Initial Exchange Offering and Binance Launchpad - Crypto Academy / S5W6 - Homework post for @nane15

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Introduction

Hi guys
Hope we are all doing great. You are welcome to this edition of my homework task in the Steemit Crypto Academy. Today I will be talking about IEO and how they are used by developers and different cryptocurrency Exchanges as a form of fundraising activity to help fund upcoming projects. I’ve describe this below vividly, so let’s get on it.

QUESTION 1:

Explain in your own words what an IEO is.

Initial Exchange Offering which is known for short as IEO is a fundraising mechanism whereby developers of a new cryptocurrency project get to an exchange to negotiate the market process of the new token. This came to existence a few years back, that’s early 2019 and over time has become hugely utilised compared to the formerly famously known Initial Coin Offering (ICO). The IEO as a mechanism for fundraising carries out the distribution of new projects (new crypto tokens) to the public or to a set of investors. However, this process is carried out after the developers team has partnered with a cryptocurrency exchange which will in turn helps in the facilitation of the sale and distribution of the token in question.

The IEOs are very much similar to the formerly used ICOs but the IEO comes with a lot of guaranteed advantages to its security even though it is more centralised. Most projects without enough funding always pass through the IEO means of making good sales. In this way they raise enough capital to support the project for a better start. This is done by carrying out a presale of the token of their project even before it gets established.

This mechanism sells tokens cheaper during their presale sessions even though they know how massive the project may become in the nearest future. This makes the IEO a good investment advantage to investors and also to the developers team since they raise capital for their project in this activity while investors make fast returns also.

Like I said from the beginning, IEOs requires that the developers team partner with an exchange for the presales I order to raise funds. Cryptocurrency exchanges can be decentralised (DEX) and centralised (CEX) depending on the management system and users freedom. On these platforms (DEX/CEX) users take advantage of the market volatility to make massive profits and so upon presale of a project there’s already a degree of confidence as to the sale success and easy raising of funds. The exchange scrutinises the project looking into its management and making sure there’s a level of insurance to its users. After being tested and proven fit, the project will be a successful one on the pact that it can’t be a scam but doesn’t guarantee its growth.

QUESTION 2:

Do you consider IEOs an advantageous way to make an investment? Explain.

The advantage of IEOs with respect to investments is seen from the fact that investors can easily and cheaply buy from presale before the project is finally launched for sale. When presales take place the market volume of the token is increased by the rapid purchase on presale and this increases the value of the token which is highly profitable to early buyers (investors).

Due to the nature of different exchanges, they tend to keep their reputation by carrying out good research and analysis on a project before they list it. This gives investors enough confidence to invest without fear since they trust the exchange especially those such as Binance exchange. This makes IEOs very safe for investing even though the guarantee ends at the level of no scam but doesn’t work on the efficiency and growth of the project. All these make the IEOs advantageous for investment.

QUESTION 3:

List advantages and disadvantages of participating in an IEO.

It’s difficult for an activity or entity to have advantages without some level of disadvantages or the other way round and this is no different from the IEOs. As they are advantageous to investors and the project developers team, they are also disadvantages to its utility. These characters are described below.

ADVANTAGES

1). IEOs have been proven safe over the years of their introduction into the financial system. Before a project is listed, the exchange in support of that project or the exchange to which the project developers team has partnered with will have to do a lot of background checks and scrutiny to prove its safety and not a scam to its users. This is so that the exchange can keep its credibility and prestige amongst others. Therefore doing this will by all means prevent malicious projects from being on the presale market.

2). IEO has high profit potential as firstly the exchange wholly supports the project bringing it to the face of its users for purchasing. On the investors side this is highly profitable as upon presales the volume increases and gives value to the token such that the presale buyers make good profits even when the project is finally available in the market the early investors will by then be in high profits.

3). IEOs are secured since they have the probability of being listed in an exchange when fully launched, in which case the exchange is the one supporting the project from presale level. This makes the investors have a lot of confidence and no fear upon purchase of tokens from such projects.

DISADVANTAGES

1). IEOs utility in the cryptocurrency market doesn't guarantee that the project will grow upon presale. It is possible to have a small increase in volume and a drastic fall.

2). Since the market is controlled by emotions from investors. In this case most investors will lose funds if the project doesn’t grow as expected. In this light we can say the IEO mechanism is unpredictable for investors to make investments.

