Trustless ICOs w/Smart Media Tokens

Andrew Levine
Oct 29 · 4 min read

The most unique, and potentially disruptive, feature of SMTs is the ability for anyone to launch a powerful cryptocurrency with industry leading features, without having to write a single line of code.

ICOs

Potentially as disruptive, however, is the unique value proposition that SMTs will offer with respect to ICOs (Initial Coin Offerings). With any other token launching protocol, it is the developers of the cryptocurrency who are ultimately responsible for airdropping the cryptocurrency to the people who contribute to the ICO.

Minimizing Risk

This creates two risks to the stakeholder. The first is the risk that the smart contracts will have a bug. At Steemit, we believe the idiom “All code is buggy,” and this belief continually shapes our development practices and priorities. Therefore, the risk that the smart contracts will have a bug is significant. The second risk is that the airdrop will not be faithfully executed. In other words, there is generally an element of trust.

Decentralized Airdrops

With SMTs you get the reliability and security of Steem, and decentralized execution of the ICO parameters. Once the creator of an SMT finalizes the traits of their token, including how the ICO will proceed, they give up all control over the token launch and distribution process, and hand over control to the Steem blockchain which faithfully executes the airdrop.

In short, SMTs are not distributed by an organization that you need to trust, they are distributed by a decentralized blockchain protocol that has been in operation for over 3 years: Steem.

Highly Customizable

Just because you don’t need to write code in order to launch an SMT doesn’t mean they aren’t a highly technical product. As you will see, there are a lot of “knobs” that an SMT creator can turn, which results in nearly infinite customizability. In this post we’ll talk about just a few of these knobs and the potential value they offer to those considering launching a cryptocurrency.

Minimum STEEM Contribution

You can think of the ICO process as having 3 stages, each of which should be designed to incentivize contributors to reach the next stage. The first stage is delineated by the “Minimum STEEM Contribution.” If this parameter is set to 100,000 STEEM but only 99,000 STEEM is contributed, then the ICO will not be executed and all of those funds will be automatically returned to the contributors. This protects contributors in the event an ICO fails to reach its goals.

Contribution Soft Cap

The next major stage is delineated by the “Contribution Soft Cap.” You can think of this as a “safety cap.” It might be a goal you believe you are likely to achieve, but not the highest contribution goal you’re hoping to get. In order to maximize the odds that the SMT creator can reach this goal, they are able to set “Pre Soft Cap” and “Post Soft Cap” token distribution parameters. They are able to specify how many tokens they want to distribute to a contributor based on how much STEEM they have contributed before the soft cap is reached, and a different distribution for after the soft cap is reached.

For example, an SMT creator could choose to distribute 5 of their SMT for every 1 STEEM that is contributed by a given account prior to the Soft Cap being reached. The SMT creator could also choose to set the “Post Soft Cap” token distribution parameters such that 2.5 of their SMT is distributed to an account for every 1 STEEM it contributed to the ICO. In other words, the account that contributed prior to the Soft Cap got a 100% bonus.

Contribution Hard Cap

But an SMT creator might still want to create some scarcity around their token so that those who contribute after the Soft Cap still feel like they got a “deal.” That’s where the Hard Cap comes in. It acts as a ceiling on the total amount of an SMT that accounts can receive in return for contributions. Once the Hard Cap is reached it will become impossible for more contributions to made. Even if the creator of the SMT wanted to increase the Hard Cap they couldn’t because all of the parameters are “locked” in consensus.

If the Hard Cap has been reached, anyone who wants the SMT must wait to purchase it from an existing token holder, or earn it through Proof-of-Brain, assuming the SMT creator decided to leverage those features.

No Code?

Just because anyone will be able to launch an SMT without writing a line of code, that doesn’t mean they are underpowered or simple. SMTs are an enterprise-level product, and there are a lot of features that one must understand in order to take full advantage of the capabilities.

More to Come

The ICO features are just one example of the types of options developers and entrepreneurs will have at their disposal, and how a trustless implementation differentiates SMTs from other token launching protocols.

We will continue to release more information about the various features included in the SMT protocol, so be sure to follow @steemitblog or subscribe to our e-mail newsletter. We will also be talking about SMTs, and much more, next week at SteemFest! So be sure to tune in to the livestreams.

The Steemit Team

officialsteemit

The Official Medium Blog for Steemit

Andrew Levine

Written by

Head of Communications, Steemit Inc.

officialsteemit

The Official Medium Blog for Steemit

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