Thus, we suggest that many retail investors previously seeking short-term returns are no longer active in token markets and interested in IEOs. This is important because these retail investors likely assessed the quality of a previous token offering based on easy-interpretable signals such as the volume of mentions in discussion forums. Conversely, those investors that remained in the token offering market post-2018 and participated in IEO investment opportunities, likely relied on communication channels emitting more sophisticated signals than discussion forums. Signaling theory suggests that these findings do not uniformly translate to the context of IEOs, where cryptocurrency exchange platforms serve as intermediaries. We thus advance from the assumption that signals from https://www.xcritical.com/ such third-party intermediators reduce information asymmetry between a venture seeking to raise funds via an IEO and potential investors (Hobbs, 2004). The absence of effective signals from an established institutional player like a cryptocurrency exchange platform will be compensated for by additional information disseminated as eWOM on social media.

Applying signaling theory to blockchain-based token offerings

In addition to the Delegated Proof of Stake (DPoS, detailed below) mechanism EOS uses to secure its transactions, EOS.IO takes an active approach to governance. There are currently a bit over 950 million EOS tokens in circulation out of the 1,027,411,229 total tokens available. Throughout his tenure as CEO of EOS Nation, Yves had formed many good relationships across the EOS Network, among BP’s in the East, West & in the global South. Yves recognized that he was uniquely positioned to coalesce the stakeholders of the EOS Network around a foundation ieo marketing services that would work on behalf of all EOS token holders to realize the true potential of EOS. With the assurance of support from a coalition of stakeholders, Yves founded the EOS Network Foundation.

Signaling in the Market for Security Tokens

After all, many meme coins have seen huge surges in value following their IEOs only to tank afterward, leaving some investors out of pocket. IEO investors can also potentially earn a profit through staking rewards and lending their tokens. Staking and lending are often most valuable when a project is new and the token supply is limited. There’s no guarantee that an IEO—or any other crypto token listing—will result in a profit.

Step 1: Create an Exchange Account

The group would craft a whitepaper for investors outlining the details of the project to circulate it among potential cryptocurrency investors. This was to investigate interest in the project and to assess potential risks and concerns before releasing a final version of the whitepaper. For an IEO, crypto exchanges normally charge a listing fee that can be quite high. In addition, exchanges might take a commission on every token that’s sold during an IEO.

What Is an Initial Exchange Offering (IEO)?

The basic idea behind ICOs was the traditional IPO (Initial Public Offering) where companies issue shares. That’s a big deal because it means that projects get to keep nearly 100% of the proceeds from their token sale. Those proceeds can then be used to further develop the project, potentially increasing the token’s value in the future. One of the biggest reasons that many crypto projects use ICOs is that they make a new token available to any investors. There’s no exchange acting as a middleman, so investors don’t need to be members of a specific exchange or own a specific token already.

Collaborating with top projects across Ethereum, Binance Smart Chain, and Polychain, GamesPad prioritizes community engagement by providing decentralized IDO platform access to investors and entrepreneurs. Prior to hosting a financial IEO, most exchanges conduct due diligence on projects to ensure they’re safe and fair to investors. This can help weed out scammy token offerings, but it can also give investors a false sense of security.

IEO crypto advertising – Leverages various mediums (such as social media, email, search engines, mobile apps, and websites) to promote your IEO through ads. You can also use digital or pay-per-click (PPC) advertising to create an immediate online presence in search results. Use Google for display advertising to benefit from both Search and YouTube audiences. Binance Launchpad – Known as the first launchpad to hold a successful IEO, Binance Launchpad, has raised millions of dollars for promising projects. Its matching engine is capable of processing 1,400,000 orders per second, allowing projects to raise the funds quickly and seamlessly. IEO crypto projects have raised millions of dollars quickly, sometimes within seconds, just it was during the peak of ICOs in 2017.

“In general, we like coins with a proven team, useful product and large user base,” he wrote in 2021. Having the initial listing on a trusted site lends a sense of validity to the new token, which may lead to people believing the exchange has vetted the project and ensured its legitimacy. Binance Launchpad, for instance, publishes research reports on all new tokens listed for an IEO. Those reports, however, aren’t critical of the projects they list; they simply explain how the projects work. After the end of the marketing phase that sometimes includes a pre-sale phase, the token sale starts, either through the project distributing tokens directly into the wallets of investors or via a cryptocurrency exchange. An IEO, or initial exchange offering, occurs when a new cryptocurrency project lists its token for trading on a crypto exchange.

