Ever since its introduction, blockchain has been continually involving to make processes and transactions more secure, transparent, and scalable. One of its innovations is the tokenized crowdfunding model, a boon to startups and businesses. They can use models like ICO and IEO to raise funds with a hassle-free mode.
When it comes to Initial Coin Offering (ICO), it was introduced in 2017 and has been gaining a lot of popularity since its launch. Several businesses, both small and large, started to rely on ICO development companies to enjoy the benefits of ICO, and many are using it even today. But after a while, scammers began taking advantage of people’s money with ICOs by promising them lucrative investments. As a result, the crypto world gave birth to some new fundraising models like IEO.
IEO – Initial Exchange Offering was introduced as ICO 2.0, as the development and launching mechanisms are similar to ICO. In a short duration, IEO also became a popular tokenized model to raise funds by startups and entrepreneurs.
Given that both ICO and IEO are successful tokenized fundraising models, making a decision is not at all easy. Therefore, to help you choose the right option, we have explained the advantages and pitfalls of both.
Pros of Initial Coin Offering:-
- As compared to other crowdfunding models, it is easier to set up ICO.
- To invest in the Initial Coin Offering, you don’t necessarily need to have huge capital.
- In the case of ICO launch, there is a little-to-no intervention by the government.
Cons of Initial Coin Offering:-
- Limited security is one of the biggest pitfalls of ICOs, which means it is vulnerable to scams and frauds.
- For long-term investments, ICO is not a suitable option.
- Lots of useless coins reduce the profitability of ICO.
Pros of Initial Exchange offering:-
- One of the prominent advantages of IEO is that investors don’t have to invest much effort and money.
- Token issuers can take advantage of a large customer base.
- KYC and AML will be entirely taken care of by the exchange.
Cons of Initial Exchange offering:-
- Some of the IEO exchanges are susceptible to fraud, especially small IEOs because they are getting required protection.
- In comparison to ICOs, the liquidity level in IEO is very low.
- Higher probability of price manipulation by the investors.
Based on the above discussion, it is clear that IEO will stay for a long run. Now you can decide whether to hire an ICO software development company or one that offers IEO development services.