What is an IEO? Initial Exchange Offerings Explained Simply

00:08:05
https://www.youtube.com/watch?v=jwns5Mkn5Mw

Sintesi

TLDRThis video provides an overview of Initial Exchange Offerings (IEOs), explaining how they differ from Initial Coin Offerings (ICOs) and Security Token Offerings (STOs). IEOs are managed by exchanges, offering more security and reducing the risk of scams compared to ICOs, which often lack regulation. STOs are fully regulated and cater to accredited investors only. The video outlines the benefits of IEOs, such as greater trust, better accessibility, inherent security, immediate trading opportunities, and marketing support. However, it cautions that IEOs can be costly for companies and may exclude users based on geography. The speaker advises thorough research before investing, as many tokens can lose value.

Punti di forza

  • 🔍 IEO stands for Initial Exchange Offering, a fundraising method using crypto exchanges.
  • 💰 IEOs are typically more secure than ICOs due to exchange oversight.
  • 📜 STOs are regulated and limited to accredited investors, unlike IEOs.
  • 🚀 IEOs often provide immediate liquidity for tokens post-sale.
  • 🏦 Exchanges handle fund security, reducing risks for investors.
  • 🎯 IEOs allow companies to focus on product development rather than marketing.
  • 🛡️ Increased trust because exchanges vet projects thoroughly.
  • 🌎 IEOs are accessible to anyone using the exchange, unlike STOs.
  • ⚠️ Always research before investing, as many projects can fail.
  • 💵 IEOs can be costly for companies, which may limit participation.

Linea temporale

  • 00:00:00 - 00:08:05

    In this episode of Crypto Whiteboard Tuesday, Nate Martin discusses Initial Exchange Offerings (IEOs), their differences from Initial Coin Offerings (ICOs) and Security Token Offerings (STOs), and their significance in the cryptocurrency landscape. IEOs are explained as token sales managed by cryptocurrency exchanges rather than companies, which adds a layer of trust and security. Nate explains that ICOs were the least regulated and often involved substantial risks, while STOs are regulated and cater to accredited investors. IEOs aim for moderate fundraising and provide advantages such as increased trust, security, immediate token liquidity, and marketing support from exchanges, contrasting the challenges faced by ICOs. However, IEOs also have limitations, such as high costs and access restrictions based on the exchange's availability in certain regions. The episode concludes with a caution on conducting thorough research before investing.

Mappa mentale

Video Domande e Risposte

  • What is an IEO?

    An IEO (Initial Exchange Offering) is a token sale managed by a cryptocurrency exchange.

  • How do IEOs differ from ICOs?

    IEOs are conducted via an exchange, providing more security and trust, while ICOs are direct sales by companies.

  • What is an STO?

    A Security Token Offering (STO) is a regulated fundraising method that sells security tokens representing financial assets.

  • Why are IEOs considered more trustworthy?

    Exchanges vet projects before listing them, providing an additional layer of due diligence.

  • Can anyone participate in an IEO?

    Yes, as long as they are users of the exchange conducting the IEO.

  • What are the risks of investing in IEOs?

    Investors should conduct thorough research to avoid projects that may lose value.

  • What are the main advantages of IEOs?

    Increased trust, security, immediate token liquidity for trading, and marketing advantages.

  • Are IEOs available in the US?

    Due to regulatory concerns, many IEOs may not be available in the US.

  • How do IEOs help companies?

    Companies can focus on product development while exchanges handle marketing and regulatory compliance.

  • What should I be cautious about with IEOs?

    Beware of hype, and only invest money you can afford to lose, as many projects may fail.

