Vitalik Buterin does it again, this time he wants to change the way ICOs work
In a new released whitepaper, Vitalik Buterin and Jason Teutsch tackle the creation of ICOs. The whitepaper details a potentially trans-formative protocol for initial coin offerings which has the aim to balance the capped and uncapped token sales.
The whitepaper focuses on the ERC20 tokens, so only on the Ethereum network.
If we see that two of the industry giants as Vitalik Buterin, who is the creator of the Ethereum network and Jason Teutsch, the leader of the TrueBit Foundation, which provides a verification tool for block-chains. More details can be found in the TrueBit whitepaper.
Proposition
No token crowd-sale satisfies that both:
(i) a fixed amount of currency buys at least a fixed fraction of the total
tokens, and
(ii) everyone can participate.
Source whitepaper
Solution
The new ICO protocol would give buyers the alternative to pull back the investment, while assessing the buyers's stake in respect to the entire ICO and adapting the bids accordingly. Also the new ICOs will be not capped in the initial phase.
Capped sales can reach tens of millions of dollars and sell out in a matter of minutes, leaving buyers unable to participate, disappointed, and frustrated.
Source whitepaper
Potential buyers may enter and exit the crowd-sale based on behaviors of other buyers, and in doing so tend the valuation towards a market equilibrium.
Source whitepaper
Buyers will be able to set the amount of tokens they want to buy at a certain price, by entering bids for the tokens. This type of transaction is known in the stock market as limit order. This will give the ICOs a direct market valuation.
Conclusion
The proposed protocol will, if implemented correctly, bring a new stage of ICO investment, where the big players would not be able to acquire the whole crowd sale for them-self and also will regulate the token prices to a more real market value.
Source:
The proposal also brings what is long existing in the stock market. It would let the market set the price and the valuation of the ICO, by setting up different scenarios of acquisitions, like it would the buyers choice on how many tokens he wants to buy and at what price, not the ones asked by the issuers. In the stock market it is known as limit order.
https://people.cs.uchicago.edu/~teutsch/papers/ico.pdf
https://medium.com/truebit/interactive-coin-offerings-7b05db0ff77e
http://fortune.com/2017/09/27/ethereum-ico-vitalik-buterin/
https://www.coindesk.com/ethereum-founder-vitalik-buterin-co-authors-plan-iterative-ico-protocol/
https://cointelegraph.com/news/vitalik-buterin-explains-flaws-in-icos-and-scaling-issues-in-ethereum
Let us know in the comments your views on this ICO and what ICO you are interested in.
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