If you have been keeping up with the latest developments in crypto; BTC is only a tip of the iceberg. This year saw the rise of Decentralized Finance (DeFi), which is now a hot topic amongst the crypto community and stakeholders including regulatory authorities.
As of press date, the total value locked (TVL) in DeFi assets stands at $14.11 billion compared to a mere $1 billion at the beginning of 2020.
This burgeoning niche is opening up opportunities to decentralize traditional finance as we know it. In fact, crypto projects can now raise funds through DeFi protocols in what is dubbed as ‘Initial DEX Offering’ (IDO). Such ecosystems have introduced the option to do away with tough restrictions that have previously been a stumbling block to innovations in the crypto space.
While there may be a gradual shift to DeFi, it is an interesting fact that centralized exchanges still run the show when it comes to crowdfunding. One of the most popular avenues is through an exchange Launchpad, which hosts crypto projects looking to offer an Initial Exchange Offering (IEO). This has been touted as the ‘safer’ option from a regulatory and trustworthiness perspective.
Well, that could actually cut given the volatile nature of cryptocurrencies coupled with a complex architecture. Unlike DEXes, centralized exchanges provide both investors and innovators an environment where they can interact based on value proposition as opposed to a speculative arena, which features any smart contract based project.
To get a better insight on the current state and evolution of crowdfunding in crypto, I had an interview with Kiana Shek, the CXO of DigiFinex.
This is a global digital asset exchange that offers varied services which include crypto purchases, spot, margin and derivative trading of these assets. The platform allows users to buy and trade over 200 altcoins round the clock.
Most interestingly, DigiFinex runs its own Launchpad known as ‘Apollo’; this product and other highlights were featured in my discussion with Kiana. Below is the interview excerpt.
Edward Moon: What is your take on the state of crowdfunding and the avenues available for crypto startups?
Kiana Shek: Like other startups, crypto projects also rely majorly on seed funding to get running. Some of the common avenues in today’s marketplace include IEO, STO, ICO, IWO and IDO which has become popular on decentralized exchanges like Uniswap. Currently, ICOs dominate the market with almost $30 billion raised through this avenue together with smart contract crowdfunding.
The DeFi boom has also been a hallmark milestone for the crypto crowdfunding space, hence the rise of IDOs as a means for crypto startups to raise capital. Nonetheless, we have observed that fundamentals such as regulation are at the core of crowdfunding decisions. Governments are now stepping in as well to fine tune the environment for crypto startups to thrive.
For instance, the United States Securities Exchange Commission (SEC) recently revised its crowdfunding capital bar from $1.07 million to $5 million. It also simplified the Security Token Issuance (STO) process, which means that these types of digital assets can be used to raise funds in the U.S at a lower risk capital.
Edward Moon: What is the Comparison between IDO and IEO? Does the growth of the former threaten the value proposition of IEOs?
Kiana Shek: In comparison to IEO, IDO is another good avenue for crypto projects to cold boot. IDO’s can gain traction and attention within a short period and rely on market dynamics to derive the value of a given token; this crowdfunding method leverages tokens to reward DeFi projects with liquidity. Basically, IDO’s have opened up the crypto crowdfunding scene by lowering minimum thresholds. IEO’s on the other hand are circulated and withdrawn through centralized exchanges compared to IDO’s, which list through the market and leverage DEXes for circulation and withdrawal.
As for the value proposition, it is clear that IDO’s have largely benefited from the growth of DeFi this year. Nonetheless, the relationship between this decentralized crypto crowdfunding method and IEOs is beneficial to both parties. The two have a common goal of moving the world from traditional forms of currency into digital currencies. With IDO’s still at the early stages, IEO’s continue to hold fort as the mainstream avenue for raising funds through token issuance.
Edward Moon: It is my understanding that DigiFinex has an in-house Launchpad dubbed Apollo. Can you shed more light about this service?
Kiana Shek: The DigiFinex Apollo Launchpad is built to provide a one-stop listing service that features high-quality crypto projects across the world including our native token ‘DFT’. Apart from raising funds, the Apollo Launchpad also assists projects with integrated marketing and branding in order to gain attention faster. Basically, this initiative aims to incubate potential crypto projects through DigiFinex resources as part of contributing to the whole crypto ecosystem growth.
Edward Moon: How many projects have benefitted from the Apollo Launchpad and what has been the success rate?
Kiana Shek: So far, we have launched sixteen successful projects with each achieving the predetermined fund-raising thresholds. Above all, we have steered the Apollo initiative towards supporting these projects in order to achieve other fundamental metrics such as media & PR exposure, number of users and investors.
Edward Moon: What is the criteria for listing Crypto startups on the Apollo Launchpad?
