TR 05.05

 
 

// THE ICO IS DEAD, LONG LIVE THE IPO

It’s happening before our eyes. 80% of capital raised to date this year - which is already more than the cumulative lifetime sum of capital ever invested into ICOs - has been raised privately. The promise of public access and the decentralised funding of future waves of technology startups is over.

Regulation is coming from all sides, and regulation means rules and restrictions around the way ICOs can raise capital from the public. Even if regulation from central authorities doesn’t come, others are self-regulating: twitter, facebook & google are cracking down on ICO advertising, whilst MailChimp won’t even let you send emails.

This is good. Investors (not, ‘community’ as the sector likes to pretend to itself) need protection. 

But it isn’t just the regulatory risk driving the change. ICOs are 10-30 person projects, requiring $500k-$2M, before even considering post-ICO costs like exchange listings. Budget another million+ for that.

It means the future is actually the past. Private books of business built ahead of public listing on exchanges. No ICO. But an IPO. Far less risk, far less time, far less cost. The exchanges need to step up - they all know it - and become regulated themselves; a safe place for the public to participate. Whilst some are jurisdiction hopping (Binance’s move to Malta looks premature as new legislation is due this month from the MFSB - they will hop jurisdiction again), others (like Coinbase), are biting the bullet with the SEC and other regulators.

As mentioned in my last (admittedly distance) note to you all, we just need to bring the cost of this IPO down. Otherwise, the ICO is truly dead. 

// MUST READS

    // DISASTER OF THE WEEK

    Ethereum and Ripple are probably going to be declared unauthorised security issuances by the Securities and Exchange Commission - on what timeline and with what repercussions remains to be seen.

    // TRACTION

      // ROAD TO REGULATION 

        // ICOS

        Last week highlights:

          • YGGDRAH raised $40m for a system of trust-based multidimensional blockchains. 

          • CLN raised $20m for a decentralized payment network powered by communities.

          • Dock.io raised $20m for decentralized data exchange powered by ethereum.

          Upcoming:

            • Verv - May 28, 2018 - A live energy and data trading protocol.

            • Neoplay - May 5, 2018- A cross-network dicing platform built on the NEO blockchain.

            • Cryptics - May 7, 2018 - AI Crypto Forecast and Trading Platform.

            // OTHER 

            Swedish bankers make a call to the Central bank to carefully consider the launch of its own digital coin that could end up with digital bank runs. Mt. Gox CEO, who has spent in jail 1 year after 850,000 bitcoins were disappeared, is now on trial for manipulating electronic dataCoinbase recently announced its acquisition of earn.com for $120 million. 

            // EVENTS

            // EOS - Deep Dive

            Brief: EOS Blockchain is a decentralized operating system which can support industrial-scale decentralized applications. Think of a MacOs/Windows with cryptoeconomic incentive.

            TPS: EOS claims to be able to compute millions of transactions per second, but has not publicly proven even 1 TPS. .

            Theory: Delegated Proof of Stake (DPOS) is used as a base theory. With DPoS, coin holders use their balances to elect a list of nodes that will have the opportunity to stake blocks of new transactions and add them to the blockchain. In this way a user will be given permission to produce blocks in proportion to the votes that he accumulates -  this is how the mining of the currency works.

            Consensus mechanism: DPOS leverages the power of stakeholder approval voting to resolve consensus issues in a fair and democratic way. All network parameters, from fee schedules to block intervals and transaction sizes, can be tuned via elected delegates. Deterministic selection of block producers allows transactions to be confirmed in an average of just 1 second. The consensus protocol is also designed to protect all participants against unwanted regulatory interference.

            Scalability: EOS will leverage horizontal scalability: While in vertical scalability scaling up is done by adding more processing power, horizontal scalability means scaling up by adding more systems and computers to the resource pool.

            Status: The final version to be released in summer, 2018. So far the team has been delivering on time and Dawn 2.0 (2nd version of the software) was delivered in December, 2017. 

            Advantages: Faster than Facebook or Google; user-friendly (supports distributed applications that have the same look and feel of their centralized counterparts, including eliminating the requirement for the user to pay for every transaction); universal and flexible (any type of application can be built, run, and governed by EOS's operating system, creating a new level of transparency for business).

            Issues: EOS is still under development and although there is a strong team behind the promised dream, the functionality is yet to be tested and proven. In addition, EOS is a software and even if the final version has all the promised features, the quality of applications will depend solely on the users (i.e. developers of applications).