ICO vs IDO vs IEO : Which is the best fundraising method for your crypto projects?
People who are familiar with stock, will definitely know that an Initial Public Offering is an IPO. In the traditional financial world, an IPO is a common way for a company to raise capital by going public and offering its shares to the public for the first time. Which means professional investors, independent speculators, and some supporters are able to buy shares in a company. However, in the crypto world, the concept of an IPO has not been widely adopted, as most blockchain-based projects have chosen to raise funds through other methods such as Initial Coin Offerings (ICOs), Initial Exchange Offerings (IEOs), or Initial DEX Offerings (IDOs).
A crypto project might engage in any of that offering or else in any combination, or even all together. But what is that offering? What does it mean, and How they are different? Let’s Discuss
What Is an Initial Coin Offering – ICO?
An ICO is a fundraising method in which a new cryptocurrency is issued and sold to investors in exchange for established cryptocurrencies or fiat currency. The purpose of an ICO is to raise funds for the development of a new blockchain-based project.
How Does ICO Work?
Since the inception of the ICO fundraising model of an ICO there has been a relatively easier option to use it, there was no vetting process enacting for gathering the projects list on this exchange platform. To get it listed the owners of the project should pay the fee. It also had a working principle:
To initiate with, a pitchbook called white paper must be provided by the crypto projects where they have to list the reason for the fund raise. It will have some details like
- Name of the project
- Aim of the project
- The target for fundraising
- The token available for the investors
- Multiple payment accepted
- ICO campaign duration
1. To get listed on a preferred platform every startup and owner’s of crypto projects should pay an exchange fee amount.
2. After finalizing the token price and its amount it is distributed to investors of the crypto project.
3. After the onboard of enough investors to the project, tokens are traded over the exchange platform for other cryptocurrencies.
Mostly ICO has a free reign on particular types of tokens that would offer an investor. Most of the crypto projects might get started by offering some utility tokens. It ‘s not actually an asset if the project goes well it can be sold by the investors. As an alternative some tokens were also offered as security, which allowed most investors to enjoy some gain over monetary in the future, mostly their value dependency on company share.
Some beneficial aspects of ICO
Most people say IDO development is beneficial than ICO development, but ICO has quite a unique benefit over their former. They are
- High Revenue On Interest
- Hassle free for startups / small companies
- Easy Accessible
What Is an IEO?
An Initial Exchange Offering is termed as IEO widely. Mostly every cryptocurrency exchange requires a verification process. Here the crypto projects that get onto a crypto exchange platform are reliable on a IEO development. When you buy from a crypto exchange it doesn’t require any information about individual projects for any payment that you will invest through exchange.
Sometimes getting verified from the crypto exchanges might take a long time, some crypto projects will have an ICO and later get an IEO. These projects are mostly to be successful on exchange. A crypto project doesn’t have an ICO of its own but waits to go public through exchange.
Mostly the ICO might get skipped by some crypto projects because they are afraid of regulators. Say for example the coinbase exchange is reporting to the IRS. Selling by exchanges has a huge pressure on organizations that host crypto projects.
How Does IEO Work?
On an IEO fundraising crypto model the initial step is the owners should submit whitepaper to all crypto exchange platforms. It should also state every individual’s background status, the overall tech behind it, their selling point and the project’s tokenomics. The IEOs work postulates are,
- Only the crypto exchange platform will decide whether a crypto project is eligible to list or not.
- After getting listed in the crypto exchange the investors have to take the KYC & AML verification process to initiate the crypto project.
- The exchange platform is publicising the crypto project. The owners of the crypto projects will also do their marketing.
Beneficial aspects of IEO
Comparing to the benefits of IEO vs ICO, IEO will come with most benefits that will help to construct a reliable crypto fundraising model. Some are,
- Confidence in between project owner and investors
- Improved User Experience
- Hassle free participate
What Is Initial DEX Offering IDO?
An Initial DEX offering service is known as IDO Offering in which a new cryptocurrency is issued and sold on a decentralized exchange (DEX) rather than a centralized exchange. So instead of buying and selling coins in exchange from sellers and buyers, they can do it among themself. Say for example if an ICO is buying crypto from artist and crypto exchange is buying from auction, a DEX will be buying from a flea market. IDO development methodology may seem easy and fun but it has more responsibility over a buyer. In some fact his DEX are way older than today’s famous centralised exchange.
How Does Initial DEX Offering – IDO Works?
The Initial DEX Offering – an IDO crypto fundraising model that will list all the crypto projects on DEX – decentralized exchange platform. Finally the DEX will act as a crypto platform to facilitate tokens or coins sale. There are various DEX platforms, but mostly the work principle will be the same for all.
On the DEX platform the crypto project will be submitted and then the platform will vets it. This is to ensure the legitimacy of the crypto project and to protect the investors from scam.
Simultaneously the DEX ensures the fixed price and the supply of the token made available once after listed. This also ensures that an investor can’t buy a token beyond the limit this is to prevent the dump/pump after the price rise.
Moreover anyone who is interested and are free to invest the money on buying these crypto tokens. Mostly this investing will be open to the persons who are DEX platform members or who has crypto wallet.
After the fund raises the liquidity pool which was created will be locked over a certain period of time. The fund that remains, will be reverted to the project. Investors are free to keep their tokens as their like.
Beneficiary aspects of an IDO
- Crypto projects that are reliable
- Sudden liquidity after sale
- Not requires KYC & AML verifications
- Eligible for startups
- Precautious from dumps and pumps
Is That All Right?
Actually no it’s not. There are more ways for a cryptocurrency to go in people’s hands. But, mostly this has to be done with various kinds of cryptocurrencies because most of them are not made equal.
Say for example, security tokens will be operating more like Company’s shares. The main difference among stocks and security tokens are instead of being registered the security tokens are at blockchain. If it’s not a cryptocurrency or a stock there is no need to answer to anyone.
Most crypto projects will have Security Token Offerings. But, the offerings will be usually limited to the investment groups of an organization.
ICO vs. IEO vs. IDO
More crypto projects which have an ICO-Initial Coin Offering can be successful. But the crypto projects that are listed on most exchange platforms are not successful. Experiences with DEX – decentralized exchange platforms can be either positive or negative. It isn’t a matter of how you buy a crypto, you should make sure to do a full research before any investment.
Conclusion on ICO vs IEO vs IDO
Among these various crypto fundraising models the IDO- Initial DEX Offering is mostly preferred to raise funds for crypto projects because of its decentralized mode. It is solving most problems that is faced by every ICO- Initial Coin Offering and IEO – Initial Exchange Offering. Whether it may be a IDO vs ICO, or IEO vs ICO, the ICO-Initial Coin Offering model has become one of the outdated ones, and it’s not an easy task to find legitimate crypto projects under this particular model.
The process of vetting is available on both IDO-Initial DEX Offering and IEO- Initial Exchange Offering helps most of the investors of the project to implement the final decision on spending their money on it or not. As stated before, it’s always a best deal to do research on before you invest on any project. You should always invest only some portion of the amount on which you are comfortable enough to loss. This will also help you prevent frauds that have become a prevalent ICO model. So, IDO, IEO and some other models that are relevant are also trustworthy.
Addus technologies is the best ICO, IDO, IEO development company that offers customized blockchain solutions to help businesses raise capital through token offerings. We provide expert services in smart contract development, decentralized application development, and blockchain integration to ensure seamless and secure fundraising. Trust us to deliver innovative and effective solutions that meet your specific needs.
