Odaily Frontline | This article reviews the IEO market in 2019 and looks forward to 2020
This article comes fromHackernoonThis article comes from
, original author: Oussama Benjelloun
Translator for Odaily | Yu Shunsui
Cryptonities founder Oussama Benjelloun recently posted on Hackernoon reviewing the 2019 IEO market and looking forward to 2020.
The article said that unless you have a fully operational and fully compliant prototype, unless you have a live transaction with a major exchange that has actual liquidity among the retail investor and trader community, you will Unable to successfully conduct IEO.
Of all the IEOs conducted on cryptocurrency exchanges in 2019, only a handful of projects were able to raise significant capital, and only on selected exchanges.
Public token sale vehicles such as ICOs and IEOs have been the subject of active and negative scrutiny by all parties involved in cryptocurrencies.
Nonetheless, IEOs are a very powerful funding mechanism, powered by cryptoeconomics, to raise capital for blockchain applications; and have been very lucrative for many blockchain and crypto companies in 2019 Figure, but a large percentage of companies fail to successfully sell any tokens to the public on the exchanges they conduct their IEOs for a number of simple reasons. But it's hard to do for a project that doesn't have both: prototyping and upfront funding (either through a private sale or through an angel/traditional seed round).
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IEOs are institutionalized
We can clearly claim that public token sales are mature enough to be institutionalized and regulated. Binance was the first to launch this model with a BitTorrent IEO, and other major exchanges have also learned and adopted this system.
What has happened since then is a trend effect, like bubble tea shops in Asia and around the world, which means that almost every established and new exchange has implemented IEO Launchpad to help projects raise funds within their establishment - Outside of Tier 1 exchanges (like Binance, Gate, Huobi, OKEx, Kucoin, Bittrex, Bitfinex, Liquid) or Coinlist for private investors, most exchanges have not been successful.
IEOs certainly have undeniable advantages such as compliance, KYC, efficient token collection and distribution, etc... but it has to go through a third party, which partly removes the financial inclusion and decentralization that ICOs represent, and the accompanying With huge costs.
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Why is the IEO market concentrated on a few exchanges?
On the one hand, there is already a high level of awareness among retail investors simply because Tier 1 exchanges are the only exchanges that conduct thorough technical, regulatory, and financial due diligence on projects before they go live.
In 2019, factors such as technology and open-source code, as well as cash backing from VCs, make for a completely different vetting process, thereby affecting projects willing to go public for sale.
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Image source: Cryptorank.io
We can see the dominance of a few exchanges in the IEO market, especially the dominance of Asian exchanges in terms of funding amount, return on investment (ROI) for retail/private investors.
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Building strong perceived value for your IEO is no easy task
Cryptonities is one of the leading IEO development and marketing agencies, having helped projects raise over $18 million through public token sales in 2019. Cryptonities makes it clear that how you gain market status for your IEO directly depends on which exchange you are conducting your token sale on.
But you need to get approval from these exchanges first, and what you can negotiate will be prototypes, testnets, developer/crypto enthusiast communities, strong open source code, well-known VCs and crypto funds who support your team and vision , and a reliable token sale development partner.
In 2019, with the rise of IEO, the behavior of joint investment (Coinvestment) has changed significantly. The following figure shows the historical highest (ATH) average return on investment (ATH) and the current average investment of some first-tier, second-tier and even third-tier exchange IEOs Rate of return (as of this writing).
Image source: Cryptorank.io
The first thing we notice is that the ATH average ROI of many exchanges IEOs is extremely high, with Binance, Gate, Huobi, and OKEx leading the way, but the ugly truth behind these indicators is that, except for Binance and Gate, almost all exchanges currently have an average IEO ROI of is negative. This on the one hand justifies the high volatility of tokens conducting IEOs in 2019 and on the other hand justifies the skepticism of retail and private investors towards IEOs.
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What will happen to IEOs and token sales in 2020?
A new decade is upon us, and since the Bitcoin genesis block was mined on January 3, 2009, the Mastercoin (now called Omni) ICO in 2013, and the Ethereum ICO in 2014, the crypto industry has experienced Come a long way.
Over the next few years, there was a series of token sales that collectively raised billions of dollars between 2016 and 2019, and the concept of "Coinvestment" spread globally.
As we move into 2020, we need to reflect and assess and envision what to expect for the coming year, namely the IEO and token sale space, the likely behavior of projects and retail/private investors, and regulatory challenges and opportunities.
1. Private Token Sale, Private Token Sale Platform and STO.
On the one hand, we will witness the rise and birth of new private token sale platforms in 2020. These platforms only accept co-investments from global accredited investors/private investors, and Coinlist is a great example of how efficient this model has been in fundraising throughout 2019.
On the other hand, we will see private token sales outperform over the next year.
The most promising early-stage projects that are shaping relatively uncharted territory, such as next-generation blockchain protocols, new internet infrastructure, and DeFi applications, will primarily focus on selling tokens to private investor communities through private token sale platforms , instead of going live on a cryptocurrency exchange for retail investment purchases.
In addition, STO is expected to make a major breakthrough in 2020, which will crowd out the traditional venture capital model on a larger scale.
With the emergence of many Security Token Offerings, Security Token Exchanges and STO Launchpads, we expect this funding mechanism and this new tokenized asset class to strongly regulate its ecosystem and be supported by A network of its builders, issuers, investors and traders.
2. More IEO, IEO Launchpad, but more market share is concentrated in the first-tier exchanges.
Cryptonities sees a surge in the number of projects conducting IEOs in 2020, as well as an increase in new exchanges embedding IEO Launchpads in their systems.
Arguably, this increase in supply is due to rising demand from startups looking to conduct IEOs in 2020, which will also lead to all major exchanges adding IEO services.
Perhaps, exchanges in the U.S. and Europe are figuring out ways to address regulatory challenges to meet demand within their borders.
There will be more IEOs, more IEO Launchpads in 2020, but the dominance of Tier 1 exchanges in this space in terms of funding dollars will only become more prominent in the coming year.
Note: For all projects looking to do IEOs in 2020, make sure to secure deals with top exchanges if you're looking to raise 7 figure funding.
3. Raise additional USD funds through private and public token sales.
We will experience another wave of institutional investors in 2020, plowing cash into established and new cryptocurrencies, looking for the next round of big returns.
First, many venture capitalists and hedge funds are also diversifying their assets under management by investing in tokenized shares of different blockchain startups that are building new crypto economies and applications, we will see this trend In 2020, develop on an increasing scale.
Second, another bull run is coming in 2020, retail investors are holding their tokens, but once the crypto market takes off, they will be ready to liquidate their altcoins and make new investments in promising IEOs or even ICOs bet.
