How to conduct a secure ICO?

Sergey Besedin, the founder of Decentralized Escrow project talks about the methods of providing security for ICO, eliminating risk of losing funds and the problem of ICO regulations
05 December 2017   3680

Initial Coin Offerings create liquidity and growth equity without giving up equity in most cases. The popularity of ICO is growing rapidly nowadays and there are a lot of projects which are running ICO in order to raise funds to implement their ideas. But how to make the ICO safer for all participants and eliminate the distrust of the potential investors to the new startups?

In order to find answers to those questions, we spoke with Sergey Besedin, the founder and CEO of Decentralized Escrow, which is a unique decentralised escrow platform for conducting ICOs.

 Sergey Besedin the founder and CEO of Decentralized EscrowSergey Besedin, the founder and CEO of Decentralized Escrow

- Please share with us the core idea of your project. Are there any DES competitors or startups that aim to solve the same problems? What is your competitive advantage?

Descrow - is the world’s first platform for secure ICO-investments with an inbuilt mechanism of decentralized escrow, which allows the backers to control the spending of the finances via voting. Our project’s mission is to make ICO the less risky way of investments and eliminate the excessive distrust of the potential backers to the new startups, giving a boost to the further ICO market growth. Every working platform that attracts funds for projects could be named as our competitor. But it is only on the surface, as such platforms massively use traditional process for obtaining the objective view on the subject of investments - Due Diligence. We are not neglecting this approach to ICO campaigns potential valuation, but in our platform it will be only the first, the small part of the startup assessment process.

We are focusing on splitting the financing into stages, which will allow us to ensure trust towards a startup on a technical level, without a need to rely on the individual experts' valuations, which could be partially subjective due to the human factor. Currently on the blockchain market the decentralised approach towards ICO valuation does not exist, and we are creating this new and comprehensive tool.
 

Sergey Besedin
CEO and founder, Decentralized Escrow

- How did the pre-ICO go? How does the preparation for ICO launch go? What are your expectations?

- We find the first investment round quite successful, we have received approximately 1000 Ether during Pre-ICO. At the moment we are in an active ICO preparation stage for a new investment round, during which we plan to attract 13 million dollars.

- How do you plan to allocate these funds?

- The funds raised during the ICO will be allocated to the development of full functionality of our platform, international marketing campaign, central office and representative offices establishment, mobile version of the platform creation, launching the Descrow on other blockchain platforms, formation and launch of initial reserve fund, integration of the Descrow solution into other crowdfunding platforms, the development of the specified DES blockchain for conducting ICOs enhanced by automated funds splitting mechanism powered by artificial intelligence and neural networks.

- When will the platform be launched?

- In the second quarter of the year 2018 (Q2 2018).

- At what stage is the system development at the moment?

- At the moment we are making final adjustments to the technical design specification with our developers.

- Are there any projects that are waiting for DES launch in order to launch ICO within Descrow platform in particular?

- Yes, we are already receiving the inquiries from the startups, which are planning to launch their fundraising campaigns using the Descrow solution. Furthermore, we are announcing with pleasure the partnership with the decentralized exchange platform and ecosystem DEEX.EXCHANGE, which is starting pre-ICO in the nearest feature. As part of our partnership all ICOs, launched on DEEX, will use the Descrow solution. This guarantees the investors full control over invested funds and secured returns.

- Why did you choose Ethereum as a Blockchain platform?

- Descrow is the solution that will serve its function for the maximum number of people. We are striving to expand Descrow instruments on the whole crowdfunding market. Only this approach will allow us to achieve the main goal - the change in the investor mindset “how to invest not to lose money and at the same time to motivate startup to deliver upon their promises till the end”.

Currently Ethereum is the most popular and widespread decentralised data base used for Token launch and funding. That is the reasoning behind our choice. We will not limit ourselves by using only one blockchain platform and on the next stages we are going to expand the solution to other blockchain platforms used for Token launch and smart contracts.
 

Sergey Besedin

CEO and founder, Decentralized Escrow

- How does Descrow provide security for ICO?

- We provide the secure solution for our investors for two following reasons. First is all, the Startup will not immediately receive all the funds, which were raised during ICO, but only the pre agreed amount necessary to start the project. It mitigates the risk of losing funds in case of disreputable startup acts. Secondly, the funds in waiting for the second tranche are not deposited in one place (like the common start contact) but are stored as frozen on the individual investor wallets. This characteristic protects the funds against cyber attacks or the database breaches.

