The IEO Question: Revolutionary Fundraising or Exchange Token Pumps?
Major cryptocurrency exchanges such as Binance, KuCoin, Huobi, Bittrex, and OKEx have actually initiated what seems to be a new trend in cryptocurrency fundraising. Initial Exchange Offerings (IEOs) have proven to be enormously successful for the projects intending to raise money. The very first to lead was Binance exchange with its Launchpad platform, however, the others were quick to follow.
Now, we can identify a new pattern within IEOs, the execution of a minimum token holding requirement. In other words, users have to hold a predetermined amount of the exchange’s native tokens in order to be able to take part, for example, Binance requires holding BNB tokens to take part in their future IEOs.
The question is, whether this is the start of an advanced fundraising model or just a plan to pump the price of the exchange tokens?
Binance Initiates the IEO Craze
Following the success of its first three IEOs (BitTorrent, Fetch.AI, Celer Network), Binance has actually chosen to alter the participation course. Users were dissatisfied. The demand to take part in these IEOs is huge since the massive returns they yield as soon as the tokens start to trade on the market.
To curb the need and offer top priority to Binance Coin (BNB) token holders, Binance chose to change the model and moved to a lottery-like distribution mechanism. Users can acquire tickets based upon the amount of BNB they’ve been holding for a selected duration prior to the IEO. These tickets are then drawn arbitrarily, permitting each ticket holder to purchase a defined amount of tokens during the IEO.
For this reason, their newest IEO will be held under this structure. Binance has already revealed that they will initiate balance screenshots for the Matic Network token sale.
Less that 24 hours ⏰ remain until $BNB balance snapshots begin for the @maticnetwork token sale on #Binance Launchpad.
BNB will only be deducted from your account if you have a winning ticket(s) after the 20 day holding period.
More details here: https://t.co/CfPwLJcrTA pic.twitter.com/GKDS8ppaOo
— Binance (@binance) April 4, 2019
Other Exchanges Follow Up The 500 Rule
While Binance was the only exchange to implement a lottery-like distribution design for its IEOs, its move to announce a minimum token holding requirement was quickly gotten by other significant exchanges.
Huobi, for instance, has a rule for participating on its Huobi Prime IEOs, which requires users to hold a minimum of 500 Huobi Tokens (HT) for a minimum of 30 days prior to the IEO occurring.
Another exchange to follow and do the very same thing is OKEx. Its first IEO will be hung on April 10th, and users have to hold 500 OKB for 7 successive days before the start to get involved.
It’s likewise worth noting that all IEOs only permit participants to purchase the tokens subject to the sale utilizing the exchange’s native tokens. In other words, you can’t utilize any other cryptocurrency or fiat besides the native tokens of the exchange. Thus, they develop the need for their token. This could advise us of the ICOs bubble of 2017 in regards to holding Ethereum in order to take part in ICOs.
Serious Pumping of Exchange Tokens
As pointed out above, the obligation to participate in those IEOs is overwhelming. For this reason, individuals are buying native exchange tokens at an unprecedented rate, triggering almost all of them to increase.
In the past 3 months, for instance, Binance Coin (BNB) has more than tripled its price, reaching a high of $20 per coin. As shown above, BNB’s ICO price was $0.1, which is precisely a 2000% ROI. Huobi Token (HT) is also marking gains upwards of 15 percent. Comparable increases can be observed with OKEx’ OKB and KuCoin Shares (KCS).
It’s likewise worth keeping in mind that all of this has taken place prior to the application of the minimum holding requirement when users didn’t need to buy, i.e., 500 BNB to be eligible to participate in Binance Launchpad based IEOs. At that time, they could purchase smaller sized amounts to get involved.
Now that things have actually altered, it’s totally possible that we may be seeing additional boosts in the prices of these native exchange tokens. Additionally, users are likewise needed to be holding them over a particular period, which is likewise likely to curb the selling pressure.
Naturally, high demand for IEOs can constantly be interpreted as a very favourable signal for the market, in general. The concern is whether IEO financiers are there for the projects themselves, or just for the fairly quick gains and the more crucial problem is the length of time it will last.
The post The IEO Question: Revolutionary Fundraising or Exchange Token Pumps? BNB, HT, OKB and KCS Seen Enormous Gains appeared first on CryptoPotato.