This article is my homework elaboration for Beginner Level in Steemit Crypto Academy. Specifically, in the class of professor @nane15 regarding Initial Exchange Offering and Binance Launchpad.
Question 1
Explain in your own words what an IEO is.
INITIAL EXCHANGE OFFERING
In 2017, an ICO project, Initial Coin Offering, appeared among crypto activists intending to raise a fund of cryptocurrency coins. Instead of maintaining its position in the market, the ICO projects sank in the Bearish Market and dimmed about a year later. Another reason for the dim of the ICO is its smart-contract system that relies on developers. Although ICOs may not survive as the blockchain-based fundraising platform coveted by the global community, IEO projects have emerged to promote themselves as alternative fundraising models to replace ICO.
IEO or Initial Exchange Offering is a platform for raising funds in crypto projects carried out by exchange as a third party. Unlike ICOs, the checking and reviewing process of smart contracts that apply to crypto pair exchanges at IEOs has been done by the third parties themselves. For example, the exchange party will study and ensure that the smart contract on a project is running according to the project's target.
Crypto holders who want to raise crypto token funds at the IEO, must first create an account on the exchange market. Accordingly, they can invest in the forum by selling their crypto tokens. Not only acting as a medium for selling crypto tokens, but IEO also manages a new crypto-asset exchange. Later, projects running within the platform's IEO will be listed as the new crypto tokens on behalf of the token holders themselves. Then, third parties will invite investors to seek funding sources by purchasing the crypto tokens.
If everything is confirmed, the project owner must pay a registration fee to the exchange and deposit tokens to be sold on the exchange. Then, the exchange (IEO) will issue a notification regarding the project. Therefore, the investors can find out about the project and they can buy the tokens so that the funds will be raised.
Question 2
Do you consider IEOs an advantageous way to make an investment? Explain.
INVESTMENT IN IEO
If we talk about money and investment, I do agree that IEOs an advantageous way to invest. I will elaborate on the reasons why I think so as below:
First, investors can earn enormous profits from investing in IEOs. In light of the tokens sold at the IEO are tokens that have not yet entered the stock market. Thus, the coins' value can keep increasing beyond the selling price in IEOs.
Secondly, Investors can buy as many tokens as possible because the tokens available at IEO are crypto tokens that have not yet been released on stock exchanges. Therefore, investors are likely can be the most profitable investors because they have a lot of assets in the project.
Furthermore, transactions in IEOs are easy and comfortable because the projects in IEOs are officially registered under the platform. All registered projects are very reliable because they have been tested by the exchange so that investors can focus on planning individual targets.
Moreover, the IEO partaker provides assurances to investors that the available projects have passed an accountable examination and the IEO themselves recommends the projects. As a result, the investors can freely decide the product they like. Indeed, all the projects have been carefully reviewed by crypto token specialists. The investors can take into account any provided information about the products offered by the startup companies. Plus, investors are also free from fake projects or scams that offer false profits. In short, IEOs protect investors and projects.
It is highlighted that how much profits the investors can earn from investing in IEOs, depends on their evaluation of the open projects. The exchange provides the details that investors need. Thus, the chore of investors is to suit the project to their target by investigating the token sale procedure in each project.
Question 3
List advantages and disadvantages of participating in an IEO.
ADVANTAGES OF PARTICIPATING IN AN IEO
1. CREDIBILITY
As we discussed earlier, IEOs assure investors of the credibility of a project hosted on the IEO platforms. It is due to the exchange ensuring the authenticity of the projects with a liable assessment. Therefore, investors can conduct transactions safely, comfortably, and fast with start-ups that work with IEOs.
2. GOOD REPUTATION
IEOs gain a good reputation among investors as the exchange will carefully screen any start-ups that attempt to launch their projects at IEOs. Therefore, IEOs can help investors to avoid scams and dubious IEO projects. Thus, fraudulent actions are almost impossible for contributors to do. As a result, IEOs accumulate the trust of both start-ups and investors.
3. LISTING
Listing is one of the processes that make IEO an efficient and safe alternative to fundraising. Subsequently, the project will run according to the targets and agreements made at the beginning of coin registration.
4. USER-FRIENDLY
It is uncomplicated to run projects in IEO as we only need to register an exchange account, fill in the wallet, and buy tokens when the sale starts. In addition, the exchange will help to oversee the token offering process on the project till its completion, including project exposure and development.
5. SECURE
The exchange side has a smart-contract protocol that must be fulfilled by any party, either investors or the project's owner. As a result, the exchange is responsible for all investigations in each project. Plus, with the Know Your Customer and Anti Money Laundering process, the security in IEOs system is reliable.