Decentralized Escrow scheme for start-upsDecentralized Escrow scheme for start-ups

- Will you develop a specific startup pre-ICO valuation mechanism?

- Yes, we will carry out the preliminary Due Diligence in order to avoid cluttering up the platform.

- What projects could be refused to be listed within the platform?

- The projects, that do not split the process of realization/ final product creating into stages - this is the main fundamental condition of the platform.

- To what extent the majority voting system could be effective when it comes to investing?

- When it comes to investing (to the matters of personal finances) this approach will work very well as negligent attitude is out of the question. The principle “measure seven times, cut once” will be applied at full capacity.

- Can investor withdraw the funds during any stage of the project roadmap implementation, if he/she does not agree with  the majority voting results at this stage?

- No, it is not possible, for the majority voting principle is applied to secure the highest probability of quality decision, because the majority is not influenced by a couple of individuals or the minority, which for some subjective reasons (or under force majeure event) might not be able to evaluate in an unbiased manner.

- How do you think, will the ICO hype quieten by the project launch moment?

- The hype will quieten in case of strong regulation and market consolidation in the hands of the limited number of big players, as it is now in the IPO industry. But that outcome will kill the core ideology of crowdfunding and individual investments in advanced breakthrough technologies. Our opinion is that even at this case the market will find the solutions to be free from regulators restrictions.

- According to your opinion, in case of decline in the number of ICO launches, what market share will Descrow secure?

- At the moment Descrow project is building the core solution, which due to its reliability, will be used by the whole crowd funding industry, - especially with the growth of distrust and failures to comply with the undertaken obligations by the startups. Investors are forced to seek alternative solutions for secure investments, which at the moment are not yet at the market. We are building this complex solution to meet the industry need.

Starting with a minimum of 5-10%, with distribution, popularisation of ideology and with integration with different blockchain platforms, we are aiming to secure 30-40% of the market and we are not resting upon it.
 

Sergey Besedin
CEO and founder, Decentralized Escrow

- What determines the choice of jurisdiction to set up a company in?

- The choice is determined by the following factors: Estonia is a full member of the European Union and it is the leader in the field of regulating the cryptocurrencies exchange. We are attracted by the government positive attitude towards the blockchain projects. Apart from that, Estonia is already a leader in the field of practical application of blockchain technology, including the application within the government sector.

- How do you assess the risks associated with a possible conflict between ICO regulations in some countries and the platform core operating principles? Do you have the risk mitigation plan for this scenario?

- Descrow platform provides a service to launch step-by-step fundraising campaigns. The platform itself is not launching or organising ICOs for startups. Therefore, the mentioned risks are on the startups side. Concerning the platform operations under different jurisdictions, the need to obtain licenses will be determined separately in each case based on economic attractiveness of each jurisdiction.

More information about Decentralized Escrow project you can find here:

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Pantera Capital to Intend to Raise $175M for Crypto Fund

Whether the firm can achieve its funding goal is still unclear
16 August 2018   201

Pantera Capital intends to raise up to $ 175 million for its third venture fund, focused on the blockchain and cryptocurrencies, which marks significant progress against the background of the company's other two funds: the assets of the first of them are $ 13 million, the second - $ 25 million. This is reported by TechCrunch.

As reported, company's partner Paul Veradittakit says the target amount is a “function of how fast the space is moving, the talent coming in, the opportunities, and the sizing of rounds. With more interesting later-stage investments [on our radar], too, we want to be flexible and able to move with the market.”

Whether the firm can achieve its funding goal is still unclear. According to documents recently sent to the US Securities and Exchange Commission (SEC), it has already managed to raise more than $ 71 million with the participation of 90 investors. Veradittakit calls this event "the closing of the first transaction".

One of the company's new funds, which opened last year, has a hedge fund structure and focuses exclusively on the ICO. The founder of the company Dan Morehead said earlier that Pantera takes part in the first stages of such campaigns, "basically getting a discount to the ICO price by getting in early, when it’s just a team and a white paper."

The second fund of the company is engaged in investing in bitcoin and has managed to serve a large number of investors during its existence. According to Morhed's calculations, the fund, launched 5 years ago, demonstrated a return of 10 136%.

The last fund Pantera invests in cryptocurrencies, which are already traded on the exchanges. It uses machine learning for algorithmic investment and takes into account the views of the company's management when making investment decisions.