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Token sales have not stopped since the boom of 2017. They have just changed their name.
The initial exchange offers (IEO), in which a cryptocurrency exchange offers a direct listing and launch campaign of a new start-up token, report millions to blockchain chain companies in 2019.
Two sources, both of whom asked for anonymity to avoid alienating their trading partners, told CoinDesk that some scholarships refused to register their chips unless their startups pay big fees, in different formats, according to exchanges. These fees, according to sources, range from 10% of the start-up's own funds, plus a percentage of the global market capitalization of the token, to more than $ 1 million for "marketing".
An anonymous source of this type said the stock markets were seeking to compete with Ethereum, which has been used primarily until now to create new badets.
"Basically, they are attacking the ERC-20 [token standard], "Said Malta-based source of exchange, Binance." They want you to issue a Binance token [BNB], at the top of the Binance chain instead of an ERC-20, to enter the [decentralized exchange business]. "
The most famous IEO platform in the ecosystem is Binance's Launchpad division. The Launchpad started in August 2017 and reopened with the BitTorrent offer that facilitated sales of $ 7.2 million with the BNB native to the stock market in January 2019.
Since then, Binance has launched four new projects and is moving forward with at least one project per month, while simultaneously developing a decentralized exchange (DEX).
Binance General Manager Changpeng Zhao (CZ) told CoinDesk that the Launchpad had received "thousands" of applications. Until now, the value of these new tokens fallen shortly after the holding of the IEO.
When asked how much it would cost a start-up to secure an IEO Launchpad and if these teams were to use exclusively the native blockchain of the stock exchange or the NBB, CZ said that "every sale is unique."
"We evaluate each project individually," said CZ. "Some projects require more help from us, such as counseling, the symbolic economy, and so on. Some projects are more independent. … We built Launchpad because we believe that fundraising on the blockchain is one of the best tools for entrepreneurs. "
Regarding the broader comparison between OIEs and ICOs, he added:
"In the IEOs, the exchanges apply an additional level of due diligence to help investors select and evaluate projects."
Competition
Global competitors such as BittrexKuCoin and OKEx also offer IEOs, although their formats vary.
For example, according to Huobi Group Marketing Manager, Ross Zhang, Huobi's "Huobi Prime" chip launch format is not an IEO (although most traders call it that) because Prime does not raise no funds for external startups.
Zhang told CoinDesk that the two Prime offers had so far been exhausted, exchanging 3.5 billion start-up chips for Huobi's native chips.
Meanwhile, unlike Binance's Launchpad, KuCoin's comparable Spotlight division will launch its second IEO on May 28, featuring ChromaWay's start-up CHROMA token, which has already generated $ 11 million in private token sales. Last year.
ChromaWay staff. (Courtesy photo)
KuCoin CEO Michael Gan told CoinDesk that the first IEO of the stock exchange in April had raised $ 4.2 million in crypto. However, it is more accurate to consider these amounts as a distribution rate rather than a profit. We do not know how much the trade generates OIE themselves.
In addition to transaction fees, conditions are determined through private discussions rather than standard procedures, according to CZ and an anonymous source that offers several exchanges.
The second anonymous source said that several exchanges were switching to prioritize IEO objects and no longer considered new badets or niche badets for general listings.
Describing the challenges in convincing an exchange to list a new token or niche token without the exclusivity of an IEO, the ChromaWay or Perelman COO stated:
"Most of the major exchanges focus on their personal IEO projects."
Trusted Conservatives
To be fair, these exchanges provide professional filtering and marketing services for the sale. In addition, sometimes exchanges do not charge IEOs.
In fact, Perelman of ChromaWay told CoinDesk that startups needed IEOs for "liquidity and marketing" and that KuCoin did not charge fees.
For another example, OKEX operations manager Andy Cheung told CoinDesk that its exchange did not charge startups for the IEOs even though the company had received hundreds of applications.
Speaking of how the IEOs are drawing attention to the stock's native token, Mr. Cheung said the sales participants had to have a minimum of 500 OKB tokens to participate in the IEO. In addition, OKEx IEOs, which should occur at least once a month during the rest of the year, will only accept OKB tokens. KuCoin and OKEx are following Binance's initiative by prioritizing the use of their native tokens and developing their own DEX in the meantime.
"We believe [IEOs] bring new users to the community, "said Cheung." We can really help [users] select a good project. It will not be like in the good old days when someone who makes an offer of initial coins runs away. "
According to Zhang de Huobi, two years after the symbolic boom of 2017, there is still a "huge appetite" among retailers eager to access digital resources quickly. He said:
"The difference this time around is that people are, overall, a lot more cautious about where they place their funds."
KuCoin image via Shutterstock
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