According to a Messari report, between 2009 and 2017 “fair launches” and ICOs predominated. The bearish market of 2018 stopped the dynamics of ICOs and new models were imposed.
According to a report by Messari, a cryptocurrency market monitoring and analysis portal, the launch models of new crypto assets have undergone important evolution since Bitcoin’s creation.
The document explains that a well-differentiated first stage predominates between 2009 and 2017, where the launches of new cryptocurrencies mostly adopted the Initial Currency Offering (ICO) model. To a lesser extent, “fair launches” occurred during this period, following Bitcoin’s pattern.
Since 2018, the dynamics of the ICOs stopped. Messari analysts note that “the scheme to become rich quickly vanished, and ICOs became decreasingly modern and frequent throughout the year.” There is an amazing pace of innovation, with the emergence of new experiments and dynamics in the styles of launching and financing cryptocurrency projects.
Bitcoin’s Fair Launch
Nic Carter, Bitcoin analyst and co-founder of Coin Metrics, explains that “fair launching” is limited to cryptocurrencies whose consensus mechanism is the Proof of Work (PoW), such as Bitcoin. Its main feature is that the launch is made public at the time that the network is activated. Besides, the cryptocurrency can be extracted from the beginning, with parameters that make it open to anyone.
Carter highlights that this type of “fair launches” is unusual, since the cryptocurrencies pre-mined by their creators are excluded. Under this heading, he includes projects such as Litecoin, Dogecoin and Monero, among others. In addition, he indicates Siacoin as a fair launch, since only 0.09% of its tokens were pre-mined by its founders, at the time of its creation.
The Messari report places the Sia project in a different category, due to the system that it uses to finance its development through a parent company that charges for the services that it provides.
From 2009 to 2017, Carter identifies about 30 launches of cryptocurrencies that used ICO to give initial momentum and ensure the development of their projects, among which is Ethereum.
According to Carter, ICOs refer to an offer or sale of tokens, generally involving founders, who keep a stock of them to finance the development of their project.
However, he clarifies that, in the case of “instamines” and furtive mining, founders use asymmetric advantages. They extract large percentages of tokens at launch or they do not announce the activation of the currency, creating an unfair distribution.
Messari suggests that this model turned fundraising into a priority, leaving little room for innovations derived from entrepreneurship with few resources (Bootstrapping) and its possible “effects on network security or regulatory compliance”. However, this style began to decline along with the collapse of the cryptocurrency market, in early 2018.
Messari shows that, between 2018 and 2019, ICOs opened the way to new fundraising styles such as Initial Exchange Offering (IEO). This method, which consists of organizing the token sale of the projects through a cryptocurrency exchange house, has become popular so far in 2019.
He also notes that the projects began to use smart contract programming to promote active participation in the network of the different shareholders and interested parties. He mentions models such as Livepeer and NuCypher, focused on reaching new forms of fair distribution of tokens, such as the Worklock method.
By Willmen Blanco