This article walks our community through the upcoming process of our highly anticipated mainnet launch, as well as the structure of our coin distribution to the community. First, we will present our rationale for choosing an Initial Mainnet Offering (IMO) and its advantages over comparable coin distribution methods, such as Initial Exchange Offerings (IEOs), Initial Coin Offerings (ICOs), or Initial Airdrop Offerings (IAOs). Then, we dive into the specifics of our valuation and allocation, followed by how we arrive at these numbers, why they will be healthiest for our project going forward, and some expectations we might have given these numbers as well as the performance of similarly structured releases.
1. What is an IMO?
The Cypherium Initial Mainnet Offering allows users of our software to purchase Cypher coins directly from our network in order to operate our technology.
Because of the unique and turbulent valuations of cryptocurrencies in recent years, it is important for us to distinguish this system from other popular forms of token releases. ICOs were met with much hostility in the public eye, and for good reason. ICOs were in some respects hollow imitations of the IPOs that permeate modern finance. Most ICOs sold coins or tokens to investors that wanted to buy new cryptocurrencies before their blockchains had been made public so that they might make a profit once that currency grew in value, either through adoption or (more often) through hitting a popular exchange, where the token could be day-traded.
Many ICOs that took place in 2017 or 2018 have vanished. In some cases, projects have run off with the money of their investors with no intention of putting out a working product; in other cases, the tradable tokens accrued a wildly high and inaccurate valuation, until they were exposed and deflated as meaningless placeholders, signifying the stagnation of projects that have depleted their resources and momentum. However, in the most successful ICOs, the ones that continue to support the progress of new crypto projects, those Initial Coin Offerings were quintessential examples of security issuances. Put plainly, ICOs were a strategy for new projects to receive liquidity from a wide array of investors riding the hype of a Bitcoin bull market on the basis that they would receive a guarantee of some future equity. While many in the space fought against this framework, in practice, ICOs operated exactly as securities, which has gotten our industry in a number of major regulatory binds. ICOs are, in fact, partially to blame for the regulatory mistrust facing the decentralized tech industry at large.
An Initial Mainnet Offering follows the roadmap of bitcoin and other leaders in the distributed ledger space to combat the negative aspects of ICOs point by point. The crucial difference is, of course, that an IMO offers users to participate in a technology that has already been successfully delivered. Firstly, this combats the possibility of the project being a scam or hollow promise. Unlike ICO schemes that essentially issue stock for a holding company, Cypherium’s IMO is grounded in the technology itself. Anyone interested in purchasing our coins can experience firsthand our network’s speed, throughput, and innovation. Additionally, an IMO helps our project work toward a fairer valuation of our operating network. Because purchasing Cyphers does not amount to idle speculation on an exchange-based security, our sale can stave off the turbulence of day-trading and profiteers. And finally, delivering our network before issuing our coins to interested users should provide some transparency and clarity for regulators, or really anyone interested in decentralized technology, who might be resistant to the uncertainty and distrust that unfortunately dominates our industry’s coverage in the public eye.
2. The numbers
The specific metrics regarding our Initial Mainnet Offering and token distribution are as follows:
The stages of Cypherium’s development:
Miner allocation halves after certain number of coins are mined. The schedule is shown below:
1st halving: 3.2B
2nd halving: 1.6B
3rd halving: 0.8B
4th halving: 0.4B
5th halving: 0.2B
6th halving: 0.1B
7th halving: 0.05B
8th halving: 0.025B
9th halving: 0.0125B
10th halving and beyond: 0.01B
Total circulating supply at mainnet launch: 1.0 Billion tokens, valuation of $150 million.
Total circulating supply after 10 years: 13.2B.
3. How do we land on our valuation?
There are, of course, a number of factors that must be considered when determining a reasonable price point for operating the network. How can we value a particular project in the context of a market that (while recovering) is still significantly bleeding? What determines value for crypto projects? How has that value historically been expressed in initial launches and how does an initial valuation contribute to the overall health of a given network?
