Establishing a perfect crowdfunding method for raising the initial funds directly on the cryptocurrency exchange
Trustless mayhem in the cryptocurrency world, specifically along with the emergence of IEO (Initial Exchange Offerings), has driven ecosystem participants come up with an advanced alternative method of setting up a new algorithm for fundraising. An Initial Exchange Offering is a disruptive method for the crowdsale procedure: an innovative fundraising prototype which empowers blockchain-backed projects raise funds directly through exchanges.
Conceptually, this type of crowdfunding structure bears resemblance to Initial Coin Offering (ICO), but an IEO has a cardinal, core difference. Instead of blindly investing in trustless, fishy projects, both investors and stakeholders are given the opportunity to invest in the ecosystem directly through an exchange which already steered due diligence for them. This approach is proven to be much more resilient — giving the power to exchanges to administer the investment process and grant stakeholders the sought-after security.
IEO Benefits in a nutshell
User-wise, IEO participation is very intuitive as no on-chain transactions need to be handled with different wallets on different blockchains. As an alternative, users only need an account on the exchange and some assets in their account and they are ready to participate completely over the trusted website’s interface. Moreover, the exchange is staking its reputation behind the projects on its platform, offering a higher degree of trust behind the project.
Letting the exchange prove the project’s integrity
Usually, project developers don’t have adept knowledge in token launching and hosting a token sale. In the case of an IEO, projects put their faith in the exchange’s hands to conduct the token sale on their behalf. By doing this, IEO-based projects avoid expensive Token Generation Events (TGE) and implement KYC/AML models, as the exchanges supervise these specifics and grant reliability and security. It comes as no surprise that the exchanges also endorse tokens and often administer marketing campaigns to attract numerous users to their platform with the aim of purchasing the token.
Eliminating “Scompanies” for potential investors
Crowdsales are generally hosted on acknowledged exchanges with global presence and a huge number of users who back its services. Investors are therefore willing to get involved as the trustless deal settlement and stress-free contribution process are under the close scrutiny of the exchange itself. As soon as the exchange lists a certain token, investors can be rest assured that the project has undergone a severe due diligence and avid background check before the token launch. With a proven track record of viability and lucrativeness, there’s no need to perform additional researches on the project and its team members. Unlike the ICOs, investors are not submitted to tedious transaction processes with several wallets, but instead need to deposit funds directly in the exchange account, and purchase the tokens on the spot.
“Nothing ventured, nothing gained” — trailblazing the IEO with agile business decisions — CoinPoint
Generally, requirements, timelines, duration, and fees vary from exchange to exchange — but they all follow a similar pattern for launching an IEO. There are common guidelines and “must-haves” projects will need to follow in order to ready themselves for an IEO launch. These are as follows:
· An MVP or demo that can be shown
· Community of more than 1,000 on social networks (optional)
· Have legal opinion, whitepaper and smart contract audit ready
· Pass due diligence (obligatory)
· 95% of gathered digital assets will be stored in cold wallet to protect against theft or loss
· Data is stored with the most resilient multi encryption algorithm, with private keys being encrypted several times
· Top level DDoS attack protection HTTPS(SSL) website security to protect against SQL injection, cross site scripting and DDoS
The most essential factor for projects to consider before engaging exchanges to conduct an IEO is a professional due diligence — yes, even before the IEO being listed on an exchange. Projects need to be fully equipped before stepping onto the IEO path, as projects whose smart contracts are not state-of-the-art usually gets turned down. If deceptive and ambiguous activities are identified, projects risk their reputation, thereby allowing their venture go down the drain without the opportunity of having a second chance — as the market and the exchange are very strict about any misconducts.
We’ve all heard and witnessed numerous IEOs attaining their hard caps in less than a minute. While this may seem too good to be true, with agile business decisions and proactive planning & execution, the IEO dream project may not be a wild-goose chase after all. Three key factors to consider are exchange & media relations, establishing project credibility, and, last but not least, marketing the project to the right audience — elements that define CoinPoint. Through avid ‘testing of the IEO waters’ we’ve hauled out the specifications that are indispensable for every IEO aiming to reach the sought-after prominence. These are:
1. Token Model
3. Business model with revenue streams
5. Smart Contracts Development and Audit
It’s an essential benchmark for any investor looking for a project to have a detailed description of the token model, its features, and its value in the long run. Furthermore, the project must specify which type of token is going to be utilized (Payment, Utility, or Security) and which distinguishable elements the tokens will have. Ultimately, token as a unit of value is produced to self-govern its business model — empowering users to interact with the product, while facilitating the distribution and sharing of rewards and benefits to all of its stakeholders.
The following aspects are of primary importance:
Token Issuance Conditions
· Crowdfunding model definition and incentive
· Token distribution model description along with token amount and initial token value
· Raised funds allocation
· Token flow analysis
All projects need to encompass fundamental features to investors and showcase their structure, roadmap, tokenomics, and other relevant justifications. All of these aspects have to be disclosed in the:
· Whitepaper — a manuscript enclosing technical project details as well as a thorough description of the ecosystem, distribution of tokens, monetary project market, and business model. Information about the project team, advisors, and partners is also included.
· One-pager, website, and pitch decks — components that contain the main source of knowledge about the project for potential contributors and exchanges so they can be totally aware of project’s goals and intentions.
Business Model with Revenue Streams
The business model precisely delineates project’s vision towards achievement of specific business goals and objectives. From an investors’ standpoint, it is of the utmost importance to grasp the operational model and monetization plans to predict the forthcoming project’s value and success.
Therefore, the business model should identify the following aspects:
· company’s use cases in the chosen industry
· key features of the business model
· financial model implementing key financial projections, including:
— future revenues
— net profit
— operational expenses
— capital expenses
— explanation in accordance with the chosen business model
— monetization model and revenue streams
If you put yourself in investor’s shoes, would you go insofar as to put in an arm and a leg into the most disruptive project if the given project lacks experienced team running it? Transparency is everything is today’s IEO market. Technically intricate enterprises need a profound, qualified team of proven track record both in development and business operation to be marked as legitimate. In cases of experience and knowledge absence, enterprises turn to IEO experts to facilitate the process for them and help in building the road to success through specialized methods and endeavors — something that CoinPoint is the most proud of.
Attaining a law firm to issue a legal opinion for your enterprise (whitepaper) is no less important as a regulatory must-have than the IEO elements we have already covered. There are a vast spectrum of legal requirements and recommendations for accessing an IEO, including:
- Groundwork for operating & investment documentation
- KYC procedures
- Risk assessments to get rid of pitfalls during the IEO process
- SEC compliance
To protect projects and their investors, it is critical to mitigate risk through regulatory compliance. Legal experts provide vital know-how to properly structure and form the financial and legal foundation of your offering.
Smart Contracts Development & Audit
Namely, the most important indicator of the project’s success — smart contracts. Technically, smart contracts must be 100% secured and audited for any potential liabilities since any minor mistake could cause insurmountable damage to the environment and all its participants, not to mention m/billions of dollars of funds extortion. Contrastingly, if the code has been perfected and the project’s idea has been well-facilitated through the smart contracts — there would be no stopping the project. In these cases especially IEOs tend to raise tremendous amounts of money.
Whether smart contracts are developed and audited internally or externally, they need to pass a distinct checklist to verify the code’s ability to be launched on the mainnet:
- an extensive initial smart-contact assessment
- compilation of a checklist with a detailed summary of vulnerable areas
1. Correct functions visibility
2. Data storage eligibility
3. Prevent overflow and underflow
4. Re-enterancy check
5. Correct “delegatecall” to untrusted code
6. Save gas on smart contracts
7. Timestamp dependence
8. Ownership of the deployed contract
9. Oracle calls
10. Lock pragmas to specific compiler version
- recommendations for possible enhancements of smart-contract semantics
- report of the work done
We have saved the best for last. IEO marketing strategy is as crucial as all the above aspects combined. Without a tailored IEO marketing campaign, the project’s lifespan would drastically lessen and investors, if there are some, would find the product repulsive. The premium marketing strategy will capitalize on detecting appropriate project’s audience and create buzz-worthy hype around the product thereby driving further attention to it and attract big investors. Even though that the exchanges themselves often offer marketing campaigns to attract token holders and big fishes to the project, they are not doing it for the wellbeing of the project, but rather to ambiguously promote their own platform. We can conclude that the incentive itself is not as good as having the dedicated marketing agency on a sole mission of getting the IEO out there — to the investors and the right, targeted audience, such is CoinPoint.
IEO also has some specific marketing features. Contacting an IEO-hosting exchange can be dubious and time-consuming, as the exchanges themselves get tons of submissions on daily basis. Therefore, having an ally that will procure the information from the exchanges, as well as convince them that the given IEO is definitely worth the shot is priceless. Some projects choose to host an IEO fundraising event on different exchanges (either centralized or decentralized) simultaneously, as means of attaining the hard cap. Having broad market knowledge and established partnerships has allowed us at CoinPoint to have a direct access to numerous top-tier IEO-centric exchanges, which we are willing to bestow to the lucky few.
With consideration for future promotion of your IEO, it is important to work on growing a user base around the project on social channels (Telegram, Facebook, Instagram, Reddit threads, Youtube, etc.). On top of this, decentralized social networks and forums have proven to dwell highly convertible users, so these will definitely bring tangible results as well. Uptrennd, Minds, and Steemit but also Bitcointalk and Cryptocurrencytalk lead the way of crypto-centric sources of valuable information.
Change is the path to a better market. Where ICOs once dominated is now under the full control and jurisdiction of IEOs, whose approach is too good to be overlooked and the fine-tuned level of trust has finally eradicated the ever-growing doubt.
However, there’s a limited knowledge and information currently circulating around the topic of IEOs, as only a few people have a proficient know-how to run a successful IEO campaign with desirable results. As with everything in this industry, education is the crucial indicator of the projects success, as without it, no IEO can ever expect to reach the heights it was destined for.
The exquisite IEO knowledge is at your fingertips, one click away. CoinPoint can finally grant the IEO “holy grail” that will not only help you reach the best business and marketing decisions, but also draw the attention of priceless pool of IEO investors whose average investment rates are jaw-dropping. Get in contact with us now, and let’s get down to it.