IEO vs regular Exchange Listing (NOIA Case Study)

By xaviercote | blockchainInsights | 5 Aug 2019


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2017 and 2018 was the era of Initial Coin Offerings or (ICOs). During an ICO, an investor buys the native tokens of a platform in exchange for a prominent cryptocurrency which is mostly Ether or Bitcoin. ICOs raised a combined $13 billion in those two years alone. Unfortunately, ICOs lost a lot of credibility because of regulatory, compliance, and most importantly, ethical and accountability issues. This was when IEOs entered the market. An IEO, or an Initial Exchange Offering, can be described as a better version of an ICO.

What are IEOs?

IEOs work like ICOs, but they have a crypto exchange platform acting as a middleman. Instead of handing the funds directly to the developers, you hand it to the crypto exchange which has partnered up with the project. In return, the exchange will give you a proportionate amount of tokens.

So, why is there so much hype around IEOs?

The very fact that the crypto exchanges are in charge of the marketing and the listing makes them a desirable prospect. An exchange will list a project only after they have conducted intense research since their names are tied to the project. As such, it gives these projects that added credibility, which inspires trust from the investors. To put it a little crudely, if the investor trusts the exchange, then they will, by extension, trust the project.

Binance, one of the most reputed exchanges in the world, and when they list an IEO, it is usually considered extremely legit. Till now, only seven projects have been listed on Binance’s IEO platform:

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Image Credit Coincodex

Of these, Bittorrent raised a staggering $7.2 million in a record 18 minutes despite being slowed down by technical glitches. Fetch.AI needed just 22 seconds to raise $6 million. These numbers resemble the kind of staggering records ICOs used to register during their heyday.

However, where there is smoke, there is fire. It turns out that IEOs are the perfect hunting ground for pump-and-dump schemers.

IEO pump and dumps

Alex Kruger, a crypto analyst and trader, noted a critical issue with all the IEOs listed on Binance. He posted the following pic while tweeting: “These are all of Binance IEOs since the tokens started trading publicly. Can you spot a pattern?” before answering his rhetoric, confirming investors fears: “the four 2019 IEOs have been crashing since tokens started trading publicly – and that in a “bull” market, where almost everything else pumped.”

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Image Credit: Asia Crypto Today

The chart above shows a side-by-side comparison of Matic, Celer Network, and Fetch.Ai. As per Kruger’s analysis, it appears that all IEOs projects were pumped ahead of the crowd sale. Al these projects are 50% or more down from their initial listing price, indicating that most of the investors have made a loss from their initial investment.

A Twitter user commented:

“I don’t understand why companies that hold assets want their token launched on an IEO – even Binance, all it does is make it look bad You’re paying for a pump., some marketing and then your token becomes a part of a long list of IEO memes.”

How NOIA counters pump and dump?

To reduce speculation, it was important for NOIA to negate the pump and dump. Before we go any further, check out the following table:

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Did you notice the initial circulating supply? It is just 1.41% of the total token supply. What this does, is that it prevents whales from consuming the majority of the NOIA tokens right off the bat and conduct a straightforward pump-and-dump. However, what happens if someone accumulates the tokens over a few months and then sells them off? To incentivize their investors to not do that, NOIA has a monthly airdrop scheme for five months:

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The NOIA tokens are getting listed on July 22 in the KuCoin exchange. Three weeks after that, the monthly bonus schemes will begin. You will get NOIA airdropped into your wallet on September 12, October 12, November 12, December 12, and January 12 for a total five bonus months.

If you own anywhere between 3,000-30,000 NOIA tokens, you will get a monthly bonus of 300 NOIA for a total five-month haul of 1,500 NOIA.
If you own anywhere between 30,000-300,000 NOIA tokens, you will get a monthly bonus of 4,500 NOIA for a total five-month haul of 22,500 NOIA.
If you own >300,000 NOIA tokens, you will get a monthly bonus of 60,000 NOIA for a total five-month haul of 300,000 NOIA. In essence, you get back your initial investment.

Because of this five-month airdrop plan, investors who choose to hold on to their tokens will be handsomely rewarded for their loyalty.

Conclusion

Noia’s token release strategy makes sure that they won’t fall victim to conventional pump-and-dump strategies. The token holders are economically incentivized and rewarded to hold on to their tokens.

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xaviercote
xaviercote

Developer specializing in Enterprise-Blockchain Solutions and Code Reviews


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blockchainInsights

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