In the first 3 articles, I focused on the structure of a Smart Media Token, a few use cases and the role of automated market makers for SMTs. In today's article I'd like to sketch an overview of what you need to know if you plan to launch your own Smart Media Token, using an ICO.
As always, please be advised that this is based on the initial version of the SMT white paper, that it may change in further revisions and that various UI implementations can group together some of the atomic operations described here.
The Basic Elements Of An ICO
Here are the most basic pieces of information needed if you want to conduct your own ICO:
- maximum supply for your token
- when are you starting your ICO, meaning from when you accept contributions
- until what time you are expecting contributions to your ICO
- when is your ICO launching - the date from which your token will be available
- when is your ICO expiring - if the ICO is not launched until this date, the ICO will be cancelled and your contributors refunded
Apart from these dates, you will also need to set up a few units.
- the smallest STEEM unit you're accepting as a contribution, example: minimum contribution is 0.1 STEEM
- the conversion unit between your token and STEEM, example: 1 TOKEN = 0.1 STEEM (that will mean you get 10 TOKEN for 1 STEEM)
After you set this up, you will have to make a decision regarding:
- minimum required participation = how many STEEM units you will need to call your ICO launched.
- a soft cap or a hard cap = the upper limits of the STEEM units you may get in the ICO
There is a difference between hard cap and soft cap.
Hard cap means that any tokens after this limit will be rejected and no new SMTs will be created. Soft cap means that any units received after this limit may be redistributed to all contributors, according to a policy you set up.
Example: if the hard cap is 10 Millions STEEM, and 11 people are contributing 1 Million STEEM each, then the eleventh person's contribution will be rejected and he will be refunded.
Example: if the soft cap is 10 Millions STEEM, and 11 people are contributing 1 Million STEEM each, it means that 10% from Each person contribution is rerouted via the soft cap policy.
Both soft and hard cap may be hidden, which means you're not forced to disclosed them. But the protocol allows you to define a minimum and maximum commitment that you want to publish. In other words, your caps can be totally secret, but you may reveal a certain range in which you will call your ICO subscribed.
Caveats And Limitations
You need to set aside a specific timeframe for your ICO. By timeframe I understand:
- time to promote it
- time to allow contributions
- time to make your tokens available and see if the ICO is actually subscribed
So the process of launching your own SMT is quite laborious and time consuming.
Also be aware that the ICO generation policy is different from the inflation, which is something you define at the token level, not at the ICO level.
And the obvious limitation is that you cannot accept anything else than STEEM. If somebody wants to participate in your ICO and they have BTC or ETH or whatever, they will first have to exchange these funds into STEEM (which translates into them also creating an account on the Steem blockchain) and after that they may contribute.
From a structural point of view, the white paper seems to cover the most common use cases, but we're only talking about pseudo-code and data types. My personal opinion is that the biggest adoption obstacle will not be STEEM limitation, or even the high entry point (I tend to think the actual cost for creating an SMT will be around 1000 SBD) but the usability of the whole process.
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