It is with great pleasure to be a participant in this week assignment of professor @nane15 which he taught about INITIAL EXCHANGE OFFERING AND BINANCE LAUNCHPAD, I can say I understood the class and I have been able to give back base on my own understanding and the research I made. I stand corrected in any way as I might have come short in details of a particular question.
Explain in your own words what an IEO is.
IEOs are called Initial Exchange offerings. It is a process whereby new crypto projects perform presale of their tokens through a cryptocurrency exchange to raise funds to run the projects.
Through this means early investors can get the tokens of the new crypto project which at the same time helps to increase the funds generated and needed by the crypto project. The exchange makes the new crypto project coin offering get much interest, exposure, and credibility.
When the IEO event is over, the new crypto project then pays a listing fee and the IEO service fee. After this, the tokens of the new crypto project are listed on the exchange.
In the time past, this form of crypto activity was done as an Initial Coin Offering ICO, but it later became saddled with a lot of risks that made it lose its appeal to investors. The risk that is found in ICOs can negatively affect both the investors and the new crypto projects.
ICOs are an unregulated terrain where scams are common and where the new crypto project does not go through the required financial regulations.
To better the process of fundraising a new cryptocurrency project, a new way was initiated i.e. IEO. They were brought about in 2019 and ever since have been a gateway between new crypto projects and early investors. It started to gain much traction when Binance introduced its Launchpad at the end of 2019.
Through the exchange, new crypto projects coin offerings get much interest, exposure, and credibility. When the IEO event is over, the new crypto project then pays a listing fee and the IEO service fee. After this, the tokens of the new crypto project are listed on the exchange.
Do you consider IEOs an advantageous way to make an investment? Explain.
I consider Initial Exchange Offerings to be an advantageous manner in which an investor can make an investment because it reduces the risks that early investors would encounter during the presale event.
By using an exchange it gives the "coin offering" by the new crypto project a sense of legitimacy. This is because the exchanges are well known and established which users of the platform are accustomed to.
In addition, since the exchanges make cryptocurrency projects undergo certain processes before they are listed, therefore they would also make a profound vetting process on the new crypto projects before the exchange can accept to help them perform the IEOs.
IEOs are excellent ways that anyone can participate in the crypto markets especially newbies as it is not necessary to make a fundamental study of a project before investing their money. They can simply buy the tokens at a cheaper rate and not have to worry too deeply about the risk associated with partaking in the presale event.
Also, the investors are buying the tokens of the new crypto project at a very cheap rate because they are buying them at the presale price. Through this means, investors can make so much profit as they can sell the tokens or parts of them at a higher price in the future.
Making profits through IEOs are high because the projects that run their coin offering through an exchange usually get massive support and after that, the tokens are listed on the exchange.
List advantages and disadvantages of participating in an IEO.
Advantages of IEOs
Investors would be more confident of the coin offering because it is performed on a trusted crypto exchange.
The process of participating in the coin offering is frictionless. Anyone can participate in the program, and the exchange is tasked with marketing and development support.
The process of running the coin offering is secured on the part of the token issuers and the investors because all things concerning regulations are well managed.
The teams behind the IEOs are known beforehand so it is difficult for the project to end up being fake or a scam.
When the IEO program expires, the token is then listed on the exchange.
Exchanges can get good benefits such as new users signing up with them as they try to get the IEO tokens.
Disadvantages of IEOs
Regulations and restrictions are unclear. This is as a result of the restrictions placed on ICOs which may have an effect on IEOs because they share the same principles.
The new crypto project would have to pay a listing fee with a percentage of their presale tokens
Some of these tokens can experience a pump and dump scheme where the presale token experience a rise in price then is reduced dramatically.
Sometimes there can be a limited number of investors that can participate in the IEO as not everyone manages to purchase the token during the IEO.
There is also the concern of the use of bots that have been programmed to participate in IEOs and take out human investors.
