What Is an IEO? Initial Exchange Offering Guide

IEO (Initial Exchange Offering) is theoretically a form of ICO, but the main difference is the platform where the cryptocurrency is offered. While in ICOs this platform is provided by the project itself or third parties, in IEO the platform is the cryptocurrency exchange itself. As you can guess from its name, an IEO is the sale of cryptocurrency not directly to investors, but through the support of an exchange platform. Developers receive funds not directly but through the exchange where the IEO takes place.

Since the initial sale of cryptocurrency is done on the exchange platform, token providers pay a listing fee along with a percentage of tokens sold during the IEO. In return, the exchange sells tokens to investors at a lower price by leveraging both their own and the project's popularity. During the IEO process, the exchange and project developers manage the marketing process together.

What are the Advantages of IEO?

One of the biggest advantages of IEOs is security. Fraud incidents that we frequently hear about in the cryptocurrency world also occur in initial sales. IEOs conducted through exchanges allow investors to trust the exchange as an intermediary institution. In ICOs, since the sale is made directly by developers, there is no alternative other than trusting the project team for the legitimacy of the project.

Therefore, IEOs allow investors to easily distinguish fraudulent and suspicious projects.

In some cases, investing in a project through an IEO can be easier than investing through an ICO. While some ICOs may require you to perform multiple tasks or have high participation requirements, IEOs are generally public offerings that all exchange users can participate in.

Another major advantage of IEO over ICO is exchange listings. After an ICO, projects need to negotiate with exchanges for listing. However, since IEOs are directly on exchanges, the cryptocurrency sold is usually listed on that exchange.

What are the Disadvantages of IEO?

The biggest disadvantage for a cryptocurrency project sold through IEO is on the cost side. When a project applies to sell through an exchange, they may have to pay a certain fee to the exchange. Therefore, some projects that don't have sufficient financial resources may not be able to conduct an IEO through an exchange.

What are the Differences Between ICO and IEO?

• While ICO is conducted directly with the developer team through a website, IEO is conducted through an exchange platform.
• ICO participation requirements can vary from project to project. IEO is conducted according to pre-determined procedures by exchanges such as AML (Risk Management) and KYC (Know Your Customer).
• After an ICO, projects need to reach out to exchanges themselves for token listing, but in IEO, the exchange where the sale takes place usually lists the project afterward.
• While in IEO the project team has to pay a certain amount of money or cryptocurrency to the exchange for the sale to take place on the exchange, in ICO no fee is paid to any exchange since the sale is done by the team itself.