Editor's note: This article is from BlockBeats (ID: BlockBeats), author: Block Beats 0x2, reproduced by Odaily with authorization.
Editor's note: This article is from BlockBeats (ID: BlockBeats), author: Block Beats 0x2, reproduced by Odaily with authorization.
After reading this article, you need to understand the four concepts of token issuance:
ICO (Initial Coin Offering) refers to the blockchain project party issuing its own tokens to the public at the beginning of the project, in exchange for Ethereum, Bitcoin and other mainstream currencies, which play a role in raising funds. The ICO model It reached its peak in 2017, and a large number of low-quality fraudulent projects appeared frequently. In 2018, the model gradually faded away.
IEO (Initial Exchange Offering), the first exchange offering, refers to the act of using the exchange as a fundraising platform to issue (sell) tokens to users of the exchange, and then the exchange will also become the token in the secondary market The main trading market on the Internet. The most recent example is the string of projects on Binance Launchpad led by BitTorrent.
IFO (Initial Fork Offering), the first fork offering, based on the functional attributes and users of Bitcoin and other mainstream currencies, to modify the future route or supplement defects as an excuse to generate new tokens by forking a certain cryptocurrency The most recent case is that in November 2018, Craig Steven Wright forked BCH to generate a new token BSV.
IMO (Initial Miner Offering), the first mining machine offering, means that the project party sells mining machines (hardware products) by itself, and users issue tokens by purchasing officially certified hardware products for mining. The most well-known case is the former Xunlei Wanke Cloud and Wanke Coin (source: Lianke)
— Do you feel that the market is recovering recently?
——Sorry, as the person in charge, I cannot comment on the content related to the market.
After the Lunar New Year, new project token issuance platforms represented by Binance Launchpad began to appear, which not only successfully drove the price increase of new project tokens several times, but also allowed the standard platform currency BNB used in token sales to gain nearly 3 At the same time, more exchanges saw this trend and entered IEO one after another.
When ICO can no longer arouse a little ripple in the hearts of investors, the market urgently needs a new hot spot to trigger investment frenzy and investment confidence, and the time for IEO is just right. Based on the current market situation and forecasts for the future, we believe that there will be a large number of exchanges following this model soon
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Blockchain project financing and currency listing logic
The first token issuance (ICO, Initial Coin Offering) in history occurred in July 2013. At that time, netizens on the bitcointalk forum conducted crowdfunding for a project called Mastercoin. The project raised 5,000 BTC (the price of BTC at that time was only 80), or about $400,000. Ordinary investors exchange their bitcoins for the tokens of the Mastercoin project and become its token holders, or "shareholders" if you prefer.
Introduction to the Mastercoin project written by Vitalik Buterin in November 2013, when V God was still working as a reporter and editor for Bitcoin Magazine. In the future, the vast majority of Ethereum and projects based on the Ethereum blockchain will adopt the financing method of ICO.
This method of buying shares of new project coins with higher value or main network coins has triggered a new trend in the capital market.
Traditional fundraising methods require cash transactions, which are time-consuming and labor-intensive. If it is cross-border, the time will be calculated in weeks. If you encounter problems such as the approval and quota of capital inflow and outflow, the time will be extended to months. However, using Bitcoin or Ethereum can avoid the above-mentioned problems. It is fast and protects privacy. Moreover, once the tokens of fundraising projects are issued, they can quickly obtain liquidity and drive the popularity of new projects in the market.
The project party uses the Bitcoin or Ethereum raised in its hands to develop projects, publicize, and operate the community, and at the same time spend a sum of money to list the project tokens on the exchange for trading. Investors trade on exchanges to generate liquidity and earn profits. This method of fundraising is a fatal blow to traditional venture capital funds. The faster investment and financing channels and faster investment recovery cycle have led many VCs to join Token Fund.
However, there are many fatal problems in ICO: the quality of new projects is uneven, there are huge risks in asset security, and investors cannot publicize at a uniform price. Even for projects recommended by a large number of celebrity platforms, there is still a risk of running away; even if a large fund participates in investing in a well-known project, the tokens of the new project may break and plummet after listing and circulation; even if the above problems do not occur, if If the standard currency for fundraising depreciates, the value of the project tokens obtained by investors will also lose value; the project may have multiple stages of private placement, and the later investors need to bear the greater the investment cost and the greater the risk .
