I wanted to take the time to write a post about the dangers of IEOs and the responsibility that you as an investor need to take when you do your due diligence.Ocean Protocol is a project that's been talked about in high regard for some time. They have a solid and experience background in big data, showing previous success outside of the crypto/blockchain space. They have identified a clear market and use case for blockchain used in a decentralised manner.Fragmented data held by multiple parties means that we lose out on vast amounts of analysis potential due to the fact that the data is not able to be shared. In short they overcome this with their protocol. Their white papers have been some of the best that i have read, and there is clearly something there that's worth pursuing. That's all i'm going to say about them as a project.I first discovered them about 8 months ago when doing bear market research. Now, remember many coins/tokens are down up to 95% from their peak bull price.It just so happens that their pre-sale was in Feb 2018... and funding using ETH, which at the time had a price of approximately $1000. At this time they pegged the token value at 12c.Moving on to IEO time, on an illiquid exchange - Bittrex - they decided to peg the value also at 12c per token and a fund raising total of $31.6m. The same as the pre-sale. Seed for what it's worth was 10.6cYou may have already started to see the problem here. Presale investors are massively up in terms of BTC value over the period essentially getting their investment protected during the bear market.When you start to combine this with the ICO tendency that they dump on launch due to general investor uncertainty, you have a hot mix evolving. Yes IEOs have been hot recently, but you do have to question whether they really can work on low liquid exchanges. You need buyers and hype, and unfortunately there is only a few exchanges that can legitimately provide that. Yes, i'm looking at you Binance.So what happened to Ocean Protocol today? You guessed it. -70% or so right away and their Telegram and social channels are a mess. They've gone to ground it seems.You have to ask questions of Bittrex here. IEOs came about to provide a token a place to be traded after launch, but they are also supposed to be doing due diligence on behalf of their investors. A big dump like this, whilst really is on investors for not doing research, should also be partly on Bittrex.It was been pretty clear for a while that this was going to happen. I made as firm a point as i could in the Ocean Telegram with official team members that this was un-investable and it was inevitable, but they did not listen (and to be fair why would they listen to some guy on Telegram, in crypto, while they're trying to run a business).The simple fact is that they have been as greedy as it gets. They raised at a launch market cap of nearly $40m, where other recent projects such as LTO have launched at 3m cap with a working main net and clients. They also only released 15% of tokens in the launch leaving a total supply of around 1.4 billion tokens.Wasn't the writing on the wall with this? Why did Bittrex not advise where necessary? Questions need to be asked and answered if this space is going to be taken seriously.How do we end up with such a disparity in this space?EDIT:I just wanted to add a couple of takeouts and additions for people who want to invest in ICO or IEO1) have they done a pre-sale? If so, when was it and what valuation was BTC/ETH at when they did it.2) How has the market responded since they did a pre-sale3) During the ICO/IEO what are they valuing their project at looking at it at a circulating supply basis.4) What's the risk in new liquidity coming on to the market? (locked tokens from the team, general team funds, marketing fund, business growth fund)5) How much % of total supply does the team hold. You can tell if they're being greedy.6) How much of the project have they built already? Most startups fail. Have they genuinely shown something that might indicate real world use?
Submitted May 04, 2019 at 02:51AM
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