The duo [Buterin, and co-author Jason Teutsch, founder of blockchain verification project TrueBit] recommends solving this in two key ways. First, ICOs — which the authors call “token crowd-sales” — would have no upfront cap on the amount of money raised, as is common among current offerings. That stipulation aims to avoid the stampede mentality that has overpowered rational buying behavior in certain capped ICOs, such as one in June that raised its maximum $35 million in just 30 seconds, with only 130 people able to buy tokens.
“Capped sales can reach tens of millions of dollars and sell out in a matter of minutes, leaving buyers unable to participate, disappointed, and frustrated,”
Secondly, the authors’ proposal would allow ICO investors to do something which has so far not been possible in token sales: cancel their purchase. The ability to withdraw offers in an ICO should help ensure that the law of supply and demand plays a healthy role in the process. That’s where the “interactive” component comes in, the authors write: “Potential buyers may enter and exit the crowd-sale based on behaviors of other buyers, and in doing so tend the valuation towards a market equilibrium.
We all know ICOs can be stupid. There’s literally no debate to be had there. The only question is what percentage of them are valid. Is it 5%? or closer to 50%?
For the Ethereum blockchain to truly reach it’s potential and have a long-term global impact, it’s obvious that some of the bullshit needs to be strained out of the drinking water. Vitalik himself has some ideas on how to build the strainer.
There’s no way to know whether the suggestions — in their whitepaper — to create interactive coin offerings will be broadly implemented, but they provide one path to what is probably a necessary evolution in this ecosystem. They essentially rationalize the token markets, in effect creating limits on potential exuberance by ending artificial constraints on supply. Giving investors more control on their investment.
- Commentary by Mack Flavelle
Bankex. A Proof-of-Asset Protocol that brings together Bank-as-a-Service and Blockchain technology to evolve capital markets. Tokenization of real-world and financial assets. Exact sales dates TBA.
Chimaera. A custom blockchain for hosting decentralized games.
Guaranteed Entrance. The GET-protocol is a smart event ticketing protocol, created by a company with working smart ticketing application with paying customers.
Horizon State. Blockchain-based governance and voting system.
Uptoken. A Crypto ATM on every corner.
Wireline. Open-source developer fund, which will invest in people and projects building cloud-based microservices.
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Originally published at medium.com on October 16, 2017.