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ICO Vs. IEO – Important Main Differences You Must Know!!!

By December 9, 2019 No Comments

Fulfilling your dreams of making the world a better place to be is as important as making others believe in that dream. On the blockchain, meeting the right people who will support this dream as team members is important but more important are the people to whom the dream is meant for- the customers. Customers and investors are the ones who will finance the dream and aid your team of experts to reach the goal quicker. 

Key take-homes

  • Softcap is the minimum amount needed to make a project successful.
  • Hardcap is the maximum amount that can be collected by a project.
  • Initial Coin Offering (ICO) and Initial Exchange Offering (IEO) are similar to the traditional Initial Public Offering (IPO) by centralized companies.
  • ICOs are fundraisings conducted by the project owners on their own website with no intermediaries.
  • IEOs differ with ICOs in the funding method. Funds are collected via a cryptocurrency exchange.
  • Many wise start-ups are now considering a mix of both ICO and IEO to collect funds from their believers, backers and enthusiasts.

Fundraising 

In the centralized world, there are different platforms that are put in place to showcase innovative dreams. This is done to attract investors, customers or early supporters who will finance these innovations. This is what started the best fundraising companies we know today, like Kickstarter, Gofundme, Plumfund, etc. In the decentralized world of blockchain technology and cryptocurrency, funds are gathered by project owners with an Initial Coin Offering and more recently in the form of an Initial Exchange Offering.

Soft Cap

This is the minimum amount needed to make a project start. Yet many projects start before the minimum soft cap is attained.

Hard Cap

This is the maximum amount that can be collected by a project. Projects after collecting their hard cap usually close their crowd sale.

ICO, IEO, and IPO

Initial Coin Offering (ICO) and Initial Exchange Offering (IEO) are similar to the traditional Initial Public Offering (IPO) by centralized companies. The only difference is that IPO deal with investors while ICO and IEO deal with enthusiasts or backers who believe in a project like in crowdfunding. 

Differences Between IEO and ICO

Initial Coin Offering, ICO

ICO presents a way for a project owner to present an innovative idea to backers, supporters, and enthusiasts. This is done to seek funds to bring the vision to fulfilment. Supporters or customers buy cryptocurrencies from crowd sale websites (with fiat or other established cryptocurrencies) to be the first adopters of the solutions a project is presenting. Most times, tokens or coins sold at the crowd sale come with huge discounts and lower prices. This is done by many projects to ensure their early adopters make a profit. It is also important to have a basic knowledge of cryptocurrency and how to exchange or trade cryptocurrencies to be able to participate in any ICO.

ICOs are totally conducted by the project owners with no intermediaries like in most fundraising companies today. It enables backers or supporters to interact directly with the team (like we encourage at Wunbit with our ongoing private sale). Usually, coins or tokens which are bought are held on the crowd sale accounts created by customers until the end of the crowd sale period. 

Initial Exchange Offering, IEO

Towards the fall of 2018, the Initial Exchange Offering model got re-introduced to the cryptocurrency world. It got momentum as many projects raised huge funds in a very short time, mainly because they were running their crowd sale with exchanges that are trusted by the crypto community.

IEOs fundraising methods are different from ICOs, because:

  • Funds are collected via a cryptocurrency exchange. There is no need for the project to create a crowd sale page, funds are collected via trading on cryptocurrency exchanges. Customers need no special accounts as they can use their existing exchange accounts  to buy tokens. Tokens are delivered directly to the customers’ wallets on the exchange. 
  • Crypto Exchanges perform due diligence on any project that will be eligible for an IEO.
  • Exchanges charge the ongoing project with money and a percentage of their total tokens to run their IEO. 
  • Exchange listing: Most times, projects that run their IEO on an exchange are usually listed on that same exchange after the crowd sale. Projects do not pay extra fees for listing their tokens or coins.

Conclusion 

Many wise start-ups are now considering a mix of both ICO and IEO to collect funds from their backers and crypto enthusiasts in a more effective way. At Wunbit, we will always work at finding and using the best opportunities to reach out to our believers and backers.

Join our private sale to get huge discounts. It is a very limited opportunity to join us in moving the Blockchain gaming industry forward.

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