Interview with She Knows|Exclusive dialogue Cheng Xiaoming, IEO is more like marketing behavior, financial products must have valuation models

On April 2nd, the second season of Babit's first-community interactive interview column, She Knows, was launched. The topic of the dialogue was "IEO big analysis second half: project side Huashan sword".

In addition to the popular IEO project TOP Network co-founder and CEO Wei Songxiang, and Fetch.AI CTO Toby Simpson. We also invited the equity financing research expert, Cheng Xiaoming, deputy director of the China Communications Industry Association Blockchain Professional Committee, who was praised by the industry as the "new three-board godfather" and has unique insights and insights into the NEEQ, OTC market, and technology finance. Theoretical research. Since 2017, he has focused on blockchain technology and has put forward many new ideas and is the pioneer of chain reform.

As a special observer, Cheng Xiaoming and the current host Babbitt editor Tang Xialing and "8 questions" host Jia Xiaobei started a wonderful sharing on IEO.

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Some of the highlights are as follows:

1. Cheng Xiaoming: I think that any financial product must have value support and valuation model.

2. Cheng Xiaoming: Most innovation projects will fail, but you can't classify them as scammers.

3. Cheng Xiaoming: Blockchain financing should learn from the practice of the securities market. For example, the exchange should supervise the project parties, such as the introduction of the market maker system. Question 1: What do you think about the live content of the two project parties before today?

Cheng Xiaoming: Very professional and objective, of course, some opinions are still different. This is normal. This is why we need to discuss.

Question 2: What do you think about the practices and performance of several IEO projects on the market today? Is there a hidden worry?

Cheng Xiaoming: The main point of the IEO is that the Exchange also acts as a securities regulator, sponsor, and investment bank, which is conducive to promoting the listing and trading of projects and improving the quality of projects. As for the hidden worry, I am afraid it is not a problem of the IEO itself. It is a problem in the current blockchain financing.

I believe that regardless of ICO, STO, SPT, IEO, stock bonds, ABS, derivatives, or even national currency, any financial product must have value support, valuation model. Any market has the subject matter of trading, and the value of the subject matter needs to be judged and divided. The world market can be divided into three categories. One is the vegetable market, and the value of the subject matter is very clear to both buyers and sellers. One is the casino, the participants are not clear, because they are not sure, they dare to gamble. One is a financial product, and the valuation difficulty is between the vegetable market and the casino. The problem with ICO is here. I don't believe that ICO's projects are all air projects, but the problem is that there is no valuation model or the valuation is too difficult, which makes the market easily become a casino.

Protecting blockchain investors is not simply to let everyone buy the coins of the project, but to buy them at a reasonable price. Therefore, the key lies in the valuation model of the project Token. IEO has improved the quality of the project to a certain extent, but it has not solved this problem.

IEO is very hot, but there is still a gap from well-regulated financial behavior, more like a marketing behavior. Question 3: What are the similarities and differences between the securities financing, the new three board financing, and the blockchain project financing?

Cheng Xiaoming: The biggest problem with blockchain financing now is to make it clear that if there is a valuation model for equity financing, if there is no valuation model, it can only be used for crowdfunding. Crowdfunding is also a financing act, similar to private equity. But in fact, there are essential differences, motivations, purposes, and demands are different, and the criteria for success or failure are different.

What is crowdfunding? Raising funds without targeting profit is called crowdfunding. And financing includes private placements, and investment is to get a return on investment. The return on investment depends on two, return and cost. So there must be a valuation model that calculates the return on the project. I think that if the ICO is used for crowdfunding, there is really no problem if it is used for fund raising and financing. Question 4: What do you think are the similarities and differences between equity financing and IEO?

Cheng Xiaoming: The reason why our country regards crowdfunding as a kind of financing behavior is because our financial market is not open enough, and the problems that should be solved in the financial market are not solved. Enterprises and individuals solve the financing problem through crowdfunding.

The key difference is whether there is a model for the valuation of the project. There are some traditional stock market equity markets, such as price-earnings ratio, and blockchain financing is not yet available. Question 5: From ICO to STO, to IEO, is this the concept of the currency exchange, and the price replaces the value. How did it evolve to this point?

Cheng Xiaoming: This problem is a bit complicated. Blockchain financing is still in the process of rapid development, and the industry will become more and more standardized over time.

There is two understandings of the use of price instead of value. The first is that the product has no value at all, pure speculation, and price instead of value. The second kind is that the product is valuable, but the valuation is too difficult, and everyone can't tell. As for a specific project, there are two situations.

In the second case, some people want to be an clerk, but they have not succeeded for various reasons. The same is true for innovation. Most innovation projects fail, but you can't classify them as scammers. Question 6: Is this the normal state of blockchain project financing?

Cheng Xiaoming: This is the normal state of the blockchain status, but the problem is that the blockchain is a developing thing, and the current normality is the past tense in the future. Today we discuss IEO or discuss other topics to promote the development of the blockchain industry.

I suggest that the blockchain industry learn from the effective practice of the securities market, which can shorten the exploration time and avoid detours. Additional questions: How to learn from the effective practice of the securities market?

Cheng Xiaoming: One or two sentences cannot be said clearly.

First, supervise the project side. There are a lot of exchanges now, indicating two problems. First, the exchanges are in great demand. Second, the gap between exchanges is relatively small, and the market structure is not fully formed. One of the reasons is that the exchange is currently doing transaction matching. In fact, the most important thing in the exchange is supervision. The main job of the A-share market is the supervision of listed companies. Exchange-regulated project parties may be unwilling in the current situation, but in the long run it should be a trend.

Second, introduce a market maker system. The main role of market makers is to guide investors in pricing investment objects, such as Nasdaq's market maker system. As I said earlier, there is a problem in the blockchain financing that the valuation model of the currency is not clear. If there is a market maker system, it will help solve this problem.

Here we have to distinguish the market maker system, which has two kinds of understanding. One is the market maker of the New York Stock Exchange. The English name is Specialist. Its role is not valuation, but mainly provides liquidity. The other is the Nasdaq market maker, Market maker, the role is valuation, this is my recommended market maker.

It is said that some exchanges are also considering introducing market makers, but it seems that they are introducing market makers of the New York Stock Exchange. Question 7: Will there be an exchange at the IEO to cut the leeks through the platform currency? Is IEO really an exchange innovation?

Cheng Xiaoming: Everyone knows that Robert's rules of procedure are one of them. They don't question the other's motives, because the motivation is hard to say clearly. The key to the problem is not whether it rises or does not rise, but because of the reasons behind it. As long as it is reasonable and legal, it is no problem to go up or down. As for a transaction, there is no such motivation. This question has to be answered by the parties themselves. We can only guess.

IEO has been there before, but it has been hot in the near future, and it is not innovation. Click to view: "She Knows Interview | Exclusive Dialogue Network Red Project TOP Network, Fetch.AI, IEO will continue to fire?" 》

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