One of the solutions to this problem, IEO (Initial Exchange Offering), is to use the exchange platform currency with relatively low price fluctuations as the purchase standard currency. This solution saves a lot of links, eliminates the private placement intermediaries that may exist in the middle, and does not need to go to airdrops, etc. At the same time, the platform's review is used as the endorsement of the project quality, so that investors are relatively more at ease.
However, with the increase in practice, the concept of IEO is changing, such as allowing projects that have undergone private placement to participate in IEO (Celer Network), allowing IEO projects to conduct airdrops (Bittorrent), etc.
But the platform currency has become interesting because of the emergence of this new gameplay.
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Change the name, the essence is fundraising
Although there is no official introduction, Binance Launchpad is a typical IEO model, that is, all Tokens that have landed and will be issued in the future must be purchased through the Binance platform currency BNB. Huobi announced its similar business Huobi Prime on Friday. Similarly, Huobi officials do not consider this business to be an IEO.
Even so, under the impetus of the IEO concept, platform coins such as BNB and HT have instantly become tokens that are in short supply in the market. Because the projects after Launchpad and Huobi Prime must be linked to the platform currency, this means that the platform currency that originally only enjoyed dividends or voting now has a new usage scenario, and the increase in value brings about an increase in price.
In the past 1 month, Launchpad, which has completed two rounds of token sales, has brought BNB a 110% increase. HT investors who heard the news also secretly promoted the rumors of Huobi Prime. HT is driven by the irrational market. up 104%.
Huobi tried to complete the exchange issuance of new projects in the form of token voting as early as a year ago. After the Huobi HADAX exchange projects were all merged into Huobi Global in the middle of last year, the mode of using the Huobi platform token HT to vote for listing has disappeared, and the official team decides whether to list the currency on the Huobi Global exchange.
The HADAX voting model and the IEO model have the same effect on the promotion of exchange platform currency prices. Voters buy HT, and then vote for their favorite projects. The difference is that the HT voted at that time is a consumable, and voters can only exchange for the right to trade one token after voting. Under the logic of consumables, those who vote for the HADAX project are early investors of the project token or the project party itself, otherwise they will not vote for an unfamiliar project.
As discussed above on BlockBeats, IEO is actually just an ICO with a different currency.
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Why restart IEO at this point in time?
Block Beats BlockBeats noticed that the model of voting for the currency was close to invalidation in August 2018. On July 30, 2018, Binance completed the 8th round of voting for listing, and the number of voters dropped significantly from tens of thousands of voters to only a thousand people. This time, Polymath, the listing project that voted for listing, only Got 275 votes.
Two months before this, HADAX also announced the transfer of boards, and HADAX's voting model for listing coins also stopped.
The routine of using voting to drive the rise of the platform currency was effective at first, but with the overall decline of the market and the uneven quality of new projects, voting for the currency was gradually ignored. However, if no new projects are listed, the exchange will lose a lot of income. In a bear market, this reduced income is very precious.
In the past few months, there have been only a handful of new coins listed on exchanges. On the one hand, those projects that use ICO to raise funds to cheat money have been cleaned up by the market, and on the other hand, the exchange needs a reason to increase the value of the platform and obtain more profits. The value of the platform is most directly reflected in the platform currency. Huobi Exchange has issued multiple Tokens for its multiple new businesses, and the price of HT has bottomed out to 6 yuan. Binance BNB fell from 70 yuan in the middle of the year to a minimum of 30 yuan.
Fortunately, at the beginning of 2019, the market heat picked up slightly. After a year of elimination in 2018, some relatively high-quality projects remained. Block Beats also mentioned some in previous articles. Justin Sun, who was marketing at the special meeting, announced the start of crowdfunding with the enthusiasm of BitTorrent, and the launchpad of the Binance exchange with the largest trading volume was restarted, and it hit it off. Binance itself may not have imagined that the sales of BTT could be so hot, and it directly brought BNB back to the level of half a year ago. The most important thing is that after the New Year, the market is about to move around, and investors are looking forward to the launch of new projects on major exchanges, hoping to earn a lottery for the new year from market liquidity.
