More Crypto Exchanges to Follow Suit as IEO Becomes a Buzzword
World’s leading crypto exchanges include Huobi, OKEx and Bittrex have had a greedy eye on token sale for a while, seeing that Binance Launchpad’s efforts have borne fruit over the past months.
On March 12, Mr Jay Hao, CEO at OKEx—currently the second largest cryptocurrency exchange by trading volume, announced on Chinese social media platform Weibo that the exchange is poised to launch its own token sale platform, dubbed “OK Jumpstart”, very soon.
Following in the Footsteps of Binance
The crypto market has seen an increasing number of new arrivals seeking to jump on the IEO (Initial Exchange Offering) bandwagon over the past week.
Back on March 7, Singapore-based exchange Huobi announced its plans for Huobi Prime, a token launching platform aiming to mirror the success of Binance and its Launchpad.
Bittrex International, the Malta-based arm of U.S. crypto exchange Bittrex, unveiled their own token sale platform in mid-March. The subsidiary is reportedly set to host the first IEO for South Korean blockchain startup RAID’s XRD token later this month. A massive 17 billion XRD tokens will be deployed on the Bittrex token launching platform.
There’s always competition out there. Crypto exchanges have vied against each other for different things over the past year, ranging from token listing, Transaction-Fee Mining and futures trading. These exchanges have turned to IEO this time, driven by Binance’s triumph.
Binance Launchpad has seen a lot of success over the past months, buoyed by the launch of BitTorrent token (BTT) and Fetch.AI (FET).
Binance has teamed up with TRON and BitTorrent to launch the token sale of the BitTorrent token on Launchpad January 28, 2019. All 60 billion BTT were sold to token sale participants within 15 minutes. One BTT could be purchased for 0.000081 BNB when the token made its debut on Binance. The price of BTT at the start of the general sale on Binance surged by 340% from the price the token had during the initial coin offering on Binance Launchpad.
Following the success of BTT token sale, Binance launched Fetch.AI shortly afterwards. According to Changpeng Zhao, Founder and CEO of Binance, the FET token sale on Launchpad was over in a mere 10 seconds.
FET was listed on Binance for trading on February 28, along with FET/BNB, FET/BTC and FET/USDT trading pairs. The new token did not disappoint its investors, posting a roughly 400% ROI on its fundraising price.
The success of both BTT and FET has become strong tailwinds for Binance’s exchange coin, BNB. Over that period, the market cap of BNB surged from $800 million to $1.6 billion.
Binance’s journey is far from over. The exchange giant announced to list the third token sale of the year on its Launchpad March 5, bringing in a 20% increase in the price of Binance Coin. The latest project, known as Celer Network (CELR), will kick off its token sale on March 19, 2019.
What Makes IEO Stand Out
Through the IEO fundraising model, potential risks of launching projects will shift to exchanges. By virtue of their own resources and experience, crypto exchanges can examine and approve certain projects, while avoiding technical risks like phishing scams and malicious attacks. Listing on exchanges is surely beneficial to the growth of these projects, as exchanges usually boast wider user base, sufficient capital and good reputation.
Though similar to STO, IEO is more efficient, because it is the exchange not some official institution that is responsible for the review and approval of projects.
Independent American rating agency Weiss Ratings said on Twitter that IEO could become a buzzword in crypto land.
Yet with great opportunity often comes great risk. When it comes to IEOs, failure is not an option. If no one wants to buy after the token listing, then the price of the token will take a nose dive, which will dramatically upset IEO participants and undermine the market sentiment. In this case, investors on the sidelines are very likely to rush for the door, leaving a possible crash in the crypto launching market.