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Author Topic: [ NEED YOUR OPINION ] Guarantee Fund for investments in Initial Coin Offerings.  (Read 202 times)
Whitly
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November 05, 2018, 07:19:07 PM
 #1

Seeing situation where 55% (Over 1,000) of ICOs failed to complete in the second quarter in last year.  I came up with the idea of the Guarantee Fund for investments in Initial Coin Offerings.
 How it will works: after auditing and checking all aspects and if the project meets all standards, a project will be accepted. After that, they should agree on sharing % from total amount collected during ICO with Fund. And if ICO will fail, everyone who invested less than "x" amount will able to receive money from this fund. So, basically accept only projects, who have the lowest chance to fail and then from those projects fund will be replenished with money to cover future failed ICOs.
I believe, that it might help resolve situation what we have right now and also raise standards for new ICOs, and effect on countries where ICOs banned right now. Also from the marketing side,  participating in this fund will be also plus for projects, since everyone will understand, that the projects in this fund comply with high standards and also if something will happen with projects, they can expect to receive their money back from this fund.
Problem what I see now: who will be the owner/holder of this fund and legal part.
So, what you think, have this idea chance on life?
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November 05, 2018, 08:35:17 PM
 #2

The seems to be good in terms of protecting the investors interest which was the same thing I wish the US SEC and the Senior regulators will do. The but there is who will be the owner/holder of this fund and legal part because we have seen a lot of situations where good person gone bad.

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November 07, 2018, 08:09:53 PM
 #3

Any other thoughts? And how hard bring this idea to life?
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November 08, 2018, 02:51:25 AM
 #4

And who will be the custodian of the funds? Who will make the decision to accept or reject? Do you think that ICO is willing to participate in this kind of funding? And how can we know that a project will likely less to fail (or succeed) for that matter? We still don't know enough matrix to say that this project will drastically change the landscape of the crypto verse so that alone will leave doubts about this so called guarantee funding.

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November 08, 2018, 09:35:39 AM
 #5

And who will be the custodian of the funds?

That's one of the problems what I see now and also how to escrow funds.

Do you think that ICO is willing to participate in this kind of funding?

"Marketing side,  participating in this fund will be plus for projects, since everyone will understand, that the projects in this fund comply with high standards and also if something will happen with projects, they can expect to receive their money back from this fund."

Who will make the decision to accept or reject? And how can we know that a project will likely less to fail (or succeed) for that matter? We still don't know enough matrix to say that this project will drastically change the landscape of the crypto verse so that alone will leave doubts about this so called guarantee funding.

I think it's possible, just needed people who have enough knowledge and experience. Also, get necessary knowledge base and set certain standards possible based on past ICOs, that were successful or not.

And NO, that's won't be a place that will say "Invest in this ICO and multiple your coins in "X"  times. This "Fund" will just give guarantees, that you will able to get your money back with profit or without from ICOs participate in this kind of funding. Otherwise, you can expect to get your money back from this Fund. So, you have a chance to invest in other ICOs without having any guarantees to get at least amount, you invested back or do relatively "safe" investments in ICOs that participate in this fund.
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November 08, 2018, 10:04:59 AM
 #6

The main issue I see with this is that most ICO projects don't have much capital, hence why they rely on an ICO to raise it. If they were to process refunds, how would they have anything left to pay into this fund?

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November 08, 2018, 10:21:46 AM
 #7

And who will be the custodian of the funds?

That's one of the problems what I see now and also how to escrow funds.

Do you think that ICO is willing to participate in this kind of funding?

"Marketing side,  participating in this fund will be plus for projects, since everyone will understand, that the projects in this fund comply with high standards and also if something will happen with projects, they can expect to receive their money back from this fund."

Who will make the decision to accept or reject? And how can we know that a project will likely less to fail (or succeed) for that matter? We still don't know enough matrix to say that this project will drastically change the landscape of the crypto verse so that alone will leave doubts about this so called guarantee funding.

I think it's possible, just needed people who have enough knowledge and experience. Also, get necessary knowledge base and set certain standards possible based on past ICOs, that were successful or not.

