Current Situation
These past months, contributing to ICOs has become increasingly difficult. More people are joining the crypto space in general and more money is flowing in. The interest level for ICOs specifically is also rising. This can be attributed to many factors, but the main one is obviously the promise of quick and big money. Potential returns can usually outpace those of the already established, fast-growing cryptos. The masses are easily influenced by the stories of gurus like Ian Balina making millions investing in ICOs.
This lead to gas wars, difficulties on getting whitelisted and public sales having a smaller cap or even getting completely cancelled because the money had already been raised during presales. Recent examples include Medicalchain for which only $4M were available for the public ICO because $20M were raised during presales, or Nucleus Vision who cancelled their public ICO altogether because the amount of Ethereum collected during the presale had reached the hard cap (because of the price increase for Ethereum). This is why getting in at the presale stage is very attractive. However, you’ll quickly realize that the minimum entry is way more than you can afford for a single project: 100 ETH on average. This is where pools get in play. By gathering the investments of many contributors, the previous limitation of the min cap is gone. One doesn’t have to raise all the money needed on its own. Enjoy the great power of collaboration.
What is an ICO Pool
An ICO pool gathers people who want to participate to the presales of ICOs. Each participant sends its contribution to a smart contract. When either the deadline is passed or the max cap has been reached, the funds are sent. Then, when the smart contract receives the tokens, it distributes them back to the investors depending on their contribution.
There are two types of pools:
- Trustless pools. A pool can only be trustless if the whole process is. The smart contract has to be open source so that anyone can review it and make sure the logic is sound. The payout address of the ICO is displayed, locked and can be authenticated. The SAFT (Simple Agreement for Future Tokens) is public to enable checking that the tokens will be sent back to the pool to be distributed back according to the smart contract code.
- Non Trustless pools. These pools are pools that could have been trustless but lack at minimum one of the attributes described above. These pools can use a third party technology that brings some flexibility and simplicity to the user in detriment of security for example. The SAFT can be private. The admins of the pool may be able to set the payout address to whatever they want to and therefore keep the funds for themselves.
Why do you need to fear them?
Now, you may have guessed it: pools can be dangerous because there is no guarantee that the pooling process will happen as planned and without scam. We believe the greater risk currently lies on the human side of the equation. Furthermore, pools have been massively using Primablock: a website that allows anyone to simply and quickly create a pool. However, the resulted pool is far from being trustless. These pools are extremely risky for contributors because they cannot be sure that they won’t be scammed.
So, should you base your decision on how many successful pools have been closed and the number of members in a group? No, of course not. They may just be building trust and wait for the biggest pool, or the biggest set of concurrent pools to exit scam. Take into consideration that investing in presales means more time to wait before you can know or decide if the pool was a scam since you usually need to wait for longer to receive your tokens.
This is why we are urging every person who is part of a pool group to stop blindly sending contributions to these groups. Stop thinking that you will receive your tokens unless you have sufficient proof that you won’t be scammed. Pools may indeed be the biggest scam in crypto so far. They have lead their creators to get millions of dollars.
The good news
You may feel frustrated after reading this article. We were as well when we discovered the idea of pooling. It’s so interesting and solves so many problems for investors. Yet, we couldn’t find one pool that reassured us enough: One pool whose admin can be trusted enough to do what he is supposed to do.
That’s why we took the matter in our own hands and created the first pool group that can be trusted. How? Well, we started by publishing our real names and profiles. We also went a step further by publishing our IDs in our AMA. The idea is simple: make it impossible for us to scam you. We are lucky to live in countries where scamming is taking very seriously (France, Germany) and we make sure that if we ever were to scam anyone, the authorities would have a very precise idea of who we are and where to find us :)
Besides this, we are serious about getting the best deals by negotiating additional bonuses. So if you are as interested and excited as we are, please take a look at our website: https://icopoolsgains.com
Reda Sabir Technical Analyst for GAINS
Alexandre Raffin Contract Negotiator for GAINS
