How Long Can The IEO Craze Last?

By Zhehao Chen

The days of the initial coin offering (ICO) craze may be long gone. But it has been clear for a while now that there’s a new king in town: the Initial Exchange Offering, or IEO. IEOs are essentially ICOs that are supervised by exchanges and offered exclusively to that exchange’s users, often requiring a buy-in with the exchange’s proprietary token.

Binance and its Binance-Coin-backed IEOs are the poster child for this phenomenon, but since the launch of the BitTorrent IEO on Binance in January, a number of exchanges are following in Binance’s footsteps.

Among Chinese exchanges, for example, OKex has launched seven projects in the past four months, while Huobi has eight in the past five months.

Some second-tier exchanges are more aggressive. For example, has launched 21 IEOs in the past four months. There are even some third-tier exchanges that release one or two IEOs each week.

In the past six months, IEO hype has clearly captured the attention of both exchanges and crypto traders. But how long can this craze last?

Some of the projects launching IEOs on major exchanges recently also conducted ICOs or did other fundraising in 2018. Examples include Erlond and Perlin on Binance, and Pledgecamp on OKex. In fact, these older projects seem to be some of the primary sources of good-quality IEOs. This begs the question: how many IEOs are left for exchanges to offer?

Assuming that it takes a year or so for a project to shift from ICO or PC/VC fundraising to IEO, we can look at how many 2018 blockchain projects not yet been involved with an IEO, and use that to estimate the number of good IEO prospects that might still be out there.

We extracted projects that conducted ICO or PC/VC fundraising in 2018 from Hypernum (the projects listed on Hypernum tend to be relatively high quality) to arrive at the following statistics. Projects that go to IEO right after the close of ICO or PC/VC fundraising have a high risk of being scams — why would a project need to raise money immediately after raising money? — so we’ve excluded those from our analysis. 

According to the 2018 data from Hypernum, there were 606 projects in total that have raised ICO or PC/VC fundraising. 396 of these are already listed on exchanges, and thus not suitable for IEO.


Going by our previous assumption, that leaves just 210 high-quality prospects for IEO, and some of these startups may never issue tokens since they do not have token economies (examples of such projects include crypto analysis firm Messari and blockchain game devs Gods Unchained). Others among these 210 are scams or have gone out of business. Conservatively, we could guess that probably a third of the 210 projects that raised money in 2018 can’t issue tokens and thus are also unsuitable for IEO. 

At that rate, the remainder of 2018’s prospects are likely to be snapped up and offered by exchanges in IEOs over the next few months. But after that, the supply will run dry. Newer projects could theoretically fill that gap, but the drop in ICO funding has meant that there simply aren’t as many well-funded, well-developed new blockchain projects as there used to be.

So at that point, exchanges will face a question: Do they continue offering IEOs at breakneck pace to feed the craze, even if the tokens are lower quality, or do they slow down their IEO offerings? Either way, the result is likely to be an eventual slowdown as the IEO craze nears the end of its hype cycle.

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