13 Nov 2020 | Finxflo
Since Finxflo’s private round of crowdfunding is drawing near a successful conclusion, we are here to talk about the next stage of our crowdfunding the IEO (Initial Exchange Offering). The IEO will be a single round of public sale where Finxflo is going to offer its native FXF utility token to retail investors through regulated cryptocurrency trading platforms. The amount available for IEO investors is 2% of the 600 million total supply of FXF tokens (12,000,000 FXF).
Initial Exchange Offerings (IEOs) are a way of fundraising where a cryptocurrency exchange partners up with a cryptocurrency startup to offer the startup’s token to its clients at a discounted price. The IEO usually doesn’t last more than a few days during which all registered exchange users have the opportunity to acquire the new crypto asset. The token sale starts at the pre-determined and pre-announced time and closes likewise or when the financial objective is reached.
Usually, the cryptocurrency exchange lists the startup’s utility token immediately after the IEO has ended, making trading pairs with the new token available to the wider trading audience. As previously stated, an investor needs to have a valid account on the cryptocurrency exchange to access the IEO and, if where an exchange is regulated, needs to pass through a standard KYC process, either before investing or immediately upon opening the account on the platform.
Exchanges are typically compensated by taking a percentage of the overall funds raised through their platform and/or a flat upfront fee.
During the bull market of 2017, ICO (Initial Coin Offering) was a popular way of fundraising in the cryptocurrency industry. Crypto-related startups offered investors their utility tokens at the discounted price in exchange for funds needed for the project development. Through ICOs, some of the most established blockchain projects were funded. For example, one of the most successful ICOs, Ethereum, raised $16 million back in 2014, before the all-encompassing ICO frenzy.
The Ethereum modus operandi was accepted by countless other crypto projects, and ICOs started booming as the crypto market scored historical highs. However, a lot of projects which received substantial investors’ backing failed to deliver on their pre-funding promises, resulting in deep losses for investors. Thus, the level of trust towards this unregulated form of crowdfunding quickly deteriorated. Consequentially, many jurisdictions started cracking down on ICOs since these types of fundraising were not regulated in the first place. Therefore, startups had to find another way to raise funds.
The first and most logical option was to offer their utility tokens through exchanges that already had critical mass and were, by late 2018, mostly regulated. The new way of crowdfunding became an overnight success; not only was IEO a far simpler way of crypto-asset acquisition, but investors could also trust the established exchanges to perform due diligence before offering projects’ utility tokens. Investors didn’t have to pass through registration on the startup’s website or run separate cryptocurrency wallets for the new asset since the whole infrastructure was provided by the exchange. IEOs immediately brought another influx of investments into the crypto startups market, fueling the next wave of cryptocurrency projects.
Benefits of IEOs in comparison with other ways of fundraising (especially ICOs) can be numerous for investors, exchanges, and startups alike. Here are some of the most significant:
While the announcement with the date and the actual platform where our IEO will be conducted is yet to come, we are going to explain why Finxflo chose this way of fundraising for its private sale and what we are looking to achieve through the IEO.
The most important thing to emphasize is that Finxflo’s IEO will only pass through established cryptocurrency trading platforms that already enjoy a high level of investor trust. Through such partnerships, Finxflo is looking to be present on some of the most integral exchanges immediately after the IEOs conclusion. We also intend to observe the highest regulatory standards from the very beginning of our market presence.
The public round of Finxflo’s fundraising campaign will offer only 2% of the FXF token total supply, which means that investors will have a chance to acquire 12 million FXF tokens. All these funds will be tradeable on the exchange where the IEO took place, allowing for potential rising demand in the FXF token after successful completion of the IEO.
Furthermore, Finxflo expects our brand to profit from greater visibility while making the investment and token distribution process simple and secure for all IEO participants. The IEO in partnership with a crypto trading heavy hitter is going to broaden our lively community and take it to another level by showcasing Finxflo’s groundbreaking product, and it is well-known that in the cryptocurrency market, the community is the cornerstone of every successful project.
Stay tuned for the upcoming announcements regarding Finxflo’s IEO and the approaching conclusion of the private fundraising round. If you want to know more about Finxflo, visit the links below: