10 Questions answered about an ICO. Today: probably the most anticipated ICO after BAT, but don't worry about it selling out.
1. When will the ICO take place?
The Tezos ICO will take place on Saturday the 1st of July at 6am UTC. On the 15th of June the Tezos Foundation announced this after its legal structure, fundraiser, and related contracts had been approved by the Swiss Foundation Supervisory Authority.
2. What is the initial price?
For 1 Bitcoin you will receive 5000 tokens (Tezzies) plus a bonus up to 1000 Tezzies. There are 5 bonus periods of 400 Bitcoin blocks starting at 20% followed by 15%, 10%, 5% and 0%. The time between bitcoin blocks is around 10 minutes, 2 days and 18 hours per 400 Bitcoin blocks, so you will have some time to enjoy the 20% bonus period.
3. What is the total supply?
The total amount of Tezzies has not been capped and so there is no limit to the amount of USD that the Tezos Foundation will accept. In total the fundraiser will last for a period of 2000 Bitcoin blocks (around two blocks). Therefore you don't need to worry about what happened with BAT, where 196 investors came up with $35 million within 20 minutes. Which made small fish like me miss out.
4. Will there be an additional issue of tokens?
No, but it is a possibility in the future. If the people holding Tezzies would eventually want additional tokens to be issued there will be additional Tezzies issued. IF the fundraiser also doesn't hit a certain number I'm also pretty sure that they will issue more at a later stage, but I don't see that as a realistic scenario.
5. What is the ICO structure?
Siply said: the founders of Tezos will receive 8.5% of all the money contributed during the fundraiser and they will also receive 10% of the tokens through DLS (Pool E in the image below). The money won't stay within the Tezos Foundation but will go to DLS which basically owns and founded the Tezos Foundation but operates independently. The Tezos Foundation then will also receive 10% (Pool D) whilst the actual people behind DLS and the Tezos Foundation are the same.
DLS’ shareholders will receive 8.5% of the contributions made during the fundraiser.
In addition, DLS’ shareholders will receive a 10% allocation of the tokens in the genesis block, placed in a smart contract that will vest monthly over a period of 48 months.
Dynamic Ledger Solutions, Inc. (DLS) is a US-based company currently controlled by its founders, Kathleen & Arthur Breitman. It owns all of the Tezos-related intellectual property (IP), including the source code of the Tezos cryptographic ledger, logos, and trademark applications associated with the name Tezos, domain names, and goodwill arising from a set of a relationships with several contractors and potential customers in the financial technology market.The Tezos Foundation (the Foundation) is a Swiss foundation based in Zug. Its directors are Johann Gevers, Diego Ponz, and Guido Schmitz-Krummacher. As a legal entity, it operates independently from DLS, though DLS advises the Foundation closely on technology.
6. What is a Tez?
Tez is the base token, basically a smart-contract, which the Tezos Foundation will issue to anyone contributing during the fundraiser. When Tez will hit the exchanges you can find it listed as XTZ.
7. How can I purchase and store Tezos?
Anyone wanting to purchase the Tezzies schould create a wallet on https://crowdfund.tezos.com and follow the instructions.
The minimum amount you can contribute during the ICO is 0.1 Bitcoin or the equivalent of this. It will be possible to purchase Tezzies with Ethereum and other altcoins through Shapeshift. However, If you choose to contribute in ETH, the equivalent BTC amount will be estimated based upon the timestamp of the Ethereum block in which the transaction is included, and the median of the the last trade price on Poloniex, Kraken, and GDAX.
This basically means that you might as well transfer your own Ethereum to Bitcoin and then transfer it to The Tezos Foundation so you are sure how many Tezzies you should be getting.
8. What is Tezos?
Tezos is a decentralized blockchain that governs itself by establishing a true digital commonwealth and facilitates formal verification, a technique which mathematically proves the correctness of the code governing transactions and boosts the security of the most sensitive or financially weighted smart contracts.
What’s more, Tezos was built to facilitate formal verification, a technique which boosts the security of the most sensitive or financially weighted smart contracts by mathematically proving the correctness of the code governing transactions. The Tezos blockchain will underpin secure, decentralized applications and smart contracts while avoiding some of the political and technological problems which earlier efforts such as Bitcoin and Ethereum have faced. Tezos was built on the belief that a deep commitment to security, formal verification, and governance that gives stakeholders the power to make protocol decisions is the formula for earning trust and generating widespread adoption on the blockchain.
9. The Team
The main people in The Tezos Foundation and DLS are the founders: Kathleen and Arthur Breitman. They created Tezos over 3 years ago and have been working on it ever since. Both have and impressive track record as Kathleen used to a management associate at one of the largest hedge funds, Bridgewater Associates. Her husband Arthur worked at Goldman Sachs at the high frequency trading desk and was an options market maker at Morgan Stanley.
10. Should you buy it?
Initially I was up for buying it as the technology has a lot of potential but now since I did some more research and actually read everything there is that they published I have a few concerns which will make me reconsider:
First concern: The amount of Tezzies is not capped and if I am the first one to jump in and buy I might have $100 million raised after me which will dilute my share in The Tezos Foundation. The amount might also be so ridiculously high that supply will eventually be greater then the demand and the prices plummets.
Second concern: The structure which allows a lot of the contributions to flow to another company. 8.5% will directly go out of the company that raised the money to DLS (the Breitman's) which is a separate entity could. Besides that DLS and The Tezos Foundation will each receive 10% of the tokens.
Therefore I will probably wait to see how much money is actually being invested into this ICO within the first 2 days. We all saw what happened to IOTA when they where valued at $1.5 billion.
*Sources:
http://www.reuters.com/article/us-tezos-blockchain-draper-idUSKBN181250
https://tezos.com/static/papers/Tezos_Overview.pdf
http://tezos.com/dls