A simpler approach to ICO presales

Last Friday, Token Report took a huge step forward in our mission to reinvent financial research for the emerging cryptocurrency markets: We published our smart contract.

The smart contract, which you can view here, establishes the EDGE token, our mechanism for growing with this market while preserving investor edge for our users. The mechanics are simple:

• Individuals access Token Report on a tiered membership model that enables us to serve both the crowdsale participant and the individual high-volume trader.
• Institutions access the Token Report API, paying per API call in a fractional amount of the EDGE token. If demand for our service increases, we grow revenue without diluting investor edge.

We have now minted 60 percent (31.5 million) of the capped total supply of 52.5 million EDGE tokens. Additional tokens will be minted as they are issued to participants in our token sale, up to the supply cap of 52.5 million, which will not change. Token Report will hold this 60 percent share under the following lockup terms:

• Half the company’s EDGE tokens (15.75 million) will be locked from trading for 18 months after our crowdsale opens.
• A quarter of the company’s EDGE tokens (7.875 million) will be locked from trading for 180 days after our crowdsale opens.
• The remaining quarter of the company’s EDGE tokens (7.875 million) will be available to trade immediately after our crowdsale closes.

Most of the more than 800 ICOs we’re tracking are now doing things the other way around: They’re raising funds ahead of ICO via a SAFT (simple agreement for future tokens), which allows accredited investors to buy a security that guarantees them tokens at a discount to the public ICO price. Cooley LLP, which is advising us on securities law, has done a lot of great work to improve the SAFT. (Cooley partner Marco Santori explains a bit about that here.) They even made one for us. But we decided not to use it.

Instead, we are proceeding with our presale by selling EDGE tokens directly to large-volume buyers. We can do that because we already have a product: Token Clarity, which you might call version 0.1 of a financial data service for crypto. Selling tokens directly, instead of through a SAFT, will allow us to do two things in the presale:

1. Open it to non-accredited buyers. Since we have version 0.1 of our product built, we can sell the EDGE token as a utility token and anyone can participate, whether or not they can (or care to) demonstrate they meet regulators’ wealth threshold, known as “accreditation.”
2. Negotiate discounts based on timing and volume. Buyers who purchase a large number of the EDGE token should get a better price, as should buyers who move early. A SAFT would require us to set the same discount for all presale buyers. The token gives us flexibility.

Our presale is open today; to participate, email us at presale@tokenreport.com. If you have questions, you can email us there, too, but the fastest way to get them answered is to join our Telegram group.

In order to duplicate the features of the SAFT that we do like, we’re offering anti-dilution protection to our presale investors. Our target price for the crowdsale is 2 USD per EDGE token. If the market prices our token below that rate, we’ll top up our presale investors with EDGE tokens so they receive their supply of EDGE at the agreed-upon discount.

In order to give this strategy time to unfold, we are pushing back our crowdsale date. We have not set a firm date, but the crowdsale will likely be held in January. Today, we begin a pre-registration process for that crowdsale, to allow people to participate without having to flood the Ethereum network on the ICO date. We are planning to conduct the crowdsale as a descending auction, allowing the market to set the price for the EDGE token. As a result, we are revising our previous hard cap of 29 million USD. The hard cap will depend on the price or prices set in the descending auction.

Pre-registration for the crowdsale is the same as registering for the beta version of Token Clarity, which you can do right here. We’re offering the beta for free until the crowdsale closes, in hopes of getting your feedback. Send us feedback using the /request command in Token Clarity, or by joining our Telegram group.