Kiana Shek: DigiFinex only picks high-quality crypto or blockchain projects to be featured in our IEO Launchpad. Most importantly, we focus on security and hence abide by a strict review process before launching any project. Some of the things that our team considers include the background of the project team, media reports, private placement & circulation, regulation status, project planning application data and active community users.
Through our commitment to provide a fair and transparent trading ecosystem, we monitor all projects that are listed through our risk control system. We also have a strict delisting mechanism which seeks to protect the interest of DigiFinex users while balancing the ecological composition of the digital asset market. Our AMA is another avenue where users can complement the projects; we have had the opportunity to host prominent figures who include Roger Ver from BCH, and CEOs from Australian Securities exchange and Simplex.
Edward Moon: DigiFinex recently boarded HollyGold as the latest Apollo Launchpad beneficiary. Can you expound more on this project?
Kiana Shek: Definitely. HollyGold (HGOLD) is the 16th Apollo Launchpad project; it was co-founded by Kevin Robl, the famous Hollywood investment financier, and Dior Wu, the Taiwanese blockchain entrepreneur. HollyGold is also the strategic partner of Hollywood production media houses Production Capital and Base FX. The team has produced over 1,600 films in collaboration with film industry professionals, some of which have won Oscars and Emmy awards while a ton are blockbusters. Kevin Robl and Base FX vice president Poli Liang have led HollyGold to leverage multiple Hollywood resources by signing cooperation agreements. These span from exhibitions, application scenarios, circulation, copyright, post-production and investment.
Dior Wu who is the blockchain face at HollyGold believes and practices chain reform. He has innovated smart vending machines and encrypted digital currency cards to be used in the entertainment industry.
The HGOLD patented technology seeks to maximize blockchain utility at the production and distribution levels of the film industry as part of transforming Hollywood’s film ecology. Its multi-purpose digital currency HGOLD is designed for both the television and film ecosystem.
The sale of HGOLD encryption cards via smart vending machines provides an avenue for more retailers/small scale investors to participate in the film industry and reap benefits as well.
Just recently, HollyGold took part in the production of upcoming Hollywood blockbusters that include ‘Recharge’, produced by Keanu Reeves and the ‘Fast & Furious’ screenwriter; Lord of the West and Willy’s Wonderland starring Nicholas Cage. Also, HGOLD sponsors Hollywood local landmark restaurant Sugar Factory and the TCL Chinese Theater.
Edward Moon: I believe that HollyGold is the latest attempt to interlink crypto and the buzzing entertainment scene in Hollywood. How is HollyGold different from the previous players that have tried out a similar debut?
Kiana Shek: There have been a couple of blockchain and crypto innovations before HollyGold that tried to disrupt Hollywood’s entertainment market. However, there have been no successful cases until HollyGold. This innovation was founded with the backing of Hollywood resources to scale on a global level. In addition, its debut coincided with the COVID-19 that has since accelerated the shift to virtual ecosystems.
Additionally, HollyGold can leverage its patented blockchain technology to facilitate cross-border operations with various industries. In fact, the HGOLD digital currency has successfully been used to purchase Jeff Koons famous Balloon Dog artwork.
Other prospects that have shown interest in the HGOLD digital currency include the 2021 global Marvel Animation Exhibition and Wolfe Air, the professional tracking photography firm based in Hollywood. HollyGold has created a blue ocean digital currency for television and film, and we see great potential in the project.
Edward Moon: How can interested Investors maximize on this particular innovation and what are the perks for active participation in the ongoing HGOLD funding campaign?
Kiana Shek: HGOLD token sale participants on DigiFinex get to purchase the digital currency at significant discounts. The subscription price of this project ranged between 2 USDT and 2.7 USDT while its private sale price was 3.2 USDT. Over 5.6 k investors participated in the initial token sale, raising around $ 4 million. Those who missed out can always purchase the HGOLD token on DigiFinex, where it is listed exclusively.
Edward Moon: Recent developments revealed that the Securities Exchange Commission (SCM) in Malaysia has moved to enact IEO guidelines and regulations. Do you think other jurisdictions will copy this move?
Kiana Shek: The SCM outlined that oversight on IEOs is meant to promote ‘responsible innovation in the field of digital assets while managing emerging risks and safeguarding the interests of issuers and investors’.
With the crypto industry still at its nascent stages, I think the move by SCM is good for investors and exchanges in terms of promoting sound development in this space. For starters, this sets ground for crypto issuance under regulated environments which means that norms could soon be established across the industry. Also, both issuers and investors' interests are protected while curbing illegal activities such as money-laundering and terror-financing. I am optimistic that other jurisdictions will issue similar policies in the near future.
Edward Moon: What would be the implication of imposing more regulations on the IEO market?
Kiana Shek: Implementing compliance policies could be the much needed catalyst for medium-sized companies to pursue funding through IEOs. Overall, I think it would be beneficial for the long-term sustainability of the crypto industry.
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