Initial Exchange Offering and Binance Launchpad. - Crypto Academy / S5W6 - Homework post for nane15.

in SteemitCryptoAcademy2 years ago

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Cover Page created by me, @msquaretk | created with imarkup app


It's a new week in the Crypto Academy. This is the week 6 of the season 5 at the Academy. The past five weeks were full of experiences and lessons from our Professors. Thanks to all of them and the entire management of the community for putting things in place.

This post is written in response to Professor @nane15 's assignment. He taught "Initial Exchange Offering and Binance Launchpad" and explained it very well by telling us what it means, how to participate and benefits and risk of it. So, I will be answering the questions given one after the other. Follow me closely.


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1. Explain in your own words what an IEO is.

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IEO means initial exchanges offering. It is a term that's very popular in the world of cryptocurrency. Initial exchange offering (IEO) is an event where the team working on a new project, the newly created token find a way to raise funds for the project. It's a way by which the project will receive maximum support from the entire populace and of course they too will benefit from the event in the later times.


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Source


The event, initial exchange offering takes place on the exchanges or trading platform where the project is listed. The exchanges give maximum support to the organizers by creating a feature where people can participate in the event. For example, on binance exchange, there's a feature called binance launchpad which is designed for the various projects which are undergoing IEO. The users only need to go there and select the project which they want to participate in and follow the steps and procedures to participate.

Initial exchange offering is very similar to what's known as initial coin offering (ICO), but some differences exist between the two. In an initial coun offering, the organizers find a way to raise fund themselves by organizing the event on their website whereas the organizers of the project that's launching the new token use a trading platform or cryptocurrency exchanges for IEO event. Further, participants send their contribution through the platform in which the IEO is held which is unlike ICO where contribution goes to the smart contracts.

There's a specified period or time for the event. During this time, the participants can participate once they have an account with the platform and have their account verified. Once the time elapses, the token is then listed on the exchange. By this, many people would have had the token at hand even before the token is listed on the exchange.

IEO is considered an investment vehicle because during the event the token are sold at a very cheap price and on listing the token, the price would have skyrocketed and and of course in the future, the price is expected to also rise. So people participate in IEO with the expectation that the price of the token will rise in the future and they can have maximum return on their Investment.


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2. Do you consider IEOs an advantageous way to make an investment? Explain

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Yes! IEOs are advantageous way to make an investment. I will give my my opinion on why I said it's an advantageous way. IEOs are initial exchange offering event where the organizers raise fund for their project, the new token that they are about to launch on an exchange. This event takes place on the Crypto exchange where the project will be listed.

IEO is considered as an advantageous vehicle for an investment because the price at which the token is sold at the event is very cheap. Everybody can afford the price of the token, and since it is cheap, they can buy as many as possible based on how they want to buy it. And of course we know that when you buy much of the asset when the price is very low, when it's high, you can distribute and make gain. In essence, the participants buy at cheap and sell at high in the future.

There's what is called discount price and premium price. A discount price is a price where the asset is said to be at a very low price. In other words, the price at which an asset is said to be at a devalued state. And a premium price is price when the asset is at a peak. The asset at this price is said to be overvalued. Now the best time to acquire an asset is when the asset is under valued, when the price is very cheap and the time to distribute it is when it is at the peak, over valued.

The price at which the token is sold at the IEO event can be liken to a discount price because it rarely has value at that time. In fact, the token is not yet listed on the exchange. Meaning, it would not be trading at any price during the IEO. When the token is listed, it will have the price at which the token is trading. Now, as the token is listed, it may shoot up and the price may rise. As time goes on because of the nature of the cryptocurrency, the price of the token is expected to rise. When the price rises high, reach a certain peak area, the token acquired at the investors who invested during IEO can decide to sell their token at premium price to have maximum return on investment (ROI).

Further, the exchanges on which the event should take place would have investigated the IEO to some extent before they give them support. So, when we join the event, especially on a Crypto exchange which are recognize, there's probability that the price will rise in no time. Investing on the token they are about to list on that exchange could be very profitable and yield a very high return on the investment.


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3. List advantages and disadvantages of participating in an IEO

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In this part of the task, I am going to be listing advantages and disadvantages of IEO. Let's start with the advantages.

Advantages

  • There's high likelihood of high profit. The IEO event doesn't just take place without a proper planning by the organizers and the platform on which it is held. So, as a result of support received, the event is likely to be successful and yield profit.

  • The investors buy the token during the event at a very cheap price and they are likely going to sell at a very high price thereby yielding maximum return on investment for them.

  • The event promotes the project and the team behind it as well as the Crypto exchange platform where the event is held.

