“Crypto” is back. This is the sentiment from both those within the crypto community and without as Bitcoin and leading altcoins have seen their prices soar since BTC began its rapid ascent in Early April.
As mainstream media return their focus once more to crypto, with Bitcoin even featuring on CBS’ 60 Minutes, Google searches for the leading cryptoasset have also hit a high - reaching levels not seen since February 2018 - when Bitcoin was trading for between $8,000 and $11,000.
We seem to finally have left the throes of the “Crypto Winter,” and there are several narratives emerging as the dominant themes for crypto in 2019. Although much attention still seems to be focussed on the long-awaited VanEck/SolidX ETF - delayed once more this month - one trend that continues to grow in prominence is Initial Exchange Offerings (IEOs).
The Rise of IEOs
For many critics outside the industry, and for many within the crypto space as well, the story of crypto in 2018 was that of over-hyped, over-promising, and sometimes outright fraudulent ICOs collapsing en masse.
While it may be true that many emerging industries see this kind of speculation and unwarranted investor enthusiasm before the real value and substance emerges, it is unsurprising that a newer model for new token launches has emerged, which aims to move the industry further towards that goal.
Initial Exchange Offerings are in essence the same as ICOs, but launched exclusively via a particular exchange, and with the exchange’s backing and moderation. The new model promises benefits to both projects and token buyers.
For the projects themselves, they save time marketing, partnering with exchanges, and on the technical expenses of self-launch. For investors, they can be more assured that due diligence has been conducted on the projects, and buyers benefit from the ability to trade tokens straight away.
OKEx’s platform, Jumpstart, has an interesting model for approving and vetting new tokens.
Their process of evaluation seeks to marry the traditional evaluation model used in the VC market, with the particularities of the cryptoasset space. Labelled COMPASS, the model assesses prospective projects across 7 major aspects: Creativity, Operational competence, Marketing competence, Progress, Activeness of community, Sustainability, and Scalability. These central criteria form part of a broader matrix of assessment in which OKEx examines 105 factors before approval:
It is level of dilligence on the part of exchanges that has many enthused about the new model.
As more exchanges begin to offer this model and the market becomes more focused and excited by IEOs, general interest is growing rapidly.
Google Trends data is one interesting, albeit rough, way to gauge how interest is growing.
Looking at search interest in “Initial Exchange Offering” against “Security Token Offering” a term that really took off in 2018, we can see how IEOs are gaining in popularity, with the gap between the two narrowing dramatically in 2019.
This kind of growing popularity, however, can come with its own problems, as exchanges can struggle to deal with the demand for new tokens, and investors can be left disappointed.
OKEx are forging an interesting path ahead with Jumpstart. Launched in March, the platform has already seen 2 new projects launch with enormous demand for the new tokens.
Such was the demand in fact, that the first token sale took barely longer than a second to sell out. For this reason, OKEx is adopting new strategies to ensure as wide a participation as possible.
To ensure that buyers don’t miss out, OKEx now supports second subscription sessions for those who failed to get tokens on the first round of token sales. Importantly, tokens are alloted in this round, not on a first come, first served basis, but according to participants’ average holdings of OKB. In this way all those eligible are guaranteed to receive some tokens.
OKEx’s second token sale, ALLIVE (ALV) recently completed successfully - seeing a 125% price increase within a week - another testament to the model’s growing popularity. OKEx’s highly anticipated third token sale has a date set for early June.
While crypto markets and the industry in general is still at somewhat of a crossroads as we enter the middle of 2019, it seems that the ascension of IEOs in 2019 is in full swing, and is a trend to watch closely this quarter and beyond.