the future of initial coin offerings - wordpress.com 27, 2017 · the future of initial coin...
TRANSCRIPT
The Future of Initial Coin Offerings
Wulf A. Kaal
FinTank
Chicago
July 27, 2017
1
Slidesavailableat:wulfkaal.com
Ethereum
Ties.NetworkEthlanceJob Site
AKASHASocial
Decentralized Applicationon Blockchain
EthereumPotGambling
EtherLoversImmortalize Love on BC
... ...
Crypto-CommunityTraders
Investors
DevelopersConsultants
Lawyers
Enthusiasts
The community is separated. There is no unique platform for finding partners and making deals.
Ties.NetworkBusiness Platform for CryptoCommutity
PRincrypto-community
Voteandratingsystem
Partnerssearchandbusiness-transactionrightinthenet
Abilitytopreservefullanonymity
Where to store data?
Keywords|Searchable|Modifiable|Deletable
Full-textsearchable |Modifiable|Deletable
PhotosRatings
Posts
Staticfiles|DeletableAggregatable|Modifiable|Deletable|Constraints
Byzantine Problem Tolerance
“ATTACK!!”
? ?
?
? ?
?
??
?
Thisproblemhasasolutiononlyiftheamountofloyalgeneralsis⅔(2m+1).Ormorethanahalfiftheycan’ttwisteachother’swordsaround
• Byzantinefaultinthesystemwhenoneormorecomponentsstarttobehavemaliciously.• Thesystemisbyzantinefaulttolerantifitsurvivesmaliciousbehaviorofitsparts.• Trust:Youneverknowifyour(anonymous)collaboratorstellyouthetruth• Therefore,allthepublicsystemsthatallowanyonetoparticipateshouldprovidebyzantine
faulttolerancetoensurestability
Ideal storage
Fast
Distributed and Decentralized
Structured data
Byzantine Fault Tolerant
Public
Sharding and scaling support
Mutable data
Advanced search capabilities
Current storage options
Blockchain
Blockchain Distributed DatabaseP2P File System (IPFS) Decentralized cloud file storage
Pros Cons
Peer to peerOnly used files are stored locally
Necessary to stay onlineOtherwise your files might not be
available
Content-addressableMalicious modification is impossible
Static files only
High throughputParallel download of popular files
Files cannot be removedonce they are downloaded by peers
No content search
IPFS(InterPlanetary File System)
Based on Distributed Hash Table, BitTorrent
Pros Cons
No need to stay onlinefor your files to be available
Static files only
High reliability No content search
High throughput Not for free
Files can be removed
Decentralized cloud storageSia, Storj, Ethereum Swarm
(just cloud storages like Dropbox, but difference is that the content is hosted on user’s computers who offer their hard drive space for rent,
rather than in datacenters.)
Pros Cons
Fast
NOT Byzantine Fault Tolerant (Allthenodesoftheclusterfullytrusteachother.Soany
maliciousnodecandestroythewholedatabase)
Linear scalability
Fault tolerant
Mature realizations
Distributed noSQL DatabaseMongo DB, Cassandra, RethinkDB
Pros Cons
As good as RethinkDB Immutable
NOT Bysantine Fault Tolerant
BigChainDBShould be: BigPrivateBlockchain
● Build on top of RethinkDB cluster
● Each BDB node can write directly to the cluster
● NOT Bizantyne Fault Tolerant
● Public - any user can write to the database
● Record remembers its creator (owner)
● Record can be modified by owner only
● Everyone can read all records
● Each user has its own primary key space
● Permissions are rechecked on replication
● Permissions are managed via smart contract
Ties DBBringing BFT to noSQL database
public key
(owner)id payload signatu
re
Alice profile {...} Alice
Alice rating for Bob
{...} Alice
Alice rating for Eve
{...} Alice
Bob profile {...} Bob
Bobrating
for Alice
{...} Bob
Eve profile {...} Eve
Eve is owner, so this record can be modified by Eve only
Special data organization Example
Incentives for
retrieval
Incentives for
storage
Ties DBIncentives
● Anyonecanparticipateinthepublicnetworkwiththeirownhardware
● Incentivesmotivatenetworkparticipantstobehavehonestlyandresponsibly
● Usersandnodesshouldhavedepositonblockchainsmartcontract
● Userspayfordatabaseoperations
User
Incentives for retrieval
Coordinator
● Coordinatormanagestheuser’srequesttoretrievedata
● Userpaystocoordinatorandnodeswith“checks”(off-chain)
Incentives for storage
User
Coordinator
Receipts
● Coordinatormanagestheuser’srequesttostoredata● Nodesreturnreceiptconfirmingtheystoredthedata● Userpaysthecoordinatorandnodeswith“checks”(off-chain)● Receiptenablesanyonetoverifythatdataisstoredproperly● Nodeviolatingstoragecontractcanbedeprivedofitsdeposit
Conclusions
Ethereum
Ties.NetworkEthlanceAKASHA
EthereumPot EtherLovers
......
