How to do better ICOs

Transcript

if I should introduce myself in this crowd I probably are a known person but if not yet this is kind of what I contributed to over the last years and I want to talk today about an idea okay okay yeah about a refundable ICO and so we kind of like seen in the last year's especially last year all of these icos right probably due to the fall of the year c20 token as well but so kind of

like we figured how we can automatically collect money and that's really the the real reason why it took off so much is that you can not only have your own token the way it works and that the way you want it to work but also you can have this automated process because you have smart conducts which can interact with each other and that's great and a lot of money was collected during that time and still is and now kind of we have to focus on how we want to do this in a more sustainable way of how we want to do these this that is not only like connecting or collecting money and then the team figures out what to do with it but how does some kind of feedback loop

between the investors and the project creators and founders okay ah it's the other way around okay so yeah a token I mean probably most of you know but the token is on a theorem especially is nothing else than a smart contract holding account balances there's probably a lot of confusion in the blockchain space of what like like night native cryptocurrencies and what other kind of asset tokens and like what are USD 20 tokens which is kind of the synonym of the token standard as of now so it's just a list of account balances in one

contract and you can simply tell the smart conduct to gifted money to somebody else and it says just transfers internally the accounts to another person so and ICO is exactly the same using these smart conducts but it nicely automate the process so you gave give one smart connect money and it releases you tokens in return the problem right now is as I described this money is collected that's kind of the point where all the money goes to the founders most most of the time today this is going to a moody signature wallet and then it sits Tyrion is spent over time on the

project somewhat successful sometimes less successful and sometimes the money grows over over time as well and then there's even more money than it was initially collected and then this project to think about okay now what to do what else to fund with that and that's all great but it also led to a lot of scam projects in the last especially in my opinion the last few months it's like kind of growing I SEOs for either applications tokens with like rather questionable what is their value or for project which are actually outright scams so making a fair ICO I think is something we can actually

easily program and today I'm showing one example what it could be so kind of this is the current situation right like we just get it on and we're all happy so Vitaly came up with an interesting idea called the dico or Dao ICO and I will quickly explain that and then go to my idea which is rather very rather similar as I figured out later but the idea here is kind of that you collect the money but it's going basically on a tap per second it goes basically over time to token holders and the participants in the ICO have an ability to

like stop that like dispersion of money to the project so it's given over time and the contributors have the ability to raise that tab so to raise the speed the money is given to the ICO project for example if they succeed is if they see it succeeds and it's very successful but there should be more money and to do certain things faster they just raise the tab or if they see the project is a failure or it's a scam for example or whatever internal struggles happened at the project what most likely will not succeed they could vote on putting it into some kind of withdraw mode and

withdraw them funds and that's actually a very good way of how you could do that and it kind of solves a few of these problems in this case I think the main issue here is that if a 51% attack happens and they want to cancel the ICO the developer could make another ICO but it's kind of like a lot of work right and but yeah it kind of prevents against these kind of these differences the idea of the refundable ICO and I call it a stencil semi-truck ICO because it looks very much like it but it's very similar but a bit simpler it doesn't not necessarily work for all current

projects and we are actually planning to use this too in the project I'm doing now which is a blockchain for the fashion in design industry so it's a separate blockchain I would like to actually use that model and I still have to figure out if we can do that and what kind of legal stretching and this involves and so on which kind of takes the fun out of the whole thing in a bit but it's kind of the same idea so instead of giving the funds directly you give the funds over time so called on at app per second and each individual at all times can basically get his money out of the fund again so basically

everybody can personally decide if he still believes in the project or if it doesn't anymore and if you for example doesn't believe in the project anymore he could simply call the withdraw and stop the whole thing and get whatever money he still has on his side for himself so there are three phases there's an allocation phase which is obviously you know the most leases like some 20 days or so of people contribute to the ICO there's a time where the money then gets distributed to the project and let's say for example that's two years then this is a reasonable long amount of time that

people can see that's the project will work out you know are they doing what they're supposed to do and and there's some kind of decision making face long enough that you don't lose all your money in a way like in one or two months and then there's the idea of the possible refund and as a book work here is kind of you would just send the tokens back and this obviously requires a token standard like triple 7 which allows to notify the smart conduct that it now received the tokens and then it would give you back whatever percentage you you still have free in the ether or available in the ether and would lock

the other balance so one thing would you create multiple tokens but that's complicated right if you split your tokens and different types that's can get complicated that what you can do is you can actually lock a part of the balance then you can actually still interact with this token with every wallet existing just some balance parts you can't move until a potential swap in the future and the last phase in this case in for example in our case if we start the look so network would be the swap to the native token so this IC o---- is obviously not for every kind of especially for this kind of app tokens we see on aetherium I mean this could be made possible too but ideally it works for when there's

some kind of like swap face or linking face at some point where that that pre token gets swapped to the native token for example in this case so these three phrases is kind of like the first one is just allocating where I could always refund 100% so imagine I go to the website and in the past we had the issue that people want to invest in an IC o---- they rather don't even read across the website it's just like it missed immediately and we kind of had this these these race with these races going on in this case you could simply see okay and I didn't really read and actually that's different than I thought and you could just refund at all times in the allocation phase and then you

