Are ICOs Becoming Too Greedy?

The initial coin offering (ICO) crowdfunding model represents a modern-day financial Wild West. Its promise as a technological marvel and unique strategy for freeing ambitious startups from their reliance on venture capital has drawn numerous enthusiasts, but also many detractors. The only whims that an ICO must tolerate are those of its many investors, who can’t explicitly claim any kind of rights within the company and instead turn to these opportunities for the speculation component. As such, it’s a hassle-free way to raise capital without the regulatory or liability constraints that would otherwise burden an initial public offering of stock, for example.

ICOs were raising money prolifically before there was any indication of market trouble, but the swift and universal decline of cryptocurrency prices that began late in 2017 had little effect. They’re still finding willing investors—and have already raised more than all last year’s ICOs combined—but new market dynamics have catalyzed a trend whereby ICOs tend to be “greedier” than they once were. They can accomplish this feat by tweaking the economics behind their token, but it’s difficult to know the true motivations behind it.

How to Be Selfish

Exercising Control Over Crypto Economies

  • Greater sustainability of capital – The ICO has a larger fund for hiring, paying overheads, and otherwise pursuing sustainable growth

  • More tokens set aside for miners – This encourages early mining and a strong, uncongested decentralized network

  • “Productive bribing” that isn’t directly related to price – Incentivizing productive partnerships and motivating developers to build dApps is encouraging for an entire ecosystem

  • Pumping the price – Reducing the outstanding supply support dumping the coin in greater numbers for profit

  • Bribing exchanges for listings – Listing is also a price booster that ultimately provides no real value to the project itself apart from added fungibility

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