Steemit Crypto Academy Season 5 Beginner Course - :Initial Exchange Offering and Binance Launchpad. - Crypto Academy / S5W6 - Homework post for @nane15 by @sonofremi
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Hey there my fellow steemians this week join me as we discuss an assignment from our very own professor @nane15 about Initial Exchange Offering or simply know as IEO
Explain in your own words what an IEO is.
Do you consider IEOs an advantageous way to make an investment? Explain.
List advantages and disadvantages of participating in an IEO.
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)
As an example of a project that had a successful IEO, explain that project. Be on topic. (Use from screenshots.)
- Conclusion.
Q1.Explain in your own words what an IEO is
The aim of business is to make gain, there every investor would like to buy at a lower rate and sell at a higher rate. Therefore IEO stands for Initial Exchange Offering, it helps traders to simply buy a token before it is listed on any major exchange. They are basically ICO managed by a Cryptocurrency Exchange.
Initial Exchange offerings are used by coins that perform a specific function, there are many promising tokens, but the market must be studied before a trader decides to buy a particular token.
For example, the Hope token is a token I recently invested in, the administrative board for hope says that they are charity tokens that are meant to help the less privileged. So basically an IEO allows a trader to purchase a token before it’s launched on any exchange, they are a relative way for traders to buy at lower rate and sell at higher rate if the token actually does well in the market based on percentages.
They are a safer and cheaper way for any newcomer to invest in cryptocurrency, but there is still a risk of loss because not all the tokens will do well in the market. For a token to be profitable in the market the amount of people buying should be higher than the amount of people selling, this will generally affect the price causing an increase. Note, a token will significantly rise based on its usefulness to traders, with the advancement of media and technology we have been introduced to crypto gaming, there are many coins that are basically used to purchase items in a particular game. Metaverse tokens are now being used in crypto gaming Eg include; YGG, STARL and UFO. Before any token is launched in an exchange they are first of all advertised in their launch pad, traders now have the leverage to exchange a particular token for the pre launched token depending on how long they have held that particular token. A company has to pay a fee to the exchange which takes on the function of marketing, listing and buying and selling of the token.
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ICO stands for Initial Coin Offering, they function by selling tokens in order to be able to fund a particular project, the general functionality is basically if a trader believes a particular token would succeed they are advised to buy that token and sell later on. When a cryptocurrency company wants to launch a particular token, they firstly release a white paper containing the use of the token, what role that token would play in the blockchain, how much is needed for the establishment of the token and how long the ICO would run for. Therefore when traders pay, they receive the tokens but if the money isn't up to the amount stated in the whitepaper the funds are returned back, but if the funds are in accordance with the white paper, the founding team would then establish the token. For instance Ethereum was once an ICO project, in 2014 1Eth was sold at 40 cents. ICO are run through the Ethereum platform and for that reason Ethereum must be purchased before one can use an ICO.
They are extremely risky:
They are high risk gamblers, many people invest in ICO just to make a quick profit, this creates a general buzz but as the project fades, the investors are likely to pull their profits causing a dump.
They are unregulated:
Because it is so easy to create an ICO, there are many low quality projects that would never progress, due to the fact that their creators basically want to create a quick profit and they are used as scam platforms.
They are prone to Cyber Attack.
How to Invest in ICO
- Read the ICO whitepaper and be a member of their online committee.
- Visit Bscscan.com and find out how the tokens are distributed because the founders have the majority of the token that may be pliable to pump and dump.
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Altcoins are basically cryptocurrency that are not bitcoin, they serve as a better and different version of btc, they are significantly important based on their functions, some examples of altcoin is Litecoin, it performs transactions faster than bitcoin. Altcoins are relatively different from Btc and they run on different algorithms. Before investing in any altcoin it is advised to research extensively about it because generally creators of this coin create a lot of buzz around the coin, which causes a pump then after a particular time there is a relative pump and dump of the coin. This is just for the creators to gain massive profit after creating a coin, this leaves investors with the coin and no one to sell too. When we want to purchase a coin we first consider it’s market cap which can be calculated by;
Total number of tokens that have been mined X The price of that particular token = Market Cap.
It is advised that before investing in an Altcoin it is advised to join the tokens social media community, a strong community is an indicator of a coin's success.
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| IEO | ICO |
|---|---|
| They are run from an exchange | They are run from unsecure site on the Internet |
| They are made in an exchange in a fast rate and within a small period of time | Trades may take long periods of time maybe months before they are successful |
| The risk of fraudulent activity is reduced | The risk of fraudulent activity is increased and loss of frauds is untraceable |
| They are secured by KYC | Reoccurrence filing of details on opening of site. |
Q2.Do you consider IEOs an advantageous way to make an investment? Explain
Yes, I would consider IEO as a good investment. Why?
Because in any business the aim is to make a profit, imagine buying a particular token at 1 cent and selling at 1 dollar, which is a huge profit margin.
