IEO is a format for primary token placement on cryptocurrency exchanges that replaced the early-stage token sales — ICOs. It emerged as a response to a high level of fraud in the industry and became a safer mechanism for raising funds for crypto projects.
Where ICO came from
In 2017, during a surge of public interest in cryptocurrencies, the analogue of an IPO* — an Initial Coin Offering — emerged. ICO became the first token sale* model, in which projects sold their tokens directly to investors.
* IPO (Initial Public Offering) is the process by which a private company sells its shares to an unlimited number of investors on a stock exchange for the first time and becomes public. After an IPO, the company's shares can be freely bought and sold on the market, and its financial statements become open and regulated by law.
* Token sale is a mechanism for raising capital for crypto projects through the issuance and sale of digital tokens. The project team creates a limited number of tokens and offers them to investors at an early stage, even before the complete product launch. Token sales provide funding for crypto projects: the funds raised are spent on development, marketing, smart contract audits, infrastructure development, and exchange listings. Token sale formats differ in where and how the sale is conducted — via the project's own website, a centralized exchange, a decentralized platform, or a gaming launchpad. The most common models are ICO, IEO, IDO, and IGO.
However, ICOs were not regulated. Most projects turned out to be fake: according to ICS Statis Group, around 80% of ICOs in 2017 were scams. Because of this, the industry began searching for a safer mechanism, and the next step became IEO.
What is IEO
An Initial Exchange Offering (IEO) is a format of primary token placement in which the sale is conducted not by the project itself but through a cryptocurrency exchange. The exchange becomes the organizer of the token sale, providing its infrastructure, audits, and security mechanisms. The project team signs an agreement with the platform, transfers part of the tokens to it, and agrees on the sale terms: price, volume, timing, and participation rules.
Unlike ICOs, in which investors interact directly with the project's website and its smart contract, in IEOs, all operations go through the trading platform. The exchange checks the project before launch (due diligence), evaluates the team, technology, financial model, and risks. After approval, it launches the sale, accepts funds from investors, and distributes tokens. At the same time, the exchange carries reputational and technical responsibility: it ensures transparency of the process, records transactions, stores collected funds, and maintains token listing after the sale.
Using the exchange as an intermediary increases trust in the project and reduces the risk of fraud, as participants receive guarantees from the platform rather than only from the token developers.
IEO platforms
The first IEOs appeared at the end of 2017 on the Binance Launchpad platform, created for launching new Web3 project tokens. The platform quickly became popular: by December 2025, more than 70 projects were launched on Binance Launchpad.
Other crypto exchanges also launched their own IEO platforms:
- ByBit Launchpad
- OKX Jumpstart
- Huobi Prime, and others
According to expert estimates, in 2025, IEOs collectively attracted between $1.2 and $1.5 billion in investments. The average return of projects launched on Binance Launchpad in the first months reaches about 50%.
Why IEO is beneficial
For exchanges
- Growth of trading volumes. After an IEO, new tokens are listed immediately, and investors begin actively trading them on the exchange. This leads to high turnover, as the first days and weeks after launch often involve many transactions. The higher the trading volume, the better the exchange's liquidity indicators and its attractiveness to traders and analysts.
- Increase in fees and revenue. Trading volume is directly tied to revenue: exchanges earn from commissions on every transaction. After an IEO, tokens are actively bought, sold, deposited, and withdrawn, which increases the number of transactions.
- Inflow of new users and retention. Launching token sales attracts new participants who register to join the IEO and buy tokens. This expands the user base and makes the exchange a hub for crypto investors. Existing users also become more active because participating in an IEO requires creating an account, completing KYC, and storing funds on the exchange. As a result, engagement and retention grow.
For crypto projects
- Access to the exchange's audience and liquidity. The exchange gives the project direct access to tens or hundreds of thousands of active users who already have wallets, funds, and trading experience. The project does not need to build infrastructure or search for investors — interest is generated automatically from exchange traffic.
- Marketing support from the platform. Before launching an IEO, the exchange promotes the project to its audience through newsletters, posts, banners, AMA sessions, and social media. For the project, this is comparable to a large-scale advertising campaign that would otherwise be too expensive.
- Increased trust due to preliminary verification. Before listing, the exchange evaluates the project: team, technology, smart contracts, token economics, and legal risks. Platforms do not want to risk their reputations, so they approve only projects that demonstrate their viability. For investors, this is a strong signal that the project is not random or anonymous.
The main disadvantage is high listing costs. Participation on a reputable platform requires significant financial investment. The larger the exchange, the higher the costs, because it must protect its reputation and avoid listing weak or dubious projects.
Listing on a top exchange can cost hundreds of thousands of dollars or more. Teams must weigh the risk–reward ratio: entering a major exchange is expensive, but potential returns often justify the investment.
For investors
IEOs reduce risk because the platform carefully evaluates the project before launch. Projects that do not pass due diligence are simply not allowed. This eliminates many weak and questionable initiatives that were common during the era of mass ICOs.
Investors know that major exchanges carefully select candidates, so the platform itself becomes a quality filter. The higher the exchange's status, the stronger the trust effect — an IEO on a top-tier platform signals that the project has real prospects.
Main differences between IEO and ICO
A key difference relates to listing guarantees. After an ICO, a token may never appear on exchanges, leaving the project without a real market. According to ICO Rating, about 70% of ICOs failed.
In the case of IEOs, the probability of listing is significantly higher: approximately 78% of tokens after placement on an exchange enter trading, whereas after ICOs, this figure is only about 62%.
Another difference concerns investor profitability. According to Messari, around 78% of projects after an IEO show positive returns, while only about 23% of ICO projects are profitable.
IEO formats
There are two popular formats of participation in IEO:
Launchpool
In this format, investors do not buy new tokens directly. Instead, they deposit exchange-approved assets into a special pool created for the IEO project.
The pool remains locked throughout the entire period, so participants cannot withdraw funds before the program ends. When the distribution period finishes, the system calculates the total liquidity and the contribution of each participant. Each investor then receives their share of the new tokens, strictly proportional to the volume contributed. The larger the contribution, the larger the share — and the distribution formula remains fair for all participants.
Launchpad
In this format, investors buy tokens directly from the exchange, but only during a predefined time window. A countdown usually precedes the sale: users prepare in advance, top up their balance, and wait for the start. As soon as the window opens, thousands of participants try to buy tokens simultaneously. Sales occur in real time, and the supply is often sold out in seconds or minutes.
This works on a "first-come, first-served" basis, so demand almost always exceeds supply. Many participants end up without tokens. To make the process more balanced and reduce the advantage of the fastest buyers, exchanges introduce purchase limits — allocations. Each investor receives a maximum number of tokens they can buy. This spreads the distribution among more participants and reduces the risk of large holders monopolizing the pool.
Examples of successful IEOs
One of the most successful IEOs is Polygon (MATIC/POL), considered one of the most prominent Layer 2 solutions. After the IEO, the token's price increased by more than 36,000%, its market capitalization exceeded $1.3 billion, and the asset ranked 52nd on CoinMarketCap.
Other successful examples include:
- BitTorrent (BTT), which raised over $7 million in just minutes
- Axie Infinity (AXS), where investor returns exceeded 18,000%