A new way to run token sales - Pro ICO Format
Proposal on how to run token sales.
PRO ICO’s
Short for “proportional”, the Pro ICO is an uncapped THEN capped token sale. Companies will set a cap they are willing to raise, but the amount accepted during the ICO period is uncapped.
After the sale is finished, total funds raised will be put into percentages based on the amount of funds sent from each address. Those percentages then determine the distribution of the tokens allotted to public funding.
Companies keep the percentage within the set cap, while excess funds from each address are then returned.
Here is an example how this would play out.
Company X – Looking for $30million in funding, 30 million tokens to public
Total Raised – $100million
Investor Y - $3million invested (3% of total funding)
Result
Company X keeps $900k (3% of $30m), returns $2.1m to Investor Y
Investor Y receives 3% of allotted tokens (900k tokens), $2.1m of excess
What does this solve?
– Everyone gets an equal opportunity to enter the token sale
– Stable valuation of total demand for the project
– Large collateral needed to buy high % of tokens.
– Investors focused on long-term success vs. quick flip
Cons – Dual transaction fee’s from returning excess funds.
– Exchange/transaction risk
What can stop one someone from sending a large sum right at the end?
– Randomized rolling closing date, unknown to founders and public
ex. X amount of days after cap is reached the address will close between 2-4 days.
Comment below with initial thoughts and criticism of the Pro ICO Format
I really like this idea and I think it will solve many of the problems ICOs have today. Of course, every company wants to get the maximum out of an ICO. This is why a system like this will not get a huge adaption. But for growth and project focused ICOs, this can be a great concept.
Founders would still getting the max out of their ICO if their cap is reached. In most cases, their own tokens are locked up for a while, so they don't care about market price as long as they are funded.
Perfectly!
In theory it works, but why would a company sign up for the cap when they see what with the Bancor ICO? Investors knew it was uncapped for an hour and still went ballistic.