It is relatively safer to invest in IEO because they are run by exchanges, an exchange would endorse any scam for its users to invest because they would try to maintain their integrity but anyone can wake up any day and form an ICO, when there is loss of funds there is nobody that can be held accountable that is why ICO are basically used to run scams. Investing in a good IEO project grants a trader maximum profit and returns for a small investment. Most times IEO are considered as a long term investment, token may not do well after being immediately launched on an exchange but after sometime they will be able to pump.
Some traders might be required to hold a particular token for a year or maybe six months, therefore patience is a highly needed virtue when investing in IEO. For instance, in the year of 2021, we saw Shiba Inu token have a significant pump, before this pump the token was firstly listed on Pancake Swap V2 before it was listed on Binance. This pump gave many traders that took part in Shiba's IEO maximize profits, so tell me why won't any cryptocurrency investor not be interested in IEO. It is basically a gold mine when it comes to cryptocurrency, but you have to be patient for a promising project to pump.
BEFORE INVESTING IN IEO, TAKE NOTE OF THE FOLLOWING
- But before investing in any IEO project it is advised to read their whitepaper which contains the aim of the token, the amount of funds needed for the token to be launched and be a member of the token's online community because an active online community is a determinant for a successful project.
- When investing in a token, you are might to invest wisely, it is advised to invest the amount of money that you are willing to lose because the success of a token is a 50/50 chance.
- When choosing an IEO to invest in, also do well to check the particular exchange that will list the token and complete their KYC verification.
- Do well to take note of how the token is shared, if the owners of the project have the highest percentage of the token, it serves as a sign that the token is a pump and dump token.
Q.3 List advantages and disadvantages of participating in an IEO.
| Advantages | Disadvantages |
|---|---|
| They are more trustworthy and run on a centralized system | They are expensive to run and have high requirements to be able to establish |
| They are more accessible and more user friendly, they are open to investors that may meet the requirements for creating an IEO | They are limited to exchange users, therefore if a particular exchange isn't available in a particular state/region those citizens are automatically excluded from the participating in the IEO |
| They are managed and regulated by exchanges making them less prone to scams, because most centralized exchanges are run on Know your Customer Technology(KYC) & AML | Different IEO are still risk to pump and dump, therefore it is advised to be a member of their online community and do extensive research before investing in any Offering |
| They have speedy liquidity, once they are listed traders can start trading the token immediately | Investing in IEO requires money to be put into the platform, how not all token will potentially do well in the market, this may lead to loss of funds |
Q.4 Explain how to participate in an IEO, for the process explore various exchanges, choose one of them and explain the process.
Screenshot from Poloniex Wallet
For this question I would be using the poloniex exchange.
As a trader before you can take part in an IEO you must be registered on an exchange through their KYC verification process. As the screenshot shows above, I have already verified my Poloniex account.
The Revv token is said to be an ERC-20 token it is used by games created by Animoca Brands. It is mostly utilized in motorsport gaming, and it is said to be used by big names in the motorsport industry like Formula 1, MotorGP. It functions on a system that credits players based on achievements in the game. The Revv motorsport game has been developed to provide gaming accessories in a sort of NFT which would incorporate cars and different drivers. They would organize competitions where you could play against other players and be able to earn. For you to be able to earn from Revv motorsport you are advised to accumulate a lot of Revv to be able to purchase a car and have some amount of Ethereum to cover fees.
Once you have completed your KYC verification, click in the launchpad for the Revv token.
The Campaign period is expected to last for at least 7days which is from December 14, 2021 at 07:00 UTC till December 21, 2021.
| Requirements | Rewards |
|---|---|
| Sign Up to be able to earn | New Users would receive 50 REVV if they complete the requirement of having traded 300 USDT in REVV, they would be selected based on time to reach the trading volume to share from 10,000 REVV |
| Deposit to earn | New or Old members would be able to get airdrop of 60 REVV if there deposit volume is 1000REVV to share from 30,000REVV |
| Trade to earn | Traders who have traded up to 200 USDT would able to earn at least 1,500 REVV shared from 30,000REVV |
Q.5 As an example of a project that had a successful IEO, explain that project. Be on topic. (Use from screenshots.)
2local loyalty is a platform used for yield farming and staking of cryptocurrency. It is a decentralized platform which entails that it isn't controlled by external bodies.
The IEO was run from 1st of December 2020 to 16th of May 2021 and it was able to raise the total sum of $850,000. When users buy coins from 2local a 1% discount is given, companies sell the 2local coins to exchanges. 2local has a cash back system established by holding the coin after a trade.
Conclusion
Initial Exchange Offerings is said to be a way of buying tokens before they are launched on an exchange. They differ from ICO because they are basically controlled by exchanges while ICO are run on websites. They relatively safe but are risky to invest due to pump and dump.
I would like to thank the wonderful professor @nane15 for this topic on IEO, and for teaching me how to buy coins before they are launched on exchanges. I hope to learn more from Steemit Crypto Academy. Thank you and God bless.