have this distribution phase let's say it's two years and in this distribution phase you could actually refund whatever is still on your side and on the end you end up with a part of the tokens or a part of the refundable tokens like as a lock balance and the other one is a not lock balance and you can at some point even if the lock balance then swept against the native token so this kind of looks then you know like a Tesla semi truck so let's say you have a pre SEO in your in your public SEO the important thing here is that you would have to have exactly the same ratio for everybody participating in the

allocation phase or in exactly the same refund if you make any kind of different ratios for example let's say the people in the pre IC o---- get 50% more so then these 50% would happy lock balance since the beginning so the only thing they can do is with that 50% they got extra they swap it against the native token on the end but I could not refund that because obviously the tech would take more out of the pot and there was ever being put in right so in this way for example after I decided after one year yeah I don't believe in the project anymore or whatever happens the ether price goes higher than the project potential or whatever I could withdraw my money still

get 50% of my ether out lock the other 50% of the token so I actually still participate in the project success if it actually launches at some point and I have less of a risk I'm taking and I could be part of it the other part is that the tokens you give back they could be actually for sale again so somebody else could come and say okay now I still believe in the project and actually I'm now buying these tokens there's still like the question here if they have should be lockable or not because obviously this has to be calculated outright so that there's never more to

be able to take out of the pot and actually it's inside but this is kind of like a good model to disperse the trust on either side and for example if you have tokens going to the founders or tokens going to lawyers and advisers and so on these tokens would be locked at all times until the actual project starts so the founders token itself have basically no value because they can't trade them until the actual project starts because otherwise they would be able to withdraw money they ever actually never put in so in my opinion this nicely aligns the incentives of the founders to make the project a success

and the investors to kind of support the project over time until the point when the project actually can like start and get successful and if this is this could be any time during that two years there could be the swap process so people could say okay now the project started or whatever functionality is available and we want to make it now accessible then you simply swap and when people swap obviously they have no possibility to refund anymore because they don't have to a pre token which take ball in the IC o---- so it would still be the same process the money would still go over time to the project but they have more security because nobody will refund

all a big chunk of people will not refund anymore that's the basic idea and I think I've quite some time still left right so if we want to have a discussion about that then feel free come on the ratio of the refund would be one to

one let's say if it's 1 to 1 right 1 euro or whatever this so it's a fixed ratio it will be the same ratio as in the public ICO and this has to be ideally equal for everybody and the zero point five the one point like the zero point five he got extra a pre ICO that's basically locked balanced so if you it would be kind of like probably like this so this would be his 0.5 and this would be his 1 so this is what he could send back to the to the smart conduct to refund and this is something he can only swap once the voucher actually starts because otherwise he could obviously refund more than he ever put in which would be a problem right yeah to prevent the refund to actually prevent multiple

refunds I mean it's it's his decision you know if he doesn't want to have it locked up he doesn't refund but if he refunds the other part he still keeps has to be locked because otherwise or for example in this case the previous your people it has to be locked because otherwise they could refund as well and and that they could refund money they never put in right and if you believe in the programming once the project actually starts or the token function it becomes available whatever and there's some kind of swap process exactly in that point you have whatever you were expecting yeah okay maybe I should repeat the questions then

yeah I mean could an attacker kind of like buy a lot of tokens and and then we found a lot of tokens to destroy the project I guess sure he could do that the question would be what is his benefit to do that because it just it's like work for him but yeah I mean it could be potentially an issue but on the other hand if the tokens are we Bible

then somebody else would jump in and buy them so I mean for example it's kind of like the the ICO is not over for two years and you could like reload the contribution pace always looking if there's now tokens available again to buy true if you have that money available then sure but maybe you don't need tend to make an IC o---- in the first place yeah I mean there are definitely ways of how you could probably game it and actually I mean it's just an idea and then thinking about something because I

would like to bring more Fame a fairness into the whole space and kind of like gives this feedback loop between the founders in there and investors and obviously we have to see if this works out I mean this is kind of like when we started to blockchain and use Bitcoin and it's here and back then I mean it was unclear if that the whole game will work you know like if the miners and users and gas price and so on and so fired like holds up pretty well that could just work perfectly also couldn't right and you could game it I mean there's also ways of how you can attack the network and we had spam attacks and all of these things that just figure that it doesn't make much sense at some point well there was just waste maybe they didn't short enough and paid

more on a network so could you repeat that again they could do that yeah that's true but I mean in the private pre-sales is most of the time people you know and people you select that's the kind of like it's kind of to secure money and

also people you choose so what we probably you chose then but but I mean yeah it could be could be possible so I mean if the token would be tradable right then it the nice thing is this kind of creates a base price so in case crates crates is the minimum of what you can still take out of the contract as a base price which actually could even increase the token price a lot over time because there's a base price and then

