Initial Exchange Offering and Binance Launchpad. - Crypto Academy / S5W6 - Homework post for nane15
Greetings everyone. It's great to be in the 6th weak of this Crypto Academy season. This week's lesson was on IEOs, what they are and how they can be beneficial to investors and traders. I would be handling the assignment tasks as thus:
What is an IEO
IEO stands for Initial Exchange Offering. IEO is a fundraising activity for projects on the blockchain or internet. The IEO is similar to the ICO (Initial Token Offering) with the only difference being that the IEO is controlled and managed by a centralized exchange.
In order to raise funds for a new project, the project offers pre-sale of tokens that would be useful for their projects. The project would have an attractive whitepaper which would be criticized beyond all doubts to convince investors that the project would be profitable in the future. It is the promise of the project, listed in it's whitepaper, that attracts investors to an IEO.
As mentioned earlier, IEOs are managed and overseen by an exchange. This improves the integrity of the IEO because an exchange would perform thorough research on a project before accepting to offer its tokens in an IEO.
Do you consider IEOs an Advantageous way of making an Investment?
Participating in IEOs is an advantageous way of making investment. Firstly, the exchanges that offer IEO must've made thorough research on the project before accepting to offer the project's tokens for pre-sale on their platform. This decreases the chances of scams in an IEO.
Because these projects have their tokens listed on exchanges, they have a high chance of being profitable. This is a known fact as projects that perform IEOs usually gain a lot of support, causing a rise in the price of the token.
Partaking in IEOs is also a profitable investment if the investors do their own research on the projects before investing in them. Making blind investments hardly every proves to be advantageous, therefore it is important for investors to do their own investigation on a project, to determine for themselves if it is worth the risk.
Advantages of Participating in an IEO
An IEO is a pre-sale of a project's token. Participating in an IEO would give investors early access to the services of a project after it has gained support and become properly established.
Participating in an IEO offers high profitablity to an investors. Projects that offer IEO usually gain support with time, causing their tokens to rise in value. Through this, investors can make large profits just by initial participation.
Because IEOs are listed and offered by exchanges, it is a safe investment as scams are not common in IEOs. If an IEO turns out to be a scam, it would compromise the credibility of the exchange(s) that offer the token.
Disadvantages of Participating in an IEO
Because the IEOs are managed by exchanges, it doesn't mean that they would turn out to be profitable. This disregards that exchanges would only list tokens of a project with a good whitepaper and roadmap, and proves that a scam can still arise from a project with a promising future.
The project offering the IEO may fail, causing the price of the tokens to drop. This would create losses for investors.
Purchasing a token at an IEO may prove to be profitless because majority of investors may sell their tokens as their greed permits, causing a fall in price. As a result of this, investors who chose to HODL for the long term would end up with massive losses.
IEOs are targeted to a selected audience. Participating in what one doesn't understand can prove to be profitless.
How to Participate in an IEO
The coincodex site can be used to identify current IEO offerings across various exchanges.
Binance IEO List
Huobi Global IEO List
Poloniex IEO List
Kucoin IEO List
I have chosen to join the CHMB (Chumbi Valley) IEO on the Kucoin exchange.
Participating in IEO on the Kucoin Exchange
Step1: Open the Kucoin app for Android and click on the top left corner of the homepage.
Step 2: Select "Log In".
Step 3: Use Touch ID to login.
Step 4: After login is successful, select "New Listings".
Step 5: A list of tokens and their details are displayed on this page. Select CHMB.
Step 6: Select Buy.
Step 7: Input amount of tokens to buy, price at which tokens would be bought and select "Buy CHMB".
Note: Proof of verification on the exchange.
Example of Project with Successful IEO
BitTorrent is a peer-to-peer file sharing network for a decentralized distribution of electronic data and files to nodes across the network. The BitTorrent IEO was conducted on the Binance Launchpad on the 28th of January, 2019. The IEO consisted of two sessions; a session for purchasing the BTT token with BNB and another session for purchasing the BTT token with TRON.
The BNB session sold all 23.76 billion BTT under 14 minutes and the TRON session sold all 35.64 billion BTT under 15 minutes. The IEO for this project is controversial as many users experienced problems during the IEO. From services messages to captcha problems, users were hindered from participating in this IEO.
There's also a controversy that more than 28% of the token were already allocated to some users before the IEO begun. This general belief arose because it was found out that 28.44% of the tokens were already acquired in 3 seconds of the IEO launch.
The BTT token has a current price of $0.002714 and a market rank of #57.
Conclusion
IEOs are good ways of venturing into the crypto market because they generally offer a good ROI. Making good research on an IEO is necessary so that the chances of investing in a scam project would be reduced.
The BTT token has a good ROI for its initial investors. Valued at an initial price of $0.00012, it's initial investors have gotten an ROI of over 2000%. This is just one out of a number of successful IEOs. Given the importance of IEOs, I believe that it is a good investment as it yield great profits.
Cc: @nane15