TiesDB
TiesDB is public, high speed, high capacity, byzantine fault tolerant noSQL database with rich queries
• ICOfall2017afterMVPout(Americancitizenscannotparticipate)
• Lookingforlong-termpartnersintheUSA• MovingbusinesstotheUSafterICOlater• InvestindevelopingdecentralizedtechnologiesintheUS
• PossiblePartnerCompaniesORpotentialclientsofTIESDB:– Companiesthatdealwithstructuringandorganizingbigdata(ourDBcanmanageHUGEamountsofdata)
– Catalogsofmusicfiles,photo,video,andaudiocontent– Socialnetworks,messengers,andforums– Healthcareblockchain-relatedprojects.WereceivedrequeststouseourDBforClinicalBlockchainLLCforexample.
– Publiccourtrecords(anylawfirmcanuseourdatabaseaswell)
– Publicdomainrecords– Copyrightandtrademarkrecords
21
UniqueICOProperties• Tokenscomparetoafuturescontractbecausetokenholdermakesapredictionaboutthefuturesuccessofacompany/project.
• Tokensproviderighttobuygoodsandservices,likeacurrency.
• Ifaprojectorcompanysucceedstokenvaluecanincrease.
• Independentstoreofvaluethatcansucceedevenifthecompany/projectfails.
26
28Source:KaalConsultingLLC– GenericICOWorkRequirements
Inku Ventures - ICO Consulting Proposal - Kaal Consulting LLC
2
Please see below a short description of required work segments and a timing sequence for your ICO. Upon request, I would be happy to provide more details as needed.
SequenceofICOWorkRequirements: BasicDescription: CostEstimatesin
US$:
Whitepaper Description of market, Purpose of the ICO, Company business, Intended use of proceeds
$10k - $15k
ICO Framework Consulting with client’s legal team to create structure for accepting money in crypto from investors
$25k-$50k
Technical Setup Smart contract (coding) development to receive money from users in crypto
$25k-$50k
Landing Page Landing page - web-site development and integration
$5k-$15k
Marketing Social Media Marketing (Facebook, Reddit etc.), representation of ICO at conferences, Network introduction to ICO etc.
$50k-$100k
Professional Relations Writing and placing articles about ICO in crypto market media
$15-$25k
Banners Banners on the web $25k Marketing Team Crypto Marketing Team - working for 2-3
months $20k
Community Managers Crypto Community Managers - working 2-3 months
$10k
Project Management Project Management - working for 2-3 months
$20k
Please be advised that the above proposal constitutes a very roughly estimated budget and actual cost may be +/-30% depending on the availability of contractors and subcontractors and their actual bids. Moreover, on top of these estimates I would charge a consultancy fee, which might consist of the following: fix + success fee + coins/tokens of ICO. Finally, raising crypto funds opens up different investment opportunities with the proceeds of the ICO, including but not limited to the following: 1. Investments in crypto currencies, 2. Investments in crypto companies, 3. Investments in other ICOs. Depending on your preferences as to the uses of your ICO proceeds, Kaal Consulting LLC would also be able to provide consulting services, among others, with regards to such investment opportunities. Please do not hesitate to get in touch with any questions. I look forward to discussing the proposal with you at your convenience.
34
3 PitchBook 2017 Fintech Analyst Note: ICOs
The decentralized nature of the crypto ecosystem allows the
industry to maximally leverage regulatory arbitrage in order to
deter scrutiny of any legal basis. Many players take advantage
of laws governing legal nonprofit associations in Switzerland,
which allows them the same legal standing as established
entities such as FIFA, the global governing body of association
football (soccer). This has led to Switzerland becoming a hub for
blockchain entrepreneurial activity. Under this guise, associations
can form token-backed sub-entities in order to carry out
development of specific crypto projects which aim to ultimately
generate revenue. In fact, this has also led to the recently formed
Crypto Valley Association formed in the canton of Zug.
