Author: childish_phillip Source: X, @ChildishPhillip

The author started his career in the investment banking department of the traditional financial institution JPMorgan Chase, and later joined the Listing team of Crypto CEX. This article records some immature insights in his short career.

IPO (initial public offering) and CEX (centralized exchange) listings themselves are two completely different ways of financing and market entry, but they have the same core goals: attracting funds, attracting investors, and expanding market influence.

Although the two were born in completely different backgrounds and eras, with the rapid development of the cryptocurrency industry, CEX listing has been continuously compared with traditional financial IPOs.

So, what are the similarities and differences between the two? Can CEX listing draw some experience from the development of equity IPOs and promote its own standardization and development?

This article will analyze these two listing methods from multiple dimensions and explore their possible intersections in the future.

1. The core goals and positioning of IPO and CEX

1. IPO: corporate adult gifts and tickets to enter the capital market

IPO is the "ultimate ceremony" for enterprises to enter the capital market. The main goal is to attract capital to support business expansion, R&D investment or mergers and acquisitions plans. Companies sell equity to public investors through IPOs, and investors look forward to gaining returns through dividends and stock appreciation. Investors participating in IPOs in the US stock market are mainly institutions, and long-term investors are the backbone of the market.

2. CEX listing: traffic entrance to the crypto world

CEX listing is an important part of the market transaction after crypto projects are issued tokens. Usually, the project party does not directly raise funds through CEX listing (except IEO). Its main goal is to improve token liquidity, expand market influence, attract more investors to pay attention and attract more users to join the ecosystem. Investor expectations are also often more direct - capital appreciation is achieved through the rise in token prices without the need for likeStock holders pay attention to long-term returns such as dividends.

2. Differences between listing and currency listing processes and mechanisms

1. The equity IPO process is relatively standardized and transparent:

The IPO process is very standardized (whether it is US stocks or Hong Kong stocks), and usually includes the following stages:

Preparation stage: Enterprises hire investment banks as underwriters to prepare financial statements and business plans

Review stage: Regulators (such as the US SEC) review the company's financial status, risk disclosure and corporate governance structure

Formal listing: the company is listed on the stock exchange and stocks begin trading.

The entire process may last for several months to several years, and the expenses are relatively high (generally accounting for 5-10% of the total financing amount, of which the underwriting expenses of the investment bank account for the majority)

left;">2. CEX listing is relatively efficient and flexible:

CEX listing process is relatively simple, mainly including:

Applying stage: The project submits an application to the exchange, accompanied by a white paper and project information

Applying stage: The exchange conducts a basic review of the project

Negotiation stage: The exchange and the project party will negotiate and final confirmation of the listing fees, marketing expenses (activities) and other expenses

Online stage: The exchange announces the token launch date, providing the market with initial liquidity

Compared with IPO, CEX is extremely efficient in listing coins, but the review standards are not unified.

1. IPO market: institution-led, strong stability

The IPO market is dominated by institutional investors, who usually evaluate the fundamentals and long-term potential of the company to make investment decisions. Because this type of investors dominates, market sentiment is relatively stable and price fluctuates less.

Big companies will introduce cornerstone investors in Hong Kong stocks when they IPO. Cornerstone investors usually reach an agreement with the company before the IPO to ensure that they subscribe to a certain proportion of the stocks and agree not to sell these stocks during a specific lock-in period after listing.

2. CEX market: retail investors are the main ones, and high volatility is the main ones. Their decisions are often strongly influenced by news, social media and market sentiment. Some giant whales and market manipulation will also aggravate price fluctuations

4. Cost comparison

1. IPOs

The cost of IPOs is relatively high, including underwriting expenses (usually 6%-7% of the financing amount), legal expenses, audit expenses, etc., but the financing ability of IPOs is also very strong, especially in mature markets such as the Nasdaq and the New York Stock Exchange, companies can usually raise hundreds of millions of dollars or even billions of dollars in funds.

2. CEX Listing

The cost of listing of CEX fluctuates greatly, usually including the exchange's listing fees, marketing expenses, liquidity provision fees and deposits.

5. A brief discussion on the experience that CEXListing can learn from IPO

Although CEX has its unique market logic, the mature mechanism of traditional IPOs still has many things worth learning from.

1. Strengthen transparency and information disclosure

IThe transparency of POs is very high, and companies need to disclose detailed financial data and business plans, which provides investors with a sufficient information base. This can be learned from the listing of CEX and requires the project party to provide more complete information disclosure, such as:

Independent audit report of smart contracts

Disclosure use plan and continuous progress and disclosure report

Team background and project development roadmap

2. Introduce institutional investors during TGElisting to stabilize market sentiment

left;">The participation of institutional investors is the key to the stability of the IPO market. CEX listing can attract more institutional investors through the following methods: Design specific investment incentive mechanisms (such as cornerstone investors) for institutions, such as token allocation unlocked in stages, providing stronger compliance endorsements and reducing institutional investment risks. 3. Optimize the listing process and improve the review standards. Although the CEX listing process is efficient, the review standards of some exchanges are relatively low, which affects the credibility of the overall market. We can learn from the practice of IPO:

Introduce third-party review agencies to conduct a comprehensive assessment of project technology, team background and business model; and disclose their evaluation reports

Develop relatively unified review standards to improve the overall quality of listed projects

4. Improve the investor protection mechanism

The IPO market has a strict legal framework to protect investors, such as false information disclosure will lead to serious legal consequences. CEX listing currently has the following ways to protect investors:

requires the project party to submit a special margin, which is specifically used to compensate investors in case of running away or fraud

Establish a rapid removal mechanism and take timely actions for projects that find problems

5. Introduce a hierarchical mechanism and dynamic adjustment

Crypto Exchange can draw on the Nasdaq's hierarchical system (global selected market/global market/capital market) and design different trading sectors to attract investors with different risk preferences to zone the scale, development stage, liquidity, risk level, etc. of the project. The following are some specific reference methods:

Flagship sector: marked as "low risk, high liquidity", suitable for institutional investors and stable investors

Growth sector: marked as "medium risk, high growth potential", suitable for investors with certain risk tolerance

Startup sector: marked as "high risk, high volatility", and requires investors to sign a risk statement before trading

VI. Summary: From comparison to integration

IPO and CEX listed coins represent two worldviews of traditional finance and cryptocurrency respectively.

The former is dominated by compliance, robustness and long-term, while the latter is centered on efficiency, innovation and liquidity. Although the goals and mechanisms of the two are significantly different, as the crypto market gradually matures, the standardization and transparency of CEX's currency listing will be an inevitable trend in the future.

By drawing on the mature experience of IPOs, CEX can maintain flexibility while enhancing market trust and stability. I think what is more important at the moment is to improve the transparency of the currency listing process and project pricing to some extent.

I think the integration and mutual learning of the two will bring more possibilities to the global capital market. This cross-border dialogue has just begun.