Whenever a company is to be newly listed on an exchange, an opening price (i.e. the price the company will start trading at) needs to be determined.
On the stock market, this whole process is called an IPO (“Initial Public Offering”). Here at Echo, we call this process “Onboarding”.
How the opening price gets determined
The basic idea of how we set the opening price is simple. We ask everybody what they think – and then calculate the average of the prices given. This will be your opening price for you!
There is one important twist, though. We do not directly ask what you think the opening price should be. Rather, we ask what you think other people will say.
Like this, we get a better approximation of what “the market thinks” from the very start.
How you’ll get rewarded
Once everybody has rated a company and the Onboarding is over, we will produce a ranking of all participants. We ask: who was closest to the actual opening price that we can now calculate?
The higher you rank, i.e. the closer your estimation was to the actual opening price, the more immies and echoes you will receive.
So it does pay off to spend some time thinking about what others might think. Of course, you may also simply let your guts decide 😉
Note for those who rated more than one company
You will not get more immies of those companies where your estimation was closer to the opening price – and less immies of those companies where your estimation was farther away. Instead, you will get the same amount of immies for all the companies you rated. But a higher rank leads to more immies and echoes overall.
You have no idea what price to enter? Here are some ideas that might help you.
1. Remember: we do not ask for your personal opinion of what the opening price should be, but about what you think others will say. You’re free to discuss your opinions in our forum. Or you may check the market to see the prices at which comparable companies are trading.
2. The basis of your estimated price should be a comparison of the company to be listed to our fictional company Prussian Pickles. You can re-watch the intro video to Prussian Pickles. Or you can have a look at the raw impact data of Prussian Pickles. Ask yourself: if the immies of Prussian Pickles trade at 10 Ǝ – what is a fair price for immies of the new company?
3. Having troubles comparing the impact Prussian Pickles has (business model: producing food) to a very different company? Here is a blog with additional information on how to compare different kinds of impact across companies.
4. Don’t let yourself be discouraged. There are no wrong answers! In the end, impact is what you say it is. Others might simply have different opinions. Just think about the big picture and follow your intuition! The good news is: you cannot lose anything, as you will always be rewarded with some immies and echoes.
What to do when the Onboarding is over?
When the Onboarding is over, you’ll be rewarded with immies and echoes based on your rank.
So you can use your echoes to buy additional immies. Especially, you might want to do this if the price you entered in the Onboarding is much higher than the opening price. Maybe the others will soon realize you were right from the start? (You could try to convince them of your view in our forum)
Or you may sell some of the immies you received to generate more cash. Especially, you might want to do this if you received immies of companies of which you think very poorly. One sign for this might be that the price you entered in the Onboarding is much lower than the opening price. Maybe you want to get rid of the bad ones and rather invest in the good ones?
Curious about Echo Impact Exchange?
Echo is a trading platform for impact rating. That’s right: you can rate companies’ impact by trading their impact certificates. Joining Echo is free for the time being and the profits you make from trading will become convertible to other currencies in 2023!