  • There's high level of security which the participants can see to be able to participate in the event. For example, the event is held on the Crypto exchange which has reputation, the exchange will not want their image to be tarnished, hence they will ensure that the maximum support is given to the event to be successful.


Disadvantages

  • Although the token may be sold at a very cheap price during the event, but there's no guarantee that the price of the token will rise at so so time. So it takes risk to participate.

  • The process to participate is often complex. And also it's not for all people as the organizers of the events often target some set of investors. Hence, to participate in it, you must learn how it's done so you don't do it wrongly.

  • The price of the token when listed may fall beyond what's expected. It's the cryptocurrency and we know the nature its nature. So it's not advisable to put all your funds on it even if you want to participate in it.


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4. Explain how to participate in an IEO, for the process explore various exchanges, choose one of them and explain the process. (Use from screenshots.) (No need to participate, just register, present proof of verified account and explain the whole process, do not use Binance)

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In this part of the question, I am going to be explaining how to participate in an IEO. Like I said above, IEO is done through a centralized exchanges and we need to do some research to be able to know the exchanges that are offering IEO so we can participate in them. So to participate in any IEO, the first step is to go search and do a proper research on the project which is doing the IEO and the exchanges on which they want to do to it. This requires some works but it's not difficult since we have many means by which we can know. We can can use search engines and other platforms to know this.

So, to search and find the list of the IEO project that's currently on going, we can use coincodex. You can click this link to visit the website coincodex website. Upon clicking the link, you will see various IEO. Let's see the screenshot below.


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Screenshot From Coincodex | SOURCE


As we can see from the screenshot above, the list of the IEO are listed according to date. We have the name of the IEO, the stage and the date they are. Now to see the exchanges with the list of IEO, we click on all launchpads. As I have already mentioned above, to participate in IEO, you have to know the exchange it's listed and have trust in the exchange. It's better you participate in the IEO which the exchange you are familiar with have. So, by clicking on the lawn chairs you will see all these exchange.


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Screenshot From Coincodex | SOURCE


In the screenshot above, we can see various exchanges. By clicking on each of them, you will see the list of IEOs on the exchange. The screenshot below shows the list of IEO on Kucoin


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Screenshot From Coincodex | SOURCE


Then, let's click on Huobi exchange. In the screenshot below, you will the list of IEO on the Huobi exchange.


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Screenshot From Coincodex | SOURCE


Also, the screenshot below shows the list of IEO on the gate.io


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Screenshot From Coincodex | SOURCE


Then, below is the list of IEO on the FXT exchange. You can explore as many as possible for the exchanges but make sure you know that authenticity and familiar with the exchange you want to use.


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Screenshot From Coincodex | SOURCE


Now, let's try to click an IEO on Kucoin and see the details of this. By clicking on the first list, you will see this. I will click on an IEO by a name CHMB. See the screenshot below.


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Screenshot From Coincodex | SOURCE


Then, upon clicking on it, you will see the details of the IEO. the overview, the stage and the price if it's already trading. We can also see the IEO price and some other details on that page. Now, the next thing to continue with the IEO it's not ended is to click on "visit launchpad". See the screenshot below.


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Screenshot From Coincodex | SOURCE


Now by clicking on visit launchpad, you will be taken to a new page where you will be asked to sign up on the Kucoin. You can also download their app. If you don't have an account, you will need to create one by clicking on signup then you will provide your names, email and some other details.


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Screenshot From Kucoin | SOURCE


For me, i have an account with Kucoin. So i don't need to signup with them. Rather, I need to click on login and provide my email and password to login.


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Screenshot From Kucoin | SOURCE


Then, after providing my details, I need to click on login. And in the next page, I will be asked to input the code that will be sent to my mobile number to be able to access my account. This is to ensure security. Then, once I input it, i will click on continue and I will have access to my account. If you are just signing up, you need to do verification, know your customer (KYC) before you can participate in any IEO. The screenshot below shows my account.


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Screenshot From Kucoin | SOURCE


As I can be seen in the screenshot above, my account with Kucoin has been verified which means I have done my KYC. And that's why it's carrying verified beside my name. Now, after the KYC verification, you can now participate in the IEO which is currently on going.


Step to Participate in IEO on Kucoin

Now, the next thing to participate in IEO on Kucoin is to go the spotlight where the new token which are going through IEO are listed. But if you are using mobile phone, you will need to click on visit PC on the homepage to access the feature to see spotlight. See the screenshot below.


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Screenshot From Kucoin | SOURCE


By clicking on it, a new page will be loaded for you. Now at the top page, you will see various features like such as finance, derivatives more etc Click on more to see the spotlight feature. Now, then click on spotlight.


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Screenshot From Kucoin | SOURCE


Upon clicking on "spotlight", you will see the list of token which are currently on IEO and those which their IEO has been ended. Now, let's click on the latest one listed by the name CHMB. See the screenshot below.


