“Do you write IEO whitepapers,” people ask us. “How about STO whitepapers?”
Yes, we write all of those. What’s the difference between an ICO, IEO, and STO whitepaper, after all? For all of these, you need a good business model. You need a good marketing plan. You need a team. You need tokenomics (not so much for STO). You need technology.
Wait. What is the difference? Is this all just hype.
The short answer is yes. It’s all hype. Of the 100 whitepapers we have written, at least 30% of them were actually STOs. In other words, they didn’t have tokenomics and the purchasers of the tokens were actually buying a share of the company/organization. While that may have not been stated explicitly in some of the whitepapers, actually that was the fact. Another 50% of the ICO whitepapers we wrote had feasible utility token models or asset-backed token models. The final 20%, well, I don’t always understand everyone’s tokenomics models or convince everyone to choose a model I agree with. After all, we are writers and we serve our customers. It’s not our job to convince someone what their business model should or shouldn’t be.
IEOs have a lot of benefits for us as writers, as well as for investors. We find that clients who come to us for writing IEO whitepapers are further along in the thought process than average. In order to be approved for an IEO, your business model needs to be approved by the exchange which is backing the IEO. For that reason, the founders have gone deeper into the product, marketing plan, and tokenomics.
Furthermore, for investors, IEOs are a good development, particularly when it comes to liquidity. Investors don’t have to worry about whether the tokens will be available on an exchange. While this doesn’t solve all liquidity problems, most of the major exchanges include market makers who help prevent the major liquidity blockages. On the downside, immediately traded tokens increases the possibility of market manipulation, pump-and-dump, and other schemes for short-term investors.
On a deeper level, IEOs are a further concern when it comes to centralization of power. For the last 2 years, the major exchanges have served as a major barrier to entry for founders, but it was an informal barrier. Now, the barrier is formalized. Having exchanges underwriting issuance of token IEOs provides some level of “self-regulation”, but… the reason we have the SEC is that we don’t expect the stock-exchange to regulate itself.
For entrepreneurs, unfortunately, IEOs are a clear signal that raising money will be difficult and expensive. One of the hopes of the blockchain industry was that capital would be more readily available for great ideas and new innovations. ICOs provided too much funding for unproven ideas and founders. However, the re-tightening of the market ultimately brings us back to where we were 3 years ago: very few ideas are able to raise the capital they need to truly make a difference in the world.
