Binance Launchpad, IEOs and Cryptocurrencies AdoptionMarch 25, 2019
“Exchange the world” is the popular mantra of Binance, the number one digital asset exchange by daily trade volume headed by maverick CEO Chaopeng Zhao fondly called CZ. Announcing on the 24th March 2019, Binance set a new rule for participants seeking to participate in its launchpad for upcoming IEOs (Initial Exchange Offerings), sparking some mixed reactions within the global blockchain and cryptocurrency space.
What are IEOs
For those who have been hearing the term IEO and wondering what it means, it is a crowdfunding mechanism whereby project founders within the sphere of blockchain and cryptocurrencies raise funds through digital assets exchange by having the investors or contributors send their funds to the exchange wallet rather than the project wallets with subsequent listing after the offering. This has been growing in popularity since the beginning of 2019 after the first IEO was launched in Binance Launchpad for the BitTorrent Token on the 28th of January 2019 raising more than $7.12 million in around 20 minutes. A slew of IEOs has since been announced by several other exchanges who launched into the foray joining the league of exchanges that have adopted IEOs.
Just like the early days of ICOs, tokens listed immediately after IEOs have followed an appreciative pattern in price where the least jump in price after IEOs was seen to be 3X. This has led to the rush in participation as seen by those who participate especially on Binance Launchpad where those who couldn’t get in complained of in-house manipulation largely refuted by the Binance team.
As typical of Binance in its innovative ways, it announced to the public a new lottery system that will govern participants of IEOs on its launchpad
Implications of the Lottery System
In its press release, Binance announced a switch from the first come, first served to the lottery system. This means for participants who intend participating in an earlier announced IEO, they will have to start upping their chances of participation as early as 20 days before since the daily snapshots for qualifying would be done everyday culminating to the IEO day.
The number of tickets each participant can claim depends on the amount of BNB (Binance Coin) they hold over the 20-day period in a Binance account leading up to the day of the lottery. It further restricted the maximum tickets per eligible account to be 5 to give room for more participants entry.
As is expected for every lottery system, their will be random draws which it claims will be done in the best and most possible transparent manner to select those who will qualify to get the IEO tokens distributed to them and the equivalent BNB deducted from their account. All of which of course it says must happen in KYC verified accounts to ensure regulatory compliance.It has also put out clear disclaimers citing extreme case of volatility that might ensue due to the newly adopted lottery system.
This development from the Binance team has sparked up mixed feelings from the general cryptocurrency community. While many are quite happy this bolsters their chances to get in and perhaps rake in some gains once trading begins or the traders who love to ride on volatility to scalp in profits, others are seen to be complaining claiming it is no longer a level playing field and is now a platform that favours mainly the rich. This in a way bears legitimate concerns judging by the fact that 1 BNB trades a little above $16 as at press time setting the minimum entry level to be at least for holders who can afford $1,600. This seems not to have gone down well with many who claim the underlying philosophy behind the creation of cryptocurrencies is to help the large un(der)banked while also ensuring those with little funds or capital are not excluded in the global financial radar, afterall ICOs were conceived to open the support and adoption of projects to a wider community across the world who have been hampered by geographical and technological boundaries.
Since the advent of the first IEO conducted on the Binance Launchpad, many have touted this innovation to be the new ICO 2.0 and should help to usher in the bull in one of the longest bear season ever seen in the cryptocurrency industry. Will this bounce back on Binance who’s coin comfortably sits at 7th spot on Coinmarketcap, reduce the craze for IEOs or will the rush be transferred to other exchanges IEOs like Huobi Prime, Kucoin Spotlight, Okex Jumpstart and others, let’s wait and see how the community reacts with its next IEO yet to be announced even as most crypto communities continue to opine Binance had just killed the FOMO (Fear Of Missing Out) it was starting to create to usher in the next “Bull Run”.