1. What is an IEO?
IEO stands for „Initial Exchange Offering“ and is the most significant emerging trend in the crypto markets at the moment. IEOs are basically token sales like ICOs (Initial Coin Offerings) with one fundamental difference. The token sales are executed by crypto exchanges rather than the companies that seek to raise capital themselves. This has several advantages against traditional ICOs:
The newly minted tokens will be listed on the exchange who facilitates the token sale almost immediately after the sale.
The ammounts raised are small, regularly under 20% oft he total supply of the tokens, which raises demand and caps supply, which in turn generates FOMO.
IEOs allow the creators of the issued digital asset an instant network effect by having access to the existing user base of the exchange.
IEOs add trust for participants because the offering exchange does the research on the project who seeks funding and basically guarantees that the newly issued digital asset is not a scam.
1.1 The Binance Launchpad
The pace-setter of this evolution of coin offerings is Binance. In the last quarter of 2017 Binance did two IEOs, for the projects „Bread“ and „Gifto“, but the concept did not gain much traction until now. In Q1 2019 Binance initiated the „Binance launchpad“. The launchpad is a platform that offers token projects the option to raise funds for developement directly through Binance. Companies who take the offer benefit greatly from choosing the Binance launchpad, as they have instant access to the 10 million+ customers oft he worlds leading crypto<>crypto exchange and they can profit from the experience and the support of the whole Binace team, which includes subsidiary companies like Trust wallet and Binance Labs. Binance also does a review process and the issuing projects have to meet certain requirements like advanced-stage project developement, capable team, growth potential and readiness for adoption. Binance stated that they plan to execute at least one token sale per month on Binance launchpad in the year 2019.
The first project was BitTorrent (BTT) which is a filesharing platform that was bought by TRON. Quickly followed by Fetch.AI and Celer. The fourth IEO that Binance launched in 2019 goes by the name of Matic and ended yesterday. Binance issued 19% of the total token supply through the launchpad and participation required every user to go through a „lottery process“.
This works as follows, every participant has to hold at least 50 BNB in his/her Binance account 20 days prior to the IEO. This will be checked through a snapshot of the user balances. Users can claim up to 5 five lottery tickets, depending on their BNB balance. For 50-200 BNB you get one ticket, for 200- 300 BNB you get two, for 300-400 BNB you get three, for 400-500 BNB you get four and for a balance that exceeds 500 BNB you get 5 tickets, with each ticket representing the right to buy tokens for 300 USD.
This mechanism also ties up the supply of exchange tokens like BNB and HT (Huobi tokens). Because of this token economics I anticipate a further rise of BNB and HT in value.
1.2 Huobi Prime
Huobi uses a slightly different system as Binance. Token sales through Huobi are called Direct Premium Offering (DPO), and the goal of Huobi is to offer token holders of Huobi token (HT) the chance to buy into new projects at favourable pricing. Every project is throughly reviewed by Huobi and projects that received an investment by Huobi Capital or Huobi Global Ecosystem Fund have a higher chance of a listing on Huobi‘s launch platform which is called Huobi Prime. Huobi sees its new platform more as a selective token listing channel based on HT and not as a platform for IEOs.
In order to participate every investor must hold a minimum of 500 HT for at least 30 days before launch. Every DPO has three parts with diminishing discount at buying price. The maximum personal allocation for every investor is the equivalent of 1000 USD in HT.
This puts Huobi Prime in stark contrast to the Binance launchpad where individual allocations vary between low 4-figure numbers up to 20k USD. Huobi Prime was launched on 26. March 2019. On 9.May 2019 a faster version of Huobi Prime will be officially released and it will be named Prime Lite. The main distinctions will be shorter listing cycles, more flexible trading allocations the burning of all HT used for the exchange.
2. Other Players
Quickly several exchanges copied the concept and released launchpads themselves, among them KuCoin, Bitmax, Bitmart, Probit, Exmarkets, Gate, Bitforex among others. IEOs from these exchanges are to be avoided due to lack of liquidity and/or dangers of wash trading or manipulation. They can be neglected for now.
One variant is the launch of the exchange itself, which is selling the tokens right now for one more day like EFIN - valid until Apr 30th 2019
3. Track Record of past IEOs on our targeted platforms
|Name||Date||Platform||IEO-Price in $||All Time High in $||ROI at ATH||Time till max. ROI|
|BitTorrent||2019-02-03||Binance||$ 0.00012||$ 0.001278||965%||2 days|
|Fetch.AI||2019-03-02||Binance||$ 0.0867||$ 0.477471||450%||1 day|
|Celer||2019-03-24||Binance||$ 0.0067||$ 0.0291967||335%||1 day|
|Matic||2019-04-25||Binance||$ 0.00263||*not enough data||*ne data||*ne data|
|TOP Network||2019-03-26||Huobi||$ 0.00255||$ 0.037067||1374%||5 days|
|Newton||2019-04-16||Huobi||$ 0.0024||$ 0.016613||592%||3 days|
*please note that the All-Time Highs are measured at the highest spikes in price. As a retail trader you are most likely not able to capture these exact tops and additionally there is not much liquidity at these extreme price points. So a more realistic view of achievable profits is the max. point – 20%. But the results are still nothing short of impressive.
My research shows that IEOs are an emerging trend with the potential of high profits. But there are pitfalls to avoid, most notably the fact that Iinitial Exchange Offerings that are executed on smaller, lesser known exchanges are more often than not resulting in a negative ROI and are susceptible to wash trading and orchestrated Pump and Dumps. If we limit our participation to only IEOs that are executed by either Binance or Huobi we have a high profit expectation. Every single IEO that was facilitated through one of these two platforms resulted in a positive ROI of at least over 300%. This is a direct result of the high userbase and reputations of Huobi and Binance.
If you want to be one of the early participants in this new paradigm shift in fundraising make sure to hold at least 50 BNB and 500 HT in your Binance and Huobi accounts and we from Blockchain Whispers will make sure to keep you always informed about upcoming and high-potential IEOs in time.
BlockchainWhispers.com will inform its all members of important changes and findings when we discover that the trend shifting is occuring (like ICOs died and we were the first to announce, the trend shifting from bull to bear, again Blockchain Whispers the first to announce). Our Premium members will get also our signals when something is ripe to buy and our suggestion where to sell it.