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Scorrimento automatico:
  • 00:00:00
    What is an IEO?
  • 00:00:02
    How is it different from an ICO or STO?
  • 00:00:05
    And what do all of these confusing acronyms mean?
  • 00:00:08
    Is this just another fad,
  • 00:00:09
    or should I really pay attention to it?
  • 00:00:11
    Well stick around,
  • 00:00:12
    in this episode of Crypto Whiteboard Tuesday
  • 00:00:14
    we’ll answer these questions and more.
  • 00:00:22
    Hi, I’m Nate Martin from 99Bitcoins.com
  • 00:00:25
    and welcome to Crypto Whiteboard Tuesday
  • 00:00:28
    where we take complex cryptocurrency topics,
  • 00:00:30
    break them down and translate them into plain English.
  • 00:00:33
    Before we begin
  • 00:00:34
    don’t forget to subscribe to the channel
  • 00:00:36
    and click the bell so you’ll immediately get notified
  • 00:00:38
    when a new video comes out.
  • 00:00:41
    Today’s topic is Initial Exchange Offerings
  • 00:00:44
    or IEOs for short.
  • 00:00:46
    It seems like every other day a new acronym is born
  • 00:00:49
    in the crypto universe.
  • 00:00:50
    First we had initial coin offerings, ICOs;
  • 00:00:53
    then came Security Token Offerings, STOs;
  • 00:00:56
    and now we have IEOs.
  • 00:00:59
    Don’t worry,
  • 00:01:00
    the purpose of this video is to bring some clarity
  • 00:01:02
    to all of these confusing terms.
  • 00:01:04
    However, since we’ve already covered ICOs and STOs in previous videos
  • 00:01:08
    I strongly suggest you start by watching them
  • 00:01:11
    if you haven’t done so already.
  • 00:01:13
    ICOs, STOs and IEOs all have the same purpose -
  • 00:01:17
    they are all ways companies can use to raise funds for their projects.
  • 00:01:21
    ICOs were the first to come about.
  • 00:01:23
    With an ICO
  • 00:01:23
    the company raises funds by selling tokens directly to investors
  • 00:01:27
    at a discount.
  • 00:01:28
    These tokens can either have some sort of utility
  • 00:01:30
    in the company’s project
  • 00:01:31
    or represent an actual tradable asset like a share in the company.
  • 00:01:35
    ICOs are the wild west of fundraising.
  • 00:01:38
    They have no oversight, no regulation,
  • 00:01:40
    and in some cases are complete scams.
  • 00:01:42
    There are no rules for an ICO:
  • 00:01:44
    as long as you manage to get investors on board -
  • 00:01:46
    you’re good to go.
  • 00:01:48
    However, the lack of oversight
  • 00:01:49
    caught the attention of quite a few regulatory agencies,
  • 00:01:52
    causing them to crack down on many companies
  • 00:01:54
    who conducted ICOs.
  • 00:01:56
    This in turn gave rise to the STO.
  • 00:01:59
    You can think of an STO as a regulated ICO.
  • 00:02:02
    There are two main differences between an ICO and an STO:
  • 00:02:05
    First, STOs deal only with security tokens.
  • 00:02:09
    The tokens being sold represent a financial asset only.
  • 00:02:13
    ICOs, on the other hand,
  • 00:02:14
    can also sell utility tokens that are meant to be used
  • 00:02:17
    in order to power a specific platform.
  • 00:02:20
    The second difference is that STOs are fully regulated.
  • 00:02:23
    This means that STOs are compliant with government regulations
  • 00:02:26
    and are usually only offered to accredited investors.
  • 00:02:29
    This leaves a lot of people out of the STO game
  • 00:02:32
    since they just don’t have enough money
  • 00:02:33
    to be considered as accredited investors.
  • 00:02:36
    And now we come to IEOs.
  • 00:02:39
    IEOs are ICOs managed by a cryptocurrency exchange.
  • 00:02:43
    So instead of a company selling tokens directly to the public,
  • 00:02:46
    in an IEO
  • 00:02:47
    everything is done through an already existing trading platform.
  • 00:02:51
    Here’s how it works:
  • 00:02:53
    The company pays a listing fee
  • 00:02:54
    and gives some of its tokens to the exchange.
  • 00:02:57
    In return,
  • 00:02:58
    the exchange takes on
  • 00:02:59
    the responsibility of making the IEO succeed,
  • 00:03:01
    by taking care of the various aspects such as marketing, securing funds
  • 00:03:05
    and vetting investors.
  • 00:03:07
    The exchange then lists the IEO on its website
  • 00:03:10
    and the token sale is conducted through the exchange.
  • 00:03:13
    Once the IEO timeframe ends,
  • 00:03:15
    the tokens are immediately listed on the exchange for trading.
  • 00:03:19
    Here are some additional things you should know about IEOs:
  • 00:03:22
    Unlike ICOs,
  • 00:03:23
    IEOs usually aim to raise a moderate amount of money.
  • 00:03:26
    So you probably won’t be seeing any $150m IEOs.
  • 00:03:31
    Also, IEOs are usually classified as utility token offerings.
  • 00:03:36
    However,
  • 00:03:36
    due to the ambiguous nature of this classification,
  • 00:03:39
    most IEOs will probably not be available in the US
  • 00:03:42
    as exchanges fear regulatory clampdown
  • 00:03:44
    by the Securities and Exchange Commission.
  • 00:03:47
    Companies can conduct both an ICO and an IEO,
  • 00:03:50
    and many do.
  • 00:03:52
    Sometimes a company may conduct a private ICO for strategic partners
  • 00:03:56
    and high net worth individuals.
  • 00:03:57
    Later on, the token sale will move to an IEO for the general public.
  • 00:04:02
    Now let’s take a look at what advantages an IEO has
