Welcome once again to my blog. This week number 6 of the season number 5 I will be attempting the homework task given by professor @nane15
. The professor taught on the topic Initial Exchange Offering and Binance Launchpad. Let's get started on the homework task.
1. Explain in your own words what an IEO is.
Initial Exchange Offering (IEO) is a common term use in the crypto currency world most especially when introducing a new project in to an exchange. It is a means where funds are raise by the project team to finance the continuation of the project they have at hand.
In essence, the IEO is a means where project which are in a process raise funds to continue pushing the project ahead. So when a crypto project or a token is about to launch on an exchange platform, it passes through the period of pre-sale and this is hosted by the exchange which will be listing it when it is finally launch.
The pre-sale time is the time where investors buy the coin at a very cheaper rate and then the money generated is in turn used by the project team to continue the project. This period is used not only for raising funds to finance the project but also it is use to register members who are interested in the project.
As I have mention earlier, the presale is done on an exchange, that means the exchange must be certain that the project in question is reliable and not a scam as that can ruin the reputation of their platform if the project is fake. In so doing, the investors mostly sees these as a wonderful opportunity as they have been given assurance by the platform that the project is secured and they shouldn't be scared of anything at all.
2. Do you consider IEOs an advantageous way to make an investment? Explain.
From my own point of view, I consider the IEOs as an advantageous way to make an investment and they reasons are not far fetched. I will be listing few reasons below to support my claims.
Firstly, as an investor, when you buy this token in pre-sale level, there is a higher probability that when the token is finally launch, you will make a lot of profit as the price of the asset may raise higher than the one you bought it. At that point you have made a lot of profit already. As we already know the pre-sale level is a stage of fund raising and if much investors come into play at that point, the price of the tolen will start having higher value even from that point.
Secondly, the exchanges involve in the IEO project have the opportunity of advertising their selves as most of these exchange might not be known by some investors but with the help of the IEO pre-sale on the exchange more customers will get to know about the exchange and possibly start using them for trade.
Thirdly, IEO is a major tool for fund raising and for the continuation of any project at all. We know that executing these project really need a lot of finance and that is mostly difficult to be sponsored by just one person hence the IEO serves as a means to raise this funds to enable the project in question continue.
3. List advantages and disadvantages of participating in an IEO.
The advantages and the disadvantages of the IEO are seen below. Let's start with the advantages first.
Advantages of IEO
One of the major advantage of the IEO is that users are given the opportunity to buy some token in the pre-sale level which they will in turn make a very huge profit when the token is finally listed in the exchange.
IEO are quite very reliable, so investors do not need to be scared of anything at all. The exchanges make sure they carry out all background check on the said project before they will allow their users participate in the project. This is because the credibility of the exchange too depends on what the present to their users.
IEO gives the users the privilege to take part in the project activity before the said project is officially launch.
Disadvantages of IEO
They profit is not really guaranteed. What I mean is that the fact you bought the asset in a pre-sale level at certain amount those not necessarily mean that when the token is launch the price will be greater than the one you bought it.
IEO are sometimes hard to participate as they are targeted to only large investors. This means that they look for only large investors and anyone without much money may not be aware of the project and hence will not be able to participate in it.
Cryptocurrencies as we already know is highly volatile and for that reason, during a pre-sale of an asset in IEO the price may be higher than the price of the asset when the asset is finally listed on the crypto exchange.
4. Explain how to participate in an IEO, for the process explore various exchanges, choose one of them and explain the process. (Use from screenshots.) (No need to participate, just register, present proof of verified account and explain the whole process, do not use Binance)
To participate in an IEO, you have to search for an exchange that has an active IEOs. Note also that it is highly recommended that you carry out a proper analysis on the said project and be sure of the project before participating in it's IEO. Though most often than known to make research on the project is very tidous and as such what gives you as an investors more faith in the project is the exchange hosting the project. I have earlier explain here that no exchange will want to loss it's reputation and hence they won't present any IEO to users if they are not certain about the said project.
When you have fully make your research or probably agreed to the IEO because of the exchange hosting it, you then check to be sure that you met all the requirement (lay down rules). If all that has been taking into consideration, then you will have to register (complete your registration by providing information on your KYC) and then participate in the IEO by purchasing some token in the pre-sale level.
Let's consider few exchanges as well as their tokens on pre-sale from the coincide.com websisite. The screenshot below will have the following information about token name, date of pre-sale.
From the screenshot above, we have list of IEO such as KalyCoin, Tryvium Travels, Crystal Token, Italian wine Bank etc. Let's see them in the screenshot below as well as their IEO overview.
Registering in one of the exchange
They step involve in registrating is simple and straight forward. Let's get started.
- Visit the Kucoin exchange via the coincide.com
- Select a token of your choice in our case we will be slecting the first which is the Chumbi Valley (CHMB).
- Enter your valid phone number and click on send code
Enter the verification code sent to you and then click on next.
Choose a valid password and login. Confirm the password by entering it again. Click on the check box to accept all terms and condition and then click on next.
- Finally you will get a success message if you have successful registered. See sample of message below.
5. As an example of a project that had a successful IEO, explain that project. Be on topic. (Use from screenshots.)
One of the projects that had a successful IEO is the VeriBlock project. This project gave rise to the VBK token. The IEO exchange platform for this project is the Bittrex International. The VeriBlock blockchain has advantages over other blockchain as it help to prevent many attacks such as double spending attack, 51% attacks etc. The blockchian uses the proof-of-proof algorithm to bring about this special feature. It also aid other blockchain to inherit the proof of work used in bitcoin.
The IEO of this project lasted only for about 10 seconds. This took place on the 2nd day of April 2019. Here, the minimum purchase made by investors is 100 VBK and the maximum is 200,000 VBK. The supply percentage for the IEO was 3.3% which is equivalent to about 70M. In all, about 855 investors took part in the pre-sale and only about 142 bought maximum they rest bought within the minimum.
Information about the project
|03.||IEO Platform||Bittrex International|
|04.||End date||Apr. 2, 2019|
|06.||Price at IEO||$0.1|
|08.||ROI in USD||-58%|
From the analysis and explanation made anove, we have said that the entire sale took only 10 seconds to be completed and because of that a lot of persons where unable to participate. A lot of investors blamed the Bittrex platform for the quick finishing of the said sale as they believe that bot were also involve in the buying and that is the reason the sale didn't take much time. Others claimed that the entire sale was already done before the platform presented the IEO to the public as a formality.
As we have clearly mention above, as at the time of listing the token, the price of the token is seen at $0.1 but currently the price of the said token has drop down to about $0.042. This is a clear indication that it's not all presale buying that generate profit to an investor as there are also room to make a losses.
IEO as we have earlier explain above has to do with a means of fund raising to assist continue the project under review. When this IEO is been done, buying of the said asset is done in a lower amount of money. Though, it is aimed to making profit and that is the reason most investors go into it. They have this believe that if the said token is listed in an exchange, it price will increase and hence they will make profit. This is not true for all time.
Considering the VBK tolen that was launched in 2019, at the presale level the token was sold at the rate of $0.1 but today the price is seen at $0.039 which implies a significant decrease from the price it was initially sold at the presale level. We have also seen problems associated with the sale as claims have it that the sale was done before the show to the public took place which lasted just 10 seconds.
My gratitude goes to the professor in the person of @nane15
for such a wonderful lecture. I have really learnt a lot and I look forward to even learning more from you as the time goes on.