Binance Announces Next IEO: But Recent IEOs’ ROI Raises Some Concerns For Investors

Binance has announced the newest initial exchange offering (IEO) and it’s the Band Protocol. As per the new rules, investors have to hold BNB for an average of 30 days prior to the IEO itself. However, given that the latest launch held on the platform – that of Perlin, brought insignificant returns, the question is if it’s worth holding on BNB to participate in the IEOs. 

Binance Announces Newest IEO

Binance has just announced the newest initial exchange offering (IEO) to be held on the Binance Launchpad platform and it’s the Band Protocol. 

The Band Protocol is intended to be a layer-2 protocol on public blockchains. According to the announcement, Band Protocol has a unique multi-token model as well as a staking mechanism that guarantees that the information is entirely free from manipulation. It makes data readily available on-chain and it offers faster and cheaper solutions compared to existing competition, according to the reports. 

The holding requirement is elevated to 30 days, so people now have to have BNB in their accounts for 30 days prior to the IEO date. Interestingly enough, Binance has once again changed the maximum investment allowed for a winning ticket. It used to be $500 for Perlin and now it’s reduced to $300.

The allocation of the winning tickets is pretty much the same. If you hold over 500 BNB for an average of 30 days you will get 10 lottery tickets. The total ammount of winning tickets is set to 19500 which is more than what it was for the previous IEO. The lottery draw is set for the 17th of September and we will probably see the tokens being available for trading on the next day, as it’s always the case. 

But Is It Worth It?

The last IEO that Binance Launchpad had was Perlin. It required people to hold BNB for 15 days prior to the launching date. During those two weeks, BNB dropped with about 10 percent. 

So let’s walk through the following scenario. You wanted to get 10 tickets and as per the rules, you would have to hold 500 BNB for an average of 15 days. 

On August 8th, which was the first date of the holding period, BNB was worth around $30 which means you’d have to invest around $15,000 in order to qualify for 10 lottery tickets. At the end of the preparation period, you’d have lost around $1,500. If you didn’t win any tickets, as it was the case for the majority of investors because only 5% of the people won, you’d be $1,500 down. 

Even if you won, the average return was about 5x on the investment, meaning that you’d get $2,500 per ticket. When you discount the investment which was $500, you’d make $2000 per winning ticket. And when you count off the $1,500 loss from the decrease in BNB’s price, the return was almost minimum. 

It’s, of course, unknown if Band Protocol’s IEO will bring the same returns, but given the disappointing results in the past couple of launches, it’s questionable if investors are incentivized enough to hold large amounts of BNB for such a long period.