Tag: IEO

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Crypto Daily Topic Cryptocurrencies

What is IDO? Is it the End of ICO and IEOs?

Cryptocurrency and blockchain aim to reduce dependence on regulated financial models and centralized platforms. Unfortunately, the majority of the exchanges are still running as centralized and in fully controlled models. 

Cryptocurrency and blockchain aim to reduce dependence on regulated financial models and centralized platforms. Unfortunately, the majority of the exchanges are still running as centralized and in fully controlled models. 

Cryptocurrency and blockchain aim to reduce dependence on regulated financial models and centralized platforms. Unfortunately, the majority of the exchanges are still running as centralized and in fully controlled models. 

IDO or the Initial DEX Offering has emerged as a solution to ensure independence and autonomy. The interest in the decentralized token listing is growing, indicating a desire to move towards a no-restriction and higher efficiency model, and that is where IDO comes in.

Initial DEX Offering is only a few months old, and it has already become a preferred method to raise capital in DeFi and distribute tokens. Admittedly, the IDO community is inexperienced, but still, it is making great strides.

Shortcomings of the Initial Coin Offering

2017 was nothing short of a fantastic year for ICO, and anyone with some white paper on digital currency could raise funds. But as it turned out, most of them were scams, and billions of dollars were lost, highlighting ICOs as scammy. 

ICO has its place in the history books as it represents the first method that investors raised funds in the crypto realm, but its weaknesses are quite glaring, and therefore the need to move past it. 

Essentially, investors in crypto startups did not have the necessary knowledge background to assess the project’s viability. Some of them invested in rumblings on white papers, and others in ICOs with staggering high valuations. But that is not all.

Initial coin offering had a loophole, and most scammers exploited it gleefully. After ICO fundraising, the project teams were free to collect the funds in one lump sum. Even if the project teams were truly committed to the project, receiving such a sum in one fell swoop was distracting, and the motivation to continue with the project would diminish significantly. 

The other shortcoming was the absence of a decent governance mechanism to safeguard the investors’ funds. People who put up their money were left stressing about their investments’ fate, continually sifting through everywhere for news, and there was also the issue of gas wars.

The most common way to contribute or participate in ICOs was through sending money from personal wallets. This created a “gas limit,” which is the maximum amount of funds you are willing to part with as transaction fees to move up the transaction validation system’s queue. 

Gas wars occurred when particular investors put up transaction fees too high to push rivals down the queue. Over time, the initially overjoyed investors for winning the gas war would then begin to sulk as regulators and other bodies started to examine some of the fundraisings’ legitimacy. For example, the SEC is beginning the process of filing cases against some of the concluded ICOs. 

Considering all these factors, legitimate projects can fail to get sufficient funding through ICOs. This is mostly because of the diminishing reputation and the need for a better alternative. 

What is IDO?

The IDO fundraising method has striking similarities to ICO and IEO. However, it is decentralized and based on DeFi, a robust, innovative, and scalable open finance technology.

An excellent example of Initial DEX Offerings is the Raven Protocol-built IDO, the first of its kind, hosted on Binance DEX. The others in operation include UMA (a Synthetic asset) and BZX, a margin trading and lending protocol. Many other platforms already have IDO dashboards and are looking to throw their hat into the ring.

Not too long ago, UMA, BZRX, and COMP used Uniswap, popular for its fair and smooth way to deliver tokens to the market. This method of distribution has become standard and is open to public access. IDO empowers users from different countries to participate in the trade. That means people from all over the globe can purchase tokens from Raven Protocol and other token vendors. 

The Difference between IDO, IEO, and ICO

The main difference between IDO and IEO is the fundraising platform hosting them. On the part of the ICO, the operations and transactions are managed on an inner platform. 

On the other hand, the centralized exchange IEO (initial exchange offerings) hosts “ICO” in-house and is, therefore, the ICO’s mutated version. Unlike ICO, IEOs offer an additional layer of intermediation, only allowing legitimate projects. Unfortunately, a large number of IEO’s are selling similar tokens to ICO, which may complicate the whole issue.

