Token issuance schemes in the cryptocurrency market have been taking new forms over the last few years. In 2017, the Initial Coin Offering (ICO) shot to fame during the crypto boom becoming a billion-dollar industry. However, after the crypto winter of 2018, the growing regulatory interference, and several scams, ICOs lost their sheen.
Earlier this year, the concept of Initial Exchange Offering (IEO) gathered steam. A number of crypto exchanges like Binance, KuCoin, etc. facilitate IEO facility to launch new crypto tokens.
Now, cryptocurrency futures exchange CoinFLEX – led by Polychain Capital – announces to launch its first Initial Futures Offering (IFO), ahead this week. Speaking to CoinDesk, CoinFLEX CEO Mark Lamb said:
“This is the first time we’ve made a futures market for a coin that doesn’t actually exist yet. It’s a determiner of the price before the asset exists.”
Polkadot’s DOT IFO
CoinFLEX will be conducting its first Initial Futures Offering (IFO) for Polkadot’s DOT tokens. On Monday, July 15, CoinFLEX already started the pre-registration for buying Polkadot’s DOT tokens at a discounted rate of $75 per DOT.
The IFO will launch on Wednesday, July 17, however, futures sales participants will need to purchase CoinFLEX’s native FLEX tokens. This model is similar to the one adopted by Binance which allows users to purchases other IEO tokens only through Binance Coin (BNB).
The CoinFLEX exchange launched its native FLEX tokens earlier this month. Similar to BNB, the FLEX tokens are also useful to pay exchange fees and get access to exclusive opportunities.
In the Polkadot IFO, nearly 300 FLEX token holders will get access to the DOT tokens at the discounted rate. Speaking to CoinDesk, a trader said that the $75 is just the over-the-counter rate for DOT contracts as the token launch is yet to happen. If Polkadot has to reach its target of $1.2 billion valuations, each DOT token needs to reach a price of $100.
CoinFLEX CEO Mark Lamb said that the futures contracts will expire in four weeks after the token launch. He added:
“In order to buy at the presale, you need to lock up a thousand FLEX. We don’t know when they [IFO contracts] expire, because we don’t know when mainnet is going to launch.”
Crypto Futures Contracts for Pre-Launched Assets
Back in April 2019, the CoinFLEX exchange launched four futures contracts for Bitcoin (BTC) and Ethereum (ETH). Company CEO Lamb has said that the exchange also plans to launch Tron and BNB futures contracts by late summer.
As most of the crypto futures contracts are currently around live assets like Bitcoin, it would be interesting to see the market enthusiasm and appetite for futures contracts associated with pre-launched assets.
CoinFLEX’s head of business development, Emmanuel Alamu says that physically settled futures contracts have less risk over the cash-settled contracts.
“IFOs are an innovative way for the market to develop price discovery and act as a barometer on the progress of these blockchains. We can handle dual margining and hence, enact rules that ensure both sides of an IFO trade will deliver their respective side of the digital asset,” Alamu added.