In our Q1 update, we announced several events which included the launch of SafeHold, our desktop client, which is designed to allow users conveniently play with current and future features of the Ellcrys project.
We also introduced Spell, our official javascript client library designed to allow developers to integrate new or exist applications with Ellcrys.
Our team released a more detail whitepaper and fixed some issues that affected the stability of ELLD, our CLI-based network client. Lastly, we indicated our preparedness to finally execute the token sale, which has been the most popular request in our community. We are proud to confirm that this process has become one of our priorities.
This article is meant to give insight into how we are going about the IEO, current token allocation and structure and our thoughts about IEO and its impact for a project like Ellcrys.
What Is IEO?
An Initial Exchange Offering is a way for cryptocurrency projects or startups to raise capital for project development through the sale of tokens in crypto exchanges. Unlike Initial Coin Offering (ICO) where tokens are distributed to a wider selection of investors, issuers specifically target members of an exchange. Tokens issued in an IEO are listed shortly after the sale is concluded; This is in contrast to ICOs where the tokens may take longer to be listed on an exchange.
Notable Advantages of an IEO
Initial Exchange offerings have several important advantages that are relevant to our project:
- Active Community: IEOs expose projects to an existing community of investors who are interested in purchasing tokens and becoming active members of projects they are invested in. Token issues spend less on marketing and can offer guarantees and features (lock periods, bonuses or prices, geofencing) that are enforceable by the exchange.
- Faster Listing: Part of the requirements of an IEO is that the tokens are listed shortly after the conclusion of the token sale event. Projects and their investors gain access to a market quickly.
- Fewer Scams: Many exchanges are required to perform thorough due diligence on the projects they expose to their users. If these projects turn out to be scams, the exchange risks losing users and damage to their brand. These are serious consequences, as such, they are well incentivised to keep the bad projects out.
Notable Disadvantage
There are disadvantages to performing an IEO. This disadvantages may vary from projects to project and will depend on the characteristics of projects. For us, the most important con of an IEO involves token distribution.
As a project with a strong belief for equitable distribution of wealth created by blockchain protocols, we think IEOs do not promote widespread dispersion of tokens or coins. Most projects today conduct IEOs on one or two exchanges which sell out in less than a day and sometimes in seconds.
The consequence of this is that very few people get a chance to acquire these tokens. New users who are learning about the project are not given a chance to learn about the project and make a decision to purchase to it.
Poor coin dispersion can affect the security of proof-of-stake protocols if a large number of coins are purchased cheaply (low price with large bonuses) and fall into the hands of a small number of people. This is something we want to avoid considering we are building a hybrid proof-of-work and proof-of-stake system and a poorly distributed coin could affect the security of the system.
An IEO Can Work For Us
Although an initial exchange offering is not great for achieving widespread coin dispersion, it enables teams to quickly raise the necessary capital required to build out the project. Fundraising is a tedious activity, small teams spend time preparing and optimising for investors when they should be focusing on building and marketing the products. An avenue that allows teams to raise capital quickly and get back to creating value will always be welcomed by creators and entrepreneurs. An IEO is that mechanism and we are leveraging it for Ellcrys.
IEO + PeopleMint
For a long time now, we have made it known that our plans to use the PeopleMint mechanism to distribute a large portion of our initial supply. PeopleMint promotes a globally accessible mechanism of distributing tokens to thousands of people in many geographical rejoin.
Most IEOs platforms are geographically centralized as most of their users originate from one or two regions allowing only these people benefit from token sale events. The token issuers will need to hold several sessions in exchanges with users based in target regions of the world in other to achieve improved geographical diversity.
PeopleMint will allow anyone, anywhere in the world to have a chance at creating new tokens (and coins on mainnet) by scanning an image of their banknote in exchange for coins.
Tokens issued in the IEO and all previous token distribution events we have had will be based on ERC-20 standard and available in secondary markets. Tokens distributed in the PeopleMint campaign will only be allocated when the Ellcrys mainnet is launched. They will be distributed under a schedule that will slowly release 1/12 of the tokens monthly.
Current Token Distribution
- Total initial supply is 1,500,000,000. With 60% — Public, Ellcrys — 25%, Founders & Advisors — 15%.
- Only 12% (108M) of public allocation be distributed in all token sale events such as private sales, pre-sales, bounties, airdrops and IEO sale. IEO sale will account for not more than 65% (70M) of this slice.
- Last year we concluded our private sale and pre-sales session. We did not launch the planned ICO but instead used proceeds from those sales to provide the resources we needed to get to this point of our development.
- On July 1st, we will be launching a pre-IEO session which will last for 2 weeks. A total of 18M tokens have been allocated for this session. Shortly after this sale, the IEO will hold. We are in an advanced stage of engagement with several exchanges. The selected exchanges and IEO date will be announced once finalized.
- 88% of the public supply will be available in the PeopleMint phase. These supply will not be part of the ERC-20 supply. Although anyone can participate in this phase for free, it will require real banknotes, it will be extremely competitive with no guarantees and it will be more costly than the private sale, pre-sale, pre-IEO and IEO phases.
Token Lock Periods
The following are the current lock periods which kicks in when the token generation event occurs:
- Private sale allocations (11M) are locked for 6 months.
- 60% of bounty allocations will be released a month after token generation, the remaining will be released in the 7th month.
- 50% of pre-IEO allocations will be released a month after token generation, the remaining will be released in the 7th month.
- Ellcrys company allocation is locked for 1 year and 1/24 is released every month from the second year.
- Founders and advisors allocations are locked for 1 year and 1/24 is released every month from the second year.
A decentralisation of a blockchain network is not only measured by the number of connected nodes. The extent of coin distribution is also a variable that is considered when determining decentralisation. We at Ellcrys are aware of this fact and are committed to achieving broad and all-inclusive distribution of the initial supply.
