Leading the way to blockchain crowdfunding 2.0

Share this article:

Evolving the initial concept of crowdfunding, blockchain technology has opened up to a new wave of financing. Eidoo is leading the way to IEO crowdfunding and a whole set of other funding acronyms thanks to its brand new EidooCROWD section.

Blockchain enables startups and projects to get the funding they need via an innovative and transparent way to raise capital. Thanks to smart contracts, teams can collect money to further develop their projects and issue a so-called token somehow related to it. Depending on the role of such a token within the project, that can assume different configurations – most notably, it can either be classified as a utility or a security. The former is leveraged directly within the ecosystem of the project and can be used to benefit of the products and services related to it. The latter is more similar to a stock, traditionally representing the company.

During 2017, the crypto industry has witnessed a huge wave of projects seeking funds via an Initial Coin Offering (ICO). A wild west that injected liquidity into the sector and boosted its growth.

A more structured blockchain crowdfunding 2.0 is emerging, that leaves ICOs in the past and opens the way to other acronyms such as IEO (Initial Exchange Offering), IDO (Initial Decentralized Exchange Offering) and STO (Security Token Offering) among others.

Let’s focus on the first two categories, what is an IEO? And an IDO?

An Initial Exchange Offering is a crowdfunding method that enables people to support a project by buying the token of such project – being it either a utility token or a security one – while it is listed on a cryptocurrency exchange.

An Initial Decentralized Exchange Offering is a variation of the above, where the cryptocurrency exchange is a decentralized one.

Differently than ICOs, the projects raising funds via IEOs tend to have a stronger background – in most cases, for example, the token is related to a project that’s already partially developed – as this increases the likelihood of exchanges backing and listing them for their crowdfunding operation.

While the ICO method sees the crowdfunding as an independent operation (that may or may not be followed by the listing of the relevant token on a cryptocurrency exchange), an Initial Exchange Offering is done within a reference exchange.

Pioneers of the blockchain crowdfunding 2.0 are two of the most well-known exchanges in the crypto industry – namely, Binance and Bitfinex. The two exchanges are leading the way by enabling projects to run their IEOs under specific conditions.

While exchanges such as Binance and Bitfinex are the underlying exchange for the IEO, tokens can be purchased on other platforms as well. Thanks to its established network of accredited investors (that also brought to life our successful LEO IOU initiative), Eidoo is able to open those opportunities to a larger crowd.

An example of this is Dusk, a Bitfinex-backed IEO made available on the Eidoo platform as well. The crowdfunding has opened on Eidoo with an available batch of 300,000 USDT, that went sold out in a jiffy!

Eidoo’s new section EidooCROWD is a Kickstarter-like crowdfunding platform for blockchain projects to get funding and for users to scroll among projects and access the ones they like. A window through IEO and IDO operations as well as other crowdfunding initiatives for users to have a perspective on what is going on in the blockchain ecosystem.

Stay tuned on our EidooCROWD section!