The rise and fall of IEO, all you need to know about the new wave of fundraising
In this article you will find the necessary information for a successful investment in IEO:
To date, more than 5,000 ICOs have been conducted. The IEO market is relatively young compared to the ICO market and is a form of raising funds. CryptoRank has currently tracked 40 IEOs for analysis.
The first IEO Bittorent successfully passed on the Binance exchange on January 28, 2019 and marked the beginning of the IEO trend. Also do not forget that the first IEOs were held back in 2017. Bread and Gifto , which also went on the Binance exchange.
The purpose of an ICO in most cases was to raise funds. The purpose of the IEO can be either a fundraiser or the only opportunity for a project to get on the stock exchange and acquire liquidity for its tokens. As a rule, many projects at the time of the IEO already held several rounds of fundraising, including through the ICO, but did not get on the exchange. Also, the purpose of IEO is marketing and public relations projects. And the funds raised are often used to conduct market-making.
Most projects have the following dynamics after listing on the exchange.
After the bidding, we see the same dynamics everywhere with very few exceptions. The fall in the first month / week after the IEO, a shift and then a possible start to growth.
The highest price is usually on the day of the sale and tokens rarely overcome their ATH tokens. This is due to both the price dynamics after IEO and the price movements of altcoins in general at the time of analysis.
What metrics are important when selecting projects for investment? CryptoRank aggregates trading data by providing real-time ROI analysis for exchanges with at least 2 IEOs. According to analytics , currently 15 out of 40 (37.5%) projects are trading below the IEO price.
In addition to analyzing the project itself, the choice of the exchange itself to participate is no less important.
Let's see in detail how the projects came out on the analyzed exchanges.
Binance: Current AVG ROI: 248%
Kucoin: Current AVG ROI: 165%
Huobi: Current AVG ROI: 74%
Bibox: Current AVG ROI: 40%
Bgogo: Current AVG ROI: 40%
Gate: Current AVG ROI: -13.5%
Bittrex : Current AVG ROI: -69%
Probit: Current AVG ROI: -74%
More detailed ROI analysis for all IEO platforms can be found here .
Out of 11 exchanges analyzed, 3 exchanges have a negative current average ROI. These are the Probit , Bittrex and Gate exchanges .
At the same time, the Bittrex and Probit exchanges also have a negative ATH ROI. This may indicate that these exchanges are poorly suited to the selection of projects and the choice of metrics for IEO, and are also not interested in market-making for IEO to exit above the offer price. Or in the case of, for example, the Probit exchange, they may have small media and financial resources. Also, the Probit exchange in our opinion seemed not transparent in terms of conducting IEO and providing information.
Out of 11 exchanges analyzed, 3 exchanges have a negative current average ROI. These are the Probit, Bittrex and Gate exchanges.
At the same time, the Bittrex and Probit exchanges also have a negative ATH ROI. This may indicate that these exchanges are poorly suited to the selection of projects and the choice of metrics for IEO, and are also not interested in market-making for IEO to exit above the offer price. Or in the case of, for example, the Probit exchange, they may have small media and financial resources. Also, the Probit exchange in our opinion seemed not transparent in terms of conducting IEO and providing information.
From the point of view of investing, to minimize risks, it is advisable at this stage of IEO development to choose exchanges with high ATH ROI and current ROI.
See analytics in real-time
There is a hypothesis that the less the project raises funds, the higher the ROI will be due to the imbalance of supply and demand. But at the moment it’s too early to talk about it, because The sample of projects is small and there are no obvious trends in this yet.
A project may raise a small amount of funds for various reasons. For some famous project this is just marketing. For example, the $ 500,000 IEO Thunder Core on Huobi. And for another project, this amount can be large and too heavy to attract.
It is also worth considering unlocked tokens and general circulation at the time of listing at the end of IEO. For example, the ECOMI project raised $ 600,000 through IEO. And investors who invested in this project at the presale stage already had a large number of tokens available for sale on their hands.
According to CryptoRank, from the beginning of 2019. Сurrent AVG ROI is higher for projects in the Data Service category, and the lowest ROI for projects in the Real Estate category.
During the popularity of ICOs, projects in the Real Estate category, as well as areas more related to real business, had a low ROI.
See analytics in real-time
AVG ATH ROI above also for the DATA Service project category, as well as for project categories more related to the blockchain industry.
The IEO industry is growing rapidly. Changing approaches to conducting IEO. If initially these were IEOs using the “First Come First Serve” system, now many exchanges are trying to create more comfortable conditions for most participants.
Exchanges try to reduce volatility at the opening of trading. Price corridors and price limits are established, various systems of the “matched orders” type are introduced prior to the start of trading at which the trading is closed.
