Why is Secondary Market an Important Part after Fundraising Completion for IEO Projects

 

Do you know how important secondary market is for your IEO project? If you think an IEO project is over after the fundraising is completed, you are utterly wrong. 

An IEO project goes through several stages. The last stage is called Post IEO stage. This stage takes places after the tokens are sold and listed. In this stage the tokens are listed and traded in the secondary market.

Many token issuers often ignore this part of IEO. It is one of the main reason why IEO projects fail. But if you approach professional companies for IEO Development Services. They will help you to take advantage of the secondary market as well. 

In this post we are going to educate you about secondary market and show you how it is an important part after fundraising is completed. But before we need to understand what exactly is a secondary market and how it works. So let’s begin.

Secondary Market

It is a platform where tokens are traded. After the IEO is launched, the tokens are first sold. And once the funds are raised, the tokens are listed on exchanges. 

Exchanges function as a link between the investors and the token issuers. Once the token issuers distribute tokens through exchanges, they are traded in the secondary market.

In this market, the trade of tokens takes place between investors rather than token issuers. The investors buy and sell the tokens among themselves on the exchanges. There is no involvement of token issuers here. It is more or less like shares that are traded between investors in the secondary market.

How secondary market works?

The secondary market in IEO works the same as it does for trading shares. It can be explained easily by comparing it with stock market. So if a company wants to raise funds through fiat currency, they start an IPO. 

In an IPO the company sell the shares to the investors directly. After the funds are raised, the shares are traded in the stock market (secondary market). Here there is no involvement of the company. The shares are traded between investors. The investors use the price difference in shares to earn profit. The shares are bought and sold through middleman called brokers.

Similarly, in an IEO the company issues tokens instead of shares to raise money. These tokens are first sold to investors directly. Once the funds are raised, the tokens are listed on exchanges for investors to trade. Now the investors can buy and sell the tokens among themselves with the help of a middleman called exchanges. 

The investors use the price difference in tokens to earn profit. This is how tokens are bought and sold in the secondary market without any involvement of the issuing company.

Example

Let’s understand how secondary market functions for an IEO with the help of an example.

Company A wants to raise funds through an IEO. They approach Exchange B to sell and list their tokens. The IEO is then launched and tokens are sold. 

Once the funds are raised, the tokens are listed on Exchange B. Now investors who have purchased the tokens can sell their tokens through exchanges among themselves. Investors C can sell the token to Investor D at a price difference to earn profit from the sale. 

This process keeps going on. It will help your IEO project to remain in the business and the market for a long time and enjoy continued success.

This is how secondary market helps the investors to trade the tokens within themselves.

Fundraising and secondary market

Fundraising and secondary market goes hand in hand. Without fundraising there won’t be any secondary market. Fundraising is known as primary market.

The tokens are first issued in fundraising or primary market. The already issued tokens are then traded in the secondary market.

In fundraising, the investors directly purchase the tokens from the issuing company. In secondary market, the investors purchase the tokens from other investors.

During fundraising the token price remains the same. In secondary market, the token price keeps on fluctuating.

In fundraising, the funds are raised for the issuing company. In secondary market the trading of tokens generate profit for the investors.

Fundraising is done only once. In secondary market tokens are traded again and again.

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How Crypto trading industry evolves overtime

 

The Crypto trading industry has been around for a decade now. But, relatively, that’s a short span of time. Yet despite being recent in terms of emergence, a lot has been achieved. There has been a great boom around Crypto and, as things stand, there is no sign of its popularity subsiding or drizzling out anytime soon. In fact, statistics shows an upward trajectory that picks up more and more traction. As such, the evolution of the industry that Crypto brought about is something every financial buff should know.

Birth of the first Cryptocurrency: Bitcoin

Up until January, 2009, “Cryptocurrency’’ was not part of the financial vocabulary that goes around in the context of trade and exchange. It was a pseudonymous name that goes by Nakamoto that was behind the birth of the first Cryptocurrency. On the 12th of January 2009, Nakamoto sent 10 Bitcoins to Hal Finney, a transaction that set in motion the birth of a new finance counterculture. This transaction was followed by Laszlo Hanyecz who purchased two pizzas for 10,000 bitcoin, the then equivalent of $30. From that point the first digital currency took off with skyrocketing values over the years.

Since the arrival of Bitcoin, several hundreds of other cryptocurrencies have entered the market. These new digital currencies following the inception of Bitcoin have proven to be a more accessible alternative as they are available at a cheaper rate. Some popular alternatives include Litecoin, Ethereum and Dogecoin. This electronic payment system is based around mathematical proof and the result is a decentralized currency (independent from central authorities) and instantly transferrable with a very low transaction cost.