And NO, that's won't be a place that will say "Invest in this ICO and multiple your coins in "X"  times. This "Fund" will just give guarantees, that you will able to get your money back with profit or without from ICOs participate in this kind of funding. Otherwise, you can expect to get your money back from this Fund. So, you have a chance to invest in other ICOs without having any guarantees to get at least amount, you invested back or do relatively "safe" investments in ICOs that participate in this fund.

Yeah marketing side, but how about the operational cost though? I mean project started from scratch with 0 funds, they're going to 'share' funds here, which I don't think that ICO project will agree upon (at least the way I see it). They needed all the money to cover there expenses and partaking some funds would be their last resort, IMHO. Although I like your idea, perhaps it needed some expounding specially the 'X amount to be refunded', in cases of liquidation.

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November 08, 2018, 10:32:39 AM
 #8

Yeah marketing side, but how about the operational cost though? I mean project started from scratch with 0 funds, they're going to 'share' funds here, which I don't think that ICO project will agree upon (at least the way I see it). They needed all the money to cover there expenses and partaking some funds would be their last resort, IMHO. Although I like your idea, perhaps it needed some expounding specially the 'X amount to be refunded', in cases of liquidation.

Ideally, I think, will be more effective to take an % from any token purchase made by the user during their ICO.


The main issue I see with this is that most ICO projects don't have much capital, hence why they rely on an ICO to raise it. If they were to process refunds, how would they have anything left to pay into this fund?

I think you get the whole idea a bit wrong, there won't be any upfront payment to join in this fund, same as ICOs won't do refunds by their own. During ICO, the project should be agreed to share an fixed % and if later this project will turn into a scam or something else will happen to this project, people who participated in their ICO can expect to get a full refund from this Fund.
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November 08, 2018, 11:51:42 AM
 #9

So, basically accept only projects, who have the lowest chance to fail and then from those projects fund will be replenished with money to cover future failed ICOs.


Doesn't that sound a bit like a ponzi scheme? I mean you're relying on getting new projects into this to pay out the losses of previous failed ICOs.
I don't really see why any ICO would participate with this really, they basically have to pay part of the money raised through their ICO and for what?

If their ICO is successful, they won't get their money back from this fund. That's a huge amount of money that's basically missing and it's used to pay for other failed ICOs...


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November 08, 2018, 03:01:58 PM
 #10

So, basically accept only projects, who have the lowest chance to fail and then from those projects fund will be replenished with money to cover future failed ICOs.


Doesn't that sound a bit like a ponzi scheme? I mean you're relying on getting new projects into this to pay out the losses of previous failed ICOs.
I don't really see why any ICO would participate with this really, they basically have to pay part of the money raised through their ICO and for what?

If their ICO is successful, they won't get their money back from this fund. That's a huge amount of money that's basically missing and it's used to pay for other failed ICOs...

Fact, projects spend a lot of money during ICOs on marketing and I don't see what can better from the marketing side, than letting users do "safe" investments.
Or as another idea, this fund can take % directly from users, so official token price + % (risk insurance).

So, what you think?
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November 08, 2018, 07:06:03 PM
 #11

While this is a great idea, I am not sure if this will really be practical. Let me try to put it in context by giving an example.

So you have a new team that develops a good idea into a project and does ICO. The assess the coin/token price to be 10 cents and ICO is a success. The coin/token is added to multiple exchanges and start selling in the range of 8 - 12 cents.

Right then Jan 2018 happens and entire Crypto market tanks for a long time (like now) and then the coin is now worth $0.001 cents (I am not making it up, if you look up there are at least 50+ example of this).

Now at what point one need to decide to release fund to investor. Remember the team is still committed and believes in their project. Also there is chance that what they do in their road map 2 year (or more) down the line can make this coin/token worth $1 or more.

Also when a project tanks (and dev and other team disappears) who are you going to reach out to get money back?

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November 09, 2018, 04:45:43 AM
 #12

While this is a great idea, I am not sure if this will really be practical. Let me try to put it in context by giving an example.

So you have a new team that develops a good idea into a project and does ICO. The assess the coin/token price to be 10 cents and ICO is a success. The coin/token is added to multiple exchanges and start selling in the range of 8 - 12 cents.

