sales, income and a boost in a reputation?
Lastly, traders are also one of the parties that get to benefit from IEOs. IEO gives users a unique opportunity to purchase tokens at the initial price. Later on, these tokens can either be sold on a secondary market for much more than the initial price, or they can be stored for the long-term for those who love to HODL.
How Crypto Exchanges Choose Coins for Listing?
Aside from the differences between IEOs and ICOs, these two have one major common point – they are the major sources of the inflow of new projects to the crypto market.
As a matter of fact, the listing of a coin is considered to be one of the biggest and important milestones for a project. Through the listing, a project is gaining a global “seal of approval” and is recognized by the crypto community as a reputable coin.
Yet, not every project is making it to the listing on the exchange. There are numerous requirements a project should meet to be able to apply for a listing.
Just some years ago, when the crypto world lacked proper regulations, the barriers for listing on a platform were much lower. During those days, the criteria for applying for an opportunity to be listed on an exchange were not well defined.
However, everything changed after the wave of crypto-scams has taken over the world back in 2017. After realizing that the crypto space needs stricter regulations, governmental bodies started working with cryptocurrency exchanges more closely.
As a result of more stringent regulations and better practices on exchanges, once flourishing scam projects are fading away, leaving the crypto industry with a clean record. Today, the most reputable and authoritative cryptocurrency exchanges play the role of the “customs” when it comes to digital assets.
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