What is ICO / IEO / IDO


ICO, IEO, and IDO are different fundraising methods used by projects to raise capital for their development.

ICO (Initial Coin Offering)

An ICO is a fundraising method where a project creates a new cryptocurrency or token and sells it to early investors in exchange for existing cryptocurrencies. ICOs allow projects to raise funds without going through traditional venture capital routes. However, ICOs have been criticized for being largely unregulated, and some have turned out to be scams or failed projects, which has led to increased scrutiny and regulatory actions.

  • Mastercoin is considered the first ICO, which took place in 2013. The project raised around 5,000 bitcoins, worth about $500,000 at that time.
  • Ethereum is one of the most famous ICOs, raising about 31,000 Bitcoins (equivalent to around $18 million at that time) in 2014. Ethereum has since become the second-largest cryptocurrency by market cap and the platform for numerous decentralized applications and projects.

IEO (Initial Exchange Offering)

An IEO is an improvement on the ICO model. In an IEO, a cryptocurrency exchange partners with a project to launch and sell the project's tokens to investors. The exchange acts as a trusted intermediary, conducting due diligence on the project and ensuring that it meets certain standards before listing the token for sale. IEOs provide an added layer of trust and security for investors compared to ICOs, as the exchange takes on some responsibility for the project's success. Additionally, IEOs typically have a shorter listing time, as the token gets listed on the partnering exchange almost immediately after the offering.

  • Binance Launchpad, the IEO platform of the Binance exchange, conducted the first IEO with the BitTorrent Token ($BTT) sale in January 2019. It was a highly successful sale, with all available tokens being sold within minutes.
  • One of the most famous IEOs is the Matic Network (now known as Polygon) token sale, which took place on the Binance Launchpad in April 2019. Polygon has since become a widely adopted Layer 2 scaling solution for Ethereum.

IDO (Initial DEX Offering)

An IDO is another evolution of the fundraising model, where a project launches its tokens on a decentralized exchange (DEX) instead of a centralized exchange like in an IEO. IDOs offer several advantages, such as faster fundraising, lower fees, and a more decentralized process. Investors participate in IDOs by providing liquidity to the token's trading pool on the DEX, typically in the form of a token pair (e.g., the project's token and a stablecoin). The tokens can then be traded on the DEX, allowing for immediate liquidity and price discovery.

  • The first IDO is attributed to the project Raven Protocol, which launched its token sale on Binance DEX in June 2019.
  • One of the most well-known IDOs is the Polkastarter token sale, which occurred on the Polkastarter platform in December 2020. Polkastarter is a cross-chain decentralized exchange that has become popular for launching new projects and conducting token sales.

Each of these methods has its pros and cons, and the choice of which to use depends on the project's goals, target investors, and regulatory environment.

You might also be interested in the following information: What is Launchpad?



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