IEO for investors: is it worth to participate?
For the first time, IEO was held by the Binance crypto exchange on the Binance Launchpad platform, which has been developed since the summer of 2017.
The first IEO tokens were Bread and Gifto. Both tokensales achieved unprecedented success, having collected hardcaps in a matter of seconds - $ 6 million and $ 3.4 million, respectively. The success of BitTorrent and Fetch.ai attracted the attention of not only investors, but crypto exchanges around the world. Almost simultaneously, they launch their own platforms Bittrex, Huobi, EXMO and other exchanges.
Such a system surpasses ICO in a number of areas:
- Security. Scams at major exchanges will not qualify.
- High chances of making a profit. Exchanges selectively select projects and conduct IEOs only if the product really has the potential.
- Lack of competition "first buyer". At the start of a promising ICO, investors often inflate transaction fees to be among the first buyers and have time to buy a token. As a result, everyone is forced to pay more. In IEO, this problem disappears.
- Opportunity to invest in fiat money. If investing in an ICO involves transferring money in certain cryptocurrencies, then theoretically you can invest in IEO using any currency that the exchange supports. Not all exchanges conducting IEO provide this opportunity, but it is likely that in the future this will become common practice.
- Minimized effort. You can invest in different projects, being a client of one exchange. No need to register on different sites and study the conditions for investing in each project.
- Advertising. Large exchanges have a huge number of customers, many of which could invest in a certain token, but do not track ICOs. The announcement of IEO attracts the attention of an additional segment of potential investors, increases the flow of investments and the popularity of the token.
It cannot be said that the intermediation of exchanges is guaranteed to provide the investor with benefits. A startup selected by analysts may also not “fly up”. The only thing that the investor receives for sure is a relative guarantee that the project is not fraudulent. Yes, and this point is in question: in the confrontation between an exchange analyst and a fraudster, the first one will not always win.
In fact, now the investor will have to evaluate the exchanges and the history of IEOs instead of startups. This is certainly easier and more profitable in the long run. If ten projects selected by the exchange were successful, then the eleventh will be highly likely to be successful. In the ICO, this formula rarely works, because not all developers have similar projects that can be used to judge the success of the development.
Also, an ordinary investor will face some formal difficulties. Well-established exchanges with a potentially strong team of analysts are usually completely legalized. This means that in order to participate in the token sale, you will have to go through complete verification, including confirmation of passport data. In addition, a number of exchanges do not allow work from some countries. In the ICO, neither one nor the other problem is usually there.
However, in general, the chances of making money with IEO are higher than with ICO. Pioneer startups were successful, which at least allows us to count on the success of the following startups on the same exchanges. Also, one cannot ignore that with high competition in the IEO field, each exchange will try to create the strongest team of analysts, which means that really promising projects will increasingly come out on IEO.
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