The Main Differences
What is an Initial Coin Offering (ICO)?
It is the crypto space’s way similar to an IPO in mainstream investments and its digital tokens are like stocks for the exchange market. ICOs are used worldwide by companies to raise capital where creators issue a share of their coin’s total supply to reward backers with the projects’ development. Early investors usually contribute via fiat or virtual currency for the new cryptocurrency token specific to the ICO which they hope will increase in value and provide them with good returns.
What is an Initial Exchange Offering (IEO)?
An IEO is administered by cryptocurrency exchanges on behalf of companies who seeks to raise funds with its new tokens. However, these token sales are not available to the public unlike an ICO. Only users of the hosting exchange may participate and in certain cases, with their own native token. As compared to limited trusted parties to monitor ICOs, IEOs may have higher legitimacy as exchanges also need to uphold their credibility before promoting any project.
What is an Initial Public Offering (IPO)?
This is the process of selling stocks of a privately held company to outside investors, converting it into a public company through investment banks/underwriters. It is also commonly known as ‘’Going Public’’ or “Being Listed”. The acquired stocks can be classified into the following categories: preferred stocks, common stocks, or a hybrid. Shareholders are entitled to receive dividends as returns and vote in the stockholders meeting. IPOs are also regulated by relevant authorities.
IEO vs ICO
|1||Exchanges will screen the project before listing.||Anyone can launch an ICO (If it’s legal in their country)|
|2||Smart Contracts are managed by the Exchange||The company raising funds needs to manage the Smart Contract|
|3||Fundraising is conducted at the Exchanges itself.||Fundraising is conducted at token issuer’s website|
|4||No need to manage the KYC/AML verification process||The token issuer needs to manage the KYC/AML process|
|5||The Exchange platform have Predefined Userbase||There is no Userbase before the token launch process.|