Options: pre-ICO process evolution

ICO is a giant leap forward in the world of crowdfunding. It is a convenient, fast and open-for-everyone way to get support for a project. But just like in many revolutionary ideas, the initial concept has some serious flaws and need to be adjusted to become more usable and effective. 

The flaws of ICO process are obvious to everyone, who ever tried to participate in the ICO of any popular project:

  • We have lost the spirit of early investment. People who have been following the project for a long time can simply be late to invest money (for example, the well-known story about BAT project, with ICO finished in 30 seconds) 
  •  A large influx of transactions in the first minutes after the launch of the ICO creates
    difficulties for ICO investors and other blockchain users. 
  •  Due to the geographical dispersion of investors, participation for many of them may be compounded by the fact that the launch of ICO falls on a deep night in their time zone. 
  •  Early investment bonuses are often given not to actual first supporters, but to those who managed to be the first to carry out a transaction in the blockchain 

We in Genesis Vision believe that the best way to solve these problems is to look back and rediscover such proven financial instruments as options.  For our own ICO, we replaced the “traditional” pre-ICO process with the first option program, built on the Ethereum smart contracts. 

In finance, an option is a contract which gives the buyer (the owner or holder of the option) the right, but not the obligation, to buy or sell an underlying asset or instrument at a specific price on a specified date. Options will allow early supporters to book their tokens in advance for a fraction of the actual desired amount of investment. During the first day of ICO, GVT will be sold to options holders exclusively. It will allow to distribute network load and make transaction flow smoother. It will allow early investors to get rid of an unnecessary hurry. Meanwhile, an option may be executed partly or even not executed at all, if an investor has changed his mind. 

Now, when we understand how this financial instrument works, let’s take a glance inside the mechanism and see how Genesis Vision options are structured inside. Just like the ICO process itself, option program of Genesis Vision is entirely built upon Ethereum smart contracts. There are 3 types of options - first 20% of funds raised via options program will be sold with 30% bonus, the next 30 % will be sold with 20% bonus, and the other 50% will be sold with 10% bonus. 

uint constant option30_TOKEN_LIMIT = 26 * 1e5 * 1e18;
uint constant option20_TOKEN_LIMIT = 36 * 1e5 * 1e18;
uint constant option10_TOKEN_LIMIT = 55 * 1e5 * 1e18; 

Each one of these options is a standard ERC20 token, except that the token will be burned by the options smart contract upon option execution: 

function executeOption(address addr, uint optionsCount)       
   optionProgramOnly
   returns (uint) {
   if (balances[addr] < optionsCount) {           
       optionsCount = balances[addr];       
   }
   if (optionsCount == 0) {
       return 0;       
   }

   balances[addr] -= optionsCount;       
   totalSupply -= optionsCount;
   
   return optionsCount;   
}

 Each option token has 2 attributes:

  1. A number of the option tokens that a participant of a options program will get for every cent when buying the tokens for 5% of the desired investment sum.
  2. A number of GVT which will be received by a participant of an options program for each cent upon execution of an option at the time of ICO.
// Constants 

uint constant option30perCent = 26 * 1e16; // GVOT30 tokens per usd cent during option purchase
uint constant option20perCent = 24 * 1e16; // GVOT20 tokens per usd cent during option purchase
uint constant option10perCent = 22 * 1e16; // GVOT10 tokens per usd cent during option purchase
uint constant token30perCent  = 13684210526315800;  // GVT tokens per usd cent during execution of GVOT30
uint constant token20perCent  = 12631578947368500;  // GVT tokens per usd cent during execution of GVOT20
uint constant token10perCent  = 11578947368421100;  // GVT tokens per usd cent during execution of GVOT10 

For example, for 5$ deposited during the options program with 30% bonus, a participant will get 130 GVOT30. This quantity is equal to the amount of GVT booked by a participant. For every cent transacted during ICO, 13684210526315800 GVOT30 will be burned, and the same amount of GVT will be issued for a participant. This way, for the remaining 95$ a participant will buyout all of his 130 GVT.

A participant may execute his option partially. In this case, reserved tokens will be available for the purchase for other participants at an undiscounted price (without bonus), starting from the second day of ICO. Also, a participant may invest a sum bigger than what is required for execution of his option. In that case, all of the funds left after the full execution of an option will be spent on purchasing of more GVT at an ordinary (undiscounted) price. It worth noting that options buying at an ordinary price are available only starting from the second day of ICO, after the finish of priority sale of options-discounted GVT is finished.

As you can see, options program of Genesis Vision is very far from being complicated. It is built on the same simple and reliable tools that all the standard ICO programs use. The only difference is that the Genesis Vision options program makes the process of early investing more convenient and fair for participants, as well as for other Ethereum users. 

Our ICO smart contracts code is open. If you are interested to study our untrivial ICO process in more detail, you can always find the sources on our Github.

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How long does the option have to execute the option, or not? If the person who buys the option changes his mind, does he have the option to cancel all or part of the option?

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Options can be executed any time during the ICO. During the first day of ICO tokens are sold to option holders only, and option holders are guaranteed to be able to purchase their coins. Starting from the second day of ICO tokens are available for purchase to everybody. However, option holders still can execute their options if there are enough tokens left in the total pool.

If a person changes his mind, he can execute the option partially or not execute it at all. Let’s take the example from the article when a person bought option for 5$ and reserved 130GVT. Instead of paying remaining 95$ he can pay, for example, 47.5$ and will get 65GVT.
However, the price of the option (5$) is non-refundable. A person won’t get 2.5$ back in the previous example.

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@genesisvision - concept is interesting, to say the least. I'm reasonably familiar with the concept of options - you have a first party (buyer) that purchases a contract from a second party (seller) with the right (but not an obligation, like you say) for the buyer to purchase from the seller at a fixed price before a given expiry date. However, what I'm not clear on here is who acts as the second party in your proposition above - is it GenesisVision (because they have negotiated a deal with the ICO - that's my impression?) or is it the ICO themselves? Thanks.

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The difference with traditional option concept here is that you don't make any contract with some company, the whole process is controled by the smart contract, providing digital guarantee for the option execution. So we can say that in this case a second party is a Genesis Vision's ICO smart contract. And the underlying asset of option in this case is Genesis Vision's ICO Token - GVT.
Basically, this concept can be implemented for any ICO, for any particular ICO token.

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IMO, smart contracts are one of the most interesting features of the block chain.

I think it is all about making capital allocation more efficient, even if the current ICO phase is wild and chaotic, it looks promising.

Hi Genesisvision

What are your thoughts on Chain link ICO https://smartcontract.com/link

Regards
Mihir

Best ICO of this Year
https://goo.gl/XruVHz
#ICO price :0.91$

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Do you want to reuse GenesisVision option sales model?