Say hello to the IFO.
The cryptocurrency to be to comes exchange CoinFLEX, backed by Polychain Capital and investor Roger Ver, will launch its first initial futures donation (IFO) this week.
“This is the first time we’ve made a futures market for a coin that doesn’t actually be yet,” CoinFLEX CEO Mark Lamb told CoinDesk. “It’s a determiner of the price before the asset exists.”
Notably, Polkadot’s DOT whim be CoinFLEX’s flagship IFO.
Stepping back, CoinFLEX launched in April with four futures contracts including bitcoin and ether. The podium then launched its own exchange token called FLEX earlier this month.
The Polkadot IFO on Wednesday will be the fundamental sale that requires participants to buy the exchange’s native token. Modeled after the Binance initial exchange contribution model, up to 300 FLEX token holders will have access to “discount” contracts priced at $75 per DOT.
A buyer speaking on the condition of anonymity told CoinDesk this is generally in line with the over-the-counter rate for DOT contracts, since the remembrance itself hasn’t launched yet. In order to reach the projected $1.2 billion valuation established by Polkadot creator and ethereum co-founder Gavin Wood, charges would need to eventually exceed $100 per token. Wood’s Web3 Foundation and Parity Technologies, both organizations erection this new ecosystem, declined to comment for this article.
While CoinFLEX’s Lamb declined to specify which obdurates are market-making for these contracts, he said they include Asian investors potentially offering “millions of dollars” value of DOT tokens. (As CoinDesk previously reported, three Chinese firms bought investment agreements for DOT tokens for $15 million.)
“In indecorous to buy at the presale, you need to lock up a thousand FLEX,” Lamb said, adding that contracts will expire four weeks after the coin eventually launches. “We don’t know when they [IFO contracts] expire, because we don’t know when mainnet is going to set in motion.”
Much like Binance’s BNB token, FLEX can be used to pay exchange fees and access exclusive opportunities, like this IFO. Lamb translated his exchange plans to offer BNB and Tron futures later this summer as well.
While most futures arrangements across the space currently relate to live assets, like bitcoin, it remains to be seen what the appetite is for catches related to pre-launch assets. While it isn’t a futures contract, the Hong Kong-based exchange BitForex has also issued the alternative for users to buy “Polkadot IOUs” for DOT tokens as a type of pre-sale for retail investors.
CoinFLEX’s head of business development, Emmanuel Alamu, told CoinDesk that physically relaxed crypto contracts carry fewer risks than cash-settled futures or IOUs while the asset itself lingers illiquid.
“IFOs are an innovative way for the market to develop price discovery and act as a barometer on the progress of these blockchains,” Alamu mean. “We can handle dual margining and hence, enact rules that ensure both sides of an IFO trade will announce their respective side of the digital asset.”
Gavin Wood via CoinDesk archives