Multiround

“If we want to strike at the heart of this problem, how would we solve it? I would say the answer is simple: start moving to mechanisms other than single round sales”.

“Under no circumstances should the money raised be released all at once to the development team.

The token holders vote at the end of that year to choose whether the next N tokens should be released or given back to the token holders (burning the tokens if gross incompetence is occurring).

One can prevent massive buying of the tokens right before the vote by requiring token holders to stake N months before the voting period to be eligible to vote. This prevents whales and exchanges being able to shut down projects single-handedly without risk.”

https://medium.com/@matthewdif/towards-responsible-token-sales-icos-291e69cc9ccf

https://medium.com/mysterium-network/mysterium-network-presale-early-access-5x-reward-b292d423f96

Code Examples

“The MilestoneVault is a smart contract implementation of a vault that stores the crowdsale’s contributions and releases the funds as project milestones get completed.”

While the above partially solves the problem of having the founders run away with the funds it adds quite some complexity regarding governance. There’s the chance token holders that lost faith in the project or with ulterior motives freeze each attempt at releasing funds for the team. There’s requirement of using dispute resolution mechanism (like whatKlerosis building).

Example of Multi-Series ICO

“Then we compared their actual results to a simulated alternative, where each project would seek funding through 4 token sale stages from ‘presale’, ‘Series A’, ‘Series B’ to ‘Series C’. The token crowdsale events are set in 6-month intervals, even though realistically the crowdsales could be spread to anything from 3–18 months. To simplify this vast analysis, we set each token sale event to distribute 10% of the total supply to participants of each token sale series, effectively leaving 60% of tokens for future distributions, project development team incentives, bounties etc.”

Example

• 10% of the total token supply is distributed during each token sale round

• Token sale rounds should secure a ‘sane’ amount of funding needed to develop the startup further. Typical investment rounds from the USA were used and the following averages were achieved:

◊ presale → average 1M USD / project

◊ Series A → average 5M USD / project

◊ Series B → average 19M USD / project

◊ Series C → average 35M USD / project

◊ Future series token sale targets have not been defined

• For simulation purposes, the token sale rounds are set 6 months apart but could be anything from 3–18 months, depending on a startup’s burn rate

• Presales attract investors willing to take higher risks to obtain possibly higher returns

• A discount on the market price needs to be given at each token sale round