Part 2/?
In my initial post, we discussed some of the good, bad, and ugly parts of ICO. Today, we'll be diving into a spacific example of blockchain stress caused by ICO.
Status
The Status ICO began and ended on June 20, 2017, raising well over $100 million USD. However, the end didn't come before a massive slowdown of transactions and astronomically high gas fees caused major mining pools such as Dwarfpool and certainly others to lose large amounts of money to fees, not to mention the thousands of investors flooding the network to try and take part.
The issue with Status was caused in part by ICO's incessant need to suggest higher gas prices when taking part in order to ensure that the transactions are processed, though the real crux of that matter was the very design of Status. As a race-condition ICO, Status' goal was to allow only the fastest processing (fastest placed/highest gas prices) transactions to completed, but what it really accomplished was creating a race-condition on the Ethereum network itself by causing investors to cram their transactions into a smaller interval of time with higher gas prices in a desperate attempt to buy in.
Ethereum does have some scaling issues to address, however these are exacerbated by ICO which take advantage of the network's transaction processing methods and the hype surrounding ICO in general. Without better planned offerings, an alternative blockchain or viable scaling solutions, the life of ICO mania is looking short lived.