Exchanges are trying to create conditions for long-term investment from the IEO stage and protect inexperienced investors from major losses. The exchanges have a reputation, and projects can suffer major losses when, after IEO, project tokens are immediately sold and the project is forgotten.
Systems of lotteries, a holding of exchange tokens, re-subscription models and additional requirements are introduced under which the investor must also be an active user and trader of the exchange to participate in IEO. Also, various trading marketing activities are carried out at the end of IEO.
The possible amount of investment in IEO projects is reduced due to growing popularity.
If this area is gaining momentum, less attractive conditions will be created for participation in the IEO stage and it is possible that the conditions for participation in private rounds will again be more profitable.
Why, in spite of such high ROIs, IEO is still not so popular?
As mentioned earlier, to participate in IEO it is often required to hold a stock token, which can be very volatile. The project may come out with a good ROI, but the investor will lose funds from the drawdown of the exchange token. To successfully invest in IEO, you need to buy / sell the exchange token on time and conduct its fundamental analysis. To minimize the risk of drawdown of the exchange token on many exchanges, it is possible to hedge their position, opening also shorts.
The greatest surges in the volatility of exchange tokens occur when IEOs are announced, conditions for participation are changed, and when a project is listed at the end of IEO.
You should also not keep most of your portfolio only in exchange tokens to diversify risks. Because There may be situations in which all exchange tokens will simultaneously fall in price. For example, if IEO is prohibited, if IEOs become unprofitable or if something new comes in their place.
Based on the analysis, we can conclude that you should choose exchanges where projects come out with high ROI, projects from categories with high ROI, pay attention to the section that describes why tokens give X.
Also, when choosing a project, be sure to pay attention to whether the project is currently being traded on other exchanges and at what price.
- IEO Features
- Price dynamics of projects after IEO
- Analysis of the amount of the fee
- Category Analysis
- Due to what there is a high ROI during IEO
- IEO Trends
- Minimizing risks when investing in IEO and conclusions
To date, more than 5,000 ICOs have been conducted. The IEO market is relatively young compared to the ICO market and is a form of raising funds. CryptoRank has currently tracked 40 IEOs for analysis.
The first IEO Bittorent successfully passed on the Binance exchange on January 28, 2019 and marked the beginning of the IEO trend. Also do not forget that the first IEOs were held back in 2017. Bread and Gifto , which also went on the Binance exchange.
The purpose of an ICO in most cases was to raise funds. The purpose of the IEO can be either a fundraiser or the only opportunity for a project to get on the stock exchange and acquire liquidity for its tokens. As a rule, many projects at the time of the IEO already held several rounds of fundraising, including through the ICO, but did not get on the exchange. Also, the purpose of IEO is marketing and public relations projects. And the funds raised are often used to conduct market-making.
IEO Features
- Money is collected on the exchange itself and the exchange acts as an intermediary between the project and the investor.
- Many exchanges themselves responsibly approach the procedure for selecting projects and partially remove this burden from the investor.
- Bidding starts immediately after fundraising, the project does not need to worry about it being unable to get on the exchange and there will be no liquidity for trading their tokens.
- Unlike the ICO, the exchange is less likely to request the passage of the full KYC procedure. This procedure is usually simpler without the need for a large number of documents.
- The exchange often helps to promote even the most unpopular projects with a weak own community, while ICO projects needed to invest heavily in the development of their community before raising funds.
Price dynamics of projects after IEO
Most projects have the following dynamics after listing on the exchange.
- Trades at a high price in the first minute of listing (followed by a fall) and the ability to sell tokens with a 100% + ROI.
- An accumulation zone that can last several months or days depending on various conditions.
- If the project has a long-term perspective, then the growth stage begins.
After the bidding, we see the same dynamics everywhere with very few exceptions. The fall in the first month / week after the IEO, a shift and then a possible start to growth.
The highest price is usually on the day of the sale and tokens rarely overcome their ATH tokens. This is due to both the price dynamics after IEO and the price movements of altcoins in general at the time of analysis.
Exchange Analysis
What metrics are important when selecting projects for investment? CryptoRank aggregates trading data by providing real-time ROI analysis for exchanges with at least 2 IEOs. According to analytics , currently 15 out of 40 (37.5%) projects are trading below the IEO price.
In addition to analyzing the project itself, the choice of the exchange itself to participate is no less important.
Let's see in detail how the projects came out on the analyzed exchanges.
Binance: Current AVG ROI: 248%
Kucoin: Current AVG ROI: 165%
Huobi: Current AVG ROI: 74%
Bibox: Current AVG ROI: 40%
Bgogo: Current AVG ROI: 40%
Gate: Current AVG ROI: -13.5%
Bittrex : Current AVG ROI: -69%
Probit: Current AVG ROI: -74%
More detailed ROI analysis for all IEO platforms can be found here .
