Explore investment forms to gain money: Seed, Private, IDO, and IEO (PART2)

In the first part of this series, we gained an understanding of the fundamentals, advantages, and operations of the following three types of investments: Seed Round, Private Sale, and IDO. Next, we’ll take a deeper dive into the IEO investment formats and popular IDO platforms of today. Now is the right time to move on!

Read more:  Explore investment forms to gain money: Seed, Private, IDO, and IEO (Part1

Advantages and Disadvantages of IDO

Advantages

• Fair Fundraising

Normally, after the public sale of tokens, investors will buy a lot of them at a price that is much lower than if they were listed on CEX. So, if the project is successful, selling these tokens will be much more profitable, allowing you to make huge profits. Furthermore, with IDO, everyone may join and purchase tokens at low prices.

• Fast transaction

Another benefit of IDO is the ability to trade the token immediately after purchase. So, investors can buy tokens at IDO and then sell them later for a higher price. For example, during the UMA protocol IDO event, the initial token price was $0.26, which immediately increased to about $2 at the end of the fundraising.

• Instant liquidity

Liquidity means that you can easily buy or sell on the market. In IDO, the project’s token is instant liquidity, which helps investors make quick profits.

Disadvantages

• Control problem

After the IDO, the price of the token will have significant fluctuations. Investors with a lot of capital can buy a project’s tokens in large quantities. This gives them the power to manipulate, which will have a big effect on the price of the token in the future. If you’re wondering who is buying how many tokens, there’s no way to find out.

• Price problem

As mentioned earlier, the token price tends to increase with the first swap. Therefore, only the initial investors have the opportunity to buy the token at the best price. As such, traders can take unfair advantage of price moves.

Previously, the BZRX token IDO event had price problems. Accordingly, the group of participants develops a trading bot. The bot quickly buys a large number of project tokens at a cheap price. At the same time, these traders sent spam messages that prevented other investors from buying BZRX tokens. After that, they sold the token for a much higher price and made millions of dollars.

• Liquidity scam

Normally, there will be a lot of different types of IDO events, which will require you to make a quick decision on which projects to invest in. When people are pushed to join quickly, they often make bad decisions. It is the scammers that can create a new token and raise funds. After calling potential investors, the money that was put into the pool will be taken out, and the scammer will run away. At this point, the investor is left with tokens that don’t have any value.

Popular IDO Platforms Today

• DAO Maker

DAO Maker is a safe platform for seed-round startups to fundraise. It was established to develop and promote new projects that could reach more people if a lot of small investors took part. More than that, it reduces the risk for investors. DAO Maker has successfully IDO projects like MetaMask, 1inch, Ronin, and Wanchain,…

• TrustPad

TrustPad is a decentralized multi-chain fundraising platform. It allows institutions to raise capital while ensuring the safety of early-stage investors. This launchpad platform is built on the Binance blockchain. In addition, it is supported by Ethereum, Certik Skynet, MetaMask, Solana, Trust Wallet, and WalletConnect.

TrustPad partners include Tokenova, Lupa X, GD10 Ventures, BlockSync Ventures, X21 Digital, Meridian Capital, Wealth Union, Twin Apex Capital and 4SV.

• Polkastarter

Polkastarter is a platform that helps connect early-stage projects with investors through IDO. Multiple cross-chain token pools are built into the platform, which lets new projects increase liquidity on the platform.

Polkastarter’s unique cross-chain swap feature promises quick transaction speeds and lower fees between different blockchains. In particular, to minimize fraud and scams in projects, Polkastarter always requires the project team to complete the screening process based on certain criteria.

IEO Investment Form

What is IEO?

IEO is a method of fundraising on a cryptocurrency exchange platform. In contrast to IDO, which raises capital on DEX exchanges, IEO will be managed by a cryptocurrency exchange (CEX). So, the new project’s token sale will be conducted on the exchange’s platform. After all, token issuers are required to pay a listing fee and a proportion of the tokens sold during the IEO. In return, tokens from crypto startups will be sold on the platforms of the exchange.

The percentage of tokens divided by the crypto exchange will be an incentive for helping with the issuer’s marketing activities. IEO participants just need to sign up for an account on the exchange platform where the IEO is conducted. Then, people put money into the exchange wallet so they can buy new project tokens.

Advantages and Disadvantages of IEO

Advantages

• Increase investor reliance — Investors don’t deal with the IEO project team directly; instead, they trade through the exchange. The exchange is what makes it safe and reliable.
• Security for both token issuers and investors — Exchanges require that token issuers verify that they are eligible to raise funds. In the same way, investors who want to take part in an IEO have to verify their KYC identity.
• Easy to join — Anyone can join an IEO, regardless of how much experience they have in the cryptocurrency industry.
• Make sure the exchanges will list — The IEO tokens will be listed on the exchange immediately after the IEO.
• Reduce fraud — IEO project teams will be strictly censored by the exchange, so there will be no anonymity, no forgery, and no disappearing after getting your funds.
• Benefits for exchange token holders — Most exchanges use IEOs to add another use case for their native tokens. The increased demand for the native token will drive its increase in value.

Disadvantages

• All investors must comply with KYC — To ensure the transparency of personal accounts.
• Market manipulation — Most IEO tokens will be pre-mined, so you should double-check the token allocation and distribution schedule before you invest. Both the project team and the IEO exchange can keep a lot of the tokens for themselves, which can easily lead to price manipulation in the future.
• Limited number of investors — There have been many complaints from investors that not everyone was able to buy tokens during the IEO.
• Bots – There is a concern that bots that have been programmed to take part in IEO are manipulating prices in an attempt to gain an advantage over real investors.
• FOMO — Both the IEO project manager and the IEO platform focus on the media to create as much hype as possible to help sell all the tokens. So, before you invest, you should look carefully into each project and try to avoid FOMO.

Popular IEO Platforms Today

• Binance

It’s clear that Binance is the top cryptocurrency exchange in terms of market share, trading volume, community, and the quality of the best IEO projects. Binance’s first IEO project was Bittorent, which raised more than $7 million. The next project is FetchAI, which has raised more than $6 million.

All IEO projects that happen on Binance are carefully chosen and evaluated. In particular, the exchange only accepts projects that have an active product or testnet. This helps to increase the success of fundraising efforts, as well as attract significant investment from a large number of users.

• Gate.io

Gate.io is a Chinese cryptocurrency exchange. The cryptocurrency community will be of great support to the projects that are listed on the Gate IEO, and the liquidity is also extremely high.

• Okex

Okex is a high-level cryptocurrency exchange. It provides many products into the ecosystem, as well as building a large global community with a large trading volume. Okex’s most popular IEOs are Wirex IEO, ROAD, and Allive.

• Huobi

Huobi has established itself as the leader in the exchange of crypto assets and IEO for all of 2019. Some of the most well-known IEO projects that successfully fundraised were ThunderCore, akropolis, and Newton. Huobi’s IEO listing process is quite complicated because there are a lot of requirements and security margin measures.

Read also: Shibarium: The Upcoming Layer 2 Blockchain Solution

Conclusion

All of the options to invest—Seed, Private, IDO, and IEO—offer a very high level of reliability. It lets you own possible tokens before they are widely sold on many cryptocurrency platforms. We hope that by providing you with these standard models for raising capital, you will be able to choose the investment decision that is most suitable for your needs.

Disclaimer: The information in this article is not investment advice from CryptoChill. Cryptocurrency investment activities are not recognized and protected by the laws of some countries. Cryptocurrencies always carry many financial risks. Do your own research before making any investment decisions based on this website’s information.