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One of the most hyped-up news stories last month was the Fetch.AI project, which raised $6 million in 22 seconds in an initial exchange offering (IEO) on Binance. Previously, thanks to very high levels of activity, the entire volume of BitTorrent tokens was sold for $7.2M in 18 minutes, using the same tool.
What is an IEO, and what are the key differences between it and a traditional ICO? You can find answers to these questions below.
Last year, the ICO (initial coin offering) was the most popular method of fundraising. I would not say that interest in ICOs has completely disappeared, but the situation has changed dramatically compared to the end of 2017, when about 50-60 new ICOs were held every day – not all of them, of course, high-quality and honest projects.
According to a study by Satis Group, approximately 80% of ICO projects are scams, with fake projects attracting, in total, one tenth of all funds invested. Of the $1.9 billion raised in 2017, $1.34 billion went to fraudsters. Another negative factor is that the legislative framework has not improved in most countries, and investors are still unprotected against fraud.
What is an IEO?
An initial exchange offering is a token sale held on an exchange. The key difference between an IEO and a traditional ICO is the use of an exchange as an intermediary. The exchange team conducts a preliminary audit and technical verification of the project and its tokens to assess the project’s investment attractiveness and potential, after which it announces the start of the token sale on the exchange. Investors wishing to purchase tokens do not need to send funds via a smart contract,