Out of 11 exchanges analyzed, 3 exchanges have a negative current average ROI. These are the Probit , Bittrex and Gate exchanges .
At the same time, the Bittrex and Probit exchanges also have a negative ATH ROI. This may indicate that these exchanges are poorly suited to the selection of projects and the choice of metrics for IEO, and are also not interested in market-making for IEO to exit above the offer price. Or in the case of, for example, the Probit exchange, they may have small media and financial resources. Also, the Probit exchange in our opinion seemed not transparent in terms of conducting IEO and providing information.
Out of 11 exchanges analyzed, 3 exchanges have a negative current average ROI. These are the Probit, Bittrex and Gate exchanges.
At the same time, the Bittrex and Probit exchanges also have a negative ATH ROI. This may indicate that these exchanges are poorly suited to the selection of projects and the choice of metrics for IEO, and are also not interested in market-making for IEO to exit above the offer price. Or in the case of, for example, the Probit exchange, they may have small media and financial resources. Also, the Probit exchange in our opinion seemed not transparent in terms of conducting IEO and providing information.
From the point of view of investing, to minimize risks, it is advisable at this stage of IEO development to choose exchanges with high ATH ROI and current ROI.
See analytics in real-time
Analysis of the amount of the fee
There is a hypothesis that the less the project raises funds, the higher the ROI will be due to the imbalance of supply and demand. But at the moment it’s too early to talk about it, because The sample of projects is small and there are no obvious trends in this yet.
A project may raise a small amount of funds for various reasons. For some famous project this is just marketing. For example, the $ 500,000 IEO Thunder Core on Huobi. And for another project, this amount can be large and too heavy to attract.
It is also worth considering unlocked tokens and general circulation at the time of listing at the end of IEO. For example, the ECOMI project raised $ 600,000 through IEO. And investors who invested in this project at the presale stage already had a large number of tokens available for sale on their hands.
Category Analysis
According to CryptoRank, from the beginning of 2019. Сurrent AVG ROI is higher for projects in the Data Service category, and the lowest ROI for projects in the Real Estate category.
During the popularity of ICOs, projects in the Real Estate category, as well as areas more related to real business, had a low ROI.
See analytics in real-time
AVG ATH ROI above also for the DATA Service project category, as well as for project categories more related to the blockchain industry.
Due to what there is a high ROI during IEO
- IEO token price advantage over previous rounds of fundraising.
- Conducting IEO on the stock exchange with high liquidity and good market-making.
- Fundamentally high-quality projects with good metrics.
- Lack of unlocked tokens in circulation (airdrop and bounty, team tokens, tokens from the presale round).
- Transparent IEO conditions.
IEO Trends
The IEO industry is growing rapidly. Changing approaches to conducting IEO. If initially these were IEOs using the “First Come First Serve” system, now many exchanges are trying to create more comfortable conditions for most participants.
Exchanges try to reduce volatility at the opening of trading. Price corridors and price limits are established, various systems of the “matched orders” type are introduced prior to the start of trading at which the trading is closed.
Exchanges are trying to create conditions for long-term investment from the IEO stage and protect inexperienced investors from major losses. The exchanges have a reputation, and projects can suffer major losses when, after IEO, project tokens are immediately sold and the project is forgotten.
Systems of lotteries, a holding of exchange tokens, re-subscription models and additional requirements are introduced under which the investor must also be an active user and trader of the exchange to participate in IEO. Also, various trading marketing activities are carried out at the end of IEO.
The possible amount of investment in IEO projects is reduced due to growing popularity.
If this area is gaining momentum, less attractive conditions will be created for participation in the IEO stage and it is possible that the conditions for participation in private rounds will again be more profitable.
Minimization of risks when investing in IEO and conclusions
Why, in spite of such high ROIs, IEO is still not so popular?
As mentioned earlier, to participate in IEO it is often required to hold a stock token, which can be very volatile. The project may come out with a good ROI, but the investor will lose funds from the drawdown of the exchange token. To successfully invest in IEO, you need to buy / sell the exchange token on time and conduct its fundamental analysis. To minimize the risk of drawdown of the exchange token on many exchanges, it is possible to hedge their position, opening also shorts.
The greatest surges in the volatility of exchange tokens occur when IEOs are announced, conditions for participation are changed, and when a project is listed at the end of IEO.
You should also not keep most of your portfolio only in exchange tokens to diversify risks. Because There may be situations in which all exchange tokens will simultaneously fall in price. For example, if IEO is prohibited, if IEOs become unprofitable or if something new comes in their place.
Based on the analysis, we can conclude that you should choose exchanges where projects come out with high ROI, projects from categories with high ROI, pay attention to the section that describes why tokens give X.
Also, when choosing a project, be sure to pay attention to whether the project is currently being traded on other exchanges and at what price.