There could be market manipulation and keeping of a large number of coins by the project teams and the exchange. This is because the tokens are usually minted beforehand.
Explain how to participate in an IEO, for the process explore various exchanges, choose one of them and explain the process. (Please use from screenshots.) (No need to participate, just register, present proof of verified account and explain the whole process, do not use Binance)
Before a user can participate in an IEO, the user has to find out if there is an upcoming or ongoing IEO on any of the exchanges that provide the service.
One of the best ways to find out about an IEO is through Coindex. Here, there is an array of IEOs that investors can scan through and find out the one that they are interested in.
On the Coincodex IEO page, we can see the list of IEOs that is captured by the platform. Users can scan through the list of IEOs by choosing any of the options such as Ongoing, Upcoming, and Ended.
Users can also get to filter the list of IEOs in terms of the exchanges hosting them. To do that click on the list button close to All Launchpads and a dropdown list of all the exchanges would display.
Checking the lists of some of the exchanges we can see a list of the IEOs that are related to the exchanges.
Clicking on Kucoin, we can see the list of IEOs that are related to Kucoin. The list being displayed are IEOs that have ended. We can see the IEO names, its Current Stage, Launchpad, Start Date, End Date, and ROI (USD).
Clicking on FTX, we can see the list of IEOs that are related to FTX. The list being displayed are IEOs that have ended. We can see the IEO names, its Current Stage, Launchpad, Start Date, End Date, and ROI (USD).
Clicking on Huobi Global, we can see the list of IEOs that are related to Huobi Global. The list being displayed are IEOs that have ended. We can see the IEO names, its Current Stage, Launchpad, Start Date, End Date, and ROI (USD).
Participating in an IEO
To participate in the IEO, one would have to click on an IEO that is listed in relation to the exchange supporting it. For instance, on Kucoin related IEOs, I clicked on Chumbi Valley (CHMB).
I was directed to the Chumbi Valley IEO page on Coincodex. We can see some details about the crypto project. Then to join the IEO, I clicked on Visit Launchpad.
From there I was directed to Kucoin's home page where I had to register because I'm new to the exchange. On the registration page, I filled in the required details to gain access to the platform.
This is my new account on Kucoin's exchange platform.
After registration, I searched for Chumbi Valley (CHMB) IEO and clicked on participate now. However, for the purposes of this exercise, the Chumbi Valley IEO has ended.
As an example of a project that had a successful IEO, explain that project. Be on topic. (Use from screenshots.)
Chumbi Valley is a blockchain game that is created on top of the Binance smart chain network and the Polygon network. It is a role-playing game (RPG) which enchant features. Its characters are called Chumbis and they stay in a mystery valley. It has its native tokens CHMB which are used for in-game applications and purchasing of NFTs.
The IEO for CHMB started on 14/12/2021 and ended on 17/12/2021. The price at which the presale event took place is $0.001. The total number of CHMB that was earmarked for the coin offering event is 300,000,000. Therefore the total amount that is expected to gain from the presale event is $300,000 (hard-cap). There is a limit of 300 USDT which an individual can pay for the presale token. There is other relevant information too.
The token has so far been listed on Coinmarketcap. As can be seen, it has a current price of $0.07783. It has a maximum and total supply of 30,000,000,000. It also has a current trading volume of $4,312,814.
Conclusion.
Initial Exchange Offering IEO, is a powerful way for crypto startups to gain ground in the cryptocurrency industry. This method of coin offering is better than the ICO of the past. With IEOs, investors are confident that their funds would not go down the drain due to scams of any irregularities caused by the crypto startups.
Also, the IEOs undergo intense scrutiny because the platforms which run these coin offerings have their reputation and credibility at stake. in addition, they are collecting fees because they are providing IEO services to these startups. And once the IEO has ended the tokens are likely to be listed on the exchange's platform.
There are other benefits associated with IEOs but in all, it is of great benefit to the crypto community that new crypto projects can gain access to fundraising through coin offerings so as to help upgrade their services.