No doubt, the regulatory landscape governing crypto exchanges such as EIO is complicated, but that does not shield it in any way. The U.S. regulator has made it clear that ICO token sales are the same as securities issuances, posing a significant risk to IEO issuers and contributors. It is not an exciting prospect to invest in a promising project only to enter the SEC’s bad books. 

Typically, IDO (Initial Dex Offering) is IEO and ICO rolled into one decentralized platform. IDOs emerged with the DeFi rally as a new form of raising capital on a decentralized platform. In the case of IDOs, it is the active community members that vet and approve projects and tokens. This mechanism is somewhat favorable as it incorporates diverse opinions. 

Also, DEXes and IDOs are part of the push to decentralization as regulators begin to shift their attention to cryptos. Furthermore, the synergy between DeFi and DEXes reinforces their value in the crypto world.

The exchange fee for IEO is spiraling out of control as the market develops, and together with increased scrutiny by the regulators put it at a disadvantage. The advantage of IDO over IEO is in its decentralized nature and scalability. You don’t need permission from any authority to trade in the exchanges.

Is IDO Replacing IEO and ICO?

The birth of new technology is most often similar to a human child that goes through various stages before it matures. IDO is still in its infancy and is quickly moving to puberty, with various noticeable characteristics such as instability. The concept of IDO is no doubt exciting and may replace IEO and ICO sometime in the future. However, it has to mature first before it can take over from IEO and ICO. 

UMA, the synthetic assets platform which placed $500k into a liquidity pool, best illustrates the above point. The total supply put up was 2% under a starting price of $0.26, similar to what the seed investors paid a couple of years ago. Investors scrambled to purchase the tokens, and the bonding curve effect occurred, raising the price in the process.

Competing traders set up higher gas costs, resulting in a higher $2 price of UMA within minutes. Some buyers were dissatisfied as they purchased the tokens at a higher price than the initial investors. 

This is the same problem that BZX’s buyers face on Uniswap, with BZRX token prices rising to 12 times within a minute. There is still no IDO model that balances fairness and the need to maximize the capital. In the future, this goal may become a reality, but there’s some distance to cover. 

Conclusion 

No doubt IDO is the next big thing in DeFi and blockchain finance. However, it is still in the development stage, with instability and slight uncertainties, and it may be some time before it becomes mainstream and replaces IEO and ICO. In the meantime, IDO is in a wait-and-see situation.

But that does not mean you should stay away from IDO, at least for the time being. It means that you should be prepared to deal with the price instability until the platform matures and stabilizes in a not so distant future.

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Crypto Daily Topic Crypto Guides

What Are Pump and Dump Schemes in Cryptocurrency?

Introduction

Introduction

Introduction

Cryptocurrencies and the blockchain technology are relatively new to the financial markets. This makes them vulnerable to the traditional scams that used to take place on stock and some new ones. Since cryptocurrencies are not regulated by the exchange board, it makes them more prone to scam and schemes than regulated securities.

Out of the many scams around, the most common scam is the so-called pump-and-dump. It originated from the stock market, but the issue was rectified and made illegal on regulated exchanges. However, the cryptocurrency market is not immune to it.

The pump-and-dump schemes are such that they put every rise or fall in the market a question mark. So, a genuine investor would be unaware of the rise was being pumped or was shooting up for real.

The working of Pump-and-dump schemes

The actors behind the scene of pump-and-dump schemes are well-organized groups working over some private messenger. They are referred to as the inner core investors, who basically shoot up the volume of a coin by targeting a single exchange. To do so, they even take the help of whales as well. The coin under target must be of low volume so that the core can lock up as much liquidity at the price they intend. Moreover, they make sure that liquidity is relatively small.

