The Difference between ICOs, IEOs, and STOs

The search for token offering methods and fundraising tools can often be grueling. The rapid rise, boom, and fall of ICOs have made it difficult for cryptocurrency enthusiasts to trust project developers and their promised solutions. Apart from ICOs, IEOs and STOs have also been widely accepted as fundraising mechanisms. 

There is an element of risk associated with every investment. But these risks can be minimized if you look into objectively at the pros and cons of every alternative at your disposal. Every fundraising mechanism comes with its share of advantages and setbacks. Therefore, you must assess the risks associated with them before you decide to take advantage of them. In this article, we shall discuss the fundamental difference between ICOs, IEOs and STOs, and help you decide which of these options is the best for you.

ICO (Initial Coin Offering)

ICOs were enjoying unprecedented popularity throughout 2017. However, several cases of fraud marred their reputation and robbed the ICOs of the trust that potential investors had in them. It is one of the simplest ways to raise funds, in which investors offer funds in exchange for the tokens and crypto coins being developed by project developers. The investors can use these coins and tokens on the blockchain platform where the project is being developed.

One of the best things about ICOs is that it requires a low minimum, which one must invest in it to participate in the project. That’s why it attracts everyone from coin owners to amateur investors onto its platform. As long as you have a reliable project developer to execute the project, you are good to go.

However, there’s also a downside, which is why ICOs have been losing their sheen consistently. Everything in an ICO is entirely up to the investor to investigate. For instance, they need to inquire and study the project and its team members to find out the chances for the project’s success. All this, while they have limited information. The endless possibilities of frauds make ICOs a risky proposition. Any ICO listing will show hundreds of ICOs lined up to collect your investment. It is easy to create an ICO and even easier to raise funds. But no one can guarantee if the developers will go ahead with the project. That is why many investors are increasingly moving away from ICOs to IEOs.

IEO (Initial Exchange Offering)

IEOs are the answer to the rising number of ICO frauds. The appearance of the third party is the fundamental difference between ICO and IEO. This third party is the Exchange. This exchange platform facilitates the sale of crypto tokens. Unlike ICO, IEO doesn’t send funds to the smart contracts but uses the exchange for all its operations. Participating in the IEO requires the creation of accounts of both parties on the exchange. Investors can use their cryptocurrency tokens to purchase IEO tokens.

One of the biggest advantages of an IEO is that the exchange is responsible for ensuring the transaction’s security. The exchange runs thorough checks on the credentials of the IEOs and carefully evaluates their chances of success before allowing them to start. The IEO is regulated by exchange experts, which creates a high degree of security for the investors. Also, the direct exchange of tokens and funds is the key security offering.

On the downside, however, are the high investment minimums, which are required to participate in the IEO. Also, a small and limited choice of IEO platforms results in genuine investors missing out on investment opportunities. The necessity to create accounts on the exchange also discourages many potential investors.

STO (Security Token Offering)

Security token offering is amongst the most complex and challenging fundraising schemes to execute for both the project developers as well as the investors. STO creates an investment contract, which is backed by security tokens that operate on a blockchain. Unlike ICOs and IEOs, here, assets support the security tokens, thereby turning them into real securities. These security tokens have a legal ownership certificate, which is recorded in the blockchain.

As tokens are protected by “real-life” security, STOs usually keep amateur investors at bay. Only accredited investors can buy such tokens. However, some of the security token offering listing are amongst the most costly fundraising methods, and the expensive nature of STO is its downside.


Are you trying to figure out which one of these methods would be the best for your project? Considering your abilities is vital for making the selection. ICOs can be an excellent option for cheap investments with fast cash out options. IEOs are suitable for people looking for enhanced security and better investment opportunities. STOs are for investors who have a substantially large budget and prefer real-life structure in their crypto investments. Therefore, your final choice for ICOs, IEOs and STOs should be based upon the time and resources that you have at your disposal, while fully considering the potential risks of each of these methods.

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *