It seemed inevitable that out of the cryptocurrency market chaos produced by ICOs that a more suitable replacement would emerge to fulfill the void left by declining ICO prevalence this year. And that alternative solution has resoundingly become the initial exchange offering (IEO).
Originating with the high-profile sale of BitTorrent Token on popular spot exchange Binance, which has seen tremendous returns so far, IEOs have raked in more than $518 million in 2019. The trend has extended to dozens of projects, and several high-profile exchanges including Binance, Huobi, OKEx, and Gate.io.
In particular, Gate.io has arisen as one of the preferred IEO platforms with their recently unveiled Startup launchpad. According to Gate.io:
“Gate.io Startup is a blockchain asset discount offering platform to provide decentralized blockchain assets (BTC, ETH, etc.) sales with discount.”
Gate.io has rapidly surged amongst a crow of competition in the cryptocurrency exchange landscape, and according to the FTX Global Volumes dashboard, is the 15th largest cryptocurrency spot exchange by adjusted volume. A notable caveat is also that 3 of the exchanges ahead of Gate.io — OKEX, Huobi, and bitFlyer — are all supplemented by at least $1 billion in derivatives volume.
But Gate.io’s real value has manifested itself with its Startup arm. Browsing some of the recently completed discount sales on the platform, like Vidy VIDY and Waykichain, reveal enormous sums of $43.4 and $18.5 million raised, respectively, in Tethers — outpacing funding targets by an order of magnitude.
Now, Gate.io has announced the results for its most recent Startup discount sale, ARPA.
ARPA Gears Up For Gate.io Startup Launch
ARPA, a second layer secure and privacy-preserving computational network for blockchains, recently completed its startup sale using the Gate.io Startup platform, and the results were impressive.
Roughly 19.5 million ARPA tokens were sold, reaching a total value of nearly $26 million, dispersed among 4,790 participants. ARPA’s token is also now the second-best performing ICO token over 14-day price dynamics, as rated by ICO Analytics, at +138 percent since its April ICO.
For their part, ARPA has been working on secure multi-party computation (sMPC) for privacy-preserving blockchain events, which is broadly seen as a major breakthrough for the industry. For example, sMPC can enable exchange self-regulation without explicitly exposing financial reserves, and can also be used for advanced, and more user-friendly, key generation/management events. Importantly, the protocol deployed by ARPA is designed to be blockchain-agnostic.
“Our objective is to deploy our secure computation network as a layer 2 solution to any blockchain system,” details the ARPA whitepaper. “The proxy smart contracts will be used as a bridge to link the blockchain and secure computation network. Additionally, they will be used as a verifier to ensure that outsourced computation is computed correctly.”
IEOs Unmask Crowdfunding Popularity Resurgence
The notion that ICOs are dead has been compounded by increasing evidence that less money has progressively been flowing into traditional ICO models. IEOs furnish better investor protections by coupling the exchange with the project itself, meaning that the risk is on the exchange to properly vet projects going through their launchpads — otherwise be associated with a scam.
For example, Gate.io does not charge listing fees, and instead, thoroughly vets projects for its Startup platform — knowing that revenue from trading fees downstream from the sale is convincing enough.
Many of the IEO sales in the broader industry have been highly lucrative so far, and have taken numerous molds. For example, Bitfinex’s private fundraise IEO of their native exchange token LEO, raked in $1 billion — covering for a costly mistake that resulted in an $850 million loss.
The concept is catching momentum in the mainstream news cycle as well. In a recent piece by Steven Russolillo in The Wall Street Journal, he referred to IEOs as “ICOs 2.0,” with a resurrected bullish market sentiment fueling the next run of crowdfunding campaigns.
It remains to be seen what the staying power of IEOs will be in a cryptocurrency market plagued by fragmented regulations and broader uncertainty, but for now, they are proving fruitful outlets for crypto startups to quickly raise capital — with Gate.io on the mantle as one of the most popular in the industry.
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