Telegram ICO now Unicorn. Is it good news?

bullhashbear (38)in #ico • 6 years ago (edited)

It's official, we have our first ICO Unicorn. So what's an Unicorn? Put simply, a tech company valued at 1 billion by private or public investment. Cowboy Ventures founder Aileen Lee coined the term in her seminal article Welcome To The Unicorn Club: Learning From Billion-Dollar Startups.

Telegram managed to raise 1.7 billion dollar with it's TON (Telegram Open Network) Initial Coin Offering. The top 5 ICO's of all time raised:

Filecoin $257 million
Tezos $232 million
EOS $180 million
Bancor $153 million
SIRIN LABS $118 million

Actually Telegram single-handedly managed to raise as much funds as the top 19 ICO's. So their concept is more valuable then those of the 19 best funded projects? Professional investors just handed over a minimum of 1 million dollar to be part of a theoretical blockchain project. How did they manage that in a bear market, where the term crypto winter seems to be a understatement?

TON promises to fix quite a few problems plaguing blockchain and stifling adoption. It's supposedly user-friendly, fast and scalable. To bring this to fruition it uses:

Proof-of-Stake Approach: Consensus mechanism where number of tokens instead of computing power (Proof of Work) determines voting power.
Infinite Sharding Paradigm: Blockchains split and merge to accommodate changes in load
Instant Hypercube Routing: Smart routing mechanisms to speed up transactions
2-D Distributed Ledgers: Tolerance for faulty blocks
Read whitepaper

This all seems a little bit too good to be true. Other players have been working on most of these solutions for quite some time now. Although I love Telegram as an app for my crypto news, it's not run on blockchain technology. Regardless of them having a good team of developers for the Telegram app, it seems weird to give a 5 point team score on ICO bench. Because this is not a blockchain developers team. What magic team do they have in hiding to get to market? The only way they can deliver this product is if they attract major blockchain talent. I guess 1.7 billion buys a lot, but why would people leave their favourite coins and projects to join Telegram's TON? Is money the only motivator for blockchain developers? I surely hope not. If money is the main drive, people with the necessary skills can always run an ICO.

Experts seem to have similiar concerns. I found a few highly critical articles, the first two quotes came from here.

Nick Tomaino: The teams that will win are teams with deep historical context who have been tinkering with consensus mechanism and scalability for several years. It’s more like science than entrepreneurship. In my mind, they (Telegram) don't have the talent to do that.
Spencer Bogart: It was an absurd valuation for something that's effectively field stage. The pitch is having more success with traditional venture firms who've missed out on crypto to date — particularly bitcoin, ethereum and companies such as Coinbase — and are feeling the pressure to get in on the craze. Their limited partners are calling them saying, What are you doing? This is the biggest airball in venture history.
Charles Noyes: It is essentially a wishlist of things they want to have, and how it will work assuming that their wishlist doesn’t crash and burn. It does not make any substantial contributions to proof of stake research. It does not make any substantial contributions to sharding research. It does not make any substantial contributions to ”hypercube routing” research. Read: $600 Million TONs of Crap

What worries me is that this ICO didn't have a positive impact (yet). The first blockchain unicorn was offered for fiat. Imagine Telegram would have sold their tokens for Ethereum and/or Bitcoin. That could have had a major impact on our market and help drive prices up. Such an event could have made quite a few of us bullish on crypto. It's possible we will witness BTC/TON and ETH/TON pairs in the near future. But is that something we want? Once prices surge it's possible initial TON investors will cash out for fiat. At this size it could deflate the market.

I want to end on a positive note. The fact Telegram managed to raise such funds can be a sign blockchain is ready for mainstream. I wish them all the best and hope they can deliver. It could positively reflect on other projects.

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