ERC-20 Creator Wants to Let Investors Take Money Back

Vogelsteller felt responsible for the ICO boom and he intends to propose a better model
31 October 2018   573

Ethereum developer and creator of the ERC-20 standard Fabian Vogelsteller during a speech at the Devcon4 conference in Prague proposed the concept of a reversible ICO (RICO), during which a special smart contract will allow investors to return the invested funds at any stage of project development by returning tokens. This is reported by COindesk.

You are able to withdraw the funds you committed at any point of time and you do this by simply sending back your tokens. It brings the balance back between the community and the project and I think this is really important.

Fabian Vogelsteller

ERC-20, Creator

As soon as the Ethereum coins come back to the investor, other users will have the opportunity to purchase tokens. Vogelsteller stressed that all this can provoke a fluctuation of quotations, therefore, projects will need to attract basic funding from private investors outside the ICO.

He added that he felt responsible for the ICO boom, because he had created the standard, and he intends to propose a better model. In his opinion, RICO can significantly reduce the number of scams and encourage project creators to keep their promises.

Earlier, Vogelsteller proposed to use the ERC-725 rulebook for the standardization of digital identification technology.

ICOs May Allocate $24B Tokens to Themself

As reported, price of tokens, "left to cover the operating costs", reached $80B at the peak
17 January 2019   145

The total cost of the tokens that the organizers of well-known ICO projects have left to cover the operating costs and remuneration of developers at the time of release was $ 24.2 billion. At the peak, their price reached almost $ 80 billion. This is evidenced by the results of a study conducted by BitMEX together with the TokenAnalyst.

At the current illiquid rate, the assets of ICO-projects in their own tokens amount to about $ 5 billion, having depreciated by more than $ 70 billion.

However, the researchers note, this value is rather arbitrary, since the liquidity of tokens at peak levels was low. It is also incorrect to classify changes of this amount as losses because the organizers of the ICO transferred tokens into their wallets in accordance with the crowdsale conditions.

Having studied the archive of token transfers from ICO-team wallets, BitMEX and TokenAnalyst came to the conclusion that the realized profit from the sale of such tokens could be $ 1.5 billion, with the proviso that some of the tokens might not have been sold or left the wallets for other reasons .

The largest amounts of tokens in their wallets were credited by the Veritaseum and Noah project teams, which, as analysts say, looks “almost comical” against the background of real trading volumes.

Token data up to Dec 2018, data based on prices at the time(s) of issuance
Token data up to Dec 2018, data based on prices at the time(s) of issuance

This analysis highlights the lack of standards and transparency in the ICO market, especially when it comes to the allocation of tokens to the founding team’s wallet. Teams were often able to mint, burn, buy, and sell (their own) tokens at will, without analysts being able to easily track what is occurring. We would often see tokens in exchange clusters, and it was hard to tell whether the token project “paid” the exchange to list tokens or the token project just transferred their treasury to the exchange to cash out.

BitMEX Researchers' Report

In November 2018, BitMEX CEO Arthur Hayes said that the tokens of the largest ICO projects would collapse after entering the secondary market.