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Screenshot From Kucoin | SOURCE


Now, upon clicking it, you will be taken to the page where you can participate. On the page you will see the number or amount of token which the are offering, the start and end dates for the IEO event. See the screenshot below.


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Screenshot From Kucoin | SOURCE


You can click on participate as shown on the screenshot above. However, before you do that, there are some things you need to know. You need to meet some criterion. You must do KYC verification , you must sign countries not supported and sign purchase agreement. See the screenshot below.


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Screenshot From Kucoin | SOURCE


As you can see in the screenshot above, I have already did my KYC and that's why it's showing verified. Now, the next thing we need to do here is to click on countries not supported. Make sure you read and see that your countries is not included. Then, if you are in a country which can participate, you check the small box provided beneath. See the screenshot below.


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Screenshot From Kucoin | SOURCE


Also, click on the purchase agreement. On clicking it, you will see the agreement. Read it and confirm if you are satisfied with I. See the screenshot below.


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Screenshot From Kucoin | SOURCE


Then, once you complete the three, you can now participate in the IEO and buy any amount you wish.


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5. As an example of a project that had a successful IEO, explain that project. Be on topic. (Use from screenshots.)

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In this part part the task, i am going to be explaining a project that had a successful IEO. Although, we have many projects which have been successful in their IEO event, but I am going to talk about just one in this task. And I am going to be talking about a project called ocean protocol.

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Source


Ocean protocol is a platform which is used for managing AI data and other services associated with AI. The platform allows their users, businesses and individuals to exchange their data and monetize it on their platform. In essence, the providers of data which share the data with them earn income and the persons who are interested in the data, the data consumer, search for the data they need and buy it.

The main aim of the ocean protocol project is to make the transfer of data very transparent, traceable and private. This means that the data which the consumer will be getting from their platform will be very authentic and reliable, since it will be traceable and transparency. The ocean protocol has its native token: ocean token and it's ERC-20 which is created on Ethereum.

The ocean token is used for selling and buying of the data on ocean protocol platform and also used for staking, data sharing etc. The oceans protocol IEO was done on Bittrex International platform. The IEO started on the 30th of April 2019 and ended on the 3rd of May, 2019. About 56Million ocean was sold during the IEO which is only about 3- 4% of the total supply of the token. The pre-sale price of the OCEAN was $0.12 per 1 OCEAN. According to the tweet the organizers released on the 3rd of May 2019, about $6M was raised during the IEO. See the screenshot below.


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Source


After the end of the OCEAN IEO, the token started trading and the price at which it started trading was totally lower than the IEO price. It started trading at $0.03. The percentage drop or decrease of the price was about 75%. When the holders of the token saw what happened, the began complaining and the organizers explained what happened. They said many people were eager to sell than holding the coin and promised to continue working on the community to build the project.


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Source


Today, the price of ocean protocol is now high to some extent. At least, it's now greater than the price at which it started trading after the IEO. According to Coinmarketcap, the price of OCEAN as at the time (24/12/2012 | 8 pm WAT) of writing this post is $0.9515 and it is ranked 132. See the screenshot below


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Screenshot from Coinmarketcap | SOURCE


As we can see, the price has now appreciated. Those who participated in IEO then would be in profit by now since the price is now trading at a higher price compared to IEO price.


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Conclusion

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Initial exchange offering (IEO) has gained popularity recently. It's a way or an event of raising funds for the project, the token which is expected to be listed on an exchange. It's very similar to initial coin offering (ICO), however it's different in the sense that I SO is done through an exchange in which the token is going to be listed while ICO is done on the website of the organizers directly. IEO event has a start and end dates. During the period of IEO, the participants can buy as many tokens as possible once they follow the steps and meet the requirements.

There are many benefits of IEO. In fact, it's considered as an investment vehicle because the token is often sold at a very cheap price and the price will rise in the future making it possible for the participants to sell at a high price and thereby gaining maximum return on investment. However, we should also know that there are risks there. The price at which the coin starts trading after the IEO may be lower than than the IEO price, so it's not a guarantee that the price will shoot up after the IEO. Also, to participate in any IEO, you may need to do some research and not just participate without knowing a little about the project.

Each exchange has the way the list the token which is currently at IEO or past IEO. But to participate in any of the IEO on the exchange, you must have an account with them and do KYC and other criteria or requirement they present. In this task, I have explained each of the section of the task based on my own understanding; I have also explained steps to participate in IEO on Kucoin exchange platform.

Thanks to our Professor @nane15 for the insightful lecture. I look forward to seeing more from you.

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NB: All unsourced images/screenshots are taken from my Kucoin App.

CC: @nane15

Written by @msquaretk

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