DISADVANTAGES OF PARTICIPATING IN AN IEO
1. Expensive
Project owners are required to pay a registration fee at the IEO. However, these costs are not cheap. Therefore, those who propose blockchain projects at IEO must have capital.
2. Centralized System
Crowdfunding is held in an exchange where the system is centralized. As we understand, in a centralized system, any information is authorized by a single unit. Therefore, there is a potential risk of manipulation by a third party.
3. Dynamic
Crypto-assets indeed have the potential to increase in value. However, the value of the assets also may fall instantly due to the high volatility of the market. Therefore, the investors must be ready with the dynamic cryptocurrencies market even after the crowd sale.
Question 4
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)
HOW TO PARTICIPATE IN IEO
First of all, we have to examine and analyze the blockchain projects on the IEO list. The IEO List can be found at coincodex. Then, we have to find out what exchange is hosting the IEO project we want because there may be more than one exchange participating in the project. Following that, we can register an account on the exchange by completing the white-listing procedure, KYC, and AML process.
Furthermore, we ought to check the types of cryptocurrencies that we will accept during the crowd sale. Finally, we have to wait for the start of the IEO so that participants can buy our tokens.
IEO LISTS:
Various Exchanges
- Huobi Global
- Bybit
- Kucoin
- FTX
- Bittrex
One IEO Project
- Standard Tokenization Protocol (STPT) IEO
Just click any IEO Project that we intend to participate. Then, look at the overview to examine the project. Last, visiti the launchpad.
The Overview:
Visit Launchpad:
We need to register the exchange that conducts the IEO project. However, I will register at the Huobi Global Exchange.
- Download Huobi application
- Sign Up, fill in the requirements such as the email and the password.
- Confirmation Code, check the email to confirm the code. Then we already registered
-Verify the Email, we need to verify the email to participate in the IEO project by uploading our ID card/Passport/Driver's License, Face Recognization. In addition, we also must verify the trading quota such as P2P Trading Quota and Withdrawal Quota.
Question 5
As an example of a project that had a successful IEO, explain that project. Be on topic. (Use from screenshots.)
MATIC PROJECT
Initially, the project was named Matic but later the name of the project changed to Polygon. It is is a protocol and framework for building and connecting the Ethereum compatible blockchain network. The project seeks a scalable solution on Ethereum that supports the Ethereum multi-chain ecosystem to put it together with the Matic ecosystem.
This project has good fundamentals that attract investors to participate. Matic tends to dominate the blockchain industry by making it an Ethereum compatible crypto asset. Developing a blockchain spectrum that is sometimes difficult to achieve is Scalability. Similar to Ethereum's consensus mechanism, Matic also uses the Proff-of-Stake (PoS) as its consensus mechanism to enhance the scalability of the transaction.
The security is also well provided by professional validators and its own blockchain. It can be proven by the modularity they offer. They mention that the modularity that applies to the Matic project has high customization, community collaboration, short marketing time, etc. Both users and developers have had a good experience, and the results are satisfying because the transaction is worth it.
Reporting from coincodex, this project has a rating of 4.5. The coin increased to $2.59, about 0.93% for the past 24 hours. The project was held at Binance Launchpad. Its Hardcap reached $5.00M while the raised hits to $5.60M. The most token distribution percentage is 23% from the ecosystem. Meanwhile, the least token distribution is from the advisors, where the number is only 4%. The crowd sale was conducted on April 24, 2019, and ended on the same day. As the result, the Matic or Polygon project is one of the successful IEO.
Question 6
Conclusion
CONCLUSION
In a nutshell, Initial Offering Exchange provides services and a place for fundraising for start-up companies that apply for crypto projects. Not only for start-up companies, but IEOs also help investors provide credible crypto project information. Instead of doubting scam projects, investors can entrust the authenticity of available crypto projects to the exchange. Although the IEO system is centralized, the IEO side has its protocol to maintain its security. In addition, IEOs must maintain their reputation to be a platform for the owner of the projects and the investors. If not, their platform cannot be long-lasting as the value of cryptocurrencies assets will potentially increase and develop more in the future.
Indeed, the Initial Offering Exchange provides reliable background project information. However, it suggests the investors also carry out their accumulation about the projects. Later, the investors can choose any IEOs project that suits their target.
Thank you to all professors who enlighten all the students in Steemit Crypto Academy through their guidance and knowledge. Your support always helps us present and future.
Signed.
@ozzarm