ICO 2.0. Ethearnal has evolved the ICO
With the explosion of cryptocurrencies and blockchain towards the end of 2017 into 2018, suddenly the whole world is actually paying attention and demanding action. And as usualy, you have the whole spectrum of responses when it comes to the world stage. Some countries are talking about outright bans on cryptocurrencies, some are cautiously optimistic, and others are full steam ahead into a future of blockchain and full adoption.
With all this extra attention, along with the fact that we are talking about actual money here, comes the watchful eye of the government regulators. And while many early adopters may lament the lack regulations as the very reason they got into the space in the first place, it is a much needed step in the legitimacy of the technology as a whole. Because along with all the attention and money comes something else, the scammers.
What is needed now is an evolution of the ICO. And to find the inspiration for this, the best place to return to is bitcoin, the blockchain, and the original Satoshi Nakamoto Whitepaper. Blockchain provides the opportunity to have a trustless contract between the project developers and investors that cuts out the middleman (eliminating fees) and allows investors to have a say in whether the project should continue, or whether they should terminate and recoup what they can.
One current project that is attempting to solve this issues is Ethearnal and it’s ERT token. ERT stands for Eternal Reputation Token, so they are serious when it comes to reputation being everything. Your reputation is something you build over time with trust, and the same should apply to the ICO process. That’s why the Ethearnal team have developed what they call the ICO 2.0. This is what is looks like:
From the very beginning, the trustless contract begins. As funds are donated during the ICO phase, they are locked away in a smart contract for the duration of the ICO. Once the funds are collected and the ICO and audit are concluded, 10% of the funds collected will be released to the development team to be utilized for production and expansion of the project. The remaining 90% of funds will continued to be locked in the smart contract. As they build and their funds get depleted, they can then petition the community, showing the work so far, and asking for an additional 10% for development. Once 51% of token holders have voted and agreed, the smart contract is triggered, and 10% more of the funds are released. If the majority of the 51% did not agree, the team will have to continue working without more funds until they gain the approval of the group.
If at any time the token holders feel that the project is not viable, they can issue a vote for refund via smart contract. Once 51% of the token holders vote, and 65% of those votes are for a refund, the stipulation in the smart contract triggers, and all remaining funds are issued to token holders addresses.
Another issue to tackle with ICO’s is developer’s cashing out early in the project before it has had time to mature. They take a large chunk of the funds raised, sell their share of the token allocation, and then move on to the next project. This is irresponsible ICO practice at it’s finest, yet it occurs on a daily basis. Again, blockchain and ICO 2.0 have a solution. As stated before, the funds for the project are locked away and need community approval to be released to the development team. This includes their share of the ICO funds collected, and this portion is the last portion to be voted on and released. That means that the final 20% of funds raised, meant to be allocated to the development team, cannot be collected until the project is finished and community members vote and agree that is the case.
An additional issue addressed by ICO 2.0 that is becoming more prominent is the concept of whale investors leaving no room for the smaller fish to get in the game. To prevent these “whales” from dominating the space early all participants are capped at $1000 worth of ETH for the first hour of the ICO from any specific wallet address. This then increases by $1000 each subsequent hour, so starting the second hour investors can send up to $2000 in ETH during that hour. While individuals can find a work around by contributing from different wallets, each time they do they will be paying the transaction fees.
No system is perfect, but due to higher suggested transaction costs for ICO’s and not being able to immediately contribute large sums at ones, this will allow “smaller players” to get their sake in this prosperous economy from the beginning.
As Blockchain technologies become more mainstream, and more of our global systems begin to make the transition, this opens the world up to new funding and revenue sources. The rise of Blockchain and Bitcoin in 2017 saw an equal rise in scams and ICO schemes designed to make their developers rich. As the entire space becomes more prominent on the world stage, all aspects of it, including the ICO process, will need to evolve. Ethearnal has shown they are aware of this fact by presenting us all with the ICO 2.0, and they are an example that ought to be studied for those looking to establish themselves with their investors.