Right then Jan 2018 happens and entire Crypto market tanks for a long time (like now) and then the coin is now worth $0.001 cents (I am not making it up, if you look up there are at least 50+ example of this).

Now at what point one need to decide to release fund to investor. Remember the team is still committed and believes in their project. Also there is chance that what they do in their road map 2 year (or more) down the line can make this coin/token worth $1 or more.


Well here quote of my previous reply :


And NO, that's won't be a place that will say "Invest in this ICO and multiple your coins in "X"  times. This "Fund" will just give guarantees, that you will able to get your money back with profit or without from ICOs participate in this kind of funding. Otherwise, you can expect to get your money back from this Fund. So, you have a chance to invest in other ICOs without having any guarantees to get at least amount, you invested back or do relatively "safe" investments in ICOs that participate in this fund.

Which means, that this fund is not going to promise, that you will make any profit, it just can promise that you will get the full amount, that you invested.

From your example :

"The assess the coin/token price to be 10 cents and ICO is a success. The coin/token is added to multiple exchanges and start selling in the range of 8 - 12 cents."

Which means that you able to cash out your investments + or without profit - that's all.
But, if you decided to keep your investments and token/coin down to 0.001$ after a month or so, a fund can do nothing with that since you had a chance to cash out your investments + or without profit.  (and that's a bad example, since we can do nothing with BTC/ETH price drops / ups. And if a person invested 100$ in BTC equivalent, but then ICO turn into a scam and BTC down on 20%, the person can expect to receive the exact amount in BTC, that will equivalent 80$)


Otherwise if will happen that :


Also when a project tanks (and dev and other team disappears) who are you going to reach out to get money back?


And the project will turn into a scam, since the fund was getting % from every transaction (token purchase) during ICO. So, no need to contact or search for someone, users that participated in this ICO will able to receive a full refund.



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November 09, 2018, 12:40:03 PM
 #13

It's impossible for such guarantee fund to have enough liquidity in order to cover all the refunds.
The fund will have to control all the spending and purchases that the ICO dev teams make with their  funding.If somebody spends coins for suspicious activities, the fund will block all transactions of the ICO project.This is the only way to prevent exit scams.

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November 11, 2018, 09:22:46 PM
 #14

It's impossible for such guarantee fund to have enough liquidity in order to cover all the refunds.
The fund will have to control all the spending and purchases that the ICO dev teams make with their  funding.If somebody spends coins for suspicious activities, the fund will block all transactions of the ICO project.This is the only way to prevent exit scams.

Well, not sure, that someone will agree to let "Fund" get full access/control of their funds. Otherwise, I don't know how "the fund will block all transactions of the ICO project" without having full control.

I still think we should try variant "B", where:


This fund can take % directly from users, so official token price + % (risk insurance).


And hope to have one failed ICO on ten successful.
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November 11, 2018, 10:24:00 PM
 #15

There are some pooled ICO investment funds where users can invest smaller amounts collectively. Reliability for the managers is ofcourse key.
There are small communities that do have build a trust relation among members and that are not out to screw you but to share knowledge and invest together as friends. 

But ICO projects will never make deals with such funds, they can just buy into it as one investor but not get anything better than all other investors get.




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November 11, 2018, 10:52:04 PM
 #16

There are some pooled ICO investment funds where users can invest smaller amounts collectively. Reliability for the managers is ofcourse key.
There are small communities that do have build a trust relation among members and that are not out to screw you but to share knowledge and invest together as friends. 

But ICO projects will never make deals with such funds, they can just buy into it as one investor but not get anything better than all other investors get.




Here nothing about investment fund, but about Guarantee Fund for investments in Initial Coin Offerings.
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November 12, 2018, 04:51:28 AM
 #17

The seems to be good in terms of protecting the investors interest which was the same thing I wish the US SEC and the Senior regulators will do. The but there is who will be the owner/holder of this fund and legal part because we have seen a lot of situations where good person gone bad.

You are essentially looking at a huge centralization of funds if that started happening.

IMO, failed ICO's should be left alone as it somewhat signifies the lack of marketable interest which that ICO wished to capture. Using funds to keep that sinking boat afloat would be a disaster.

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