What Is an Initial Exchange Offering (IEO)?
Initial exchange offerings (IEOs) take place on exchanges so that projects have the opportunity to raise capital through the exchange. Similar to the initial coin offering (ICO), which uses a website via a project’s means, an IEO leverages the power of an exchange.
How Did IEOs Start?
Since ICOs were banned in 2017 in China, IEOs have become a great alternative, allowing new projects to continue launching. IEOs allow for new projects to gain more exposure and leverage the power of an already-existing platform, such as an exchange that serves customers.
Why Are IEOs Important?
IEOs are beneficial to both potential investors and the projects themselves. For investors, they know the IEO is conducted on a well-known, trusted exchange and understand that it has taken the proper precautions to make sure the project is vetted and safe. This works both ways, as a project participating in an IEO can demonstrate its legitimacy because it has implemented the necessary steps to become eligible to participate in the IEO.