- Introducing the Selfless ICO (S-ICO)
Introducing the Selfless ICO (S-ICO)
This is setup to be a simple read for all crypto enthusiasts.
ICOs and Token Distribution Events (TDEs) attempt to raise funds from the crowd without being give to or any centralized powers as was the case with Angel VCs, who I always wondered if they loved the project or were selfish at best.
The purpose of this "paper" is to highlight the impedance caused by the present ICO/TDE model. If this model is cleaned up or restructured, we can have a first step towards stable crypto markets. This will not completely eliminate the effect of whales as that solution was proposed in my previous article.
Traditional ICOs are Selfish:
The idea for an ICO is to raise funds to foster the development of a cause! To help make the world a better place by offering decetralized solutions that "de-power" or loosen the grips of central authorities and organically enforcing an autonomy in nearly all facets of our existence.
When a token is prices unfairly, where some participants are favored by virtue of their financial providence and status, then you have an initial unhealthy bias that is engrained in the lifetime of that project. These favored investors purchase tokens in a greedy fashion and dump them later to the detriment of the "unfavored" investor. This begs the questions: Do ICOs/TDEs prefer certain investors to others? Do these startups that conduct the ICOs sincerely care about solving the problems they pitched about? Are they also selfish? Why should an investor immediately dump on a project he/she claims to back?
Some good ICO/TDE practices:
Vitalik Buterin, the founder of the Ethereum Foundation, in a bid to not only smoothen the ICO process, but also ensure that integrity and honesty was reinstituted, masterfully introduced the well-crafted DAICO.
While integeity and trust is achieved here, DAICO doesn't ensure fairness to all investors. Some ICO investors benefit from huge discounts during Presales, with conditions that completely exclude the masses (supposedly the 80% of the crowd according to the 80-20 rule).
Institute Mechanism and Contracts that enforce Fixed Token Pricing (FTP). Some of the FTP techniques are:
Reversed Dutch Auction:
This technique, which IMO is simply masterclass, allows fair pricing for all investors. In any truly democratic process, everyone is allowed a fair share of votes. No participant is attributed a different weighting from another. No "Electoral College" needed to hedge against anything. There should be no assymetric knowledge whatsoever and pricing should be constant across the board for all participants. This would prevent initial dumps when the project is listed at the exchanges.
Regular Fixed Pricing:
This is my proposal. Void the presale aspect of the ICO/TDE event. As you can see, there's simply no need for it other than selfish reasons. One argument in favor of a Presale is the need to incentivize investors. However, any investorin your project who seeks a 30% discount only to dump later (right after listing) is a destroyer! Such dumps inorganically alter the semtiments of traders by creating FUD. Whales get compensated by creating FUDs and FOMOs, which in my opinion, is inorganic and destroys the natural play/flow of the market. The Whales are actually centralized authorities in the system and need to unplugged!
If a Presale must hold, perhaps the founders want to offer some grants to friends and family etc, I suggest that there be a token lockdown period of X months. This will X months for the market to organically play out before any articficial interruptions like massive dumps that alter the emotions of market paticipants (possible creation of FOMO and FUD).
The Selfless ICO is one that combines DAICO and FTP
S-ICO = DAICO + FTP
- Date of publication:
- Wed, 02/14/2018 - 02:12
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