there's the speculation of what it will be more worse than actually these are being put in and that's exactly what I would like to see this which is playing out and see how it works out and and concerning the risk with the piece a I mean it could be one to one author for the pre-sale and you just say okay it's just your secure spot in in the in in the IC o---- so the nice thing about this and that's like different to the dico in the dico you need to consensus with a lot of people and you need specific interfaces the beauty of this

is the only thing you actually need is a wallet which can receive tokens and send tokens for example if you use ears a 7 to 77 and we will hear a talk from geordie after that the ico Kandra will know when he received the tokens and he could immediately initiate a refund so the only thing you need to do is having a wallet which is able to receive USD 20 like tokens and sent them out and you just sent your tokens back to the ico contract and it gives you immediately the refund so it doesn't require any additional interfaces which is kind of what also makes it rather easy to interact with so the exchange rate of the refund has

to be exactly the same ratio and it has to obviously be in the currency you put in in this case ether on the blockchain yeah yeah it's exactly the same ratio like you put money in because if you make a different ratio I mean you you probably could think about that as well I mean there could be all kind of variations of that but then you have to do a lot of calculation and make sure that on the end people can't take out more than they put in sure if you count it in dollar terms it would be different sure you could also use it as a savings wallet with slight decrease and maybe

increase in in dollar terms I mean that's kind of the risk and here you take less risk but this is technically the risk you're taking investing in any ICO I mean there's some project I participated in if I would just have kept the ether that might be a better idea by now but still to be determined right I mean this is kind of the risk you take by investing with ether or any other cryptocurrencies but in this case you could just if for example if you see the ether price goes up and you want to you know get your ether because you believe there are more worth than the actual tokens that will be a problem for the project but at the same time the the ether which would still stay in the

project for the project also went up in value so probably in dollar terms the project was still end up with a very similar amount of tokens and if it shows success these tokens which again available will people probably bought as well so this is exactly the thing what we probably would have to see then over time how well and how how good it works out obviously everything in the cryptocurrency space is somehow dependent on the ether price going up or down I mean like if the price goes now super and everything then projects will have less money available in any case generic across the whole network but I could actually play really well out for actually projects funding even if money

goes out and later comes in again or even if it stays out it could be the same amount of dollar available okay could you speak a little louder yeah

hmm as only the question is like the risk you take by participating in in like Jamaica by making it refundable I see oh yeah I mean it's it's very similar I mean in the dico if people vote to put the project at the halt then the money immediately at this point is not available anymore for the project and it would be refundable in this concept is everybody's own choice right I mean it could be obviously there is like a fat moment and and people like panic they could go out but again you know this could also recover because

people can go in again so it's it's it's hard to say if this is more risky or less risky but it gives definitely greater choice to do the individual in my opinion yeah I mean the thing is you could always make your token you know you could always have a boolean in your token which just prevents it moving at all and say hey we lift this at some point or we don't in this case what I also like is that the founders token itself has no value until the actual

promise is fulfilled and this is actually not because maybe it's wanted but it's technically necessary which is also a nice component I don't fully understand the question

but I guess it's about how the refund works and and how to make something in the dico refund and you put it in a risk Ross site and people withdraw their money in this model you simply send back your tokens and it starts to refund right in a moment so basically you get exactly the part up you still hold but you have to send hundred percent of your talks if you for example get want to get the full refund possible at this time you would have to send hundred percent of your tokens and it would only take half and lock the other half you can also only choose two to refund a part of the tokens then it would like like for example after one year it would look then like of whatever token amount you send fifty percent of the token it would lock and fifty percent of what the ether

would be worth you get back so it's up to you whatever on how much you refund and when so the powers X back with every investor separate and it's a withdraw so nobody needs to take care of any kind of refunding except each person's themselves I'm not sure what my time is it's yeah no more questions so I mean what I would like to see is these kind of ideas to be discussed to really like figure out what are good models of how we can have the aftermath of an ICO done in a safe and a more fair way and a more yeah in a way like that there's some

kind of feedback loop and not like just penis on the website so I have not put that online yet but anybody can put it online maybe I put that I'm not sure if this should be discussing in an A or C or so I think probably just read it it's fine already I guess maybe in the se I don't know and you had just one one one last question then okay so your idea is about like creating

milestones and then refund I mean this is kind of what the dico does right so the idea is that their milestones if they're not hit and people can refund the problem I see here is with the Dicor that we saw on a scene already with the DAO like getting a bunch of people to vote is rather complicated in a decentralized system okay only doing some kind of a milestone evaluation phase that's an interesting one yeah I could work only refunding in certain time frames could be a good idea okay I think that's okay one last one yeah it probably is more generalizable I mean

the obvious one I mean this is to what we would like to do is like swapping it for native Network talking at some point which obviously has some kind of regulations of how you could frame it it's a pre-sale of a software license this is like security which is obviously right now the big thing here to be determined I guess you could also make it not transferable and then maybe the security is less of a problem but yeah it could technically also be swapped for some kind of native app token utility token protocol token whatever are a system to I mean yeah thank you so much [Applause]