Industry analysts have lumped in token sales and ICOs. In
the former, entities issue a tradable token typically using the
ERC20 standard which makes them compatible with other
dapps (decentralized applications). The former include tradable
token sales as well as other crowdsale projects facilitated using
cryptocurrencies. Ethereum first enabled the development of
smart contracts using its turing-complete architecture. Turing-
complete means that the Ethereum network acts as a distributed
virtual machine with the ability to execute any application that a
typical computer would using its distributed network. Some of the
most successful token sales have utilized the Ethereum blockchain
to execute their smart contract tokens.
ZombieICOsoftencannotanswer:• Whatisthebusiness/infrastructureproblemtheinvestmentpropositionsolves?
• Howwillinvestormoneybespenttobuildtheidea?
• TeamcanshowMVP,pre-productionsolution orasset?
• Businessplancredible/providesclarityonhowpropositionworksandwhycustomerswouldbuyit?
• ICOteamqualifiedwithexperiencestartingandrunningabusiness?
• Sufficiencyofinformationforinvestmentdecision?35
CoreProblemsinICOs• Uncappedraiseswithnoproduct• Tokenstradingbeforeunderlyingprotocol,network orapplicationislive
• WebpagefocusonICOwithprojecttimelinebutlesscontentonproduct,project,technology,andteam.
• Lackingdisclosuresonvestingandlockupperiods• ManipulatingthesmartcontracttochangeICOsalesrulesmid-courseduringtheICO
• Uncertainuseofproceedspiechart:%onsoftwaredevelopment,%marketing,%operational,%legal
• UncertaintreasuryroleforICO:currencyconversionplansintoactualcompanyreserves unclear
• Non-disclosureofchangesincompanyvia10k10q8kequivalence
• Promotingadviserswhosetokensvestimmediately36
FixingICOs• AppropriateDueDiligence• Vesting• KnowYourCustomer• AntiMoneyLaundering• Leadershipandteamwithaprovenabilitytoexecute• Viablebusinesswithasolidvaluepropositionandbusinessmodel• Teamwithdeeptechnicalskills• Whitepapersuggestingefficientuseoffundsandbusiness-basedthresholdsfor
minimumandmaximumraise• Well-Definedlegalframework,outsideUnitedStates(Howey)• Scamprotection• TransparentICOprocess• Escrow• Controlledreleaseoffunds• Delayedfounderliquidity• GovernanceStructures• Opt-intocryptodisputearbitrationplatform 37
TrendsinFutureICOs• Increasedaccountability.
– Developers“carteblanche”forICOraisedfundslesslikely
– CryptocompaniesbecomingtransparentandaccountableforICOfundspending
• Fixedfundingtargets.– Open-endedfundingcampaignscancreatesuboptimalresults,e.g.DAO.
– Futureprojectshavemoreconcretedevelopmenttargetswithfixedbudgets
• Governmentregulation.– Investorfraud+increasingICOquantities=governmentinvolvement
38
Short-TermOutlookonICOs• ICOpromoterswillbeprosecuted bytheSECfor:
– Violationsofsecuritieslaws– Promoter/teammisappropriatesfunds– ICOteamimplodesduetolackinggovernancestructureandbasic
bookrunning• ICOmainstreaminthenext12months.
– FollowingSingaporeseveraljurisdictionswillformallydetermineandannouncethat,asdefinedinsuchjurisdictions,“networkaccesstokensarenotinherentlysecuritiesunlessmarketedassuch”
– FirstsmallerEUstateswithBlockchainhistorylikeEstonia,Gibraltar,Malta,Luxembourg
– UnitedStateslastcountrytoadoptthisposition• Next18months:
– PushedbytheirVCs,existingpipelineofzombiestartups(nogrowth,stalling,lackvestingperiodsforexistinginvestors)ICO soVCcanliquidatepositions
39
Long-TermOutlookonICOs• BecauseofICOmainstreamtrend:
– Employeesand/orusercommunitiesorchestrateICOtakeoversofunderperformingWeb2.0platforms
– Butlackofpropercrypto-economicdesignresultsinfailuretoturntheWeb2.0platformsaroundlong-term
• Proven/commercialmanagerswithhand-selectedteamsareinstalledbyactivistinvestorforkstoleadprotocols
• ICOScrapYards:Hedgefunds/privateequityfirmsbeginscoutingfailedICOteamstorelaunchundernewmanagement
40
Join the Conversation!
Wulf [email protected]/@wulfkaal
Wulf [email protected]
Facebook.com/wulf.kaalwulfkaal.com
AKASAH wulfkaal