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IEO research: Not all IEO projects are created equal, what investors should know

IEO research

It’s hard not to come across Initial Exchange Offering (IEOs) these days with a significant chunk of crypto projects opting to do an IEO over ICOs. For perspective — In 2017, there was just a handful of IEO projects (back then the term wasn’t even coined yet) but in 2019, this number jumped to 100. This could be because of the surge in IEO launchpad platforms which are exchanges offering IEO hosting services.

Investors are so keen IEO projects that some of IEO projects have sold out in seconds, mirroring the trend observed during the peak period of Initial Coin Offerings (ICOs). For example, Veriblock IEO sold out in less than 10 seconds and there are many others.

Since IEOs are so similar to ICos, discussing about IEOs without drawing parallels to ICOs is almost impossible. So here’s the question “ Will IEOs follow the same path as ICOs and leave investors in the lurch?”

So let’s take a dive into what’s troubling about IEOs.

Minimum Viable Product (MVP), it matters.

In the ICO space during Q1 2019, only 26% of ICO projects had a minimum viable product at the time of their token sale (source). That means 74% didn’t have one. Let that sink in for a moment, 76% of ICO projects with nothing more than a website and a whitepaper (maybe even a developer) raised funds for their projects. While this was the norm in the ICO space initially, should that be the way forward? Especially after the numerous ICO exit scams? 

Well IEOs are not better, maybe slightly better but just by a hair.

IEO research

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Of all the IEOs launched so far, only 30% of these projects had a MVP at the time of their token sale. Keep in mind that funds raised by IEO projects so far has crossed $1.6 billion, so is there a good chance that most of these will likely fail or end up to be scam? Definitely yes! 

But now you maybe wondering, IEOs are safer investment option than ICOs because exchanges have strict vetting process for launching IEOs. You’re right! Some exchanges do. But not all of them.

IEO research

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Here’s the top five exchanges based on funds raised by IEO projects. Do you know what’s the vetting process behind each exchange? Exactly, only very few people do and that’s mostly employees of these exchanges. That’s the problem here, there is no standardized vetting process if at all there is one. And as long as exchanges have the freedom to decide where to draw the line, bad actor and fraud crypto projects will always creep into the limelight.

InWara Analyst notes

“IEOs are at the same phase as ICOs were in early 2017 — many early adopters and rapid growth at breakneck speeds and this should serve as a cautionary sign. A maturation phase will only set in, once a universal structure gets adopted across all exchanges” 
— Shubham Priyadarshi, Business Analyst

 

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