By this, most part of the inner core investor is done. And that’s when the outer core investors kick in. These are the investors who have no clue of the planned pump-and-dump. Once the pump is implanted, all the actors in the scene, mostly the outer core investors, get buying. There are also unaware flocks who see a drastic rise and began to buy as a cause of FOMO. This drives the prices much higher and more swiftly.

Once the price anticipated by the inner core actors is reached, they step back into the business. In other terms, they initiate their dumping. Since they are the first ones to short sell, they get the best price available. Then there are the outer investors who were left scammed, sitting with huge positions looking to sell at higher prices. But the dumping brings it down. Hence, this leaves the investors harmed as well as the integrity of the coin been pumped and dumped.

The pump-and-dump has been annihilated from the stock market and other regulated exchanges. However, the haunting in cryptocurrencies or non-regulated exchanges is still in existence. With this into account, the U.S Commodity Futures Trading Commission warned people about these schemes in virtual currencies. Click the image to learn more.

Conclusion

Pump-and-dump are schemes that cannot be put to a stop in the cryptocurrency space due to its non-regulated nature. The only way to get away with it is to avoid trading cryptos with very low liquidity and low volume. Or you may research the coin on its rise and fall and predict if the move is real or just an illusion.

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Crypto Guides

What Should You Know About Security Token Offering (STO)

Introduction

Introduction

Introduction

In our previous guides, we have understood some of the most important fundraising methods like ICO and IEO. These are the ways through which a crypto start-up can raise funds to bring their idea to a reality. But these two methods have paved the way to the raise of one more offering known as STO. STO stands for Security Token Offering, and the entire process behind it resembles the working of an ICO. So in this article, let’s discuss what STO is, how different it is from an ICO, and the pros involved.

What is an STO?

Just like an ICO, a Security Token Offering is launched as a way to raise capital by selling tokens pegged to a firm. As we see, these tokens do not belong to any Crypto company selling their coins. Instead, STO tokens are related to common securities that are speculated by traders and investors across the world. Anything from Stocks and Bonds to Real-Estate Investment Trusts can be offered to the investors in STOs.

Mainly, when we invest in any security, we are investing in a portion of property or company behind that security. For instance, if we are investing in a stock, we are betting on the company behind it. If the company’s performance is better, our stock price will rise, and we make a profit. Using traditional methods, the purchases are documented on a piece of paper, but in STOs, the purchases are recorded in a blockchain.

STOs can be considered as a fusion between the crypto ICOs and the traditional IPOs as its overlays with both of these fundraising methods. It is important to know that SEOs are heavily regulated compared to the ICOs. This is because ICOs are considered utility tokens, and the essential purpose of these tokens is for the usage as an investment, as per the rules. So the ICO platforms do not have to follow most of the strict regulations while reaching out to a broader public.

On the other hand, STOs can only be offered to qualified investors with specific criteria. The fundamental intention to launch as STO is to offer investable asset contracts that are under the purview of securities law. Hence, compared to an ICO, launching an STO is very hard because of the regulations that are in place.

Pros Involved In SEO Participation

💰 Compliance – As discussed, the STO process is heavily regulated compared to ICOs. This will increase accountability and makes sure the entire process is extra transparent because of the transactions being recorded in a blockchain.

💰 Clarity – By now, we know that real-time companies and properties back the security token that has been purchased in an STO. So there is some clarity in the value of the purchase we have made. However, in an ICO, we won’t be sure of the value a token possesses as it is not backed by any asset.  

💰 Low Costs – Just like an ICO, there’s no question of middlemen while purchasing tokens in an STO. Since the transactions are executed in Smart Contracts, there’s no reliability on lawyers and complicated paperwork, which reduces the costs big time while increasing the execution speed.

💰 Increase in Liquidity – As the security tokens purchased in an STO can easily be traded all the time irrespective of the date, the liquidity of many illiquid assets increases.

That’s about STOs and the pros involved in purchasing these Security Tokens. Please make sure to do your due diligence of what STOs to participate in and what security tokens you must buy. All the best.

