Huobi Prime + Reserve: Is it an airdrop, IEO, or DPO?
The Crypto space is home to myriad innovations that go beyond technology and stem into marketing.
As projects have had to fiercely compete for the Crypto community’s attention, marketers in this space have been forced to think out of the box. One of the most common approaches undertaken by projects—particularly new ones—is the issuance of airdrops.
Airdrops started off as a successful means of attracting interest, but the use of this marketing method quickly became saturated. Today, airdrop lists are often comprised of hundreds of projects offering varying amounts of free tokens on a number of blockchains. The result is that offering an airdrop no longer attracts the degree of attention it would have in 2017. However, airdrops don’t seem to be dead; rather, successful airdrops might be resurfacing in a new format.
Major Exchange IEOs: Just an Airdrop
Initial exchange offerings are the evolution of initial coin offerings. However, this is primarily true for projects that are raising the larger portion of their capital needs via an IEO. There’s a growing trend in which projects launching on major exchanges, like Huobi, have already raised the major portion of their capital needs in private rounds. These projects issue a small, low-priced allocation through an IEO.
For example, Huobi’s last IEO & DPO, Thunder Token, raised over $50 million in private funding rounds. Its launch on Huobi Lite was a mere $500,000 sum—just 1% of the sum raised through private funding.
The Thunder Token IEO & DPO sold out in an instant and opened on the secondary market to a near three-fold increase in price compared to the IEO/DPO round. Such price hikes on Huobi’s IEOs & DPOs have become the norm. Retail investors quickly swarm at IEOs on the highest volume cryptocurrency exchanges with the intent of making a quick profitable flip.
Huobi's next Prime offering (IEO & DPO) might further strengthen the theory of Huobi’s DPOs being simply a new shell for free Crypto gains, ergo airdrops.
Reserve Token IEO/DPO—or is it an Airdrop?
Reserve Protocol, is a project that has recently caught fame amongst the wider Crypto community due to its IEO & DPO on Huobi. Reserve is creating a decentralized stablecoin and the project’s mission is supported by major Crypto firms like Coinbase and well-renowned Silicon Valley entrepreneurs like PayPal co-founder Peter Thiel.
The vast portion of Reserve’s capital was raised during the project’s seed and private rounds, and thus most of the Crypto space was not a part of the project's community. This is evidenced by the project’s meager Telegram base of less than 1,500 people.
Exchanges like Huobi have millions of active users. Their IEOs/DPOs provide more than a capital raise; a token offering on such a large exchange is the most impactful marketing campaign as a massive portion of the Crypto space gets an immediate insight into the project that’s about to be launched on Huobi Prime. However, to garner as much interest as possible, Huobi has set Reserve Protocol’s launch price at a far lower rate than the project’s private sale price. This is absolutely unprecedented but it has the remarkably positive impact of driving retail investor interest due to the potential opportunity this IEO & DPO may offer to the masses.
There is, however, a caveat.
While Reserve's private sale investors were able to buy tokens valued up to $500,000, the projected average buy value of the IEO & DPO participants is between $100 to $200. Thus, even if the project kicks off its trading pair with a several-fold gain, the average earning of IEO & DPO participants will be limited to a scale of earnings more typically associated with a good airdrop.
The New Airdrop
While some projects look at IEOs as a new means to raise capital, others have amped their marketing potential by leveraging IEOs as a tool to reach the mass market.
To make the most of its token sale on Huobi Prime, Reserve has made the IEO & DPO price far lower than the private sale price, but has greatly limited the amount participants can buy. Thus, Reserve Protocol might be the first project to execute an airdrop in the format of an IEO & DPO
This new form of airdrop remains rewarding to the public but organically screens out those participants who are interested in just free money. Since an initial capital expenditure is required, participants are inclined to actually learn about the project, thereby converting a much greater portion of retail investors into supporters as opposed to the conversion rates of a typical airdrop.
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