What Is an Initial Exchange Offering (IEO)?

Initial Exchange Offering is a process that is happening on a platform of a cryptocurrency exchange. Some IEOs may be on multiple exchanges, but mainly, IEOs are only available to exchange users. Like ICOs, IEOs allow investors to receive new cryptocurrencies (or tokens) while raising funds for promising crypto projects. However, ICOs have become less popular in recent years, while many crypto projects are starting to raise money through the initial exchange offering. Token sales are going on in exchange platforms. Therefore, token issuers must pay a listing fee and the percentage of tokens they sold during the IEO. In return, token issuers will sell crypto startup tokens on the exchange platform. They will have their coins listed after the IEO is complete. Cryptocurrency exchanges make up a certain percentage of the tokens sold by startups. Thus, exchanges have to support the marketing activities of token issuers.

Characteristics of Initial Exchange Offerings

Like the ICO, the initial exchange offering offers a limited number of coins at a fixed price. Restrictions exist on purchasing minimum and maximum tokens per user, soft and hard caps, and a dedicated accepted cryptocurrency.

However, in contrast to ICO tokens, IEO coins are coined before the crowd sale. In addition, it will be more convenient for investors to access the exchange days or weeks after the IEO (immediate liquidity). The IEO process involves an intermediary to control the funds. It also helps increase investor confidence in projects that most ICOs lack.

Pros and Cons of Initial Exchange Offerings

As with any of the offerings, the initial exchange offering also has advantages and disadvantages. To start with the benefits, they are as follows;

1. Investors feel more sure. Seeing a digital asset token sale on a crypto exchange they trust can give a project more legitimacy.
2. Benefits for the projects. Increased marketing activity through exchanges, increased credibility, awareness, and interest in the project.  
3. Removal of scams. The IEO project teams are not fake or incognito; thus, they won’t disappear after receiving the funds.

The disadvantages of the initial exchange offerings are;

1. Not clear regulations/restrictions. Many countries have partially restricted or fully banned ICOs, and to some extent, it may affect IEOs as well.
2. Crypto projects must pay listing fees. Moreover, they will have to pay percentages from the tokens they sold. 
3. A limited number of investors.  Many investors complain that because of a limited quantity of investors, not everyone manages to get tokens during IEOs.

Statistics

The Binance Launchpad and the newly introduced Launchpool are platforms for the Binance ecosystem that help projects remove tokens from the ground. We provide full-service advice from pre-launch to post-listing to marketing support. These aim to help project teams focus on product development and construction while providing an initial marketing exposure and user base. 

By August 2021, Binance Launchpad raised more than $ 96 million in 48 projects with more than 1.8 million participants. The benefits of launching with Binance include:

• Exposure to millions of Binance users worldwide.
• Strong liquidity in multiple pairs.
• Token distribution to a broad user base.
• A future with Binance ecosystem projects.

Conclusion

Initial Exchange Offering is a process that is happening on a platform of a cryptocurrency exchange. Alike the ICO, the initial exchange offering offers a limited number of coins at a fixed price. Nevertheless, in contrast to ICO tokens, IEO coins are coined before the crowd sale. As for the investors, IEO is a more trustworthy and convenient process, moreover, it has far more benefits than an ICO.