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Crypto Guides

What Are IEOs & How Are They Better Than ICOs?

Introduction

Introduction

Introduction

In our previous guide, we learned about what an Initial Coin Offering (ICO) is all about. We also discussed that 2017-18 was the golden era of ICOs, where some of the biggest ever ICOs like EOS, Telegram, and Dragon Coin happened. But what happened after that? ICOs took a hard hit after the Chinese government banned them. Also, there was a lot of negativity in this space after many large ICOs turned out to be scams. So it has been challenging for the Crypto startups to raise funds for their companies ever since the downfall of ICOs. This necessity resulted in the invention of a fantastic solution – Initial Exchange Offering (IEO)

Understanding IEO

In an IEO, any crypto company willing to raise funds for their project will approach a credible cryptocurrency exchange. The crypto tokens sales of that particular company will happen on that exchange, and the companies will have to pay a certain amount of fee and a percentage of tokens that got sold during an IEO. The exchange here is acting as a platform for the companies to sell their tokens.

So basically, Initial Exchange Offering works just like how Initial Coin Offering works without the decentralization part. That means, there is Smart Contract functionality in this process. All the transactions are centralized as they are authorized by the exchange in which the tokens are being sold. This is a win-win situation where the crypto companies can have a smooth fundraising process, and the exchanges can make profits by listing new crypto tokens in their platform.

Working of an IEO

In an ICO, people who are interested in purchasing tokens must send their funds to a given smart contract. But since IEO is a centralized process, interested participants must create an account with the exchange that is undertaking an IEO and complete their respective KYC procedures. Then they must deposit their funds in the exchange wallet and purchase the newly issued tokens using those funds. Most of the deposits are accepted in cryptocurrency only.

Top IEOs Till Now

Unless you are absolutely new to the crypto world, you must have heard about the Binance exchange. This exchange is one of the first ones to start the IEO revolution by designing a platform known as Binance Launchpad. The first successful IEO was of BitTorrent, a popular torrent service provider, and it was launched on the Binance Launchpad. BTT (BitTorrent Token) sales created a record in the world of IEOs by raising more than seven million dollars in a mere fifteen minutes. This company was backed by TRON, so this success isn’t a surprise.

If not for IEOs, it would be impossible for a new crypto startup to raise this amount of funds in hours or minutes. One more notable success story of an IEO is also from the Binance Launchpad only. A crypto company known as Fetch has raised about six million dollars and met the target in less than half a minute. After seeing the massive success of Binance Launchpad, many other exchanges have shown keen interest in this space. Let’s see what those exchanges are in the below section.

Top Exchanges That Embrace IEOs

As discussed, it is a potential business for any exchange for conducting IEOs using their platform. So many exchanges have shown great interest in the recent past to conduct IEOs and increase their visibility as well. Some of the top exchanges include Binance (Binance Launchpad), BitMax (BitMax Launchpad), Bittrex (Bittrex Int. IEO), KuCoin (KuCoin Spotlight) and Huobi (Huobi Prime).

IEOs have many pros over ICOs in terms of legality, security, and ease of access. That’s about IEOs; in our upcoming article, let’s discuss another fundraising method known as STO.

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Crypto Videos

IEOs Explained Part 3 – Launch Your Own IEO Now!

https://youtu.be/D-6REY8AO8g

https://youtu.be/D-6REY8AO8g

IEO marketing – part 3/3

This is the third and final part of the IEO guide. It will continue by explaining what to look for when listing your IEO on the exchange.
Exchanges will not market your IEO

One of the main benefits of an IEO is that the exchange handles quite a few aspects of the token sale, like the KYC/AML requirements as well as payment processing. The exchanges also offer some marketing, but that is simply not enough to guarantee the success of the IEO. One thing that needs to be remembered is that you are not the top priority of any exchange. The chances are that, if an exchange is large enough, it has many IEOs running simultaneously. On top of that, they need to handle other aspects of their exchange and to market them.


