Hi family, I hope everything is going on well with you. Below is my presentation for this week.
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1. Explain in your own words what an IEO is.
Initial Exchange Offering (IEO)
In simple terms, an IEO is a fundraising method used by Exchanges to support the introduction, sustenance and success of new cryptocurrency projects.
IEO preceded ICO (Initial Coin Offering) in 2019 and it aims at new cryptocurrency projects whiles curbing the challenges associated with ICO such as fraudulent activities, low quality projects etc.
IEO is similar to the ICO, but with IEO, a relevant crypto Exchange takes the responsibility for evaluating and assessing the project, attracting investors and managing the distribution of the project's tokens. Thus, IEO is centralized whiles ICO is decentralized.
Examples of IEO platforms includes; Binance ( Binance Launchpad), Huobi (Huobi Prime), Okex, Kucoin (KuCoin Spotlight), Bittrex (Bittrex Global) etc.
With IEO, zealous investors or participants get the opportunity to make pre-sale orders of a new project's token, of which they possess high probability of making more profits during or after the official listing on Exchanges.
2. Do you consider IEOs an advantageous way to make an investment? Explain.
Yes, I consider IEO's as an advantageous way for an investor to make an investment.
This is because, IEO's give investors the opportunity to purchase an asset at low price during the pre-sale period, of which they get high probability of making profit on the official launch or listing on an Exchange. Normally after being listed on an Exchange the token's volume increases as well as the price, even if the price decreases or doesn't increase as expected by investor, he or she can wait for a grace period in order to gain profit, and that is due to the fact that the crypto market is highly volatile, therefore prices of assets keeps changing.
Also, IEO's projects are secured, because the Exchanges take the responsibility to check and validate such new projects before advertising, launching or listing them on their platforms. Therefore, I consider IEO's projects as positive investment tools.
3. List advantages and disadvantages of participating in an IEO.
Now, I will ponder on some advantages and challenges associated with IEO.
Merits
It ensures investors safety and security; investors become safe and secured with their investment, since an Exchange does thorough research to check the credibility of a project before launching or listing it. The Exchanges ensure that such projects are not scam in order to keep their reputation and credibility.
There is higher probability of making profits; investors seize the opportunity to buy the tokens on pre-sale at low prices and sell them after the listing at higher prices. As I pondered on earlier, there might be change of circumstances, but the chance to make profit is always high.
Investors get the opportunity to bet on projects before their official launch, which serves as a form of security and ease.
It takes few days to list IEO projects after the pre-sale period, which gives room for investors to make profits swiftly without waiting for much time.
Demerits
The concept of making profit at the start-up stage of the listing or launching is not guaranteed. The price also has the potential to fall at the listing stage, which will make the investor to run at a loss or be in wait before a gracious period.
The participation for IEO projects are quite complicated, and such projects tend to aim at certain group of people.
The high volatility of the crypto market makes it unpredictable, therefore prices might fall after buying an IEO asset.
Only users with verified accounts get the opportunity to participate in an IEO since an Exchange is involved and responsible for the management of such projects.
IEO is centralized, therefore an investor's asset can be tampered by the Exchange in the participation process.
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)
To participate in an IEO, the enthusiast participant will need to find IEO supported Exchanges, create an account on one's preferred and go through the account verification process.
I explored IEO platforms such as Kucoin, Okex, Bittrex global and Huobi (Huobi Prime) and among the list I picked Huobi because it is user-friendly, and it accepts users from my country.
Below are the steps for Huobi account creation and verification, for the elegibility of IEO participation.
- Sign up on Huobi.com with your e-mail or phone, and as stated you can't change your country after registration.
A code will be sent to you through phone or email for verification, and you will as well verify a recaptcha.
You will set your password after your phone or email verification, and then click on sign up to complete your account creation process.
- You need advance verification for IEO participation, therefore you will click on your profile section, and click account and security.
- You will then proceed with the verification by using a government issued ID, whereby you will upload the front and back picture of your ID and submit your application.
- Your account will be verified if you meet the requirements within 5 min or max of 6h.
- After the verification you will then scroll to the bottom section of the page and click Support from the Services section, and then you will be directed to a page where you will see Important Announcement, Latest Promotions etc.
- You will come across relevant information in the Important Announcement section such as Latest News, New Coin Listing, Project Introduction etc.
Look through any of the Important Announcement section in order to get information about new projects IEO, and then follow the necessary procedures as required by the platform, and you will be eligible to participate.
Take note that, Huobi Prime do not offer pre-sale orders, but Price Limit Rounds, whereby there is rounds of direct trading of limited tokens**, and after the limited listing the platform enables unlimited listing of the token. Only Huobi's native token (HT) is used for buying the new tokens. Thus, there is 3 limited listing for fundraising before the final unlimited listing.
5. As an example of a project that had a successful IEO, explain that project. Be on topic. (Use from screenshots.)
I will take Fetch.AI as an example of a project that had a successful IEO.
The Fetch.AI project was founded by an entrepreneur Humayun Sheikh, a scientist Thomas Hain and a software developer Toby Simpson, in the United Kingdom in the year 2017.
Fetch.AI is a decentralized project that aims at introducing artificial intelligence (AI), machine learning (ML) and multi-agent systems into the cryptocurrency economy, thus to make data self-delivering and self-exploiting, and it has a native token of FET which is based on the Ethereum blockchain through the ERC-20 token standard.
The Fetch.AI project was launched on Binance Launchpad, and the IEO took place on 25th Feb, 2019, with FET tokens of 69,204,152 which were sold to 2, 758 participants within 11 min 14 seconds, and the tokens were purchased with only BNB of which the minimum purchase amount was $20 (230 FET) whiles the maximum was $3,000 (34,602 FET).
source Announcement of project
The IEO price of 1 FET was at $0.0867, and 2,758 people successfully made a purchased out of the 19,860 people who successfully submitted their buy orders.
The Fetch.AI project's IEO was able to raise a fund of $6 million, and the price of FET shoot about 400% after the official listing, from a price of $0.0867 which was the pre-sale price to $0.4891 on 28 February 2019, on Binance, although It didn’t stay at the peak for long.
source
Results of Fetch.ai pre-sale
In fact the Fetch.ai project's IEO had a success, since it was able to raise an amount of $6m in a short period of time to ensure the sustainability and success of Fetch.ai
Fetch.ai is doing great till date, and it is all about the help of the IEO and Binance Launchpad.
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source
Fetch.ai official listing on Binance (FET/USDT 28 Feb,19)
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The images above shows how good Fetch.ai is doing, after having a successful IEO.
All the unsourced screenshots were taken from www.Huobi.com, www.kucoin.com and www.okex.com
6. Conclusion.
I believe IEO is a means by which zealous investors can capitalize on to make more profits, although there are some exceptions.
ICO was a failure due to its entertainment of fraudulent or scam activities, and it was preceded by IEO which is more secure and profitable.
Most of today's cryptocurrencies and blockchain projects exist because of IEO, and therefore it should be embraced.
Thank you Prof. @nane15 for always helping us in broadening our horizon with regard to the crypto arena.