ICOs, IEOs, and IDOs are different fundraising methods used by projects to raise funds to support their growth.

ICO (Initial Coin Offering)

ICO is a fundraising method in which 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 the traditional venture capital route. However, ICOs have been criticized for being largely unregulated, and some have proven to be scams or failed projects, leading to increased scrutiny and regulatory action from regulators.

• Mastercoin is considered the first ICO, held in 2013. The project raised approximately 5,000 Bitcoins, worth approximately $500,000 at the time.
• Ethereum is one of the most famous ICOs, raising around 31,000 Bitcoins (about $18 million at the time) in 2014. Ethereum has become the second largest cryptocurrency by market capitalization and provides a platform for numerous decentralized applications and projects.

IEO (Initial Exchange Offering)

IEO is an improvement of 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 and conducts due diligence on projects to ensure that they meet certain standards before listing tokens for sale. Compared to ICOs, IEOs provide investors with greater trust and security because the exchange takes some responsibility for the success of the project. Additionally, IEO listing times are typically shorter as tokens are listed on partner exchanges immediately after issuance.

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

IDO (Initial DEX Offering)

IDO is another evolution of the fundraising model. The project is on the decentralized exchange ( DEX) rather than on a centralized exchange like 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 a DEX, typically in the form of a token pair (e.g., a project’s token and a stablecoin). The tokens can then be traded on DEXs, enabling instant liquidity and price discovery.

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

These financing methods each have advantages and disadvantages, and the choice of which one to use depends on the characteristics of the project, target investors and the regulatory environment.

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