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Has the IEO financing model trumped the ICO model?




IEO research: In-house crypto tokens the way forward for IEO platforms?


Over the past couple of months, the number of IEO launchpads has increased dramatically. From fewer than a handful in 2017 to more than two dozen in 2019, it’s safe to say every exchange out there is jumping on the IEO bandwagon (source).


Total funds raised by IEO projects has crossed $1.6 billion, out of which almost 1/3rd of the funds have been raised on just five exchanges. A trend to watch out for with IEO platforms right now is the significance of in-house crypto tokens. The exchange leading the change? Binance, of course!


Binance launchpad


Binance, widely considered to be largest cryptocurrency exchange, is also the pioneer of the Initial Exchange Offering financing model. Binance isn’t the first exchange to launch an IEO, launching its first IEO (Gifto) in 2017, but Binance is widely attributed for popularizing the idea of IEO financing model.

Since February 2019, Binance has consistently launched an IEO project every month eliciting enthusiastic response from investors. Some of the token offerings for example, BitTorrent concluded within a few minutes. The latest IEO project Harmony (ONE) just went live, but with a slight change - a lottery format.
The lottery format is a welcome change from the first-come-first-serve format Binance followed for its earlier token launches. The earlier format invited the ire of investors who couldn’t take part in the token sale - considering hard caps being reached in minutes, they aren't wholly unjustified.


In essence, the new format lays heavy importance to the amount BNB tokens an investor holds in a Binance account over a 20-day period leading up to to the token sale. The number of lottery tickets you receive depends directly with your BNB balance. If the number of BNB tokens is more than 100 but less than 200 then 1 lottery ticket and so on.


On top of directly determining the number of lottery tickets you receive, your BNB balance also determines your worthiness to take part in a token sale. Should a users balance fall below the required minimum balance on any given day during the 20-day period leading up to the tokens sale then they will be put on to a lower threshold. To know more about the lottery format and how it works, check out this blog post.

Following suit on Binance’s success, several other exchanges like Kucoin and the infamous Bitfinex. Clearly this is an exchange hey-day by artificially creating a demand as well as a "lock-in period" for their own tokens.

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