ELI5 IEO : Initial Exchange Offering

IEO is an acronym for Initial Exchange Offering.

Whereas in an ICO new coins or tokens are distributed to investors using a smart contract or some software automated process, in an IEO the new tokens or coins are distributed straight from the exchange wallet and can be traded immediately.

In short, an IEO allows swing traders to do what used to be routine for many ICO’s : buy during pre-sale and then sell during early trading after the ICO.

This strategy became very profitable between 2014 and 2016, but lost steam and became commonplace in 2017. Everyone then purchased tokens and coins just to dump them upon exchange listing. When everyone sells at the same time, crashes happen. This was the case with many ICO’s from 2017.

Why participate in an IEO?

There are several reasons why startups could want to run an IEO instead of an ICO.

1. The exchange has a large number of active users. The tokens/coins start their life with good volume.
2. The exchange does a lot of the promotional work via email and on their dashboards.
3. Lower cost than running your own ICO operation. Simply outsource the IEO and let the exchanges take care of everything.
4. Trust. If you’ve been a member of an exchange for a long time and never got scammed, you can probably trust this exchange more than unknown ICO operators.

Examples?

Traceto.io ran a IEO in 2018.

NuMoney coin also released via a IEO.