Crypto Launch Models: ICO vs IDO vs IEO Compared
The crypto space has seen various launch models over the years, each with its own set of risks and benefits. Three dominant models have emerged: Initial Coin Offering (ICO), Initial DEX Offering (IDO), and Initial Exchange Offering (IEO).
An ICO is an original crowdfunding model in crypto where a project creates its own token and sells it directly to the public before the project's platform is fully built. The team publishes a whitepaper, sets a token price and supply, and opens a sale window on its own website or a third-party portal.
The ICO model became popular around 2017 but attracted a large number of scams and abandoned projects due to lack of vetting. Regulators now scrutinize ICOs closely, and the SEC considers a token sold this way as a security under U.S. law if it meets the criteria of an investment contract.
An IDO moves the token sale onto a decentralized exchange instead of a centralized platform or the project's own website. The project deposits its tokens into a liquidity pool or a launchpad contract on a DEX, and investors connect their wallet to contribute funds and receive tokens instantly.
The IEO model shifts the token sale onto a centralized cryptocurrency exchange, which acts as an intermediary between the project and its investors. Exchanges like Binance popularized this model in 2019 through Binance Launchpad, and other major exchanges followed suit.