What type of ICOs we need in crisis?

18 May 2020 by rate3

ICOs have been the subject of this group's reviews since its inception in 2017. In three years we have passed from ICO boom, when almost $8 billion were collected during one year, to 95% fall in 2019, when under $400 million were raised.

We can see three major trends in this market.

First: after ICO demise private equity fundings dominate the market with ~$3 billion grasped by DLT startups in about 800 deals from VCs and crypto-companies, which were forming their own ecosystems.

Second: US has been gradually forfeiting its dominant position on DLT market to China. In 2015 USA was associated with 51% of the global DLT funding (compared to China’s 2%), but in 2019, the USA accounted for 31% while China had grown to 22%.

Third: DeFi has registered a dramatic rise in 2019 reaching more than $1 billion (primary locked in ETH). With that decentralized finance space has already worked out a couple of new ways of rising funds through 'quadratic finance / funding', proposed by Vitalik, and late-stage issuance of usability tokens (e.g. Uniswap).

Extract (google): "quadratic funding - a way to allocate the distribution of funds (for example, from a government's budget, a philanthropic source, or collected directly from participants) based on quadratic voting".

Extract (wiki): "quadratic voting is a collective decision-making procedure where individuals allocate votes to express the degree of their preferences, rather than just the direction of their preferences."

However, the 'quadratic finance' despite its early promises still remains a local project spearheaded by Vitalik himself in collaboration with Weyl. At the same time, it's obvious that to keep our space growing at the pace required to preserve our technological dominance over Finance 1.0 we need something better than slow and outdated PE / VC risings, which are mostly available only to well-known entrepreneurs with proved truck record and dominated by several major crypto-funds located in Silicon Valley, Singapore and Hong Kong.

At the same time, the modified TGE proposed by Uniswap (also financed by Vitalik), when utility coins are issued on top of the popular platform, can be fused with the DAICO (the hybrid of DAO and ICO, also Vitalik's invention). In that case investors funds would be secured on custodial accounts to be gradually (upon reaching milestones) released to support development, while ICO happens only if this project reaches a certain level of maturity / adaption among users.

That approach might help us to avoid most excesses of 'old' ICOs as well as to allow new projects to prove its worth to users before any renumeration go to founders / investors - the 'New Deal' we all need in our times of global economic crisis.