Running costs or transaction cuts?

[NevermindTheBlockchain]

What is the difference between charging 30% for transaction fee and being a middleman? Why so many platforms born from ICO charge transaction fees for "company running costs" and they still manage to raise huge amounts?

[bob3772]

What is the difference between charging 30% for transaction fee and being a middleman? Why so many platforms born from ICO charge transaction fees for "company running costs" and they still manage to raise huge amounts?

The funds they raise are for the development of the project. After that it needs to generate finances in some way in order to pay for running costs and this is what transaction fees are used for. Tokens reserved for founders and such are then used as a payment and added incentive for them to perform and deliver.

[damberg]

What is the difference between charging 30% for transaction fee and being a middleman? Why so many platforms born from ICO charge transaction fees for "company running costs" and they still manage to raise huge amounts?

The funds they raise are for the development of the project. After that it needs to generate finances in some way in order to pay for running costs and this is what transaction fees are used for. Tokens reserved for founders and such are then used as a payment and added incentive for them to perform and deliver.

Well written. ICO's has been more reasonable in token allocations lately than they were a year ago. Quality ICO's pay attention to correctly estimate marketing and development costs while minimizing running costs. That being said, I think there is a place for a "post-ICO auditing" that could tell investors how raised funds were actually spent.

[NevermindTheBlockchain]

What is the difference between charging 30% for transaction fee and being a middleman? Why so many platforms born from ICO charge transaction fees for "company running costs" and they still manage to raise huge amounts?

The funds they raise are for the development of the project. After that it needs to generate finances in some way in order to pay for running costs and this is what transaction fees are used for. Tokens reserved for founders and such are then used as a payment and added incentive for them to perform and deliver.

Well written. ICO's has been more reasonable in token allocations lately than they were a year ago. Quality ICO's pay attention to correctly estimate marketing and development costs while minimizing running costs. That being said, I think there is a place for a "post-ICO auditing" that could tell investors how raised funds were actually spent.

Agree with you both, but how one should avoid the middleman effect? What then is the difference with traditional crowdfunding if we are just recreating the same middleman structure?

My questions are genuine and I'm simply trying to get my head around business models for [Suspicious link removed]panies

[ManaMan]

That depends on what ICO company we are talking about. It's not just cutting the middleman but it also, in many countries, means that there is no regulation as this is somewhat gray area and this enables you to do much like whatever you want and how you are going to raise funds. With crowdfunding it is totally different story.

[NevermindTheBlockchain]

That depends on what ICO company we are talking about. It's not just cutting the middleman but it also, in many countries, means that there is no regulation as this is somewhat gray area and this enables you to do much like whatever you want and how you are going to raise funds. With crowdfunding it is totally different story.

Yes, absolutely, I get that. But isn't disintermediation and distribution the main point of building a blockchain startup?

[bob3772]

What is the difference between charging 30% for transaction fee and being a middleman? Why so many platforms born from ICO charge transaction fees for "company running costs" and they still manage to raise huge amounts?

The funds they raise are for the development of the project. After that it needs to generate finances in some way in order to pay for running costs and this is what transaction fees are used for. Tokens reserved for founders and such are then used as a payment and added incentive for them to perform and deliver.

Well written. ICO's has been more reasonable in token allocations lately than they were a year ago. Quality ICO's pay attention to correctly estimate marketing and development costs while minimizing running costs. That being said, I think there is a place for a "post-ICO auditing" that could tell investors how raised funds were actually spent.

Agree with you both, but how one should avoid the middleman effect? What then is the difference with traditional crowdfunding if we are just recreating the same middleman structure?

My questions are genuine and I'm simply trying to get my head around business models for [Suspicious link removed]panies

Which middleman are you speaking of? I'm a little confused as to who you see as being the middleman in the ICO process. The only real middleman in most ICOs is the ETH platform (sometimes other blockchains) but they only take fees for transactions which isn't nearly 30%.