Cryptocurrency exchanges are taking advantage of the fact that Initial Exchange Offerings (IEOs) are trending in the crypto community. Recently, Binance has introduced new rules to its Launchpad that requires users to hold BNB for a time to participate in an IEO.
Huobi – that had its first successful IEO yesterday on its Prime platform has followed Binance’s path with setting token holding rules for IEOs in an attempt to pump the price of the Huobi Token.
Huobi pumping its token
According to a blog on Huobi’s Medium, to be able to participate in an IEO, crypto traders and users need to have a fully verified Huobi Global account as well as an average monthly holding of 500 or more Huobi Tokens (HT).
At the time of writing this article, HT stands at $2.42, so IEO investors need to hold over $1,200 worth of Huobi Tokens in their exchange accounts if they want to participate in an IEO.
Huobi excluded the TOP Network IEO (its first sale on the platform) from this rule. Therefore, investors of the token sale could contribute to the IEO without the need to hold any HT tokens.
Binance’s controversial Launchpad rule change
On March 24, 2019, Binance has published an update on its blog stating that the cryptocurrency exchange is using a new, “lottery format” for the next IEO on the Launchpad platform.
In summary, the token sale contribution will be conducted as a lottery instead of the first-come-first-served system that was used in previous IEOs. Contributors will get a number of lottery tickets based on the BNB they hold over a 20-day period in their Binance accounts.
The minimum threshold to get a ticket is 100 BNB tokens (worth $1,676 at the time of writing the article) with the maximum numbers of lottery tickets per user being five. To receive the maximum number of lottery tickets, users have to hold at least 500 BNB in their Binance wallets (worth $8,380).
Each of the winning tickets represents a $500 limit that they can use to contribute to the IEO. For example, if a user has two winning tickets, he can contribute a maximum of $1,000 in the token sale.
Soon after Binance’s March 24 announcement, BNB’s price skyrocketed, reaching $17 from $15 in a matter of approximately four hours. Due to this rule change, we expect that the Binance Coin will be highly volatile for a certain period.