This craze was so lively that before Launchpad started selling, other exchanges began to trade futures air coins. Investors around the world are like hungry children waiting to be fed in front of their computers, expecting more IEOs from exchanges.
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The camp of the project party "defects"
We have noticed an interesting change of view, that is, someone mentioned that BNB will replace Ethereum as the new public chain for issuing coins in the future. The further extension of this point of view is that the project party used ETH to raise funds before, and now it raises funds on Binance, which actually gave up the Ethereum ecology, because Binance Chain has better performance than Ethereum.
However, those who put forward this point of view did not realize that Binance Chain can only provide decentralized exchanges and currency issuance functions, and lacks the smart contract functions of blockchains such as Ethereum and EOS. As a result, it actually pays more attention to The fundraising function is still very different from the vision of ETH and EOS.
Although the project was publicly raised on Launchpad, Celer Network's Layer-2 technology still needs to return to public chains such as Ethereum, and BitTorrent's BTT also runs on the TRON blockchain. Because the Binance Chain cannot carry and does not need such technology.
Although the public chains of the exchange are all in the early stage of development, it is debatable whether the future performance can reach the level of other public chains. However, it is certain that in the short term, the project party only changed its financing channels. There is no ecological defection of the project party, but the project direction is closer to channels that are easier to raise funds.
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Can IEO rebuild market confidence?
Although it seems to have the reputation of the platform and the platform currency as a new financing "guarantee", IEO is still not divorced from the essence of ICO. Block Beats prefers to call IEO as IECO, that is, Initial Exchange Coin Offering, which is easier to understand.In the second half of 2018, when the price of Ethereum ETH plummeted, the media including BlockBeats were also discussing the Ethereum ecology to issue tokens and DAPPs with tens of thousands of DAU, what else is supporting its price[How long will it be before the panic selling of ETH by the blockchain project party? 】
The blockchain of the POS consensus mechanism is an indisputable fact. Investors are also more willing to use Bitcoin, Litecoin and other Coins as value storage currencies. This makes the positioning of Ethereum a bit awkward.
Platform tokens rush to buy new projects, making Ethereum, EOS and other traditional ICO standard currencies pale in comparison. Taking Binance as an example, Binance will give priority to projects that issue coins on the Binance Chain to realize the bundling of projects and values by the exchange. If the above theory about the value of Ethereum ETH is copied, the more projects that issue coins on Binance Chain, the higher the value of BNB will be.
Is this really true? No, hundreds of coins have been issued on EOS, but the price of EOS is still in a corner and dare not move.
At its root, what really determines the currency price is the project, that is, the project team, development level, market popularity, etc. It is undeniable that the project quality of Launchpad is better than many projects that have been listed on exchanges before, which has enhanced the endorsement effect of exchanges on projects.
The project is still the same batch of blockchain projects, the difference is that a screening is carried out with the endorsement of the exchange, but it is still a high-risk blockchain project. Neither the exchange nor the project party can respond to the irrational market. Intervention, there is no guarantee that all IEO projects can double their benefits, etc.
The risk of investors investing in IEO projects has not disappeared, but has been weakened to a certain extent in some aspects.
There are still many risks that have not disappeared due to the emergence of platform coins. For example, blockchain projects are still high-risk, and IEO projects also have private placements. Especially for the latter, Celer Network has been rumored that private equity investors are selling their shares layer by layer. After the news of the public offering sale on Launchpad, Celer’s official team also stated that the private equity shares will also be partially unlocked with Launchpad sales.
IEO is helpful in rebuilding market confidence, and exchanges will no longer just recognize money and list coins at will. As long as IEO issues rubbish coins, exchange platform coins will definitely plummet.
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IEO is about to become a money-making tool for low-quality exchanges
At the same time that BlockBeats was writing this article, there was news that ZBG, Kucoin and other exchanges were about to launch IEO-like business in the market.
We believe that this model is likely to be abused in the future, and become a tool for low-quality exchanges to join hands with project parties to "make money". The exchange endorses bad projects or even projects controlled by itself, and uses IEO to issue tokens for low-quality blockchain projects, thereby promoting the tokens of their own platforms.
These low-quality exchanges will break through the KYC restrictions and allow non-compliant investors to enter the market, blatantly violating the relevant laws of various countries.
