5 factors threatening the new fund collection model

Initial Exchange Offerings (IEOs) have recently started to attract attention. The main crypto-money exchanges supporting certain projects are seen as a very successful fundraising model, and these studies centered on the Blockchain seem to provide a significant return to investors as well as the resources they need.

IEOs are managed by the stock market as a reliable source. it's advantageous. However, some of the potential disadvantages need to be taken into account when looking at such new trends. Therefore, if this trend continues, the potential problems that both stock exchanges and investors should keep in mind are as follows:

Security issue

Crypto money exchanges are always one of the areas targeted by hackers.

During the sales of tokens, such as IEOs, there is a lot of funding transferred on the stock exchange in a relatively short period of time. This makes the stock market a final target for a variety of attack attempts, including phishing attacks.

In addition, the majority of crypto money exchanges have a minimum funding requirement. In other words, those who want to join the IEO must keep the local token of the stock exchange for a certain period of time. However, the subject should be stored on the stock exchange. For example, Binance demands that IEOs keep 500 BNB (currently equivalent to $ 9,000) in their accounts as a requirement for participation in their auctions. Hackers know this and are now more transparent than ever.

Effect of IEO tokens on value

Unlike traditional ICOs that evolved in 2017 and 2018, the value of the IEO's token topic is the only tool used to participate in the sale because the local tokenden greatly affected. Therefore, fluctuations in the price of the local currency token will also seriously affect the actual value of the token sold during the IEO. For example, Kucoin's Token, KCS, has greatly benefited from the follow-up of the first IEO MultiVAC. Most of the stock market-based tokens currently traded on the market are providing certain commission reductions. Therefore, if there is something unexpected in the stock market, the value of the token is also likely to be affected and is not limited to cyber-attacks that only the exchange may be exposed to. Regulatory activities can also be influential.

Centralized exchanges: Unknown opportunities and whales

Almost all the exchanges, especially those with the highest volume, act as centralized exchanges. This means that central organizations carry out all IEOs. Yes, these companies or stock exchanges have full control over token sales of the projects selected for this resource creation model. Moreover, although centralized, the stock exchanges may also seriously affect the value of tokens sold in their IEOs. After all, they are very interested in proving the success of this new fund-raising model.

Regulatory influence

The regulators have considerably increased their review of the general issues of whether they are issued to ICOs and the types of securities classified as securities. In addition, the SEC recently published a guide with clear clarity on possible problems

However, once again the centralization of the crypto-money exchanges is on the agenda. Thus, regulators can strengthen their hands about restricting IEOs. Because they can be subject to regulation after the stock exchanges. This may have an impact not only on those tokens, but also on public exchanges and anyone using it.

Of course, none of the above does mean that IEOs are a horrible app. However, it is useful to consider some possible pressures that may occur in the future


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The information contained herein is for informational purposes only. It does not constitute any investment advice. The author and are not liable for your profit or loss arising from the investments you are making. The investment is ultimately based on many foundations, such as knowledge, knowledge, experience, research and personal decisions.