KuCoin Spotlight – KuCoin Spotlight aims to assist blockchain projects in raising the needed funds, attracting market attention, and improving industrial influence. The IEO crypto space is an ever-evolving field, especially in the areas of regulation, marketing, and community engagement. It is part of a natural evolution of raising capital through cryptocurrencies that started with Initial Coin Offerings (ICO) to the rapidly growing Initial Dex Offering (IDO). EOS is currently ranked of all cryptocurrencies by total market capitalization, with a market cap of EUR. DPoS uses a real-time voting and reputation system to decide who creates the next block on its blockchain. Anyone who owns EOS can help operate the network, but the more tokens you own, the more likely it is that you will be the one to create the next block.

Lastly, future research should also consider the negative implications of IEOs. The introduction of intermediaries and self-regulation also led to some of the same disadvantages that traditional fundraising methods experience. Both approaches should not be viewed as disparate mechanisms where IEOs inspire trust and ICOs generally do not. Instead, we propose a continuum-based view on which, for example, ventures performing ICOs could provide additional information to establish the same level of trust themselves. There might be instances where organizations pursued both pathways, which raises the question as to whether interdependencies exist.

The presence of such market disciplinary mechanisms in and of itself is an effective signal ICOs do not possess and reduces the overall information asymmetry of IEOs more effectively compared to unregulated ICOs (Srivastava & Lurie, 2001). So all the new projects gain access to a highly liquid market which allows them gain access to investors who are eager to buy tokens which enables high possibility for sales. Some IEO’s Allow users to purchase new tokens with funds they currently have on the market, making it extremely simple for users to invest in new projects.

We hope to inspire more respective research that considers these various factors when seeking to explain differences in fundraising performances within ICOs or IEOs and analyzing the general efficacy of social media signals. Second, ventures seeking to raise capital through token offerings mechanisms should consider which strategy to promote an ICO or IEO offerings to prospective investors may be best suited for their individual needs and position in the market. At the same time, IEO investors need to be cautious considering the recent FTX scandal. Our findings suggest that IEOs might not just benefit from a good reputation, but also suffer from a poor reputation of cryptocurrency exchanges. This would be more difficult for them to overcome, as additional information in terms of eWOM valence is less impactful for them compared to ICOs. The ICOs and IEOs investigated represent necessarily only a subset of all token offerings available.

The industry is undergoing a notable transition with similar other models such as Security Token Offering (STO) and Initial Exchange Offering (IEO). The fast-evolving demands of the crypto community ensure constant evolution of the modes of crypto offerings and trading, which leaves the issuer or the investor—depending on who you are—weighing what is best suited for each of you. Day Pitney’s Technology Transactions team is well positioned to help investors and issuers evaluate their options. IEOs take place on a cryptocurrency exchange on behalf of the company issuing new tokens.

In addition, Know Your Customer and Anti-Money Laundering processes are also conducted by the exchange rather than by the token issuer. With ScaleSCORE, ScaleSwap is removing the entry barriers while continuing to incentivize dedicated users and investors. Additionally, ScaleSwap offers multi-chain support, which means it can host an IDO on multiple blockchains, including Ethereum, Binance Smart Chain, Solana, Avalanche, Harmony, Polygon, and Fantom. Now, instead of being limited to projects on a single blockchain platform (e.g., Ethereum), investors can view projects available on Binance Smart chain, Ethereum, Polkadot, Solana, Avalanche, and others.

• The exchange can also limit access to an IEO to investors in certain countries.
• The drawbacks of IEOs – gatekeeping, opaque vetting processes and listing fees – have attracted some projects to initial DEX offerings.
• A cryptocurrency exchange, also known as a digital currency exchange, is a platform that facilitates the trading of cryptocurrencies.
• Lastly, their capability to track and optimize campaign performance will help ensure your IEO’s success.
• However, as we’ve said further up, many traders prefer to invest in ICOs rather than IEOs.

This can be done by a vote, but in practice most DEXs simply list all new tokens without a formal approval process. So, tokens listed through an IDO often don’t undergo the same due diligence process as tokens listed through an IEO. One of the most important differences between IEOs and ICOs for new crypto projects is the cost of each type of public sale. For example, the exchange might give priority access to institutional investors or investors who hold a certain volume of the exchange’s own token. They may also limit an IEO to investors who held an account at the exchange at the time of the IEO announcement, limiting the ability of new customers to join the IEO. Crypto exchanges usually conduct due diligence into projects before agreeing to host an IEO.

Second, we encourage others to build on our present work and to advance insights into the performance of token offering fundraising mechanisms using new sources of data and methods. For example, topic modeling using Latent Dirichlet Allocation (LDA) is increasingly recognized to analyze large bodies of unstructured qualitative data sets (Antons et al., 2023). This would also be of high managerial relevance, as it enables the venture itself to take a more strategic approach and to signal exactly those qualities it aims to communicate to others. Besides focusing on the investor audience, LDA could also help explore the characteristics and perception of the cryptocurrency exchange platforms launching IEOs. In particular, the reputation of a cryptocurrency exchange platform may be an effective signal prior to an IEO.