[ad_1]
The ICO boom of 2017 and 2018 brought with it a mixed baggage gap for investors who funded blockchain projects on the Ethereum blockchain (ETH). In terms of successful projects, we have seen the likes of Tron (TRX), Binance, VeChain Thor (VET), EOS – just to name a few – continue to keep the promises that the teams had given in the white papers of the individual projects.
However, we have also seen other projects that have left investors suspended and demanding justice like the teams responsible for ICO, or have not produced a successful product, or have vanished into thin air with the funds raised. A new study indicates that 80% of all ICOs initiated were scams. The most recent was the founder of the Oyster Protocol which took off with $ 300,000 in funds from the smart contract that managed ICO crowdfunding.
But what if I could get your funds back to the first sign of difficulty?
The smart contracts that manage ICOs have so far only been able to manage incoming funds from investors. However, the best-known developer for leading the creation of the ERC-20 token standard – Fabian Vogelstellar – proposed a reversible ICO (RICO) process at the Ethereum Developers' Conference underway in Prague.
According to CoinDesk, his proposal would allow investors to recover their funds at any stage of the project's life. The concept includes a new smart contract that allows investors to reverse their funding commitments.
Vogelstellar has simplified the process as follows:
You are able to withdraw the funds you have committed at any time and do so by simply postponing the tokens.
After the return of the tokens and funds of the investor in ETH have been repaid, a new investor can now buy. Because of the volatility of this contract, Vogelstellar has also suggested that ICOs may need to obtain some initial funding from private investors outside the ICO.
The reversibility of the whole process would in turn eliminate scams from the crowdfunding process. One way to look at it is that private investors should first be convinced that the idea for the project is feasible, before committing any funding in the initial phase of the loan. The reversibility factor of the ICO will also ensure that only serious teams will attempt crowdfunding in the first place.
Vogelstellar told the DevCon4 audience to feel obliged to create something better than the available ERC20 protocol. The first step of the RICO would be to test the code. Vogelstellar is willing to implement the method within its startup called Lusko: a blockchain in the fashion and design sector.
Do you think the concept of a reversible ICO is a good idea? Will it reduce the amount of output scams in the crowdfunding cryptographic space? Let us know in the comments section below.
[Image courtesy of thummech.com]
Disclaimer: This article is not intended to give financial advice. Any opinion here is purely that of the author and does not represent the opinion of Ethereum World News or its other writers. Perform your research before investing in one of the many cryptocurrencies available. Thank you.
Source link
