The future of IPOs is blockchain

Is it possible to improve the traditional ICO by adding best parts of IPO? Let's figure it out
03 November 2017   56106

Nowadays, ICOs became very popular fundraising method. In 2017 amount of funds, raised via Initial Coin Offering is already more than $3B.

Bigger part of modern ICOs has little in common with Initial Public Offerings, or IPOs. Nevertheless, one company believes that ICOs with their innovative use of blockchain technology can replace IPOs, that have unchanged for decades.

The pioneer of online trading, Binary.com decided to perform and ICO instead of IPO as a  more advanced substitute. Binary.com ICO is scheduled for the end of 2017 and it will issue  securities-backed smart tokens tied to the company’s shares.

Binary.com
Binary.com

Let's take a better look at main parts of every traditional IPO an compare them to what  Binary.com is hoping to create through its “IPO on the blockchain.”

Company development stage

The bigger part of tokensales are considered as high-risk investment due to the people running them - young startup projects that need money to put their idea into practice or even individuals with questionable business plans. But an IPO is typically being held by the more mature company with business model, that works for decades and generate profits.

Binary.com is a firm latter camp member. It is a profitable and debt-free company that's been working since 2000. Its financial history and key financial milestones are fully available in the Information Memorandum for its ICO. In the near future, we may see more companies with similar track records to consider ICOs of their own.

Binary.com gross and net profit
Binary.com gross and net profit

Regulations and investor profile

Almost all ICOs are not regulated by a governmental regulator. They rely on self-regulation,  and the onus falls on the company conducting the ICO to decide on the extent of transparency and protection it wishes to provide to prospective investors.

Binary.com ICO advantages
Binary.com ICO advantages

Binary.com has designed its ICO to protect investors by adhering to best practices in corporate governance, investor disclosure, and transparency.

Listing requirements

The IPO performing companies must list its shares on a traditional stock exchanges after the IPO to sell them and provide liquidity to its shareholders.

Ordinary tokensales are not required to list on any exchange to provide liquidity to its shareholders. Nevertheless, Binary.com made an agreement with Lykke.com cryptoasset exchange to list its tokens after the end of ICO. This will allow investors to buy and sell Binary.com tokens, and, as a result, to increase their value. Lykke is a fintech company that’s building a global blockchain-powered marketplace for securities-linked tokens.

Lykke exchange
Lykke exchange

Beneficiaries and transaction costs

ICO gives no fees to beneficiaries, presented in any IPO, such as underwriter and the stock exchange itself. Additionally, when participating in traditional IPO, you will have the trading costs. Even buying a share is not cheap. Typical broker fee is $10 - $50 or a % of the purchase price. If you want to buy a share listed on the oversea exchange, local broker service is very expensive

No middleman
No middleman

And let's compare it to a cost of cryptocurrency transactions –– practically free when you’re trading directly with another person. If you are using the centralized cryptocurrency exchange,  you can expect to 0.1% - 0.3% fees.

Are ICOs are better for investors?

A blockchain-based IPO offers many more advantages, including round-the-clock trading, faster settlement times, international reach, plus an immutable and public audit trail. These cannot be replicated by traditional stock exchanges easily and we may see that Binary.com’s “IPO on the blockchain” is a new wave of financial market development on the blockchain.

Chainlink May Sell Big Amount of Own Tokens

According to the experts' research, $30M worth tokens were sold by the ICO team itself
12 August 2019   360

The Chainlink team was suspected of large-scale liquidation of LINK tokens. For a month and a half, the project capitalization decreased by $ 600 million, Trustnodes reports.

On July 6, a recruitment message was posted on the project’s Twitter page, which, according to some observers, was the beginning of the dump.

We do sincerely appreciate our community’s continued support and understanding as we expand the number of people working on Chainlink, and we will of course do our best to ensure that our expansion plans are accomplished responsibly, carefully managing the company's resources, capital and LINK, with a focus on continuing to create an overall positive effect on the Chainlink network over the long-term.
 

Sergey Nazarov (old message in the company's blog)

Chainlink team

Following this message, a schedule was circulated on social networks showing the alleged token sales of 700,000 LINK at each price rebound after reaching a peak at the end of June.

Alleged Chainlink Dump, Aug 2019
Alleged Chainlink Dump, Aug 2019 

According to Etherscan, 14 transactions of 700,000 LINK were made, which totaled 9.8 million tokens, or about $ 30 million.

After going through a small chain of addresses, these tokens were sold on Binance, noted in Trustnodes.

Chainlink Selling, Aug. 2019
Chainlink Selling, Aug. 2019

Observers believe that at the end of June the daily trading volumes of ChainLink on the Binance exchange were artificially boosted. So, with a capitalization of only $ 1.4 billion, this figure amounted to $ 863 million. According to some, the price movement chart for the mentioned period looks unnatural, especially considering that volumes in favor of sales were recorded on one of the green candles. There is a possibility that the unknown wanted to provoke FOMO, but could not achieve the goal.

Some believe that the message about the expansion of the staff was only an attempt to hide the large-scale liquidation of tokens.

It is worth noting that in 2017 Chainlink raised $ 32 million through the sale of 350 million LINK through an ICO. At the same time, the team saved 650 million LINK for the further development of the project.

According to a recent analysis of the ICO market, Chainlink entered the top five most successful ICOs in terms of growth in bitcoin.