In January 2019, financial writer and consultant Charles Bovaird asked his readers in a Forbes article about the death of the ICO market. Bovaird quoted analysts saying that the ICO market was pretty much dead right now.
After China banned ICOs and the US SEC regulators issued official warnings against Initial Coin Offering processes in the second half of 2017, the crowdfunding model entered in a downtrend that has been in place since then.
Many voices are calling against the ICO market, and even Investopedia reported back in 2018 that most of the ICO projects were scammers.
“Dead and over,” as Forbes quoted analysts saying… but is it accurate?
While global funding in fintech companies rose to a record $111.8 Billion in 2018 according to KPMG research, the ICO market seems to be declining. However, the numbers tell a pretty much different story.
What is true is that the average money raised by ICOs has been going down in the last years, the total amount of funds collected by projects remains stable. ICOs raised $6.2 billion for 875 projects in 2017, while the funds raised in 2018 increased to $7.8 billion, but for 1,258 projects.
So, companies that are developing ICO projects are struggling to raise money. However, that situation is changing as ICOs are evolving into a new way of crowdfunding.
IEO Projects Are Ending the Crypto Winter
So, is the ICO market truly dead? No, it is just evolving. In the same Forbes article, Bitcoin Market Journal publisher John Hargrave said that ICO market is not dead, but changing.
In December 2017, Binance launched the first ever initial Exchange Offering through its Binance launchpad. It happened quietly in the industry, but it showed the path that would transform the crowdfunding market in the crypto industry.
First, What Is an IEO?
It is similar to an ICO but implemented in an exchange or marketplace that allows people to participate more efficiently. In the platform, startups don’t need to develop their token sales on their own anymore.
Selective token sales are completed in seconds as platforms provide a place where everybody is there: network, money, security, and a post-sale marketplace.
Also, IEO provides projects with the option to get listed right after the selling concludes, so it will allow investors to exchange, sell or buy more assets, or even cash in investments if they want.
IEO platforms are changing everything in the way startups are raising funds and doing ICOs. They provide a holistic solution for startups that want to raise money. Arthur Boytsov, vice president of IEO consulting agency Priority Token said:
“We’re starting to see IEOs growing in popularity similarly to ICOs in 2017, and the projects which can manage to qualify for an IEO are likely to raise money quickly and easily.”
Why Are IEOs Better Than ICOs?
IEOs have more requirements than ICOs. Usually, the Initial Coin Offerings are developed by the company launching the token. They put the rules, and they make the sale.
It raises many questions regarding the safety of the investors as nobody, but the company itself is granting the process.
On the other hand, IEOs are different as projects are conducted through exchange platforms that have high-quality standards. All projects should meet the legal, technical and team requirements from the exchange as cornerstone components for security.
Exchanges want to protect their customers. Platforms don’t want to get involved with unsuccessful projects or scam artists. So, not only KYC processes but also research, security, and reliable company backgrounds are required.
IEOs should be developed and robust business models. Companies should have a strong online and PR presence, a reputable team and a community behind.
Finally, tokens issued in IEOs are in the market right after the sale. So, investors will be able to exchange, sell it or buy more to build their portfolios.
Despite IEO are not open to the public as you should be registered in the selected exchange to participate, it offers security, guarantee liquidity and a marketplace where you can work with your new acquisitions.
So, let’s ask us again. Is the ICO market truly dead? No, it is just evolving. IEO projects are ending the crypto winter. The long crypto night has ended.
Disclaimer The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of CoinGape. Do your market research before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.
Andrey is a digital entrepreneur with more than 10 years of experience, IEO Adviser, Hackernoon and BitTorrent investor. He believes that actual usefulness is the best PR for any project.