Gate ruined IEO?
The IEO of Gate Exchange is one of the recent exchange trends that have attracted more attention. First, the platform token GT was issued, and then the first IEO project CNNS was launched, followed by the three projects DREP, FACTS and MovieBloc. The first project, CNNS, rose sharply after opening, and then fell rapidly in a short period of time, and investors in the secondary market suffered large losses. Looking at the K-line charts of various IEO projects in the market, it can be seen that most of the projects had a large increase when they first went online on the exchange, and then fell all the way. But Gate has become one of the most controversial IEO exchanges, and the reasons are worth exploring. The following will analyze the performance of the Gate IEO project and the reasons behind it.
Is the Gate IEO project making money?
1. CNNS, the first IEO project of Gate IEO, rose about 9 times at the opening. The current prices of CNNS and DREP are still above the IEO price, and investors in the primary market can obtain higher returns
Figure 1 IEO projects of some exchanges
Note: The current price in the picture is the closing price on May 8, and the historical lowest price statistics are as of May 9. The data in the picture are all from the official website of the exchange
As shown in Figure 1, the historical highest prices of IEO projects on mainstream exchanges such as Binance, Huobi, OKEX, and Gate have increased significantly compared with their IEO prices. Among them, Huobi TOP, OKEX Block Cloud, Binance BitTorrent, and Gate CNNS went online and rose 27 times, 17 times, 10 times and 9 times respectively. Except for FACTS and MovieBloc, the current prices of most projects are still above the IEO price. Among the 4 IEO projects of Gate, the current prices of CNNS and DREP are still above the IEO price; among them, CNNS rose more than 9 times on the first day of opening, but its historical lowest price fell nearly 11 times compared to the highest price.
2. According to K-line trends and data, the lowest prices of the four projects launched by Gate are all lower than the IEO sales price, and they are in a state of breaking; the first project CNNS has experienced the highest increase on the first day of opening and has fallen all the way, and there has been almost no rebound since then , investors in the secondary market suffered heavy losses
As shown in Figure 2, according to the representative IEO initial projects of the four exchanges, the Huobi TOP project skyrocketed 27 times on the day it was launched, and then rose for 5 consecutive days after the rapid decline. The Binance BTT project rose to the highest price 6 days after its opening, and then fell slowly. Gate launched CNNS project rose more than 9 times at the beginning of its launch, but fell rapidly on the same day. According to the data, the historical lowest prices of the four projects launched by Gate are all lower than the IEO sales prices, among which MovieBloc has the largest drop.
Figure 2 K-line trend of the exchange’s first IEO project
To sum up, compared with the top three exchanges, Gate’s first IEO project also had a large increase when it was first launched on the exchange, and the current price is maintained around the IEO price, so it is the primary market for participating in Gate IEO token sales Investors can still get higher returns. In contrast, the four projects launched by Gate are in a broken state compared to the lowest price in history. The initial project CNNS ushered in the highest increase on the first day of the opening and then fell all the way. After that, it hardly rebounded. The secondary market investors who participated in the project lost more Heavy. It can be seen that the main reason for the controversy over the CNNS project is that the price has skyrocketed and plummeted since its launch, and investors who chased up and bought in the secondary market suffered serious losses.
behind the slump
Generally speaking, the rise of the currency price is proportional to the difference between the amount of buying funds and the amount of selling funds. When the amount of buying is greater than the amount of selling, the price of the currency rises. For IEO projects, the main factors affecting the buying and selling volumes are: the number of exchange users or the number of active users participating in IEO projects, user market sentiment, high-quality projects, and appropriate risk control behaviors.
Gate, as a 6-year-old established exchange, has attracted a large number of users in the early stage with its market strategy of not charging listing fees; CNNS and DREP are also very popular in the subscription stage, so the four projects launched There are mainly the following reasons for the high opening and low going:
1. The frequency of project launch is fast, and the strategic preparation is insufficient
Binance and Huobi launch an IEO project on average every month; OKEX jumpstart currently only launches Block Cloud; and Gate launches an IEO project every three or four days, and the project launch frequency is relatively high.
In this way, on the one hand, the early publicity of the new project is not enough, users do not understand the value of the project, participating in IEO is only out of the consensus that they can make money by grabbing it, and the secondary market has insufficient motivation to buy. In addition to CNNS, which has a strong pre-publicity for the Gate launch project, the promotion of the other three projects is insufficient. On the other hand, Gate did not allow enough time to adjust its strategy after its first IEO project, CNNS, launched three other projects in a row.
2. The performance of the project after it goes online is determined by market forces
Judging from the K-line trend, CNNS and other projects have no obvious protection behavior in the secondary market, and the performance of projects after they go online is more determined by market forces. The purpose of IEO investors' participation is mainly to make a profit and exit in the primary market. Therefore, the secondary market without risk control behavior has high risks. The performance of the project after it goes online is determined by the free market or there must be appropriate risk control behaviors. These are worthy of careful consideration by IEO rule designers.
On the whole, transactions need to carefully design the IEO mechanism, balance the interests of the exchange, project parties and users, and protect their users from losses.
Outlook for the IEO market
Gate IEO projects open high and go low, and the skyrocketing and plummeting is not an industry exception. At present, IEO projects on many exchanges have broken. In the long run, IEO breaking projects will gradually increase, and the money-making effect cannot be sustained.
1. Signs of breakout: Exchanges such as Binance, Huobi, OKEX, and Gate are the first IEO projects with the highest growth rate. The performance of follow-up projects is not as good as that of the first project, and the profit-making effect is getting smaller and smaller. In addition, most of the projects had a big increase when they first went online on the exchange, and then fell all the way.
2. Limited high-quality projects: The core of the IEO model is to provide investors with high-quality projects. Currently in a bear market, high-quality asset resources are limited, and as more and more exchanges launch IEOs, the high-quality projects that can be provided to investors are very limited.
3. Limited entry funds: The vast majority of users participating in IEO projects are not optimistic about the project itself, but only recognize the IEO mechanism, thinking that the project party and the exchange will pull the market. But the emergence of breaking projects has broken this consensus. The decrease in the profit-making effect and the increase in broken items will affect the enthusiasm of users to enter the market.
