ICO: doing it right

ICO: doing it right
Mukhtar Mussabetov
BlockSpace Labs Inc.
Blockchain Conference
Hotel Novotel Centre
February 27, 2018, Toronto

What is Token?
• A unit of value designed by an organization to
self-govern its business model, where value
created, produced or exchanged by members
of the token ecosystem.
Mukhtar Mussabetov bit.ly/ico-expert

So what is an ICO?
• ICO is an evolutionary integration of the following
concepts and technologies:
– Offshore zones – relative anonymity; relaxed regulation,
usually outside national borders;
– Crowdfunding – small amounts raised from a large crowd
via the internet;
– Penny stock – highly speculative;
– IPO – public investment;
– Sharing economy – assets shared between private
individuals, either free or for a fee, typically via the
internet;
– Open source – transparency of transactions;
– Seed capital – high risk investments

Define ecosystem
• It’s a mini-economic model;
• It’s not about users but members;
• Specific group interests;
• Ecosystem integration.

Token Functionality
• More uses of the token guarantees stronger
model and ecosystem.

Business Model Tokenization
• Design and integrate incentives;
• It’s not about distributing, selling or gifting
something but opportunities to create value
and use token for value exchange, from simple
data sharing to activities that produce new
product/service.

Token Distribution
• There are no ideal token distribution standards or
benchmarks.
• Key issue: who would be in charge for long-term
growth, team or community?
• Lock-up periods: 3 to 12 months in average,
especially for large amounts. Ether was not
usable or transferable until the launch of the
genesis block;
• Keep public exchanges updated on tokens in
circulation;
• Clear and timely communications are required.

Compliance & Legal Issues
• Clearly define token functionality first and
then evaluate regulatory risks;
• Most jurisdictions are unclear;
• Some jurisdictions are more friendly (Estonia,
Gibraltar, Cayman Islands, Australia, etc.).

Software audits
• Code strength of the smart contracts for ICO
cycle by a professional, independent party and
security procedures for accepting funds, TGE,
multi-signatures, lock-ups, and other
automated procedures

Purpose of Foundation

Use of Proceeds
• Before developing this part, have a realistic
strategic and business plans;
• Go beyond pie chart and support it with more
details from those documents.

Management, Team and Governance
• Focus more on team experience rather than
celebrity advisors. Everyone knows the truth.

Develop White Paper
• Business/Technical;
• One-pager/Investor Summary;

High-level White Paper Structure
• Contents
• Executive Summary [a separate document for
public use]
• Abstract
• Problem
• Solution
• XYZ Overview
• Value Propositions for Esosystem participants
• XYZ Token Economy [Tokenomics]
• Competitive Strategy
• Marketing Strategy

High-level White Paper Structure
(continued)
• Implementation
• Security Audits (pre-ICO to post-ICO)
• Ecosystem Development
• Conclusion
• Risks, Challenges And Considerations
• Legal Terms, Conditions and Disclaimers
• References
• Glossary Of Terms

Marketing
• Passive Advisors add less credibility than six
months ago;
• Use popular ICO channels and platforms to
market and promote (GitHub, Subreddits,
Steemit, Reddit, Bitcointalk, Telegram, bitcoin
forums, etc.);
• Website: avoid entirely ICO focused content
and have more project related content.

ICO cost structure
• Vision, Strategy & Governance (white papers,
roadmap, one-pager, investor summary)
• Board (mentors, advisors)
• Compliance (regulation, incorporation, guidance)
• Design (branding, UI&UX)
• Engineering (TGE, smart contracts, wallets)
• Marketing & PR (social media, specific channels)

Thank you and welcome to the new,
brave world of cooperative funding!
Mukhtar Mussabetov
bit.ly/ico-expert

Step 2. Find a solution
• It’s not just a product/service;
• Solution = a real token need

Step 3. Create MVP
• You can go with just an idea or concept but
your ICO won’t look solid;
• Invite early adopters;
• Test it.

ICOs by Industry
Source: icorium.com

ICO Map
Source: icorium.com

Monthly New ICO Funding
Source: coindesk.com

All-Time Cumulative ICO Funding
Source: coindesk.com

All-Time Top 10 ICOs
Source: icorium.com
Total ICOs to date: 1,478
Past: 852
Ongoing: 438
Scheduled: 188
Max raised: $262M
Average raised: $14M

Key decentralization facts about ICO:
• A token is a hard-to-regulate, digital asset;
• Instant funding accessible for startups right after
completion of a token sale and higher liquidity for
token holders;
• More distributed ownership, where traditional
investors may not have special privileges;
• Global fundraising. Most blockchain startups are
global by definition, and with cryptocurrencies spread
around the world, anyone can buy tokens;
• No need in Silicon Valley – now traditional hubs are
less attractive or defunct.

General Observations
• Millions can be raised in matter of hours or even
minutes. Brave Browser raised $35M in less than 1
min.;
• If people around the world are willing to cooperate, no
Government or regulator can stop it;
• Collective wisdom is maturing pretty fast and
outpacing any official regulations;
• People may want to re-evaluate personal risks and give
up low interest options (savings accounts, mutual
funds, etc.)
• There is a growing interest from non-blockchain
startups.

Canada: regulation
• Banking regulation pushed away
cryptocurrency exchanges: Kraken, Coinsetter,
Coinbase
• Ethereum born in Toronto but registered in
Switzerland and now US$29B market cap
• Regulator sandboxes: Ontario & Quebec

ICO: doing it right

More Related Content

What's hot (20)

Similar to ICO: doing it right (20)

Recently uploaded (20)

ICO: doing it right