What Is an Initial Exchange Offering (IEO) In Crypto?

Cryptocurrency is defined as a digital currency based on a distributed network. The increasing demand for cryptocurrencies and wide adoption by financial institutions and payment giants such as PayPal and Square reflects its undeniable ascent. While Bitcoin and crypto have had a somewhat rocky start, today BTC’s value is almost surpassing its all-time high again, and more cryptos are emerging to follow in its footsteps. 

In general, you can purchase cryptocurrency during its initial release in the initial coin offerings (ICOs). But the ICO fever of 2017 proved to be a risky environment for investors. In contrast, an initial exchange offering (IEO) offers a more secure alternative for investors to purchase tokens with funds directly from their exchange wallets during the fundraising phase. 

What Is an IEO?

An initial exchange offering (IEO) is a way for start-up companies to raise capital by selling utility tokens which confer preferred status with the company through a cryptocurrency exchange platform. In short, crypto exchanges help to oversee the token sale by making sure the project vetting process is scrutinized. The IEO originated in January 2019 when Binance Launchpad launched the BitTorrent Token (BTT). The initial offering sold out within 15 minutes of release, raising funds of more than $7.1 million.

The IEO has gained popularity mainly because it’s easy to participate in. Instead of processing on-chain transactions across multiple blockchains and wallets, the IEO offers a solution for users to assess the reliability of a project and to participate in funds exchange all under one roof. At the same time, project developers get immediate exposure to the crypto exchange’s user base without needing to fork out millions of dollars to formulate and execute their marketing strategies. Thus the IEO is a win-win for both users and developers.