7 questions to consider before joining an IEO – Hannguyen

Since July 2013, when the very first initial coin offering (ICO) was issued, countless blockchain projects have fundraised money through ICOs. However, in the downside of this success, a rapid influx of ICO scams and Ponzi schemes came to the picture increasing doubts and disinterests within the crypto community.

The rise of ICO scams caused the appearance of other means of cryptocurrency fundraising. The most well-known model is the initial exchange offerings (IEOs).

It’s been a serious discussion on whether IEO offers more benefits than ICO has ever been. Believe it or not, there are still some questions you should ask yourself before putting your money in an IEO.

In its simplest form, IEO is a new way of initial fundraising, in which a cryptocurrency exchange plays a role as a counterparty that helps facilitate the token sale process. Recently, it’s not hard to find crypto exchanges that are supporting IEOS. Binance started its own IEO platform in December 2017. Some exchanges are even supporting airdrop programs.

Since IEO involves a cryptocurrency exchange, the exchange platform will ensure to eliminate scams projects which will put its reputation at risk. In order to conduct an IEO, the project team must meet and comply with the exchange’s requirements. Contributors are, therefore, protected by the exchange.

Even when your favorite exchange supports the project, you should do your own research before dipping your toe in the water. It’s always crucial to discover what is the company’s business model, who is the team behind it, read through their white paper, their former projects if any, and how they’re handling marketing.

You must check which exchanges will participate in the IEO you want to contribute. A token issuer might make an agreement with only one exchange, which means that you have to create an account on that particular platform (in case you don’t already have one). It’s important to double-check if the exchange is reliable.

Some exchanges require KYC ( “Know Your Customer” process). After registering, you must go through a verification procedure. Make sure that you’re familiar enough with all the terms and regulations of the platform, and don’t postpone it to the last day, since it may take several days to complete the whole process.

Most exchanges accept Bitcoin and Ethereum as payment options. However, keep in mind that there are still exceptions who go with their own tokens.

Take note that in most cases, citizens from certain countries are prohibited from participating in an IEO, regarding country laws and regulations on digital assets.

Countries and regions that ban IEOs:

Albania, Afghanistan, Ethiopia, The Republic of Belarus, Bosnia and Herzegovina, Burundi , North Korea, Congo, Congo, The Republic of Guinea, Guinea-Bissau, Canada , Zimbabwe, Cote d’Ivoire, Lebanon, Liberia, Libya, Malaysia, Macedonia, United States, Myanmar, South Sudan, Serbia , Sri Lanka, Sudan, Somalia, Thailand, Trinidad and Tobago, Tunisia, Venezuela, Uganda, Ukraine, New Zealand, Syria, Yemen, Iraq , Iran, Central Africa, Mainland China.

It’s a fact that ICO created a fundraising boom in the crypto space in 2017–2018, but this way of fundraising has a lot of flaws. On the other side, it seems that IEO is becoming a more secure and reliable model for crowdfunding and have the potential to create the next alternative form. As with every new solution, it’s better to exercise caution on every project even when IEOs are relatively easy to navigate and guarantee great visibility.