IEO – Initial Exchange Offering
As opposed to an ICO often conducted directly by the project team to raise funds to develop a cryptoasset. Initial Exchange Offerings (IEO) take place via exchanges when projects launch their tokens using the exchanges infrastructure in an attempt to leverage the exchange’s user base to raise capital.
Exchanges are incentivized to offer this option to projects because of the listing fees they can earn. Projects are incentivized to take this route because they can raise capital more easily by leveraging an exchange versus building out the capabilities required for an ICO independently.
Another advantage for projects using this approach is the ability to diversify their treasuries. Historically most ICOs have taken place on Ethereum. Post ICO, projects ability to fund development is then heavily tied to the price of ETH.
During an IEO, exchange users typically have the option to purchase tokens using the same options offered for trading on the exchange. So the funds raised usually reflect a combination of bitcoin, ethereum, and a variety of fiat.
Binance was the first exchange to offer an IEO via its Launchpad platform. Given the success of this approach on Binance many other exchanges soon followed including:
- Bittrex
- OKEx
- KuCoin
- Huobi
One downside of IEOs is that the token is only available to users of the exchange the listing takes place on. Versus the open architecture approach of ICOs were anyone with a wallet can participate in the sale.
Further Reading IEOs
Binance Launchpad Guide: How To Invest In IEOs