After several years of market dominance, ICOs have been replaced by IEOs (Initial Exchange Offerings), which feature the following differences:
a) Projects sell their newly-minted tokens to investors not on their own but through an exchange that acts as an intermediary;
b) Projects have to satisfy multiple criteria;
c) Exchanges subject issuers to a strict selection and verification (KYC) to minimize investors’ risks;
d) The exchange is also supposed to provide liquidity: though a success is never guaranteed, the chances to reach the Soft Cap (the minimal amount of funding that makes project implementation possible) are much higher;
e) The token is listed on the exchange right after the IEO, solving the issue of listing.
It could seem that Iand EO is a win-for-all. Indeed, projects obtain support from the exchange that helps them attract investors and list their token, while buyers face a much lower risk of fraud. However , the IEO market is facing a serious problem: exchanges charge too much for their services. The cost of holding an IEO on a leading exchange can reach $3 000 000. Centralized exchanges view IEOs as a major source of revenue, which leads to two negative consequences:
1) Many promising, high-quality projects cannot afford an IEO and thus have no access to funding;
2) Small exchanges seeking to profit from the IEO boom agree to hold token offerings for dubious projects without a proper KYC. This discredits the IEO concept itself.
