Making The Most Of An IEO

Admin

Feb 9, 2022

Being given the opportunity to partner with a highly successful fintech company in the age of digital assets is an incredible opportunity, but a lot of people don’t realise how this can be done. Such partnership is often thought to be reserved for wealthy executives who run Venture Capital funds and lots of money to spare. But with the advent of blockchain technology, there is now opportunity for everyone everywhere to participate in the successes of some of your favourite companies.

The particular company we’re talking about in this post? Us of course. Yes, forgive us for being a little hubristic in our approach here, but we’re excited to invite you, the valuable users of our tried and tested platform, to partner with us as we launch MEX Digital.

What we’re talking about is an “Initial Exchange Offering.” An opportunity for users like yourself to partner with us and our vision for the future in an incentivised manner.

What is an Initial Exchange Offering (IEO)?

So let’s start there… What exactly is it that we’re talking about here?

An IEO is an offering that takes place utilising blockchain technology, and is conducted directly by an official cryptocurrency exchange like MEX Digital. The exchange can either host its own IEO, offering a token related to its business offering, or it can administer offerings on behalf of a small business or a startup that is looking to raise funds in return for tokens. The exchange issues and sells tokens that will help such businesses raise a certain amount of capital.

For The Listing Businesses

Third party businesses have to pay a fee when they are conducting the token sale on an exchange platform. Not only the listing fee, but these businesses also many times have to pay a percentage of token sales to the exchange (this depends on each exchange in this instance - and of course we’ll be careful to divulge our own practices here!).

These fees enable the crypto startups to sell their tokens on the platform, which lists their coins after an IEO is over such as how stock would trade on a stock exchange. The exchange is incentivised upon helping the issuer’s marketing operations and is receiving the percentage on the tokens sold.

Participants

IEO participants traditionally have to create an account on the platform of the crypto exchange in question, and do not have to send contributions using smart contracts up front (unlike ICOs). Merely having an account on the exchange with funds in their wallet is sufficient for an investor to participate. The contributors then use the coins they added in their exchange wallets to purchase the tokens of the fundraising company, or the exchange itself depending on the IEO.

How to make the most of it

So how do you make the most of an IEO? Well, the key is to find the offerings that are both new, and promising. Contributing to a company that makes empty promises and outlandish statements without any true substance to their business plan is always going to be unwise.

This is why we always encourage users to “do their own research”! Research the companies that are running an IEO, and see if their project is indeed promising. If you believe in it, then it’s worth supporting them. Remember, this isn’t just for you to “make a return”, it’s to support a good cause/vision, with the bonus of being rewarded for doing so.

In the event of an exchange, it’s helpful to find an exchange early! For instance, users who bought the Kucoin token when they first ran their offering back in 2018 have been rewarded handsomely, because Kucoin have gone on to become highly successful. If you can find exchanges that look promising, but have solid roadmaps and strong vision, you’ll stand yourself in good stead.

And above all, on top of doing your research, never invest more than you can afford to lose! This must be done responsibly.

Keep an eye out on our email newsletter and social media channels, because we have exciting IEO news coming in the not too distant future!

Thanks for reading, and stay safe.

We at MEX Digital always encourage users to take extreme caution when trading crypto. As always, please do your own research, and devise your own strategies. This is not financial advice!