How to get away with m̶u̶r̶d̶e̶r̶ an ICO
The 2017 bull ride was largely fueled by the speculative frenzy of ICO. While many ICO projects withered quickly, some project teams manage to walk away with large sums. These heists are so large the project teams with half-baked roadmap don't even know what to do with the funding. Instead of liquidating the ETH they received, many projects are sitting on them without proper treasury management.
"While comprehensive financials are not disclosed by many companies, the amounts that they have in their original Ether treasuries at the time of their ICO is public information. Some of the most popular and anticipated projects, most of which have yet to launch, are sitting on treasuries north of $500Mn. That’s excluding their cash on hand, as well as their own token reserves."
2/ The sum of ETH holdings of all ICO treasuries is 3,744,651 ETH or roughly 3.7% of the total Ethereum supply. In April, the treasuries held 4,651,675 ETH (4.5% of the supply) so they most likely liquidated (or moved) more than 20% since then.— Larry Cermak (@lawmaster) September 10, 2018
"The days of explosive growth in the blockchain industry have likely come and gone now that the average person is aware of its existence, according to Vitalik Buterin, co-founder of Ethereum."
The current way ICO teams are handling funds doesn't inspire confidence. How should these teams manage so much money professionally and fairly? The tweet below brings up an interesting point. Is the community-managed treasury system the best approach?
When done correctly, ICOs are a subset of DAO governance— Ryan Sean Adams (@RyanSAdams) September 10, 2018
It's backwards to launch 1000s of ICOs w/o blockchain enforced governance to support them
Todays token holders have 0 rights to treasury. Insane. Blockchain enforced treasury is a no brainer
No ICO 2.0 until DAO 2.0
"The blockchain is the foundation or heart of the whole endeavor, it should shape how the many off-chain components of the project operate. Contributing should be permission-less, but should have to fall within the consensus view of what a useful contribution is, to be compensated."
tl;dr: If you want to get away with an ICO, you better know how to manage the proceeds.
"However, it does mean that Dash users must trust the masternodes with their privacy. After all, the mixing masternodes can link the sending and receiving addresses together; they know exactly which coins are going where. If these masternodes are run by spies or share their information with spies (on purpose or by accident), the Dash users gain less than nothing: They don’t have privacy, while revealing that they would have liked to have privacy."
"Assuming secured full reserves, Tether could be still be shut down by authorities in the future, or lose their reported banking license with Noble, which could lead to a liquidity crisis. In the most likely and sensible scenario Tether holders would be given a 3–6 month time period to redeem their USDT for Tether Limited’s fiat reserves. As a result, trust in the ecosystem as a whole could temporarily be impaired and many holders of cryptoassets could look to exit their positions, all crowding into the same narrow fiat gates."
News & Commentary
"Enter the Gemini dollar — a stable value coin (often called a 'stablecoin') that is (i) issued by Gemini, a New York trust company, (ii) strictly pegged 1:1 to the U.S. dollar, and (iii) built on the Ethereum network according to the ERC20 standard for tokens. The Gemini dollar (ticker symbol: GUSD) combines the creditworthiness and price stability of the U.S. dollar with blockchain technology and the oversight of U.S. regulators, namely, the New York State Department of Financial Services (NYDFS)."
"The narrative fueled bubble doesn’t usually loop in other asset classes. Take the internet for example. A massive speculative bubble fueled by narratives formed in the late-90s, pushing valuations way higher than its fundamentals. Then, a subsequent crash far below the fundamentals. And eventually, the environment changed. Better valuation methods and regulation decreased reliance on narratives, leading to the more efficient market we’ve seen since the dot-com bubble."
"When you begin tracing the ties, it becomes apparent that video games and cryptocurrencies are intertwined and well suited for each other. Many of the entrepreneurs who are building the biggest blockchain companies today got their start in the world of video games and digital currencies. In retrospect, perhaps, that’s not so surprising."
"First, we map the space of trust mechanisms operating today, and propose a classification schema focused on the participants, informational content and function of a trust mechanism. While online platforms differ in terms of the transparency of their trust mechanisms, we show that design choices depend on the nature of the trust problem faced in the industry. We also demonstrate that firm-level differences in trust mechanisms may impact the competitive dynamics of an industry."