Although initial coin offerings have become a lot more popular over the past six months, they are not necessarily decentralized. All sales occur through a centralized website, which often creates problems and leads to scam attempts. Decentralizing the concept of an ICO is not all that easy, but the Komodo team is working to do exactly that. Now would be a good time to take a closer look at how their “dICO” works exactly.
DECENTRALIZING INITIAL COIN OFFERINGS
The Ethereum and Waves platforms are the two most common solutions for creating ICO tokens these days. Especially now that the ERC20 token standard has been officially finalized, we may see even more creations taking place on the Ethereum network than ever before. While these crowdsales are pretty successful in their own right, there is still a certain degree of centralization involved in the process. That in itself is pretty problematic, considering most projects aim to focus on decentralization in the first place.
Changing this business model is not all that easy. That doesn’t mean it can’t be done, though. If the Komodo team is to be believed, their “dICO” business model is the only way forward. This particular venture is not about creating so-called colored coins which remain pegged to the parent chain on which they are created. Moreover, ICOs in their current form are limited in their functionality, as they can only use features provided by the parent blockchain.
In the case of Ethereum-based ICO tokens, there is plenty of functionality to enjoy. However, there is always room for alternative solutions which can make these tokens even more versatile moving forward. Not having token transactions recorded on the parent chain and reducing blockchain bloat are two appealing developments, assuming they can be pulled off. As one has come to expect, all of this is much easier said than done right now.
This is where Komodo claims to be different from the competition. By supporting native cryptocurrencies, any coin can latch onto the existing platform with some minor modifications. Moreover, the platform also provides a crowdfunding solution – including support – which can be taken off the platform at a later date. The latter point is pretty intriguing, as it shows such projects can easily be “ported” to a different ecosystem if needed. Whether or not that is something a lot of people are looking for remains to be decided.
All currencies created using Komodo can operate independently, which means not all transactions will be recorded on the parent chain. All they need to do is transact with the parent chain for security checkups and updates. It is a very different type of business model compared to more traditional initial coin offerings, and represents a competitive edge unlike any other in the world today. Having more options to choose from can only be seen as a positive trend.
It is evident the ecosystem is slowly gravitating toward fully decentralized cryptocurrencies. That means we also need fully decentralized coin offerings, although not every project may benefit from such solutions. It will be interesting to see how things play out for dICOs in the future. It is certainly worth considering the implications, as not being “bogged down” by a parent blockchain is a significant improvement over the status quo.