Co-founder at Raven Protocol • Investor at Deep Ventures • Author at Forbes • Editor at GoodAudience
Spoiler: We are pushing the industry forward and want to engage the community to do so. Read through all the way to the bottom of this article and share how you think blockchain fundraising, IEOs, or ICOs could be improved. We’ll reward you with 100 RAVEN tokens.
As a founder (Raven Protocol), investor, and author in the crypto and blockchain space, I get to see every single advancement in the industry. It always amazes me how the crypto community can push things forward.
We went from public ICOs, to pre-sales, private sales, seed rounds, strategic partner rounds, a deep bear market (crypto winter passed by fast but it sure felt long while we were living in it), to launchpads, to IEOs, and everything in-between. The crypto community is a creative bunch.
Blockchain fundraising has enabled incredible technology to be built that otherwise would have never been possible. Talent is equally distributed, but opportunity is not. The blockchain industry has put the entire world on a level playing field.
It’s incredibly hard to say what’s next. The rush into IEOs by all exchanges seem to be working. Projects are able to raise funds and that’s great. Investors are able get a nice profit on their investment.
While this is a healthy evolution from ICOs (exchanges are doing a ton of DD on projects before they will launch an IEO), it feels like the the rush into ICOs again. Investors are jumping into the FOMO and the hype in search of the next IEO announcement. Projects are trying to capitalize on this and whipping out whitepapers again.
Will this be sustainable? Who knows. There needs to be strong incentives put in place to prevent downward sell pressure that destroys the prices of a project’s tokens. It’s really hard to recover from that. The profits are great in the short-term, but every person involved (founders, investors, exchanges) needs to think hard about building the crypto ecosystem for the long-term.
Let’s have a look at how different organizations are approaching the next evolution of blockchain fundraising.
Binance kickstarted this whole IEO craze with their Launchpad. They’ve only completed four thus far. While they probably have a pipeline of hundreds of projects, I’m glad they are taking things slowly but surely. That’s the right move for the industry.
A few hours ago, CZ (not giving crypto away) tweeted me a suggested plan for how a new project could leverage the entire Binance stack. It’s kind of incredible how they have so many ways to help projects at each stage.
@SHERM8N @binance @Binance_DEX Suggested plan: - idea - raise BNB from private investors (including @BinanceLabs) - build product/prototype, get users - raise more BNB via Launchpad - launch token on @Binance_DEX - get listed on DEX - and then get listed on https://t.co/9rMMAmtCxH - expand #crypto ecosystem
Most recently they launched Binance Chain and the DEX. Mithril took a big leap of faith being the first project to migrate to the chain and first to be listed on the Binance DEX. Congrats to both teams on the success.
On the surface, it may seem like Binance DEX is another low volume DEX. But remember Michael Arrington has said CZ plays 4D chess. I don’t disagree. If his suggested plan in the tweet above plays out, Binance will enable more companies to be created than ever before.
The DEX is where the community decides what up and coming projects should be listed. If projects prove themselves, they can go to the big leagues of Binance.com.
Bitmax is an up and coming exchange with an interesting approach. They leverage in-depth traditional finance expertise. Co-founder Ariel Ling came from almost 20 years on Wall Street. She claims to be not “innovative” which I found funny since they are so well known for their customer service and growing fast. They are taking what has worked in traditional finance to improve the overall crypto trading and exchange market structure for better efficiency and transparency.
The CEO, George Cao, did his PhD in Computer Science. Being an engineer and understanding machine learning is probably why we got along and were morally aligned with the long-term health of the industry. We had a very interesting chat on how Bitmax partners with projects.
They seem to treat relationships carefully. Perhaps even like family. Collaborating closely together on the token structure, economics, and even marketing is important to support the price of the token long-term. If you wanna learn a bit more about Bitmax, check out their interview with my buddy Blockchain Brad. It’s really good and of course Brad is interested in doing what’s best for the industry long-term too.
Now let’s take a look at it from a top project’s perspective. ThunderCore raised privately in 2018. It wasn’t a small amount either. According to Venture Beat, they raised $50M from top tier funds. They stayed heads down and built though the bear market. In 2019, they released their Mainnet.
A project of this caliber can go straight to listing on an exchange with no problems. That is why I was kind of surprised that ThunderCore decided to do an IEO with Huobi Prime Lite.
“We wanted a partner that puts the customer first, has inspired integrity, and truly believed in the promise and potential of ThunderCore. That’s why we chose Huobi Prime Lite as an exchange listing partner.”
— Peter Abilla, VP of Growth and Business Development
After speaking with the team, it’s clear it wasn’t about raising funds. They already raised $50M. ThunderCore sought out a true partner that believed in helping the project long-term. And for that to happen, they needed someone who believed in the potential of the team and the technology 5 years down the line.
Another project that raised privately in 2018, stayed heads down building, and now doing an IEO is Ocean Protocol. AI + Blockchain is my jam and what they are working is huge. Finding AI training data is never-ending problem in the AI/ML industry.
At Raven Protocol, we’re supporters of Bruce Pon and Trent McConaghy as they are rare world-class founders. They’re both supporters of Raven too (datasets on Ocean are a perfect fit to perform AI training with Raven).
But the reason the team is world-class is simple. During the peak of the bubble in January 2018, they refused to allow their tokens to be in the hands of flippers or any short-term thinkers. Their roadmap and timeline reflected that. In fact, they were upfront that you would be waiting until Q2 2019 before any type of token launch. This automatically meant only true believers of the project invested and they were oversubscribed.
Ocean also could have gone straight to listing on an exchange. But they know from an exposure perspective, an IEO is a powerful thing. Now, in partnership with Bittrex, they ensure their tokens will be in the hands of many people all over the world.
During the great bear market, many crypto funds died. The majority of those that survived, moved to investing in projects for equity only. Some even did some double dipping receiving equity and tokens 1:1.
A handful of crypto funds remained confident and bullish on token networks. Moonchain Capital, Tel-a-viv Capital, and Cluster Capital are a few off the top of my head that never gave up on tokens.
In fact, during that time they accumulated even more tokens in projects that truly believed in for cheap. I have full conviction that if they HODL for 5 years, they will have the happiest LPs in the world. Full Disclosure: those crypto funds invested in Raven during the bear market. So hit them up if you are fundraising. They’re solid.
We're super excited to announce our latest investment in @raven_protocol! A truly amazing project run by AI superstars ⭐️💫✨ "Overnight Success: Raven Protocol Q1 2019 Update" by @raven_protocol https://t.co/RAZnSC551q
In terms of IEOs, they see it as a stepping stone for exposure. Moonchain believes that projects should be doing what is best for the project in the long-term. Don’t just hop on an exchange that will launch your IEO with a bunch of dumpers. Figure out how that exchange will help you reach token HODLERS.
Exchanges still hold a ton of power. They are the gatekeepers to IEOs. And because of that blockchain fundraising has moved towards centralization. We are taking a step backwards. From public ICOs (decentralized) to IEOs (centralized).
But I get it. Decentralized ICOs brought out a lot of bad actors and exit scams. Sometimes we need to take a few steps back to take a few steps forward. If we slowly evolve from a centralized IEOs to another form of decentralized blockchain fundraising, we may just build a healthy crypto ecosystem that will benefit humanity in ways we could never imagine.
We need a method of blockchain fundraising that protects all three parties involved:
(Medium responses count too!)
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