ICOs and IEOs: what they are and how to participate in them

In the world of cryptocurrencies and blockchain technologies, you can often hear such terms as ICO and IEO. These acronyms denote various methods of raising capital for new projects. In this article we will understand what ICO and IEO are, what are their differences and how you can participate in them.

What is ICO?

ICO (Initial Coin Offering) is an initial token offering. It is a way to raise funds to finance new cryptocurrency projects. As part of an ICO, a company issues and sells its tokens to investors in exchange for fiat money or cryptocurrency, most often Bitcoin or Ethereum.

How does an ICO take place?

• Project preparation: Project creators develop an idea and write a White Paper – a document describing the essence of the project, its goals, technical details, team and a plan for using the raised funds.
• Token creation: Tokens are created on a platform such as Ethereum using smart contracts.
• Marketing Campaign: The project is actively promoted through social media, forums, blogs and other channels to attract investors’ attention.
• ICO launch: During a pre-announced period of time, investors can purchase project tokens by paying in cryptocurrency or fiat.

How to participate in the ICO?

• Research the project: Familiarize yourself with the white paper, the project team and its reputation.
• Wallet preparation: Create a cryptocurrency wallet that supports tokens of the standard used by the project (e.g. ERC-20 for Ethereum).
• Registration and KYC: Register on the project platform and go through the KYC (Know Your Customer) process if required.
• Token Purchase: During the ICO period, transfer the required amount of cryptocurrency to the project’s smart contract address and receive tokens to your wallet.

What is IEO?

IEO (Initial Exchange Offering) is an initial token offering conducted through a cryptocurrency exchange. Unlike ICO, where the project itself sells tokens, in IEO the exchange is responsible for the process, which provides additional security and trust from investors.

How does an IEO take place?

1. Exchange selection: The project chooses a cryptocurrency exchange that will conduct the IEO.
2. Preparation and audit: The exchange audits the project, verifying its legitimacy and prospects.
3. Marketing and Announcements: The exchange and the project jointly conduct a marketing campaign informing users about the upcoming IEO.
4. IEO launch: At the announced time, investors can purchase project tokens directly through the exchange.

How to participate in the IEO?

1. Select an exchange: Decide which exchange will host the IEO.
2. Create an account: Register on the selected exchange and go through the verification (KYC) procedure.
3. Account funding: Transfer the required amount in cryptocurrency or fiat to the account of the exchange.
4. Participate in the IEO: At the appointed time, buy project tokens through the exchange interface.

Main differences between ICO and IEO

• Platform: ICO is conducted directly by the project, IEO – through the exchange.
• Security: IEO provides greater security due to the verification of the project by the exchange.
  Ease of participation: It is easier to participate in IEO, as the process of token purchase is organized through the exchange.

Conclusion

ICO and IEO are effective ways to raise capital for cryptocurrency projects. ICO gives more freedom and independence to projects, but requires investors to carefully analyze and be cautious. IEO, on the other hand, provides additional security and trust due to the participation of cryptocurrency exchanges. Choose the investment method that best suits your preferences and security requirements, and remember to thoroughly research projects before investing.