While the initial exchange offering brings benefits to investors and project teams, compared to the ICO, it is hamstrung by a flaw that is inherent to this fundraising model: often, there is little incentive for other exchanges to list the token. As a result, most IEOs will live and die on the exchange that hosted their token sale. For the handful of IEOs that have thrived post-sale, both in terms of token price and other benchmarks, it’s no coincidence that they’ve transcended their issuing platform, and gained deep liquidity in the process.
The most liquid token IEO to date, based on the number of exchanges where it’s listed, is also one of the earliest: Bittorrent (BTT), which launched on Binance last year. Today it appears on 34 exchanges – 24 more than the next most-listed tokens. It’s no coincidence that tokens listed on the most exchanges – namely BTT (34), MATIC (10) and SERO (10) – outperform all others as far as ROI and ATH ROI are concerned. The correlation between number of exchanges and project performance is inarguable.
For better or worse, IEOs have taken the crypto world by storm, but most projects will never see the sort of liquidity enjoyed by Bittorrent and Matic. In fact, of the 65 IEOs launched in the past six months, the vast majority have failed to even make it onto a second exchange. The consequence of this has been limited liquidity, low accessibility/visibility and, in many cases, a project which has effectively died before it has even gotten the opportunity to develop any serious momentum.
A final note on IEO liquidity: when it comes to securing multiple exchange listings, quality beats quantity every time. According to Cryptorank.io, Binance leads the way, with a much higher average ROI for its listed tokens (94.53%). Bittorrent’s runaway success played a part in this: it was the first IEO on Binance Launchpad, meeting its funding goal of $7.2 million in mere minutes. Every project since has struggled in vain to emulate that success.
Do you think IEOs have peaked, or are they just getting started? Let us know in the comments section below.
Images courtesy of Shutterstock and Cryptodiffer.
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