What are ICOs, IDOs and IEOs?

Imagine a team that wants to build an app and seeks funding before its product is finished. Instead of offering shares, it sells tokens under specific terms. Participants pay and receive the tokens either right away or later. Where and how that sale takes place is what sets ICOs, IDOs and IEOs apart.

How each one works

In an ICO (Initial Coin Offering), the team usually runs the sale directly, through its website and possibly a smart contract. It publishes the terms, the number of tokens and its development plan. The name doesn’t necessarily mean a coin with its own blockchain is being sold.

In an IDO (Initial DEX Offering), the initial sale is tied to a decentralized exchange (DEX), often through a platform for launching new tokens known as a launchpad. You usually connect your wallet and follow the participation rules. The sale and the start of trading aren’t necessarily the same event.

In an IEO (Initial Exchange Offering), the sale is hosted by a centralized exchange. You take part through its platform, usually with an account and identity verification (KYC). The exchange may vet the project, but that doesn’t guarantee its success or safety.

Why it matters

These terms describe the sale mechanism, not the quality of the project. Buying a token doesn’t automatically give you shares, a cut of the profits or a right to a refund. Your rights depend on the specific terms and the legal framework.

You’ll also come across “token sale” and “presale.” These are broader descriptions, not a separate guarantee or a single way of selling tokens. A presale may come before a wider sale and have a different price or restrictions.

What to watch out for

When can you actually use or transfer what you bought? Vesting, meaning gradual release, can keep tokens locked. Even after they unlock, there may not be enough liquidity to sell.

We focus on the sale terms, the token allocation and whether there’s a working product. Fake sale pages, malicious contracts and abandoned projects can lead to a total loss of funds. Being listed on a launchpad or exchange doesn’t make these risks go away.