The cryptocurrency world was a consistent trend, but it’s no longer about market caps and price changes. Initially, initial coin offerings (ICO) defined this industry. They surged in growth in a relatively short period back in 2017. However, they’re declining due to several scams and rug pulls. Instead, startups and investors are now opting for initial exchange offerings (IEO).
With CEOs, developers bring up their tokens with an existing crypto exchange and use an already-established user base. As a result, investors can gain more confidence, and the chances of fraud are reduced, simplifying some regulatory requirements. Since they use crypto exchange platforms as a third party, they’re safer than ICOs.
Despite IEOs’ perks, there are some things to consider before investing in them to reduce and even avoid the risks ahead. Here are some things you should do when evaluating IEO campaigns.
Run a Background Check
Know everything you should know about the team and its market potential. Find out if the advisory board and development team members have relevant experiences. Having reliable experiences is a good advantage in case some bad things happen.
More importantly, analyze the whole plan of an IEO campaign since every campaign has different aims. Probe the campaign’s whitepaper to figure out their problems, solutions they provide, and the possibility that they can break through.
Comparing a project to another project is a must as well. Cover all the bases. Dope out the cons and pros of those similar projects. Determine which campaign is better and worse. After doing these things, you’ll know the ropes when choosing IEO projects.
Identify Clear-Cut and Scam-Free Campaigns
Having clear-cut and measurable goals is the aspect that an IEO campaign should have. When you check CEOs, make sure you can immediately pinpoint their objectives. If not, there’s a big possibility that they don’t have one and might deceive investors.
In addition, don’t immediately give developers the benefit of the doubt. Be keen always. If your developers or partners aren’t giving you clear answers, communicating poorly, changing their stories, or being economical with the truth, You shouldn’t trust them. It is especially true if you’ve taken out a pledged loan to fund these campaigns. But what is a pledged loan meaning?
A pledged loan is a type of loan in which the borrower will pledge their assets as collateral. This type of loan falls under the secured loan category.
Immediately presenting project development and even overcoming issues is one of the ways to attract potential investors.
Indulge in Social Communities
Knowing something from other experienced people can also aid you in evaluating projects. Start by browsing digital communities or forums that let investors share their ideas or raise questions.
Social media platforms can also be a source of information. However, it’s important to note that not everything is reliable. Bounty threads can be seen everywhere on these platforms. It would help if you were skeptical about these threads since they usually sugarcoat projects and are mainly done to increase media coverage.
Mind the Market Adoption Process
Expect possible changes in the future of the cryptocurrency market. There might be another kind of technology that’ll be a hit too, which can slowly replace other tangible systems, just as blockchain and other related terms suddenly emerged.
In this sense, many think it would be better if an IEO project not only aims to change technology but also enhances how people connect with the world. This ideal would instead continue to improve and then be gone.
Further, it’s expected that some projects might either fail or succeed in a market adoption process in IEOs. There are negative factors that can leave a substantial negative impact on some ISO projects, such as being too far ahead of the time of the project or other technical stuff like financial issues and technical constraints.
On the other hand, many project teams created cryptocurrencies, which, even being ambitious, continuously succeeded until they gained market adoption. These tokens can eventually increase in price value. The bottom line is you need to stay tuned to the market adoption changes.
Learn about the Exchanges Offering the IEO
Look for crypto exchanges offering IEO projects that you want to invest in. Always opt for the safer ones. Since they’re only open to the exchange’s registered members, they need to make an account on them.
Here are some things you need to keep in mind:
- Different platforms have different requirements, so always check the exchanges’ registration process;
- There’s a need to complete the KYC/AML process if you want to register to the exchange platform; and
- The process can be time-intensive, so sign up a few days before the IEO launch.
After registering to the exchange platform, check the accepted currencies out and fund your account to purchase IEO tokens. Also, know the amount that belongs to the investors and the token percentage assigned to the issuers. If the token issuers get most of the funds, that’s a red flag. It’s essential to learn about IEO Tokenomics, mainly how IEO tokens are distributed.
Final Thoughts
Mind that any investment is a war field. As an investor, you’re a fighter who should always be dubious of possible harm in your surroundings. It’s necessary to be always prepared and know the different ways to attenuate the chances of being ripped off.
