What is an IEO?
An Initial Exchange Offering (IEO) is a fundraising method in which a cryptocurrency exchange acts as an intermediary between the project developers and investors. Unlike Initial Coin Offerings (ICOs), where projects directly sell their tokens to investors, IEOs involve the exchange facilitating the sale.
How Does an IEO Work?
In an IEO, the project team collaborates with a cryptocurrency exchange to list their token. The exchange conducts a due diligence process, assessing the project's legitimacy and potential. Once approved, the exchange promotes the IEO to its user base, allowing them to purchase tokens through the exchange's platform.
Advantages of IEOs
- Higher trust and credibility as a reputable exchange oversees the process.
- Increased visibility due to the exchange's marketing efforts.
- Simplified participation for investors, as they can buy tokens directly through their exchange account.
Risks of IEOs
While IEOs offer several benefits, they are not without risks. Investors still need to conduct thorough research, as the exchange's approval does not guarantee project success or safety. Furthermore, fees can be higher due to exchange involvement.