Initial Exchange Offering: Why it’s All about Liquidity

Home » Initial Exchange Offering: Why it’s All about Liquidity

When it comes to measuring the success of an Initial Exchange Offering, liquidity is the factor that matters most.

The initial exchange offerings (IEOs) market has been on an upward trend since 2019. Investor demand for initial exchange offerings also remains robust despite the remarkable rise of DeFi products.

However, while initial exchange offerings brings benefits to investors and project teams, IEOs are also hamstrung by a flaw that is inherent to IEO fundraising— there is little incentive for other exchanges to list the token. As a result, most IEOs will live and die on the exchange that hosted their token sale.

To thrive beyond the public token sale, IEO projects must transcend their issuing platform by securing listing in multiple exchanges. This is the best way to gain deeper liquidity.  For example, one of the most liquid IEO, Bittorrent (BTT) launched on Binance in 2018 but today appears on 34 other exchanges. It’s no coincidence that tokens listed on the most exchanges – namely BTT (34), MATIC (10) and SERO (10) – outperform all others as far as ROI is concerned. The more exchanges an IEO reaches, the greater its prospects of survival.

Failing to list in more than one exchange can be detrimental—limited liquidity, low accessibility/visibility and, in many cases, a slow death. Nobody wants to see their project effectively die before it has even gotten the opportunity to develop any serious momentum. For this reason, blockchain startups must ensure their projects are of good quality in terms of technology and team behind it. A strong community around the project can also go a long way to boosting its credibility.

When adding a project, exchange platforms put their reputation on the line. They want to make sure that the projects they support are believable, and investors can be sure that the platform did its due diligence before launching the initial exchange offering. Exchanges check the product’s whitepaper, screen its team members, and ensure that the project goals are realistic and attainable. They might back out of an IEO at any time before it takes place if they find out anything shady about the project. So make sure your project is viable, convincing, and promising.

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