The early years of bitcoin exchanges

The pioneer of early bitcoin exchanges was Bitcoin Market. On the 5th of January, 2010, Bitcoin Market announced that it was engaged in the process of building an exchange. It pointed out that the motive behind the venture was the concept of a real market where people would be able to buy and sell bitcoins with each other. It also announced that a website would soon be in place. Subsequently, on March 17 the same year BitcoinMarket.com went live. Those days even PayPal was serving as a means of exchanging BTC for fiat. What caused the eventual breakaway of PayPal from Bitcoin Market was the rise of scammers in the space due to the growth and success of bitcoin. 

A few months after Bitcoin Market’s launch, several other exchanges emerged on the horizon and the financial world witnessed a wave of exchanges hitting the market. Amongst the many exchanges that followed, Mt. Gox that went live in June 2010 was the most notable one.

DEX

The year 2014 marked the launch of one of the first decentralized exchange systems. On the 3rd of January that year NXT announced their intention to build a decentralized exchange. NXT asset exchange used the NXT digital currency as the fuel for the NXT ecosystem using it to create assets that represented the likes of bonds or network storage. Later, the term “coloured coins” found its use to imply this system of creating assets on pre-existing blockchains. But, in the early days of DEX, the assets could only be traded for the NEXT coin and direct asset-t-asset trading was not yet feasible. 

However, innovation and evolution propelled DEX to a new level. Counterparty launched their DEX and took it a notch higher. Though trading was limited Counterparty related assets, it was an improvement on the coloured coins as Counterparty tokens were not tied to the BTC balance of any given address. As the year 2014 drew to a close, Blocknet announced their intention to create the first truly decentralized exchange and took peer-to-peer trading a notch higher.

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Ways to attract the audience with the Bounty Programs and Airdrops for your IEO Project

 

What are Bounty Programs in IEO campaigns?

A crucial objective of every marketing strategy is to warrant as much market penetration as possible for a particular product/service. In the process, several people get adequate knowledge about the company, what they offer, and how to communicate with their products and services—this aids in increasing the word-of-mouth advertisement, eventually leading to boosted sales. Following the advent of the digital era, there has been a lot of weight on social media marketing—the application of internet-based platforms to develop a business. Bounty programs are customarily an elemental part of any digital marketing and promotional campaign.

What are Bounty Programs?

Bounties in the digital world draw their origin from online gaming platforms that gave rewards for partaking in their game advancement. Bounties are mostly incentive and reward tools granted by companies to people. In simple terms, it means that a company introducing a product or a service renders some rewards to people in exchange for executing specific tasks. It is similar to a barter trade of sorts; the company proffers rewards to an individual, and in return, the individual does some easy jobs for the company. It is a legitimate means of advertisement for many companies.

From the cryptocurrency viewpoint, bounties have become an essential element of any IEO campaign. Several start-ups usually include a bounty program as a segment of their IEO campaign. Throughout the bounty program, the IEO grants compensation for numerous tasks dispersed across marketing, bug reporting, or even enhancing features of the cryptocurrency framework. The reward is generally in the form of cryptocurrency tokens or fiat currency (though this option is uncommon). The cryptocurrency expanse has demonstrated to be a highly favorable habitat for bounty programs. This is because it grants excellent rewards and incentives for both the cryptocurrency start-up and individuals likewise.

The IEO Bounty Framework

This has become a ritual for cryptocurrency IEO campaigns that incorporate bounty programs to either go for a Pre- IEO bounty or a post-IEO bounty. Bounties are generally not done synchronically with IEOs but have grown over the last few months.

Pre-IEO Bounty Programs

As the name suggests, these bounty programs are implemented before the actual IEO. They are typically done to create a buzz and to supply the cryptocurrency project an augmented appearance on social media platforms. These programs all about building awareness for the cryptocurrency IEO and getting word-of-mouth going. The framework is such that informal advertisement channels are employed to expand market penetration. The purpose of such bounties is that as participants go about conducting out the diverse activities, the people in their sphere start knowing more about the cryptocurrency. The standard Pre-IEO bounty activities include:

• Social Media Campaign Bounties
• Article Writing Bounties
• Bitcointalk Signature Bounties

Post- IEO Bounty Programs

At this juncture, the IEO has been completed, and funds have been allocated. Now, it’s all about securing reforms to the cryptocurrency projects based on community recommendations. Post- IEO bounty programs are directed at enhancing feedback from the project community. Some of the popular types of Post-IEO bounty programs are as follows:

• Translation Campaign Bounties
• Bug Reporting Bounties

It is essential to note that there isn’t any pre-determined rule that concerns the activities for Pre-IEO and Post- IEO campaigns. Cryptocurrency IEO can determine to exercise any of the activities mentioned earlier in either Pre or Post-IEO bounty programs.

It is usual for a cryptocurrency start-up to set aside a portion of the total coin supply for the bounty program. Knowledge concerning this amount can customarily be obtained from their website, white paper, or Bitcointalk ANN thread.

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