The biggest marketer of your IEO should be none other than you and your team. No one knows your cryptocurrency project like you do, which means that you should play a big part in marketing your IEO. Whether that means having your internal marketing team or working closely with an expert crypto marketing company, all of the efforts made can only increase the chances of your IEO succeeding in reaching the goals set.

Make sure to prepare a budget for marketing. Professional marketing teams may charge you in the range of $50-100k per IEO. Most companies will expect to be paid up-front or in monthly payments. A promise of future profits no longer does the job well enough to secure an expert marketing team.


ICOs and STOs are not that much different from IEOs

There is no need to reinvent the wheel here! Much of what was true for marketing ICOs and STOs will also be true for IEOs.

You will need to be clear on whether your token is considered a utility or a security. Marketing should be done according to that.
You will have to contend with many advertising bans, such as Facebook advert bans and bans on other major networks.
You will need to create and engage with the crypto community, which means that your marketing team needs to be knowledgeable about cryptocurrency, the blockchain, and your project.

IEO marketing time-frame

Unlike ICOs which can run for multiple months, most IEOs only run for 1-2 months. This means that you have a much shorter time period of intensive marketing. You need to reach investors, provide them with all of the necessary information, and convince them to participate in your crowdsale in quite a short frame.

Take advantage of the hype

IEOs are a new fun thing in the cryptocurrency space, and everyone is talking about it right now. If you’re ready to launch your IEO, the worst thing you can do is wait. Don’t be afraid to ride the hype train. Try reaching out to cryptocurrency and financial news organizations with your personal insights on what it’s like to run an IEO, which may create even more traction. Look for interview opportunities that can bring exposure. Make sure to do anything and everything in your power to make sure that your voice is being heard. Your marketing plan should be much more aggressive than an ICO or STO marketing plan. The PR plan should be full of press releases, interviews, speaking engagements as well as any other ways of putting your face and name in front of potential investors.

The post-IEO phase

Just like with ICOs and STOs, the marketing should not stop after the crowdsale ends. If you are running multiple consecutive IEOs on different exchanges, you should consider diversifying your marketing. Investors that invested in your project on one exchange don’t want to be bombarded with requests to back you on some other exchange. On top of that, make sure to provide regular updates on development, new partnerships, and other major and minor milestones beyond the money you’re raising.

Hard work pays off

If you want your IEO to be successful, you’ll have to work hard. Preparation both in terms of the project development and marketing will differentiate you from the others. We’ll probably never see as big of hype around crowdfunding projects like the one we had in 2017. However, there are many opportunities for projects with a strong vision, a quality project, and a good marketing team.

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Crypto Videos

IEOs Explained Part 1 – The Death Of The ICO

https://youtu.be/pnuevvHipxM

https://youtu.be/pnuevvHipxM

IEO’s explained – part 1/3

This guide will explain the basics of IEOs as well as their benefits when compared to ICOs. It will also focus on the benefits of every party involved.

IEOs explained

The abbreviation “IEO” comes from Initial Exchange Offering. Its core concept is the same as with an Initial Coin Offering (ICO). However, it is done on the website of a cryptocurrency exchange, which acts as a middle-man and conducts the sale itself. New digital currencies are sold to the public at a discounted price with ICOs. Its purpose is mainly raising money for a new project. In an IEO, however, everything takes place on the website of the exchange. The exchanges usually keep a small percentage of the token supply to themselves.

IEOs are considered the next new thing after ICOs and STOs. ICOs have stopped being as appealing to investors as before because of numerous scams and failed projects, as well as the lack of credibility of most of the ICOs. Cryptocurrency exchange Binance was one of the first exchanges that launched their IEO.

The most important thing when it comes to IEOs is that the exchange is at the forefront, which brings additional security to the offering. IEOs have the advantage of the exchange doing all the promotion and marketing, as well as managing the smart contracts of the IEO itself. It also ensures that the sale is legally compliant and follows all the KYC/AML processes.

