What Is IEO (Initial Exchange Offering)?

In an IEO, the exchange vets the project according to its own criteria before the sale, organizes the sale on its own infrastructure, and commits to listing the token shortly after the sale is completed. Participants need to have an account on the exchange that has passed KYC verification. The exchange generally receives a fee or a share of tokens for this service. The model became popular in 2019 with major exchanges' launchpad platforms.

After the scams of the ICO era, IEOs were presented as a more auditable alternative because the exchange puts its reputation behind them. For the investor, it means participation without dealing with smart contracts or wallet management; for the project, it provides direct access to the exchange's broad user base.

However, an exchange's vetting does not guarantee that a project will succeed. Because participation is often conditional on holding the exchange's own token, demand can be artificially inflated; after listing, early participants' profit-taking can cause the price to fall sharply. In addition, because token sales can be treated as falling under securities regulations in many countries, exchanges exclude citizens of some countries from participating.