Initial Coin Offerings, or ICOs, is an investment platform unique to the crypto industry. However, it has many faults, with no real way of determining if the ICO is an exit scam. Recently, a new form of initial offering has reared its head, looking slightly more desirable than its predecessor: The Initial Exchange Offering, or IEO.
Next Step In ICO Evolution
In essence, it’s a more regulated form of ICO. The coins are put on an exchange, which first verifies the token’s validity, and then sold much like an ICO. With most exchanges placing a limit on the number of tokens sold and only providing permission for small-scale purchases, it seems like IEOs allow for a more regulated platform.
While relatively lower risk compared to ICOs, most of the IEOs that launch fail and drop below its initial pricing. A prime example of this is the BitTorrent Token. BTT was one of the first IEOs to be offered on Binance but quickly sank into nothingness after its initial price of 33 Satoshi dropped to just under 4 Satoshi, with volumes going ever lower.
Another prime example is Fetch.AI. The token launched with a trading price of $0.42 but quickly dropped around 90% in value. Even with the launch of its main net, the FET price continued to fall and lost a further 8% last week. The asking price now is a measly $0.04.
The Rare Exception
As is the way with all things, an exception was bound to happen. Cue the Matic token (MATIC), being one of the rare few that managed to keep its value and expand on it. The asset originally started trading for about 71 Satoshi, going through several peaks in an upwards direction. The current price for a MATIC is about 225 Satoshi, which is a massive growth in terms of BTC and USD prices. An important matter of note is the price was achieved after a massive pump-and-dump event.
Improved, But Not Perfect
A critical factor in the poor performance of IEO tokens is simple: It suffers from very low liquidity. The tokens were being added in a year where exchanges were already keen on culling a vast array of smaller tokens. Even with a hefty amount of hype, these new assets don’t usually achieve any form of success. The memory of the ICO tokens crashing and burning in a slightly more spectacular fashion is fresh on the minds of most investors.