[MEXC Global: For Beginners] What is an IEO? Difference from ICO and STO


If you are interested in virtual currency, you should have the opportunity to hear the term IEO often. IEO, like ICO and STO, is a type of fundraising method for cryptocurrencies. Therefore, this term will come up frequently, so it is better to memorize it. You can also make money through an IEO.

What is an IEO?

IEO is an abbreviation for Initial Exchange Offering. The meaning is one of the methods of raising funds through the issuance of virtual currency through the virtual currency exchange. For companies that issue virtual currencies, by issuing them through a virtual currency exchange before they are listed on the market, they can appeal that it is not a fraud. It is possible to attract attention. Therefore, the reality is that there are so many projects that have adopted this funding method.

How IEOs work

The IEO first asks the virtual currency exchange to review the coin. Coins that pass inspection have the advantage of being mediated by exchanges and purchased by investors. If you buy and sell using an exchange, you can raise funds, so it is one of the most effective means of procurement. Investors also benefit, and those who use the exchange have the advantage of being able to buy at a discounted price, so it is a win-win for both parties.

Advantages of investing in an IEO

The advantages of investing in an IEO are:

avoid fraud

In the case of an IEO, we will first ask the exchange for review. If the aim is to defraud only money with a fictitious project, it cannot be listed in the first place. We will list after reviewing certain standards and projects, so we will not purchase inferior tokens in IEO transactions.

Open to everyone

Any user who is actually registered on the virtual currency exchange can purchase the virtual currency participating in this IEO. The barriers to entry have been lowered as IEOs do not require a connection with a token issuer. It is easy to trade even for beginners.

large profit?

Projects participating in IEOs are still completely worthless. By investing in that state, if the value soars in the future, you will make a lot of money. Since you can buy at a low price at IEO, if you buy it, you may be able to make a big profit in a short period of time.

Disadvantages of investing in an IEO

There are two disadvantages to buying IEO stocks:

Few tokens listed

Since the examination at the time of listing of IEO is very strict, the tokens that can be listed in the first place are quite limited. Due to the strict examination, the number of tokens that can be listed is small, and it is common for investment options to be reduced.

Crash risk after listing

In most IEOs, the tokens sold increase in price after being listed. However, there is no guarantee that this will always be the case. Since the IEO transaction itself is a new transaction, the risk of a crash is also high.

Difference from ICO and STO

IEO is very similar to ICO and STO, so many people get confused and make mistakes. So what are the differences?

UserAllExchange userAccredited Investor
investment methodsmart contractExchangesmart contract
Third party Check×KYC/AMLKYC/AML

What are ICOs?

ICO is the abbreviation for Initial Coin Offering. It is a method for companies to raise funds by issuing and selling their own new virtual currency. It had become established. In fact, ICO fraud cases accounted for more than 90% of the total, and it was a problem all over the world.

What is an STO?

STO is an abbreviation for Security Token Offering. Security tokens are tokens with securities functions and must meet the requirements of the SEC (U.S. Securities and Exchange Commission) Howye test. This makes it far less fraudulent than ICOs. The Howye test has four requirements: If this requirement is met, it can be treated as a security token. STO was born because there was a need for an alternative to ICO, which has a fraud rate of over 90%. The ICO was almost a hotbed of crime.

  • money investment
  • Earnings can be expected from the investee
  • joint venture
  • Expected profits from the work of promoters and third parties

IEOs are safe

IEOs go through cryptocurrency exchange screening anyway, so there are very few scams. At least it is safer than ICO, so you can invest with confidence.

Open a free account

MEXC will be a virtual currency exchange that offers IEO services. To use the service, you need to open an account. Opening an account is free and risk-free. I hope you can refer to the following articles.