In the shadow of own tokens
Main market
Today we experience a huge outflow of value from alternative cryptocurrencies market into basic Bitcoin market. For the requirements of this article, I would call it the “main” market (Aggregating top 5 cryptocurrencies). As many people acknowledge, it may have strong influence on the ICO market, as most investors are on a hold positions until the fork comes. Many ICOs use in such situations diversification strategies — they collect in different kinds of crypto in exchange for their tokens, willing to catch the “alts” market when the reflection comes.
Short-term and long-term strategies
On Waves DEX one can deposit different kinds of crypto, like LTC, BTC, ETH, but still basic cryptocurrency is Waves. However, because DEX acts like a matcher, anyone can set-up any pair for his token sale, he wants.
For example, for tokenloyalty.io tokens (LOYAL) we can set up pairs in our incoming ICO (16th of Jan, 2018) to Waves, BTC, LTC, ETH and.. alternative tokens in DEX. Why I am writing about this? Because, in the shadow of basic cryptocurrencies, there is a market of tokens that are very close to the basic market values (for example, Waves Community WCT token with almost 1/3 value of waves) and future ICOs may relate to such alternatives, building long-term strategies.
Long-term strategy in that case will be setting up pairs to buy tokens in form of other ICO tokens (or close to post-ICO tokens), which seem in the early-stage, more risky. In such way one can also diversify the risk of market fluctuations, for example, hedging with other ICO tokens to 10%. From this place it is only one step before consolidation comes. This strategy may be highly efficient for ICOs with low marketing budget, because in such cases token sales are at low levels. Also there is a huge increase of ICOs generally, in count to investors, and sometimes it is hard to show the project to the wide audience, even if it is good. So, sometimes, collecting 50000 tokens of other young post-ICO company may be better strategy then collecting, for example, 50 ETH (which is a short-term). Of course, the risk of negative fluctuation is high, however, for the non-scam projects, who do their job well, this strategy may increase the real FIAT (or in relation to BTC) budget after a year or two, than at the moment of the ICO — it only depends if it is the time of the “alts” market or “mains” market.
Such situation came with WTC tokens, where they are consuming capitalization of the main asset — Waves (which justifies a little the Waves value drop, despite the capital outflow to BTC). WTC is still in his run for (unwittingly) dethronement of the main asset. Examples are also in Ethereum network — ICOs that collected equivalents in 30–50M USD may strongly influence the basic asset, for example, “obstructing” the main network or influencing the price drops in case of selling the main asset to FIAT to realize budget in the non-crypto world. That is why we are strongly thinking about the pairs building strategy during our token sale that will be in January (16th). Maybe we will set up pairs to BTC, LTC, ETH, Waves, as well as set up pairs to sub-alts, like WTC. This is very important for the proper protection of the budget of the project that will be realized (finally ICO is about the business, don’t forget that!).
Automation of decisions
DEX as a matcher could evolve in the future into automation of the purchase phase in token sales. For example, it could do an automated price swap (of course if someone wants to). How it could look like? Like this:
You can set up one price in Waves (0.1), BTC (4000 Satoshi), Eth (0.000982027 ETH) and so on.. If someone would like to buy in Eth, the system could automatically change the sell order from BTC to ETH price, finalizing the deal. It would be a great functionality for ICOs. DEX would then function not only as a matcher, but also a full-time, decentralized cabinet.
Moving out of the shadow
The time will tell us what strategy will be most suitable for the incoming ICOs, as well as our ICO itself (tokenloyalty.io). Maybe, in the future, (because we know that our project is business-based and price is related to demand and supply of the loyalty points, which is progressive), there is also opportunity to be in the “alternative” section, that may have higher price than the main asset. Let the force of utility tokens be with you :).
