When yesterday our project announced the first ICO in the history to run on EOS platform, we naively expected nothing but a warm welcome from the EOS community. However, after publishing our post on EOS subreddit we got a lot of comments that the only proper way is an airdrop.
Here are some most explicit opinions:
why do they want to do legacy fundraising on EOS?
Just airdrop your tokens. Keep releasing the alphas and betas of your project and your tokens will gain value organically.
Airdropping model is for serious projects. ICOs are for scammers that want to exit scam with money without delivering anything.
While during the discussion we managed to present our arguments so that our interlocutors seemed to agree with our point of view, we realized there is a growing belief among EOS community, the airdrop is the only proper way of raising funds for the project.
Even though we understand in some circumstances an airdrop may be the right solution, in our opinion preferring the only way and rejecting completely ICOs will be detrimental not only to our project but for the whole EOS network and EOS community. Here is why.
An Airdrop — this project is amazing — I got free tokens!
An airdrop seems to be perfect. EOS token holders get free tokens and if there is a consensus on the market they are worth something, the project to issue them can fund itself. The success of EosDAC with current token cap estimated at around $70 mln USD led almost all the EOS projects to take this way.
Other notable projects to choose an airdrop are Scatter and Everipedia.
So let’s check why they decided to do so:
This block producer candidate decided to do an airdrop in order to spread the tokens among EOS token holders. This was a brilliant idea, as almost all the members of EOS community got a clear incentive to vote on EosDAC as a block producer and as we can observe this really happened. Now the token value is backed up by the earnings as a block producer. An airdrop was a perfect choice.
Scatter develops an identity and reputation system to be used within EOS network. Even though the tokens were airdropped, the earnings for the project in the long run will be from users buying or renewing there identity. It will cost 1 EOS and when doing it, a user will get 10 extra RIDL tokens. Thus the RIDL price will be around 0.1 EOS in the long run. An airdrop was a perfect choice, as the earnings are not from the tokens, but from selling the identities.
Here the situation is different, so it is not a good example and I will not dig into details. However, there is a clear partnership between the creator of EOS — block.one and Everipedia. The partnership announced at the beginning of the year at the big event in Hong-Kong during EOS ICO helped to raise EOS token price. Even if a part of this extra cash was spent by EOS to fund Everipedia, even token valued as 0 will not be a disaster to the project.
So when an airdrop?
What do Scatter and EOSDac have in common is that they are focused only on EOS community. They have a clear incentive to give free tokens, as the wide adoption of the project depends only on EOS token holders.
There is also another situation in which an airdrop is perfect, and by no means I would like to say it about the project mentioned here, as I see a lot of effort and good will to make them happen!
The other situation is when a project does not have much but just an idea or very early stage of development. In this kind of situation the real token value is near 0, and every positive valuation of the project will benefit the team. The team is happy with token valued at 50 cents, but also with token valued at 5 cents — every positive number means earnings relative to almost no spending.
An ICO — a legacy fundraising?
Ok. So here is the situation of our project. The project started almost a year ago, and its current stage of development is the effort of mine, and my partners — Kasia and Magda that joined in the meantime. During this time we managed to create a working application with its first version released in April. The application to run needs resources — servers, EOS tokens after integrating with EOS and staff to support the application and users when using it.
Our token has a real value — it is the cost of using our existing application and its minimal value must cover all the expenses needed. Our project cannot simply afford giving free tokens, as the users could come and use our application and we would not be able to provide the service, because we would have to cover all the costs without having any payment. It is clear that an airdrop is not an option for us.
Going into mainstream
The other reason we prefer an ICO over an airdrop is that the prospective user of our application is an average John Smith, that maybe never heard about EOS, blockchain and cryptocurrencies. The value in our solution is not dependent on distribution among EOS token holders. We see value in real supporters of our project and we want to create a relationship between us and our token holders. Giving tokens just to everyone is detrimental to the group of project supporters, as they are treated equally as project haters — no matter your feelings about our project you get our tokens.
I want free tokens — how to get them
If you really want to get some free tokens from us, you will need enter into some relation with our project. In a couple of days we will present our solution at Blockchain Expo Europe — if you join our pitch and use our app., you will earn tokens. In July there will be also a promotion for users to register in our app using Scatter — still we want to engage you and to become a part of the project.
Token price after ICO
We believe that what we propose can be a much better option for token purchasers. Even though our token is a utility token, its price is backed up by the value of our services. We are selling it with 25% discount compared to the minimum token price after ICO, and in the long-term and application scaling the token will allow accessing more and more services if expressed in USD.
Airdrops only harmful for EOS community
The final remark is that simply making airdrops the only way on EOS platform is harmful to EOS community. The price growth of EOS token is dependent on the number of projects to use it. And there are a bunch of projects that prefer to do an ICO because of the reasons similar to ours. If they do not see a chance to run a successful ICO, they will decide to stay on Ethereum or other platforms. The success of our ICO will be a success of the whole EOS platform and similarly our failure will show this “airdrop only” attitude that will discourage many talented teams to work on EOS.