Launching a successful Initial Exchange Offering (IEO) is simple if done correctly.
The initial Exchange Offering mode of fundraising was invented after Initial Coin Offerings (ICOs) proved to be hectic to regulate, thus becoming a playfield for scammers. The IEOs, however, retained the basic framework of the ICOs but placed the process of the token issuance/sale on the hands of cryptocurrency exchange platforms. That is why IEOs are sometimes referred to as ICOs that are issued on cryptocurrency exchanges.
Although IEOs were intended to solve the issue of safety with the ICOs, IEOs ended up introducing lots of other advantages for the token issuers. Some of these advantages include:
An IEO instils trust into potential investors. The token crowdsale is conducted through a cryptocurrency exchange and investors/ users believe that the exchange properly vets any token issuer before agreeing to sell the tokens to its users. Besides, exchanges are in business and if they allow a scam project to conduct an IEO through their platform, it could greatly harm their reputation; therefore they have to be vigilant in cross-checking the projects behind the IEO.
A good example of how careful exchanges are when listing IEOs is the recent case where Bittrex, one of the most famous crypto exchanges in the world, cancelled the RAID IEO after suspicion of fraudulent activities following the termination of a partnership between OP.GG. (a data analytics company) and RAID.
Therefore, if your IEO gets listed on an exchange, investors will have some trust that your project is not a scam and it could become a success in the future.
When issuing an IEO, you do not have to worry about managing the AML/KYC since the crypto exchange handles all that.
Once you have accomplished the hard part of creating a token, doing the tokenomics, and writing the white paper, the rest is left to the exchanges.
Also, you do not require to conduct a lot of marketing and roadshows compared to the ICOs, since the exchange where the IEO is listed already has some users who will get interested in your IEO.
- Token Listing
There is nothing more precious than to see your project’s token listed on a crypto exchange for trading. It is a painful reality that quite a number of projects that have conducted token crowdsale struggle to have their tokens listed on exchanges.
However, for an IEO the token is easily listed on the same exchange where the IEO was issued since the exchange had already vetted the project before.
Examples of successful IEOs that have been conducted
The first projects that were conducted taken crowdsale through IEOs were Bread and GIFTO, which conducted their IEOs in 2017 just after IEO was invented.
IEOs then embarked on a journey to fame that culminated in 2019, during which a number of projects carried out very successful IEOs within record-breaking timeframes.
Some of these projects include:
|Project||Platform used||Token issued||Amount Raised||Time Taken|
|BitTorrent||Binance Launchpad||BitTorrent Token (BTT)||$7.2 million||28 minutes|
|MultiVac||KuCoin’s exchange||Multivac (MTV)||$16.8 million||1 day|
|Top Network||Huobi exchange||TOP||$15 million||7 seconds|
|DOS Network||BitMax||DOS||$1.7 million||1 day|
|VeriBlock||Bittrex International||VBK||$7 million||10 seconds|
|Ocean Protocol||Bittrex International||OCEAN||$6 million||4 days|
|Fetch.AI||Binance Launchpad||FET||$6 million||10 seconds|
|Matic||Binance Launchpad||MATIC||$5 million||4 days|
Steps to launching your successive IEO
Hitting the anticipated target with your IEO is the dream of every blockchain startup or company that launches an IEO. However, to do that, you have to follow through with all the necessary steps.
We shall go through the entire process of launching an IEO step by step.
1. Work on your blockchain project
Remember you are raising funds for your project. Therefore, you have to have a concrete blockchain project that at least seeks to solve a particular problem.
Also, your project should be viable with the prospects of being implemented in the foreseeable near future. A good project idea should include a progressive business model, the use of breakthrough technologies, and also have a strong team of experts.
2. Token Economics (Tokenomics)
This is a very critical step and you should hire experts to do this for you.
Most exchanges prefer issuing utility tokens to get off the hook of being required to apply for the strict regulations that go with issuing security tokens. As a matter of fact, most of the exchanges will require a legal opinion that concludes that the token is a utility token. Therefore, you should ensure that the token that you create for your project is a utility token.
However, if you prefer to create a security token, you should be ready to look for a securities exchange that is registered and authorized to conduct the sale of security tokens. You should also be ready to adhere to the strict rules that go with issuing securities.
The whitepaper explains your blockchain project, the tokenomics of your project, and how you intend to distribute the funds collected through the IEO within the project. Therefore, you should hire a professional to draft and write the whitepaper for you.
Some of the most important parts of a whitepaper are:
- Legal disclaimer
- An executive summary of your project
- The problem statement
- Overview of the project
- Description, use cases, advantages, and usefulness of the created product/technology
- Financial model of the project
- Market analysis
- Token economics (Tokenomics)
- Team members
The whitepaper should demonstrate to potential investors why they should invest in the project by purchasing the tokens being issued through the IEO.
The team members should also be well-listed alongside their qualifications and contact information.
To reach as many prospective investors as possible, you should embark on good marketing strategies. Also, the stronger your project is the high the chances that you will get a strong exchange to launch your IEO.
Some of the marketing strategies that you could employ include:
- Social media marketing – LinkedIn, Facebook page, Twitter, Telegram chat, and Medium.
- Community management – You should work at generating as much hype as possible around the project on different forums. Some of the best platforms to use include Reddit threads, Bitcointalk threads, Medium, Telegram chats, and so on.
- Press Releases – these should work at explaining the advantages of your project and also creating awareness of the coming IEO.
5. Finding the right cryptocurrency exchange for the IEO Launch
Once the project, tokenomics, and whitepaper are done, you will have to diligently choose the cryptocurrency exchange platform to use for your IEO.
When choosing an exchange, you should consider whether the exchange is registered to operate in your country or region. Regulated exchanges always hold the front seat in the hearts of cryptocurrency investors. Therefore, launching your IEO on a registered exchange is an added advantage. You also avoid the risk of getting your IEO interrupted by legal case battles.
You should also do a background check to find out about its reputation; whether it has been involved in irregularities in the past and if any, how it resolved them.
Some of the cryptocurrency exchanges that are known to conduct IEOs are:
- Huobi Prime
Once you identify the cryptocurrency exchange where you want your IEO launched, you should approach the exchange’s listing team. The listing teams of most of the exchanges are can be approached through their agencies or partners.
The conditions set by the listing teams vary from one exchange to the other and you should be keen to identify what is required for the exchange you have chosen. For instance, different exchanges ask for different fees; to some, it could be a percentage of the amount received from the token sale while in others it is a standard listing fee while others ask for both.
The listing team will also require enough information about your project. Therefore, they are going to review the entire project to understand the current stage of the project development, the readiness of the token for the sale, the team, and the potential of the project to succeed.
Most importantly, exchanges require a legal opinion on your token.
The legal opinion is a legally abiding document that concludes that the token of your project is a utility token. Different exchanges have different requirements for legal opinions and you should enquire about what your specific exchange requires from you.
To get a legal opinion, you should contact a legal company that is recommended or trusted by the exchange that you chose. The legal company will then take you through the necessary legal procedure.
Once you are cleared by the legal company, the IEO goes ahead and launches your IEO.
However, it is important to note that the exchange can still cancel the IEO before the set start date in case they realize some anomalies.
Post IEO launching
IEOs generally take a short duration of time to hit the target amounts. Some IEOs have less than 1 minute in the past to sell out.
So, after holding a successful IEO, you should concentrate on ensuring that your project achieves the objectives you have highlighted in the whitepaper following the developed roadmap. Hitting the milestones on the Roadmap gives investors hope that your project is headed for success.
You should also embark on ensuring that the collected funds are distributed as stated in the whitepaper so that they can go to the proper use in the project.