3). IEOs are mostly selective in audience and this makes it a complex process to participate in because they don’t stick to a particular investors category

QUESTION 4:

Explain how to participate in an IEO, explore various exchanges, choose one of them and explain the process. (Please use from screenshots.) (No need to participate, just register, present proof of verified account and explain the whole process, do not use Binance)

Before I talk on how to participate in an IEO I will like to briefly talk on the reasons why anyone should even want to participate in IEOs.
As we know the financial market is all about buying commodities or projects cheap and selling at higher prices so as to make profits. With IEOs it has been tested by many investors and seen that they make high profits for investors. Buying during presales is done at very low prices and it’s very safe following the descriptions I gave on the other questions above. Upon continuation the volume of the presales may increase and this leads to more profits to investors as their “project” is already on the growing lane.
Secondly, the stress of studying new projects is taken away since investors seeing a presale via IEO leads to a certain degree of confidence especially from the supporting/partnering exchange. With all this and evidence of investors that have used this process and made it refits I can conclude that it’s a good thing to get involved in such activities for profit making.

With all that said, let me talk now about how to participate in this profit making activity of the financial markets (IEO)

Firstly, participating in an IEO will depend on the partnering exchange since different IEOs link to specific exchanges partnered by the project developers team. This process is known to be time consuming but not as complicated as one can think of it to be.

You have to get to any exchange of your choice and check for their active IEOs if there’s any. Now the responsibility is on you to check the requirements needed to participate in the IEO. This you can look into when you must have seen the project valuable for your investment provided you already evaluated it. For example, a project with a developers team the same as that which is known for an existing good project in the market will be a good one. You now can follow the process of registering and then participate properly in the presale like I will do below but I will end at the level of registration as my task is limited to it.

It will be good financial management to participate with an amount you are ready to lose in the market? I’m not saying it’s guaranteed that you’ll lose funds but it’s just good to buy a new project with what you are ready to give into the market. This especially goes to short term investors, in the case of presale you also have to think about the future not the very short term take profits. Make sure you are buying with an amount you are ready to wait a little before taking returns.

I have explored four different exchanges and their IEOs and below are the screenshots to this claim.

KuCoin IEO List Source


Okex IEO List Source


Huobi IEO List Source


Bitfinex IEO List Source

To register for the IEO you are required to have an account on the exchange supporting the IEo presales and to do this I have made an example with the Bitfinex IEO list by the following steps. This ends when I successfully created my account and verified my email.

Step 1
I visited Bitfinex via coincodex and picked a token of my choice on the list. In this case I took $KIM which was the token on the top of the list as seen on the screenshot below

Source

Step 2
After clicking on the desired token name I was redirected to another page where I clicked on “Visit Launchpad”

Source

Step 3
After clicking “Launchpad” I was taken to the Bitfinex site where I had to create an account. I “sign up” and filled in the necessary information.


Source

Step 4
I verified my email by confirming the mail sent to my email address as seen on the screenshot below.

Screenshot from my e-mail App

As we can see below I was all set up to go on with activities on the Bitfinex exchange and this activities also included taking part in the presale of tokens on IEOs linked to this exchange.

Source

QUESTION 5:

As an example of a project that had a successful IEO, explain that project. Be on topic. (Use from screenshots.)

The VeriBlock project is amongst one of the most successful IEOs of the year 2019 according to COIN360.

Activity	Description
Project	VeriBlock
Token	VBK
IEO platform	Bittrex International
Ended date	04/02/2019
Funds raised	$7M
Price at IEO	$0.1
Current price	$0.00414

About VeriBlock
This blockchain enables a secure PoP consensus which leads to a rapid and widespread execution of activities on a blockchain. This consensus of the VeriBlock prevents double spending activities and also prevents the system from any 51% attack. The VeriBlock blockchain technology utilises the known PoW consensus mechanism of the BTC blockchain but in a decentralised, permissionless and transparent way.

IEO History

Source

On the 2nd of April 2019, the first Bittrex IEO of VBK started and this lasted just for 10 seconds. Notwithstanding, the starting date was announced a day before the presale launching. In total, 3.3% was sold from the total VBK supply. It was done such that the presale price was $0.01 and the least amount of VBK was 100 while the highest amount that one could purchase was 200,000VBK. Hence the total Exchange offering was 70M VBK which was of course the said 3.3% total supply. It was by Bittrex official Twitter handle that they managed to sell the maximum amount to 142 users.

Controversy that followed
Due to the very short timeframe for purchase of the presale, Bittrex didn’t put any Captcha which could’ve prevented bots from taking part in the sale activity. Many users complained of this and also that some tokens must have been sold before the presale was launched to the public.

Source

QUESTION 6:

Conclusion

To conclude this write up I will note that IEOs are a very good investment tool for both the investors and a developers team which uses this tool to raise capital for their project. It requires that as an individual investor you can choose to study a project very well upon launching or just believe in the effective management of an Exchange that partner’s with this project. With such schemes it becomes easy for new projects to surface without having the limitation of project finance because the fundraising helps in that order. IEOs are a great means of investment as they bring profits to both parties involved (that is the developers; the Exchange; and the investors). Presales are good for profit making and Launchpads are the places where we can find IEOs to participate with. Remember to always do your own research about a particular project and put your eyes on the partnering Exchange involved.
Thanks for reading
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