In the middle of 2017 and until the beginning of 2018 the ICO´s had a great boom and the often unknown projects attracted large capitals in dollars in a matter of minutes.
Then it should not surprise us soon this attracted the attention of the scammers, whose projects, as a rule, had no value to the industry and were often based on a multilevel marketing model. The new tokens rarely fell into more or less large exchanges, and if they did, it was not for a long time, losing most of its value after the announcement of the foreclosure or in the context of a significant market decline.
This caused market participants to lose faith in the prospects of the ICO´s projects, many of which disappeared without a trace after raising funds or, at best, violating the road map.
According to the analytical resource TokenData:
"In the first quarter of 2019, ICO´s projects attracted $ 118 million, 58 times less than last year, when the figure was $ 6.9 billion."
"By surprise, and in contrast to the expectations, the sale of tokens returned. Having changed the abbreviation to IEO and based on the exchanges. These being the key partners of the promoter company and the person in charge of guaranteeing the process."
What is special about IEO?
The main feature of IEO (Initial Exchange Offerings) lies in the fact that cryptocurrency exchanges are responsible for selecting promising projects and distributing tokens among their own users. Therefore, the main marketing efforts are transferred to the shoulders of the market, and developers have the opportunity to focus better on the product.
Benefits
Since the representatives of the Exchange are interested in the favorable outcome of the project and the long-term investment perspectives of the tokens, they are the ones who evaluate the viability of the projects. Therefore, the admission of the project to IEO depends completely on the professionalism of the exchange analysts, who perform a fundamental analysis.
With this process all the parties benefit:
For stock exchanges: attract new users, be the first to list new currencies, an increase in commercial activity and, consequently, the income of commercial commissions.
For developers: tokens are guaranteed to be listed on the stock exchange.
For investors: since many of them once invested in ICO´s projects without waiting for the appearance of tokens in the exchange.
When the haste for ICO´s decreased, the blockchain projects increasingly resorted to so-called adjustable tokensales: security token offers (STO) and other currency distribution options available mainly to wealthy (accredited) investors. IEO is available to a wide range of market participants, who only need to be verified and acquire a certain number of native exchange tokens.
Overcoming the Ethereum bandwidth barrier
When the ICO´s were established in 2017 and the beginning of 2018, in the context of a rush for initial offers, the participants of the tokensale competed with each other, then to increase the speed of transactions and be the first to acquire the prized tokens They established high gas limits. Bringing as a consequence the so-called "**gas wars**". Often the Ethereum network did not support the number of transactions due to its limited bandwidth this exuded its escalation problem.
IEO driver exchanges also use their native token, usually the ERC-20 standard. However, such trading platforms are centralized, therefore, the corresponding operations are carried out outside the Ethereum network. In other words, the IEO platform is responsible for loading, not the Ethereum blockchain.
FIRST IEO's
Binance
IEO appeared not now, but in 2017. Based on the then little-known Binance Launchpad platform, the tokensale of the BREAD ($6 million) and GIFTO ($ 3.4 million) projects were successfully carried out.
At the beginning of 2019 the Launchpad restart occurred and the first projects were BitTorrent and Fetch.AI. The collective sale of BitTorrent finished in less than 18 minutes, according to its results, 59.4 billion MTB chips were distributed (around $7.2 million).
There were many disappointments.
The users complained that there were technical problems. The site could not stand the influx of visitors.Some users did not see the purchase button, while others had an error message in Chinese. Some still managed to get to the purchase page, but there they found a message indicating that the application was in the queue and then a notification that the campaign had ended.
However, the sale was a success.
The BTT (Bit Torrent token) token soon appeared on the big UPbit and OKEx sites in addition to Binance. Just a week after IEO, the currency was trading almost 10 times more than the initial price. The rumor about the success of Crowdsale BitTorrent, obviously, stimulated the interest of the cryptoinvestors to the new form of crowdsales.
The success of the following IEO project at Launchpad was even greater: investors bought the chips from the Fetch.ai project in just 22 seconds, which led the organizers to raise $6 million. However, according to the head of Binance, only 2,758 of the 20,000 participants managed to buy tokens.
There were complaints. According to the opinions of certain users, most of the buyers were bots.
OKEx (Refining the Process - Evolution)
Not surprisingly, the impressive success of Binance Launchpad has inspired other important exchanges to open their own IEO platforms.
So, shortly after the BitTorrent crowdsale and opening Fetch.ai, OKEx announced the details of its first IEO project, Blockcloud, whose collective sale is scheduled for April 10, 2019. Almost at the same time, the exchange presented the rules for participation in IEO on the OK Jumpstart platform. OKEx decided to implement a subscription mechanism that only OKB holders can use.
Features of the JumpStart subscription mechanism of OKEx.
- The token subscription is open only for 30 minutes, or until the established application limit is reached. The latter is installed in front of each IEO, as well as the amount of project coins available for purchase.
- In the next step, the system assigns the distribution coefficients directly to the amount of OKB token that the IEO participants have. After completing the allocation calculation, the tokens are credited to the user accounts. At the same time, the corresponding number of OKB tokens is automatically deducted.
To participate in IEO, the user must have at least 500 OKB during the seven days prior to the tokensale subscription.
Bittrex
The first bittrex tokensale in IEO format would be held on March 15, 2019, but it had to be canceled because the Exchange authorities doubted the good faith of the project. It turned out that the Singapore company that issued the RAID tokens is ONERAID PTE. LTD - is not in the official registry of legal entities of the Corporate Regulatory Authority (ACRA).
Overcome this problem, Bittrex announced the VeriBlock IEO project. On April 2, the crowdsale lasted only 10 seconds.
VeriBlock, whose main network was launched on March 25, allows other cryptocurrency networks to use the Bitcoin blockchain to counter "51% attacks". VeriBlock is based on the Proof-of-Proof consensus algorithm.
Again according to the opinion of the users the tokens were bought by bots.
An opinion was also expressed on the need to rethink the approach to carry out the IEO.
Financial Paradox Without Loss - Crypto Market Stimulation
CONCLUSION
As we could see, the dissatisfaction of the users has been a common factor in all the IEO carried out so far.
Measures should be taken to regulate these IEOs and democratize access to the purchase of shares.
The main negative aspect that can tarnish the image of this new negotiation alternative is precisely the massive complaints of users who can not access.
Intelligent controls must also be established. Well-developed codes that serve as a kind of firewall for scripts. The bots saturate the demand and prevent the "real users" from acquiring the shares in these crowdsales. Apparently, in parallel with IEO, there is a market for the bots that allow you to buy offers of tokens in a matter of seconds. After all, it is unlikely that all "live" market participants can acquire tokens in just a few seconds.
If IEO sales are not regulated on time, in order to favor better distribution of the tokens and democratize the acquisition opportunity, we will be seeing the imminent death of the IEOs and their HYIP.
Hopefully, the HIGH PERFORMANCE INVESTMENT MARKET of the IEOs will not be as fleeting as the ICO's, but the IEO model is not free of defects.
There is no guarantee that regulators will not participate in this area in the near future as investors risk their own money by participating in IEO. Because many crowdsales have not occurred, it is not possible to objectively compare different platforms with each other. There is also great legal uncertainty inherent in this area.
It is also possible that even the growth of the entire cryptocurrency market will also slow down with the first deep reductions in the prices of the new tokens and the decrease in the activity of the IEO, as it happened during the boom of the ICO´s in 2017 - early 2018. The emotion turned out to be fleeting, because in this area there were many FALSE projects that turned out to be ordinary scams.
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