  • 00:04:05
    over an ICO or STO.
  • 00:04:07
    The first and most important advantage is increased trust.
  • 00:04:11
    Investors rely on the exchange to vet potential IEO projects,
  • 00:04:14
    and since the exchange’s reputation is on the line,
  • 00:04:17
    it has an incentive to do extensive due diligence
  • 00:04:19
    on each project that wishes to be listed.
  • 00:04:21
    This means the chance for dubious projects
  • 00:04:23
    or outright scams is reduced dramatically.
  • 00:04:26
    Second, IEOs are open to everyone who isn’t restricted
  • 00:04:29
    from using the exchange.
  • 00:04:31
    This opens up a whole market of investors
  • 00:04:33
    who otherwise wouldn’t meet the eligibility standards to participate
  • 00:04:36
    if a token sale were classified as an STO.
  • 00:04:39
    Another major advantage is security.
  • 00:04:41
    In the past,
  • 00:04:42
    ICO funds were lost due to hacks or theft.
  • 00:04:45
    With an IEO,
  • 00:04:46
    the exchange deals with securing investor funds
  • 00:04:48
    instead of inexperienced startups.
  • 00:04:51
    Additionally,
  • 00:04:52
    the company selling the token doesn’t need to worry about regulation.
  • 00:04:55
    The exchange is responsible for vetting its own users
  • 00:04:58
    and conducting KYC processes.
  • 00:05:01
    Probably one of the biggest advantages of an IEO
  • 00:05:03
    is token liquidity.
  • 00:05:04
    Once the IEO ends
  • 00:05:06
    people can start trading its tokens instantly on the exchange.
  • 00:05:09
    This eliminates what sometimes happens with ICOs
  • 00:05:12
    where you can’t find a marketplace to trade your newly received tokens.
  • 00:05:16
    And finally we have the marketing advantage.
  • 00:05:19
    The exchange can offer the IEO to its existing user base,
  • 00:05:22
    saving the company
  • 00:05:23
    the hassle of trying to build a prospect list from scratch .
  • 00:05:26
    IEOs are aimed to be a win-win-win situation
  • 00:05:30
    for exchanges, investors and companies seeking funds.
  • 00:05:33
    With an IEO,
  • 00:05:34
    each party can focus on
  • 00:05:35
    what’s necessary to reach its particular objectives.
  • 00:05:39
    The exchange deals with funds and regulation,
  • 00:05:41
    the company can focus on building its product,
  • 00:05:43
    and investors can feel safer
  • 00:05:45
    knowing that a reasonable amount of due diligence was done
  • 00:05:47
    for each project.
  • 00:05:49
    However, IEOs also have some downsides,
  • 00:05:52
    mainly for the companies issuing the tokens.
  • 00:05:54
    First, conducting an IEO costs money and in some cases quite a lot of it.
  • 00:05:59
    Sure, you can say this premium is an investment
  • 00:06:02
    for the marketing, security and regulation efforts you get
  • 00:06:04
    from an IEO,
  • 00:06:05
    but in the end not all companies can afford this.
  • 00:06:08
    Second, an IEO is limited to the exchange users.
  • 00:06:12
    Meaning if the exchange isn’t available in a specific country,
  • 00:06:15
    those people are automatically excluded from the IEO.
  • 00:06:18
    As IEOs become more popular,
  • 00:06:20
    exchanges have started to set up dedicated platforms for them.
  • 00:06:24
    For example,
  • 00:06:24
    the Binance Launchpad is a platform dedicated to conducting IEOs
  • 00:06:28
    on the popular cryptocurrency exchange Binance.
  • 00:06:31
    And as token sales become more mainstream and regulated
  • 00:06:34
    some people believe that IEOs are about to boom
  • 00:06:37
    just like ICOs did in late 2017.
  • 00:06:40
    Will this happen?
  • 00:06:41
    Only time will tell.
  • 00:06:43
    But I will say this - Beware of the hype.
  • 00:06:46
    You should do extensive research into each project
  • 00:06:49
    you consider investing in,
  • 00:06:50
    and never invest money that you can’t afford to lose.
  • 00:06:53
    The majority of tokens end up losing value
  • 00:06:55
    after their initial offering
  • 00:06:57
    and many projects don’t even see the light of day.
  • 00:06:59
    On top of that,
  • 00:07:00
    most of these projects don't even need their own token.
  • 00:07:03
    And if you’re not really clear on what I mean by that last statement,
  • 00:07:06
    you’ll want to take a look at our “What is Blockchain” video
  • 00:07:09
    to learn a bit more before starting to invest.
  • 00:07:12
    That’s it for today’s episode of Crypto Whiteboard Tuesday.
  • 00:07:14
    Hopefully by now you understand what IEOs
  • 00:07:17
    or Initial Exchange Offerings are -
  • 00:07:19
    A token sale that is managed by an exchange
  • 00:07:21
    rather than a company issuing its token directly.
  • 00:07:24
    You may still have some questions.
  • 00:07:26
    If so, just leave them in the comment section below.
  • 00:07:28
    And if you’re watching this video on YouTube,
  • 00:07:30
    and enjoy what you’ve seen,
  • 00:07:31
    don’t forget to hit the like button.
  • 00:07:33
    Then make sure to subscribe to the channel
  • 00:07:35
    and click that bell so that you’ll be notified
  • 00:07:36
    as soon as we post new episodes.
  • 00:07:39
    Thanks for joining me here at the Whiteboard.
  • 00:07:41
    For 99bitcoins.com, I’m Nate Martin,
  • 00:07:43
    and I’ll see you… in a bit.
Tag
  • IEO
  • ICO
  • STO
  • cryptocurrency
  • token sale
  • blockchain
  • exchange
  • fundraising
  • investing
  • regulation