What is IEO

An Initial Exchange Offering (IEO) is a fundraising method used by cryptocurrency projects to raise capital through the sale of tokens. Unlike Initial Coin Offerings (ICOs), which are typically conducted independently by project teams, IEOs are facilitated by cryptocurrency exchanges. This model provides a layer of trust and security as exchanges conduct due diligence on the projects before listing their tokens for sale. The IEO format gained popularity as it offers more protection for investors and aims to reduce the risks associated with scams and failed projects.

The concept of IEOs emerged in early 2019, gaining traction as exchanges sought to attract new projects to their platforms. By leveraging their established user bases, exchanges can offer projects a streamlined way to access funding while allowing investors to purchase tokens directly through a trusted platform. This shift has transformed the fundraising landscape in the cryptocurrency space, with many projects opting for IEOs over traditional ICOs.

The IEO process begins with a project team approaching a cryptocurrency exchange to facilitate their token sale. The exchange conducts a thorough evaluation of the project, including its whitepaper, team, and market potential. Once approved, the exchange lists the IEO on its platform, providing promotional support to attract investors. Investors can then purchase tokens directly using the exchange's native cryptocurrency or other digital assets.

During the IEO, the exchange typically manages the smart contracts, ensuring that tokens are distributed automatically to buyers upon completion of the sale. This system streamlines the process for both the project and investors, as the exchange handles the technical aspects and provides a secure environment for transactions. Additionally, IEOs often come with a vesting period for investors, preventing immediate sell-offs that could impact token prices.