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The ICO as a means of crowdfunding blockchain ventures is now firmly on the decline after it hit its peak in June 2018.
Tech entrepreneurs are turning to other ways of funding their vision. PwC predicts that the security token offering (STO) will overtake the ICO as the preferred crowdfunding mechanism. However, the initial exchange offering (IEO) is now also gaining momentum with Coincodex listing 27 IEOs taking place in April alone. But which are the ones worth watching?
Wait, What’s an IEO?
Before diving into the list, it’s worth recapping on the mechanism of an IEO. Whereas an ICO appeals to investors directly, in an IEO, the project offers its tokens through a crypto exchange. The principle is that the exchange will conduct due diligence on the project, providing credibility.
The project also gains access to the exchange’s customer base and marketing capabilities. Because the project isn’t offering tokens directly to investors, then there are fewer regulatory hurdles to clear than in an ICO.
From the investor perspective, buying tokens in an IEO offers a better assurance of liquidity, as they are traded on the exchange from day one. In an ICO, the token can end up being dominated by a smaller number of VC investors, who can rapidly devalue the token if they decide to sell off.
Binance was the first exchange to provide the IEO service, under the banner of its Binance Launchpad which hosted the BitTorrent IEO after its acquisition by TRON. Since then, OKEx, Huobi, and KuCoin have all opened up their exchanges to IEOs.
Another more recent entrant from the Asian crypto exchanges is Hong Kong-based Bitforex. Having been initially funded by familiar names including TRON and QTUM lends it the kind of credibility that will be welcomed by projects trying to make a name for themselves.
So now that you’re up to speed on the IEO, here are some of the IEOs that are making waves in the blockchain space right now.
Matic Network – Launching on Binance
Matic Network is a layer 2 solution aiming to overcome Ethereum’s scalability challenge. Using an adapted version of the long-awaited Plasma scalability protocol, Matic uses proof-of-stake side chains to transact at speeds far higher than Ethereum can currently manage. Think thousands of transactions per second (tps), in contrast with Ethereum current measly twenty tps. The side chains communicate with the Ethereum main net to ensure finality.
Why does this matter? Well, Matic Network believes that the key to mass blockchain adoption lies in usability. Today’s distributed applications (Dapps) have users that number into the thousands, far away from the millions that are needed for any dapp to claim mainstream success. This is partly due to the slow speed of Ethereum, which gets even slower during times of high throughput.
The CEO of the company is Jaynti Kanani, a developer who’s contributed to Plasma; therefore, it bodes very well for the company making a success of its endeavors to solve Ethereum’s scalability challenge.
Evedo – Launching on Bitforex
Evedo is set to whip up a storm in the event management industry. Event management is fraught with challenges and inefficiencies for organizers, venue owners, performers, and even the average Joe Public ticket buyers. Sourcing a venue is a trial-and-error task involving enquiring with each individual, finding performers and suppliers means dealing with endless middlemen, and ticket fraud is rife.
Evedo wants to fix all of this by creating a single, B2B and B2C marketplace for all services related to event management, and ticket sales. In the B2B marketplace, an organizer can browse and book available venues and source service providers either by finding them through the directory, or service providers can also apply to provide their services to the event.
On the B2C side, any individual can buy tickets. All transactions within both marketplaces are recorded on the blockchain, with payments transferred in Evedo’s ERC-20 tokens, ticker TPT.
The CEO, Stoyan Angelov, has previously co-founded an event management company, meaning the company is undoubtedly positioned to understand the scale of the challenge ahead.
According to the projects white paper, event management is worth a staggering $850 billion each year. Therefore, Evedo has a huge opportunity to establish itself as a market leader in the convergence of blockchain and event management.
Ocean Protocol – Launching on Bittrex
Ocean Protocol is a decentralized ecosystem for data and artificial intelligence (AI). It aims to address the growing demand for data to feed AI algorithms and the need for computing power to drive those algorithms, while using features of blockchain to ensure that individual user data is kept private. The protocol will connect data providers with data consumers through the means of its native token, called OCEAN.
The white paper describes various use cases for the Ocean Protocol. One example is in the case of autonomous vehicles. The paper cites that to 500 billion to one trillion miles would need to be driven to amass enough data to power an AI machine that drives a car without human intervention.
Working with the research arm of Toyota, the team behind Ocean Protocol developed the idea of pooling the necessary data from the Ocean decentralized marketplace. This collaboration earned Ocean Protocol a place in MOBI – the Mobility Open Blockchain Initiative, alongside household names including Ford and General Motors.
In the face of increasing regulatory pressure, IEOs are becoming more and more prevalent. High liquidity and the endorsement of an exchange makes them an attractive proposition for everyday crypto speculators. At the same time, they provide an excellent alternative to the now-risky undertaking of an ICO for tech founders. The IEO looks like it’s here to stay.