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ICO Features to Consider


So, You are thinking about starting an ICO campaign. Here are some features that You might take into consideration before embarking on an ICO journey.

Multi-round

Segmenting the raised funds into multiple rounds is likely to increase Your ICO stakeholders trust.

Funds release rounds are usually tied to meeting milestone goals. After a predefined time period for a certain milestone has expired, the token holders vote to choose whether the next round of funding should be released, or given back to token holders. This decision is made based on the success of the milestone at stake.

The problem with this approach is that "whales", exchanges and other big players can do a massive token buy-out, right before the next round vote, which would enable them to shut the project down single-handedly. A workaround for this problem is to require token holders to stake a couple of months before the voting commences, in order to be eligible to vote.

One of the smart contract implementations for this kind of fund raising is Giveths The Vault Contract.

Example of the multi-round fund raising

Token sale rounds should secure a viable amount of tokens needed for the development of the next milestone. Mapped-out to the typical VC investment rounds in the USA, it would look something like this:

  • Pre-sale - average of $1M
  • Series A - average of $5M
  • Series B - average of $19M
  • Series C - average of $35M

Token sale rounds are usually set 6-18 months apart, depending on the project burn rate.

Pre-sails faze is targeting the "higher risk-higher reward" investors.

A discount on the market price should be given at each sale round.

Forecasting

Forecasting is the mechanism that enables token holders to guess the probability of a certain event in a project life-cycle. Those events might vary from the amount raised during an ICO, milestone fulfillment, to the future token price.

As the adoption of the decentralized market prediction platforms (such as Augur) rises, the forecasted events could become ever more refined.

Forecasting feature is useful as it provides an insight to the public opinion on the health of the project, to the stakeholders and future investors.

Volume discount

Volume discount option refers to "buy N tokens and get some percentage more" clause. This feature is considered to be undesirable by a majority of blockchain ecosystem, as it:

  • Clashes with egalitarian spirit of crypto
  • Creates KYC/AML mess, as it incentivizes buyers to gather in pools, in order to achieve the discount

Token locking during an ICO

Token locking during an ICO is not a reliable safety feature, as it might just result in wrapper contracts.

Wrapper contracts are the so called "IOU" contracts that are tied to the locked tokens. They enable buyers to claim the purchase first and then withdraw the original tokens later, when they become unlocked.

The wrapper contract can be regarded as "an ICO within an ICO".

ICO approaches

Hopefully you find this article on various ICO features useful. In one of the following blog posts we will address the subject of various ICO approaches present today (such as Reverse Dutch Auction, Interactive Coin Offering, Variable Token Vesting, etc.)

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What's Next

If you've completed this tutorial, we recommend you follow up with these tutorials:

ICO Approaches: Reverse Dutch Auction
Flat Rate Crowdsale Explained
Increasing Price Crowdsale Explained

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