Token Sale Models Keep Evolving

July 19, 2019

Token Sale Models Keep Evolving: Polkadot and CoinFLEX Ignore ICO and Go for the First-Ever IFO

The rising cryptocurrency prices are sparked a new interest in digital tokens around the world. The situation now is actually quite similar to the one in 2016 and 2017, when ICOs reached the height of their popularity. However, once 2018 arrived, their popularity started to waver. Not only was the harshest crypto winter in the sector's history beginning to rise, but the sheer number of scams discouraged investors from participating. Not to mention the regulatory crackdown, and the US SEC's announcement that most tokens are, in fact, securities.

With ICOs dying out, the world moved on to new token sale models, such as STOs, which were considered safer due to the fact that they are not based on trust, and are mostly regulated by securities regulations. Then, with the start of 2019, IEOs started gaining attention, as the investors could simply invest in tokens that their trusted exchanges deemed safe and worthy of their support. The trend was started by Binance and its Binance Launchpad, but countless other exchanges soon followed, and IEOs grew.

Now, the situation is once again changing with the crypto futures exchange CoinFLEX holding the first-ever IFO (Initial Futures Offering). The new form of token sale will be held today, and it will see the sale of Polkadot's DOT token. CoinFLEX's CEO, Mark Lamb, commented on the move, saying that this was the first time that the exchange has created a futures market for a coin that does not even exist yet. Furthermore, the asset's price was also already predetermined.

The first-ever IFO

The IFO was scheduled to take place on today, July 17th. The pre-registration for those interested in buying the token started two days ago, on Monday, July 15th. The token's price will be available for pre-registered investors at a discount, for $75 per 1 DOT.

In order to participate in the futures offering, investors will first have to buy CoinFLEX's FLEX token. This is not a new practice, as it was one of the main characteristics of IEOs, which are token sales held on exchanges, where investors can only purchase tokens in exchange for the specific exchange's native coin. This trend was also started with Binance, which only sells tokens in exchange for its own BNB.

CoinFLEX launched its FLEX token earlier in July, and the token has pretty much the same use cases within the exchange as BNB within Binance. In other words, it provides certain benefits, such as lower exchange fees, as well as access to opportunities such as the current IFO.

It is estimated that around 300 FLEX token holders will be able to access DOT during the IFO, and purchase it at a discount. One trader shared his opinion by stating that $75 is the OTC rate for DOT, since the token has yet to see its launch. He added that, if Polkadot must reach its targeted $1.2 billion valuations, then each DOT will have to reach $100 in terms of price.

Mark Lamb also added that the futures contracts would expire around four weeks after DOT sees its launch.

How will the market react?

Of course, CoinFLEX has quite a bit of experience when it comes to futures contracts. It launched four futures contracts for Bitcoin and Ethereum only a few months ago, in April. Back then. Lamb stated that the futures exchange has additional plans for the future, which will include additional coins, where he mentioned TRON and Binance Coin, which are expected to arrive by the end of summer.

However, the situation regarding DOT is clearly different. Most other futures contracts are centered around live assets, with Bitcoin being the best example of this. With the current development, it would be rather interesting to see the market's reaction for futures contracts associated with pre-launched digital assets.

Emmanuel Alamu, the head of business development at CoinFLEX, also commented, stating that physically settled futures contracts are usually less risky when compared to the cash-settled ones. He added that IFOs are a good, innovative method of developing and discovering the market price of the assets. The exchange can also handle dual margining and apply rules that would ensure that all IFO trade participants will deliver on their part.

Author: Ali Raza for

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