Initial coin offerings were introduced to raise capital for the new tokens. Listing these tokens in crypto exchange platform might cost you more than expected.
Initial coin offerings or ICOs is said to be a popular method to raise capital for the new tokens. However, listing ICO tokens on these platforms may cost you a lot.
There is a new blogpost by Autonomous Research that says, listing an ICO token on the crypto currency exchange platform may cost promoters somewhere between $1 million and $3 million. Experts who provide SEO services in London have said the wide disparity in their range depends on access to quick liquidity and online reputation. The lower end for the estimate is a “reasonably regarded token” and the higher end denotes easy access to liquidity by means of exchanges that provide fiat conversion services. An example of the latter exchange is Coinbase. These exchanges consist of a pecking order with the ones that offer easy conversion to and from fiat crypto currencies, which is the most expensive one.
The post’s numbers can be found after the reports claim that Ripple had tried to list its crypto currency XRP on Gemini for at least $1 million. This report has also stated Ripple swayed the prospect of lending $100 million , that is worth of XRP to Coinbase that had fallen in exchange for a listing.
Other than the exchange fees, there are other expenses built into this ICO launch marketing process. For example, there are costs involved with advisors that can be compared with investment bankers in an IPO. Advisor activity also spans an extensive range starting from establishing connections with larger investors to producing positive press for tokens and structuring ICO method. They usually charge 5% of the overall ICO amount. However, bounty programs are another costs involved with this program that reward both marketing folk with tokens and social media influencers.
Usually, you will find three kinds of premiums – illiquidity premium, block regulatory premium and conversion premium, all of which are attached to listing on the cryptocurrency exchanges. Now, the first premium is associated with the absence of a bank that helps in cryptocurrency transactions. On the other hand, the second premium is related to the difficulty when searching for banks or other financial institutions that allow conversions of larger blocks of cryptocurrencies to fiat money. Finally, the third premium is about the uncertainty that is inherent in cryptocurrency transactions for government regulation.
According to DubSEO experts, these three premiums have introduced inflated costs and greater risks to investing in tokens. This dynamics have led to the “bifurcation” of route for raising funds. The Wild West route includes paying off cryptocurrency exchanges and marketers while the other is more conventional route for raising capital through private investors without accessing public markets.