Abstract: In this piece we present data on a relatively new phenomenon, Initial Exchange Offerings (IEOs). The ICO market is down around 97% in Q1 2019 (YoY), based on the amount of capital raised. In this relatively challenging climate to raise funds, some projects have changed the “C” in ICO to an “E”, perhaps in an attempt to assist with raising capital. At least for now, to some extent, this appears to be working, with almost $40m having been raised so far this year. However, we remain sceptical about the prospects for long term investors.
Overview
We consider an Initial Exchange Offering (IEO) as the issuance and sale of a token based on public-private key cryptography, where participation in the issuance occurs exclusively through one trading platform or exchange. This piece provides a basic overview of the largest IEOs and tracks various IEO token metrics, including investment performance.
ICO market
First we briefly look at the ICO market. As the following chart indicates, the market has dried up following a massive boom in 2017 & 2018.
Funds raised by ICOs – US$M
Source: BitMEX Research, icodata.io
Notes: Data as at 25 April 2019
As the below chart illustrates, the investment returns of the 2018 ICOs has been poor, many of the projects are down around 80% from the ICO price, if the coin even trades at all. Peak to trough, project token prices typically declined much further than this.
Top ten ICOs by funds raised in 2018 – Investment performance data
| ICO Name | Funds raised – US$m | Return based on average ICO price |
| EOS | 4,234 | (4%) |
| Telegram | 1,700 | Coin not listed |
| Dfinity | 195 | Coin not listed |
| Bankera | 150 | (87%) |
| t0 | 134 | Coin not listed |
| Basis | 125 | Returned capital to investors |
| Orbs | 118 | (64%) |
| PumaPay | 117 | (93%) |
| Jet8 | 33 | (99%) |
| Unikoin Gold | 32 | (88%) |
Source: BitMEX Research, tokendata.io
Notes: Data as at 25 April 2019
Changing a “C” into an “E” – The IEO market
Perhaps in an attempt to address some of the concerns about the poor investment returns and the lower levels of enthusiasm for ICOs, IEOs appear to have gained in popularity. Below is a list of the major IEOs and the main exchange platforms involved.
List of IEO token sales
| Coin | IEO Date | IEO issue amount vs total coin supply | Return vs first exchange trade price | Return vs IEO price | US$m raised in IEO |
| Binance | |||||
| Gifto | 21/12/2017 | 3.0% | (90.5%) | 142.2% | 0.4 |
| Bread | 26/12/2017 | 7.9% | (84.2%) | 164.6% | 0.8 |
| Fetch.AI | 02/03/2019 | 6.0% | (55.0%) | 203.6% | 4.1 |
| BitTorrent | 03/02/2019 | 6.0% | 54.8% | 433.9% | 7.5 |
| Celer | 24/03/2019 | 6.0% | (29.4%) | 82.0% | 4.5 |
| Matic | 24/04/2019 | 19.0% | Ongoing | ||
| Binance Total | 17.3 | ||||
| Huobi | |||||
| TOP | 26/03/2019 | 7.5% | 10.2% | 357.0% | 3.3 |
| Newton | 16/04/2019 | 2.0% | (23.0%) | 197.0% | 4.8 |
| Huobi Total | 8.1 | ||||
| Bittrex | |||||
| VeriBlock | 02/04/2019 | 3.3% | (30.9%) | (33.0%) | 7.0 |
| RAID | Canceled | ||||
| OKEX | |||||
| Blockcloud | 10/04/2019 | 5.0% | (43.1%) | 599.7% | 2.5 |
| BitMax | |||||
| Dos Network | 11/04/2019 | 14.2% | (55.1%) | 74.2% | 1.7 |
| Kucoin | |||||
| MultiVAC | 03/04/2019 | 6.0% | (30.5%) | 20.0% | 3.6 |
Source: BitMEX Research, IEO Launchpad websites, Coinmarketcap
Notes: Data as at 25 April 2019
The number of IEOs taking place has intensified in recent months, as the model is proving somewhat successful. Smaller exchange platforms are attempting to replicate the model, as the long list of IEOs below illustrates.
