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Token sales have not cooled off since the 2017 market boom. They just changed their names. Most recently, IEOs – where cryptocurrency exchanges open listing and launch campaigns directly for crypto projects – are making hundreds of millions of dollars in money, but for whom. ?
The two sources, both requesting anonymity in order not to compromise their partnership with exchanges, told CoinDesk that some exchanges have refused to list their tokens unless companies This agrees to pay a hefty fee, in different forms, depending on the exchange they are working with. These fees, according to sources, range from 10% of the company’s equity, plus the token’s global market cap percentage, to over $ 1 million for “marketing”.
The ecosystem’s most famous IEO platform is undoubtedly the Binance Launchpad. This Binance service initially started in August 2017 and reopened with a BitTorrent offering – which has brought Binance $ 7.2 million in sales from the sale of BNB tokens on January 2019.
Since then, Binance has launched four new and ongoing projects at least once a month while simultaneously developing a decentralized exchange (DEX).
Binance CEO Changpeng Zhao (CZ) told CoinDesk that Launchpad has received thousands of “listing” applications. So far, however, the value of these new tokens has plummeted right after the IEO took place.
When asked how much it costs to get an IEO on Binance Launchpad and whether development teams are required to use their own blockchain or BNB, CZ replied:
“Every time is different”.
We value each project individually. Some projects need more help from us, such as consulting, token economics model, etc. Some projects are more independent. We built Launchpad because we believe that fundraising on blockchain is one of the best tools for entrepreneurs.
Talking about the broader comparison between IEOs and ICOs, he added:
During IEOs, exchanges intervene at a more intensive level to help investors in selecting and evaluating projects.
The race between exchanges
Now the major exchanges in the world such as Bittrex, KuCoin and OKEx are all participating as IEOs, although the process differs from place to place, their essence remains the same.
For example, according to the head of marketing Ross Zhang of Huobi Group, which sells Huobi’s token, called “ Huobi Prime, ” is not an IEO (although most traders call it so. ) because Prime doesn’t raise capital for outside startups.
Zhang told CoinDesk that so far, both Prime launches have been sold out quickly, with good results for investors.
Meanwhile, KuCoin’s Spotlight division – which is the equivalent of Launchpad and Prime – of KuCoin will launch a second IEO on May 28, which includes the CHRoma token issued by service startup ChromaWay, which has obtained 11 million dollars in a private token sale last year.
KuCoin CEO Michael Gan told CoinDesk, the first IEO sale in April raised a stash of $ 4.2 million. However, this number should be understood as the amount distributed rather than the profit of the exchange. Nobody knows how much money exchanges can make from launches like these, because in addition to transaction fees, there are terms defined through private discussions instead of formalities. standardization, as noted above.
Another anonymous source said that some exchanges are turning to IEO preference and are no longer looking at new asset classes or niche products.
Describing the challenges of persuading an exchange to adopt a new token or target a smaller client file without IEO monopolies, ChromaWay Perelman COO says:
“Most of the top exchanges are basically looking at their personal IEO projects.”
A reliable investment way?
To be fair, exchanges are offering professional screening and marketing services, and even those like KuCoin and OKEx accept no IEO fees.
Andy Cheung, head of operations at OKEx, told CoinDesk the exchange does not charge an IEO start-up fee even though the company has already received hundreds of orders.
Talking about how the IEO attracts demand to trade the exchange’s tokens, Cheung said participants must have a minimum of 500 OKB tokens in order to qualify for the IEO. Furthermore, the OKEx IEOs, which are expected to happen at least once a month for the rest of the year, will only accept OKBs. Both KuCoin and OKEx follow Binance’s lead, prioritizing using their native tokens and developing their own DEXs at the same time.
“We believe that [IEO] will bring new users to the community, ”said Che Cheung. “We can really help [người dùng] Choose a good project. Now it won’t be the same as in the old days when companies could make an ICO sale and run away. ”
According to CoinDesk
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