One of the most important considerations facing our valuation is the fact that Cypherium has already delivered working products with observable statistics and meaningful partnerships. Presumably, if you are reading this, you already have some knowledge of Cypherium and its innovations in the blockchain space. However, some important (and brief) highlights of our mainnet include: a dual chain structure in the mainnet that utilizes both HotStuff and PoW to achieve fast, secure, and scalable decentralization; high network throughput and speeds reaching upwards of 5,000 TPS; Turing-complete smart contract platform; Java virtual machine; instant transaction finality. Compared to other third-generation solutions such as Algorand, Avalanche, Hashgraph, or Conflux, Cypherium is the only blockchain that revises the working innovations of the crypto space — instead of sacrificing decentralization or veering into unproven consensus mechanisms. Cypherium seeks to make Proof of Work scale, at a time when so many peer projects have abandoned the fundamental innovation, proposed by Satoshi in Bitcoin, that has brought our industry to life. Cypherium is the first time that this open, permissionless mechanism has an opportunity to become a viable transaction solution.
Moreover, in addition to the value that these innovations pose to the crypto space, Cypherium already has an enterprise-level blockchain available for private and consortium use through both IBM and AWS. Cypherium Enterprise does more than build brand credibility and display awareness of the power of our technology; the enterprise blockchain adds concretely to the robustness of our mainnet in several ways. First, instead of paying membership fees, enterprise members can hold Cypher coins for voting power in a blockchain consortium. This promotes CPH beyond the mainnet and creates a symbiotic relationship wherein private blockchain users have a stake in the public network and vice versa. Secondly, enterprise adoption attests to the speed and efficiency of the underlying technology of our network. For example, we saw this in action recently with the release of the Cosmos network. Prior to their public network, Tendermint had been released as a private chain technology first, then Cosmos was built on it. Enterprise-grade chains may serve, in this way, as a proof-of-concept that may eventually migrate onto the public chain. Thirdly, Cypher coins that operate the private chains can be used as intermediaries for exchanges, which serves a similar purpose to that of Ripple’s XRP. This promotes general liquidity in the crypto space, as it encourages private and consortium blockchain users to maintain a stake in digital assets. And lastly, the Cypherium Enterprise chain can serve eventually as a Layer 2 solution, much like Bitcoin’s lightning network, that bother augments and is anchored to the public chain, in order to help our entire ecosystem scale as it continues to grow.
So, in summation, our valuation comes primarily from our software’s deliverables, the value that our mainnet adds to the crypto space and the demonstrable benefits put forward by our preexisting private chain solutions. This — taken holistically with our partnerships with the US Faster Payments Council, AWS, IBM, and IC3, as well as our advisory board full of luminaries such as Emin Gun Sirer, Bryan Ford, and Jeremy Gardener — offers a carefully considered valuation that respects our technology, our developers, and our community.
4. Precedents and expectations
CZ says it best: “Good tech wins!”
But what does “winning” look like? And what should we hope for the Cypherium network?
We believe that the healthiest path in this stormy climate has been and continues to be the one that Cypherium is walking. In other words, we must continue to let our technology lead the way for our community rather than letting zealous marketing or enthusiastic hype get out in front of the usefulness of our software.
Our network benefits most when it is not the target of empty speculation, but rather a subject of fascination for the developers and problem solvers along today’s technological frontier. Like Bitcoin, like Ethereum, and now like Cosmos, Cypherium refuses to put the cart before the horse, insisting instead that our innovations and industry connections speak for themselves.
A positive launch for Cypherium will be use cases, adoption, new partnership; it does not mean riding market trends towards a favorable outcome.
For good tech, “winning” means “working.” It means becoming a necessary part of the decentralized tech ecosystem and a state-of-the-art enterprise solution. And with IMO, that is exactly what Cypherium intends to accomplish.