IEO benefits

There are many benefits that IEOs have when compared to ICOs. The benefits of the three parties involved in the process will be considered separately.

The investors benefit from IEOs mostly in terms of the increased trust and security, which they do not have when investing in ICOs. The fact that the crypto exchanges are involved makes a significant difference. In order to maintain a good reputation with its clients and beyond, all exchanges will vet the projects that are launching IEOs. The exchange stands to benefit (or lose) from an IEO as well. Many exchanges tend to set too high of criteria for the funding rounds as they want to ensure that the IEO will succeed. This instantly brings more trust to the IEO space as this method removes a lot of scams. On top of that, investors don’t have to manage their transactions in order to exchange their funds. Exchanges are always supporting the IEO trading when the token is ready as it benefits the exchange as well.


The projects are also benefiting greatly from IEOs as the preparation and marketing processes become much easier than what they would be if the project launched an ICO. This is simply because the crowdfunding happens directly on the exchange’s platform, which means that the platform undertakes all of the promotion and marketing. This instantly solves the problem of trust as well as differentiates the project and makes it known. Also, the KYC/AML process and everything else that relates to making the sale legitimate is done by the exchange. Another advantage of projects that are doing IEOs is the immediate exchange listing, which is an increasingly difficult task nowadays.

Conclusion

IEOs are another form of project token offerings that certainly solves many problems that came with the ICOs. This type of offering will undoubtedly be used more and more in the world of cryptocurrencies.

 

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Forex Videos

IEOs Explained Part 2 – Why A IEO Is Right For You

https://youtu.be/I5ZqoqHCABw

https://youtu.be/I5ZqoqHCABw

IEO marketing – part 2/3

The concept of IEOs was quietly flying below the radar ever since December 2017. However, they have suddenly picked up a great deal of interest at the start of 2019. If an IEO is something you are considering for your cryptocurrency project, there are many questions you need to be answered. This is a guide on how to market an IEO and how it all works.


Not every IEO will succeed

The high-profile success of some recent IEOs has brought a certain amount of hype surrounding this new way of crowdsale. However, this is not 2017, and investors are not going to throw their money at a project just because it has the word “blockchain” in it. You will need to put some effort into marketing your IEO. On top of that, you may even need to run not one but multiple IEOs on several exchanges in order to meet your hardcap.

Setting yourself up for success

If you want your IEO project to be a success, you need to enter the market prepared. A polished whitepaper is considered a must-have in this day and age. The whitepaper should clearly explain the use-case for your project as well as why it needs to be on the blockchain.

People were used to investing in early-stage projects during the 2017 ICO hype. However, we have to say once more that this is not 2017. You should release, at the very least, an MVP. However, a product in beta stage or ready to launch is even better. This will not only help you attract more investors, but it will also help the exchange itself to determine whether they want to be a host to your IEO. Exchanges are looking for good teams that have already made and built something. After all, exchanges are putting their reputation at stake when hosting an IEO, and they do not want to host a project that does not have at least a part of the “product” finished.

The exchange also expects the project to have already recruited most or all of the required staff. They should be listed on your site and have your IEO project listed on their LinkedIn account.


Choosing an exchange

Your choice of exchange matters greatly. One of the main benefits of an IEO is that it gives you a ready-to-invest audience which is brought from the exchange in the form of its users. You will want to partner with an exchange that has a broad and user base of altcoin traders, as they are the ones that will be most interested in projects such as yours. However, larger exchanges usually have higher listing fees, so a balance needs to exist.


Make sure to at how the exchange has hosted previous or ongoing IEOs and if you like what they are doing. If you’re one of the first IEOs that the exchange will launch, what terms are they offering you? Do you have confidence in the exchange’s ability to oversee your IEO? The decision of which exchange to choose is crucial and should not be taken lightly. An exchange is the most critical partner in your IEO. A poor choice of exchange could hurt your project as much or even more as a poor choice in CEO or lead developer. Choose an exchange that you are confident in and excited to work with.