Other IEOs with limited data available
| Coin | IEO Date | Platform |
| Coin Analyst | 07/07/2018 | Exmarkets |
| SID Token | 15/11/2018 | Exmarkets |
| Rebglo | 01/12/2018 | Coineal |
| Aerum | 01/01/2019 | Exmarkets |
| TerraGreen | 21/01/2019 | Exmarkets |
| Verasity | 01/03/2019 | Probit |
| Percival | 05/03/2019 | Coineal |
| Decimated | 06/03/2019 | Exmarkets |
| Menapay | 15/03/2019 | Exmarkets |
| Linix | 16/03/2019 | Probit |
| Levolution | 18/03/2019 | Coineal |
| WeGen | 18/03/2019 | Probit |
| Spin Protocol | 19/03/2019 | Probit |
| CharS | 20/03/2019 | Probit |
| Windhan Energy | 21/03/2019 | Exmarkets |
| HUNT | 23/03/2019 | Probit |
| KIZUNA GLOBAL TOKEN | 25/03/2019 | Coineal |
| PUBLISH | 26/03/2019 | Probit |
| ZeroBank | 31/03/2019 | Coineal |
| REDi | 03/04/2019 | Probit |
| VenusEnergy | 04/04/2019 | Exmarkets |
| Bit Agro | 05/04/2019 | Exmarkets |
| XCon | 06/04/2019 | Coineal |
| YellowBetter | 08/04/2019 | Bitker |
| Link by BlockMason | 09/04/2019 | BW |
| GTEX Gaming Platform | 12/04/2019 | Coineal |
| AlienCloud | 16/04/2019 | IDAX |
| Evedo | 16/04/2019 | Bitforex |
| PantheonX | 18/04/2019 | BW |
| NUVO | 19/04/2019 | Probit |
| Grabity | 19/04/2019 | BW |
| Farm2Kitchen | 22/04/2019 | Exmarkets |
| Cryptobuyer | 23/04/2019 | Coineal |
| Airsave Travel | 01/05/2019 | Exmarkets |
Source: BitMEX Research, IEO Launchpad websites
With respect to all but one of the tokens, investors have earned strong positive returns based on the IEO price. However, after the tokens begin trading, the investment returns have typically been poor. This is illustrated by the below chart, which rebases the token price to the IEO issuance price.
IEO Investment performance since launch (IEOs in 2019)
Source: BitMEX Research, IEO Launchpad websites, Coinmarketcap
Notes: Data as at 25 April 2019
US$38.9m has been raised so far by IEOs in 2019 (up to 25th April). Binance has been the most prolific IEO platform by a considerable margin.
Top exchange platforms by IEO funds raised – US$m
Source: BitMEX Research, IEO Launchpad websites, Coinmarketcap
Notes: Data as at 25 April 2019
The proceeds from IEOs can be relatively small, however on average only 4.4% of the total token supply is made available in the sale. Therefore, there are opportunities for project teams to make considerable profits from selling coins they granted to themselves. The 2019 IEOs were priced at a level which implies a total market capitalisation of US$907.7m, based on the disclosed total token supply.
Top exchange platforms by IEO token market capitalisation at IEO price – US$m
Source: BitMEX Research, IEO Launchpad websites, Coinmarketcap
Notes: Data as at 25 April 2019
Conclusion
While exchanges, traders & subscribers may have done very well from IEOs thus far, we are less confident on the outlook for long term investors. However, this is simply a high level analysis – we have not looked into any of the individual projects in detail.
Disclaimer
Any views expressed on BitMEX Research reports are the personal views of the authors. BitMEX (or any affiliated entity) has not been involved in producing this report and the views contained in the report may differ from the views or opinions of BitMEX.
The information and data herein have been obtained from sources we believe to be reliable. Such information has not been verified and we make no representation or warranty as to its accuracy, completeness or correctness. Any opinions or estimates herein reflect the judgment of the authors of the report at the date of this communication and are subject to change at any time without notice. BitMEX will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents.
If we have made any errors in relation to particular projects, we apologise and are happy to correct the data as soon as possible.