The last two years marked the rise of Initial Coin Offerings (ICOs). This greatly impacted the crypto industry because ICO projects raised a total of USD 24.4 billion in 2017. In 2018, the total funds raised by ICO projects was a fraction of the previous year at just USD 6.2 billion; according to Statis Group research, this is partly related to the fact that almost 80% of ICO projects launched in 2017 were not credible.
Because of this, an interest in Initial Exchange Offering (IEO) projects started to grow. Projects still need a method of financing, and current projects turned to fundraising by private placements (when a project solicits the funds for the project from private investors). Private placements are an adequate fundraising method if you have the right network with enough resources. An IEO is also becoming a popular method of financing a project, and it involves an agreement between the project and a crypto exchange.
In this post, I’ll cover how participating in a project’s IEO can benefit investors.
Benefit 1: Reputation of the project has first been vetted by the exchange platform
In order for a project to run an IEO on an exchange, the exchange must assess potential projects and estimate the attractiveness of their investment. To do this, exchanges conduct due diligence of the team and project, the viability of the products developed, the risks involved, the market position, and other critical factors that affect the project’s credibility and potential to add or detract from the exchange’s reputation. Exchanges do not want their reputation to be tainted after cooperating with a scam project. If an exchange assessed the risk of associating their reputation with that of a new project, investors can be more confident in the credibility of the project.
Benefit 2: Investment opportunities are equalized for newcomers
Are you new to investing and didn’t you get a chance to take part in the ICO wave? ICO projects often initiated private coin suggestions and made them mainly accessible to large investors. An IEO, or token sale, makes the process of investing in digital assets more open to investors of all kinds, which enables a wider range of participants. Moreover, issuers will be able to trade with more freedom and transparency with more potential users. There is also easy access for new users; this means newcomers can test the water with greater ease and assess the investment opportunities available.
Benefit 3: Short wait time between token sale and listing
Tokens that have been sold through an IEO is usually listed on the exchange shortly after the conclusion of the token sale. Investors can freely liquidate their bought coins almost immediately after the token sale. This is a huge benefit compared to the practices in an ICO, where a major risk is that the token sole might not end up being listed on an exchange, or there could be long delays until the coin is listed. A coin is not tradeable until it is listed on an exchange and buying coins through the token sale offers the guarantee that the coin will be listed on at least the exchange where the IEO is taking place.
The practice of selling coins through an IEO has changed the ecosystem for raising funds in the crypto market. It creates a relatively transparent, fair and reliable investment environment for investors. Investors are there for the projects themselves, instead of merely purchasing for quick gains. These benefits contribute to a healthier and more credible industry.
Finally, for PlannerScape’s IEO, we have an ongoing PLAN token sale on LATOKEN Exchange. PLAN Tokens are utility tokens of PlannerScape. The PLAN Token Sale will last for 90 days from 15 March 2019 to 12 June 2019, and the earlier you participate, the bigger the discount.