IEO is accelerating towards the stage of failure?

2017 was a boom year for the initial coin offering (ICO) market, in which the world discovered new ways to raise capital. However, as the total market value of digital currencies gradually declined in 2018, the market gradually fell into a downturn. In 2019, the world's first exchange offering "IEO" broke into the vision of investors, bringing new hope to the sluggish market.

If we say that ICO is gradually declining because of the following three points.

1. The breach of contract of a large number of "air currency" projects that can achieve fundraising only by white papers has caused market disorder, the trust foundation for transactions has collapsed, and market sentiment is extremely low;

2. The Token economic model of the blockchain project is unreasonably formulated, or the project does not have real and effective technical product support, resulting in almost no liquidity even if the token is listed on the exchange;

3. The formulation and maturity of relevant regulatory laws and regulations is relatively lagging behind, making it difficult to pursue accountability for previous fraudulent projects, and emerging blockchain projects cannot be relied upon;

Then IEO is also trying to follow the old path of ICO, bringing the hope that investors just ignited into the abyss.

The "IEO" battle of exchanges is in full swing, and there are no complete statistics. There are more than 20 trading platforms that have launched or will soon launch IEO in the world. The number of IEO projects exceeds 50, and blowouts are mainly formed from March to April. According to the data from ICObench, Exmarkets Launchpad, followed by ProBit Launchpad, issued the most IEO projects, with 11 and 10 IEO projects released respectively. In 2019, Binance Launchpad, Huobi Prime, and OK jumpstart released 4, 2, and 1 IEO projects respectively.

At present, mainstream exchanges can still maintain the rhythm of issuing one IEO project per month, but due to the overall market warming brought about by IEO, some small and medium-sized exchanges have begun to launch IEO projects in batches, among which Exmarkets Launchpad and ProBit Launchpad are the most important represent. According to CoinMarketCap data, the average daily transaction volume of ProBit Exchange is $5,563,632, while ExMarkets Exchange has no relevant data. There have even been reports that IEO projects have run away. This large-scale launch of IEO projects may lead to a decrease in the exchange's review of projects, frequent occurrence of inferior projects, and excessive diversion of funds, which will eventually lead to increased investor distrust and the overall decline of the IEO model.

According to the statistical analysis of standard consensus data, the IEO projects launched by the three mainstream exchanges Binance, Huobi, and OKEx are used as representatives.

1. IEO projects reached the highest price in history on the first day of listing, accounting for more than 70%, and the closing price on the first day has a large retracement from the highest price.

2. The trading volume on the first day of listing is basically the same as the IEO offering volume of the project. Even for some projects such as BLOC and TOP, the trading volume on the first day of listing far exceeds the offering volume of the project. And according to statistics, the closer the transaction volume on the day of launch is to the project’s release volume, the higher the probability that the highest price on the day of launch will be the highest price in history. The data shows that the winners of the IEO project’s snap-ups sold and snapped up chips on the day the project went live, and the project party also lacked the need to maintain the currency price continuously, and more often used the trading platform as a channel for exchanging the chips in their hands for operating funds.

3. According to incomplete statistics, the number of rising days of IEO projects accounted for more than 50% of the total trading days was basically 0, and all projects showed a downward trend as a whole, and all fell by more than 50% from the closing price on the first day. The shorter the total transaction time of the IEO project, the higher the proportion of rising days to the total transaction days is because there are still wide fluctuations in the initial stage of new projects to attract investors' attention and attract new funds to enter the market. But in general, IEO projects have no profit-making effect in the transaction process except for the snap-up winners, which will make the IEO project market less and less attractive, and the snap-up income will gradually narrow.

To sum up, the IEO project is currently in the explosive period of the number of projects, but there is only a high return in the process of snapping up, and there is no profit-making effect in the overall transaction process. Moreover, most of the newly launched IEO projects staged a one-day parade, quickly rising and then falling rapidly. Investors who snapped up chips could not get the same level of income as the performance of the IEO project disk, and gradually became a channel for project parties to sell their chips in exchange for funds. . If things go on like this, investors' attention to IEO projects will continue to decline, and the IEO model market will accelerate into a state of exhaustion. If the IEO project is still blindly over-issuing, lacking supervision and strict project review, IEO will eventually embark on the old path of ICO.