Initial Exchange Offering (IEO)

A crowdfunding platform in the crypto space that allows crypto projects to raise funds directly on exchanges is referred to as an Initial Exchange Offering (IEO). IEOs are very much similar to Initial Coin offerings (ICOs). Instead of startups, these are administered by crypto exchanges that seek to raise funds. IEO is often referred to as a mode of crypto banking that is gradually attracting the attention of traders across the world. In this unique process, the exchanges behave as brokers or middlemen between the project creators and the contributors.

The working model of an IEO is simple. Whenever a token sale is announced, rather than submitting the contributions to the smart contracts, the participants of the IEO create an account on a crypto exchange. Funds are then added to their coin exchange wallets. These funds are then used to purchase the tokens of the startup of the fundraising blockchain. In exchange for all this, a percentage of the tokens along with a listing fee is sold during the initial exchange offering. The entire process is conducted under the regulatory controls of the exchanges.