Earlier this year Binance, a leading cryptocurrency exchange by trading volume, launched a token sale platform called Binance Launchpad. On the platform the exchange holds one token sale per month, in what’s now known as an initial exchange offering (IEO).
An IEO is essentially an initial coin offering (ICO) conducted through a cryptocurrency exchange. Binance Launchpad started off with the native token of BitTorrent, BTT, and has so far held three successful token sales. These contributed massively to its native token BNB surging in price.
This also added to its list of use cases. Not only can BNB holders get discounts trading on Binance, they now have the ability to purchase tokens on Binance Launchpad, participating in the IEOs. Since these started, BNB’s price has risen by over 135%.
DataLight data shows that since these started at the beginning of the year, the price of BNB has gone up 300%, with its trading volume rising in tandem.
The spikes seen on the graph correspond neatly to Binance Launchpad's token sales. On February 25, Binance Launchpad sold Fetch.AI’s FET token, in a sale that ended in 22 seconds, after 2,758 buyers rushed to get ahead.
After the cryptocurrency’s sudden rise ahead of the sale, there was a sell-off, likely caused by investors who didn’t manage to participate in the token sale, and by speculators who saw the initial pump coming.
On March 19, Binance sold CELR tokens through its platform. In 17 minutes, 3,129 buyers – out of 39,0003 – bought all the tokens, again leading to a small pump and subsequent dump. The dump likely led to the huge transaction spike seen.
Since most BNB holders weren’t able to participate in the CELR token sale, Binance has since announced a new IEO lottery system, that came to replace its first-come, first served basis. The new system helped the price of BNB rise by roughly 15%.
On April 24, Binance Launchpad is set to host the sale of Matic Network’s MATIC token. The Matic Network is reportedly looking to help solve problems associated with decentralized applications’ ease of use.
The IEO model has been so successful other cryptocurrency exchanges have launched their own IEO platform. OKEx, for example, has its OKEx Jumpstart, while Bittrex announced the sale of XRD tokens to compete with Binance, although it later on had to pull it. Huobi Prime, Huobi’s token sale platform, sold 1.5 billion TOP tokens in only 19 seconds.