The Pre-ICO Checklist, with William Mougayar and Ty Danco
I sat down last week for a video call with Ty Danco, a fintech angel investor in Boston, and William Mougayar, the Toronto-based early advisor to Ethereum and co-author with Vitalik Buterin of The Business Blockchain.
This was before three issuers pushed back their token generation events (TGE) citing security concerns, and before the U.S. Securities and Exchange Commission’s long-delayed thunder over The DAO.
William, Ty and I covered a handful of topics over three quarters of an hour. We didn’t solve all of crypto’s problems, but we did get into a discussion about a topic that’s of great interest to me and to Token Report: How can a token issuer signal to token holders that it is legitimate and worth their time to investigate? (Tomorrow, I’ll publish a second excerpt from our conversation: A post-ICO checklist for startups.)
Many are falling short on what we see as requirements. For example, of nine TGEs that originally planned to go out this week, we found zero that planned to publish a smart contract address in advance. On Token Tracker, it can take extra legwork on our part to obtain critical information, like a hard cap valued in USD, ETH or BTC.
Some questions are trickier. For example: Does a token need to be a protocol in order to be credible? “This whole thing started as a funding of protocols, but now it’s becoming applications,” Mougayar said. “It’s becoming anything, really.”
We talked about tokenized assets, which unabashedly resemble securities. Mougayar was bullish, but drew an implicit line between, say, tokenized real estate, and projects that are bolting on a token without good reason.
As for a checklist, Mougayar said best practices are still emerging. “First and foremost is real transparency: Transparency and being very open about what you will be doing with those tokens,” he said, citing two data points in particular:
- Who will get the tokens (and how much of them)
- Lockup period for the company and insiders
Mougayar has launched a project called Token Filings, aiming to keep track of equivalent transparency data in projects, post-TGE.
“When we were building it, it was very obvious that the information was very difficult to find,” Mougayar said. “It was everywhere, and it was not just on the website.”
Token Report sees the tokenized world in the same way.