CHK Blog: So… how’s the IEO?

CHK Blog: So… how’s the IEO?


2021-03-22 05:44:39

Is the IEO past its prime, or have we seen just the tip of the iceberg?

CHK Blog: So… how’s the IEO?

2019 is the year of the IEO.

There are only about two more months before we will enter the new year, perhaps already sure enough to make such a claim. The surprising thing here is that just a year ago, crypto pundits almost unanimously agreed that STOs will be the driving force behind the market in 2019. Despite signs of cooling off in Recently, IEO open sale projects are no longer attracting investors as before, it is difficult to say that IEO has become dead trend or something like that.

ICO is bad, IEO is good?

Turning back history a bit, the last quarter of 2017 was probably the best (or worst) time to invest in the crypto market. Bitcoin breaks new ceilings every day, altcoins are being pumped like bubbles, ICO projects deliver insane profits. The trillion-dollar target for the crypto market suddenly became very close, and then everything collapsed just as quickly. 2018, if not exaggerating, could be the worst time ever considering the size of market losses.

Big projects put oxygen up on them, and small projects are half-alive. ICOs, despite being heavily promoted, still cannot avoid being estranged from investors.

But then, all of a sudden, we have IEOs – huge energy pills for the market.

In essence, IEOs are not much different from ICOs – both are tools through which blockchain projects raise funds so they can continue to grow. In the case of an ICO, the responsibility of evaluating the legitimacy of the process rests with the investor – an extremely difficult task for an ordinary individual. The sale of IEO tokens is done by a specific cryptocurrency exchange. Of course, because the reputation and reputation have been built hard, exchanges are required to “choose the side to send gold”, but cannot do it indiscriminately.

That is in theory

Furthermore, after the IEO sale opens, exchanges will also bring the coin to their platform, causing the liquidity of that coin to increase, further attracting investors. In the case of an ICO, token sales do not guarantee going to the major exchanges, even boosting usage and increasing the number of users is delayed for a long time in the worst case scenario. You have an expensive (seemingly) pile of rocks, but if no one wants to buy it it’s still just a pile of rocks. (coughing… Wanchain… cough). And finally, exchanges usually only allow verified clients to participate in their IEO, doing all the KYC on behalf of the project.

In this article we will not go into too much detail on the development of IEOs, the only thing we need to keep in mind is that the IEO projects, in the first few months, have brought about thrilling profits. participation of all parties in the cryptocurrency market. After the great success of BitTorrent on Binance, different platforms quickly jumped into the market, Kucoin had Sptolight, Houbi had Huobi Prime, OKEx had Jumpstart.

But what is really important to the market is not how many projects generate or how high they “fly” when they go on sale, but how long they can stay in that form …

See also: The data shows that the IEO is not a guarantee of profit

Story after going on the floor …

Like the ICOs in the first few days, the first few months, IEO projects proved to be very “delicious”. The fever that this wave brings has even made many people dream about a scenario like the end of 2017, when the market returns to its peak.

Investors started buying tokens (which were not even traded) at four times their IEO price through OTC channels on Telegram and Discord.

Projects like Matic, Harmony and Elrond have continued to warm up the market. Other exchanges have also started to have their own projects, surpassing Binance in terms of profitability – like BlockCloud on OKEx, which used to be 18.1 times higher than IEO or Top Network’s price on Huobi. The increase peaked at 13.9 times in price with USD.

IEOs have the highest rate of return so far

However, nothing can guarantee long-term price sustainability for the token price. And the remarkable short-term growth is also the sand castles that are most likely to collapse when there is upheaval.

Taking the main BlockCloud example above, this is a project that aims to build an advanced TCP / IP architecture based on blockchain that promises to provide improved quality for mobile phones. Listed at the price 0.005 USD, BLOC token soared $ 0.089 before falling down to 0.0018 USD. At the moment, this coin is traded at 0.0024 USD – that is, halving from the opening price, or 36 times from the high.

Obviously, exchanges are only responsible for ensuring a smooth token sale, while selecting projects to minimize risks as much as possible, while maintaining the price of tokens is entirely up to you. development team. Because no matter how much money you get on sale, a few weeks later the price dump will not solve the problem except that investors continue to lose confidence in the market.

That leads us to the next question.

What are IEOs’ secrets to success?

If we examine a large enough sample of IEOs, factors such as the reputation of the exchange, the liquidity of the token or the amount of capital raised are all … not very important. Is the market going back to the heyday of ICOs, when coins can pump freely for no reason?

In fact, in the crypto market there is no magic formula that applies to all, but by building a serious project, with a clear plan and a sense of commitment, can guarantee an IEO. With positive returns to investors, along with a bit of luck favored by the market, projects can create a big enough run to advance in their development.

Average IEO return rate by exchange
Average IEO return rate by exchange

The same is true for brothers who are intending to invest in IEOs, meaning that besides researching the project’s vision and finding the development team’s credentials, luckily a companion. indispensable. However, these things, brothers with many years of experience in the market must know all of them, right?

In short, IEOs are still a very effective way for projects to reach quality investors, the biggest problem lies in the projects themselves – whether they can continue to retain users when the the initial excitement is over. ICO, IEO or I whatever O is just a means, for the market to continue to grow again, projects must self-advocate for such names as “the one who brought down Bitcoin / Ethereum / the Bank”. Not simply a nickname, but it really becomes of real value.

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