Ever since Ethereum coined the term “ICO” (Initial Coin Offerings), based on IPO (Initial Public Offerings) from the traditional stock market, ways of raising money in the crypto space have emerged both endlessly and strangely. IFO (Initial Fork Offerings), IMO (Initial Mining Offerings), IEO (Initial Exchange Offerings), etc… Too many to enumerate. It feels like we are going to need a longer alphabet very soon. As the first hotspot of the year 2019, IEO can be said to be a very good starter. While fully mobilizing the interest of many investors, it also laid a foundation for the market’s uptrend later on. But its subsequent development is also mixed.
As the first exchange in the world to launch a physical delivery contract, CoinFLEX is certainly not idle. Having launched monthly and next month futures of BTC, BCH, ETH, and stablecoins, we are on the verge of announcing another product which we call IFO. Yeah, it sounds familiar. But honestly, we are not doing this deliberately. The alphabet has a limited length after all. In fact, it’s called Initial Futures Offerings.
Unlike IXOs, our IFO is not a means of fundraising. It is, in fact, as the name suggests, a futures contract. The investor can long or short a coin when it has not been officially issued. Thus, like a general futures contract, IFO can also be understood as a price discovery mechanism. The same part as other IXOs is that it is possible for longs to get the tokens when the project is officially launched. As for why is it just possible, we will leave suspense and reveal in follow-up articles.
You can not opt-out in the middle of most IXO projects before they are officially online. This puts investors in a place where it’s absolutely passive. It’s also one of the primary reasons that many founders abscond with the money. And with the tightening of regulations, more and more founders choose to raise funds through private sales, which many retail investors can only shrink back at the sight of the thresholds. Some would turn to secondary markets like OTC desks or proxies because of FOMOs. Not to mention the not so low thresholds of these OTC desks and proxies, there are going to be serious trust issues. Escaped founders are not so rare on the news. Besides, it is common that secondary markets operate in a nontransparent way. The chances you get ripped off without even knowing it are very high. However, these concerns won’t exist with IFOs. You can register and trade IFOs on our platform as long as you are not from or at any of the restricted areas listed on our website. They will be traded 24/7 throughout the year with full transparency.
The charm of the futures market is that there are various roles involved, thousands of buyers and sellers, who represent the power of both supply and demand, gather to compete, and ultimately achieve the purpose of price discovery. IFO can achieve the same effect. Believers, early investors, market makers, and speculators will participate and make their own predictions about the true value of a project. More importantly, the team of a project can adjust their subsequent plans according to the activities on the IFO market, before the project is officially launched. And after making such adjustments, the IFO market will respond in a timely fashion. It’s almost beneficial for everyone.
Of course, this model is not perfect, because what we are trading here is a coin that does not even exist. It could end up with us speculating on thin air if the risks were not well managed. One of the larger risks is naked short selling.
Naked short selling, or naked shorting, is the practice of short-selling a tradable asset of any kind without first borrowing the security or ensuring that the security can be borrowed, as is conventionally done in a short sale. When the seller does not obtain the shares within the required time frame, the result is known as a “failure to deliver” (“FTD”). The transaction generally remains open until the shares are acquired by the seller, or the seller’s broker settles the trade. (https://en.wikipedia.org/wiki/Naked_short_selling)
The coins traded on the IFO market are also the ones that do not yet exist. In some extreme markets, shorts may choose not to deliver or make other defaults. For this type of risk, our highly experienced product and risk teams already have countermeasures. But please excuse us for not being able to disclose any details for the time being. We will elaborate when we officially go online.
What we can disclose is that the first IFO project that is about to be launched is the superstar, Polkadot, an invention of one of the founders of Ethereum and programmer of the first Ethereum implementation. So, get excited!