Post-ICO: what exactly happens with all those coins?

[dimanyc]

What exactly happens with all the coins that a company raises during an ICO process? Let's say Company X runs an ICO and raises $10M in approx 40,000 ETH coins (or BTC, or Wave). After the ICO closes there's a nice celebration going on at the office - champagne and all that. Now most companies at that stage in the game mostly work on "Grit, Spit, and a Whole Lotta Duct Tape". They now need develop a working prototype (if they don't have it yet), then the actual product, do business development, S&M and all that fun stuff that a "real" company has to deal with. They will have R&D expenses, Marketing expenses, human resource expenses,  ovearhead cost etc. For all that they will need to pay in USD (or EUR if a European company) because the world we live in still in 99% of cases does not accept crypto for payments. At this point they need to start selling all those coins that they raised and reserved for themselves and cash out. I think that's what most will do for a number of reasons:

1) there are no lock-up periods as is the case with VC investment. Company can coins today and sell it all tomorrow with no repercussions
2) as i mentioned above, they need cash to burn
3) most of these companies are NOT in business to trade cryptocurrencies or even make long-term directional crypto bets. Holding onto their ether (or other coins) as an investment is not their business model. Running their business is, however
4) regulatory risks: there has been an increasing amount of calls for the regulators to step in and interfere with the Wild Wild West market of ICOs that's been happening lately. One day one of the regulatory bodies might come in and crush the ICO party. Who know what will happen to the coins then. But nothing will happened to hard cold dollar bills in the bank.

So our company begins to sell and cash out. Some companies have a lot to cash out. Bancor raised $153M worth of ETH. I don't know the exact amount, but I bet a large percentage of these proceeds was earmarked for the development needs of the company. How much of this was already cashed out - I am not sure there a way to find out. And when such cash-outs happen, it puts a LOT of pressure on the "underlying" coin. This could at least partially be the reason for such wild gyrations in ETH rate lately. Investors buy a ton to participate in an ICO and thus create demand. Companies sell the raised ETH after the ICO is over. With the number of ICO's rising exponentially lately, these fluctuations only increase.

Would love to hear feedback from you guys.

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[rdnkjdi]

Lol you're starting to understand this  

Here's what happens.  Ethereum pumps to 25 billion.  Hundreds of new millionares.  Eth makes ICOs easy like a commodity.  Grandpa can do it.

New millionaires buy ICOs.  People buy Eth just to buy ICOs.  It's gonna be the "new frontier of investing."

Most ICOs tokens go up with caps (for a little bit) since they were raised with a cap.

ICOs cash out eth.  Eth has selling pressure from 30% miner inflation + probably another 30% ICO inflation.

Eth tumbles down the hill.  ICOs tumble down the hill.  Last one out loses the most.  

[dimanyc]

Right, but there must be at least a few good ones in a sea of scams (semi-scams). Just like during the dot com bubble, there were still Yahoo's and Amazon's of the world that prospered!

I would like to see details about how fast and much do these ICOs dump their ETH. Is this available anywhere? Also, future ICOs need to step up and be more transparent about their use of proceeds. Lock-in periods should be added to their Whitepapers.

[Antikais]

thing that i dont understand is why people join to icos? after ico when bounties are distributed people sell their coins. and price of the coin goes down. why they dont buy at this stage ?

[rdnkjdi]

Right, but there must be at least a few good ones in a sea of scams (semi-scams). Just like during the dot com bubble, there were still Yahoo's and Amazon's of the world that prospered!

I would like to see details about how fast and much do these ICOs dump their ETH. Is this available anywhere? Also, future ICOs need to step up and be more transparent about their use of proceeds. Lock-in periods should be added to their Whitepapers.

I suspect you're absolutely right.  I like BAT even if I don't really think they needed their own token and might should have committed to just buying back a token with 50% of the profits using BTC or Eth or something.

But I think the investment opportunities are letting the shit clear and see what's standing a year from now.

I would like to see details about how fast and much do these ICOs dump their ETH. Is this available anywhere?

Nope, not that I know of.

Also, future ICOs need to step up and be more transparent about their use of proceeds.

Yep.  But asking for an unregulated market gets us exactly what we've got.  The only way it makes sense for them to be transparent is for investors to demand it and right now they aren't.

[ranih]

Right, but there must be at least a few good ones in a sea of scams (semi-scams). Just like during the dot com bubble, there were still Yahoo's and Amazon's of the world that prospered!

I would like to see details about how fast and much do these ICOs dump their ETH. Is this available anywhere? Also, future ICOs need to step up and be more transparent about their use of proceeds. Lock-in periods should be added to their Whitepapers.

I completely agree.
You know their wallet address, so you can look it up and see where the money went to...
But they should be transparent about it anyway.

[Finalshot23]

And the blind sheep just keep throwing money at them.  I guess you can't teach stupid.

[dimanyc]

I suspect you're absolutely right.  I like BAT even if I don't really think they needed their own token and might should have committed to just buying back a token with 50% of the profits using BTC or Eth or something.

I am not a big fan of BAT. I come from the digital advertising background and really don't see how advertisers would be willing to pay top dollars (or any dollars) for ads that people engage with (click on or just view) in order to get paid. How is that different from all the bot traffic or click farms somewhere in a prison in the Philippines? Those ads would really be worthless and advertisers would tend to stay away from them. I do like the idea behind AdToken however. They need to bring a few large pubs on board to generate momentum.

[dimanyc]

I completely agree.
You know their wallet address, so you can look it up and see where the money went to...
But they should be transparent about it anyway.

I am not tech savvy enough to do that. Or maybe too lazy haha. But if it's that easy, someone should come up with an easy service to help others do that!

[Spoetnik]

Right, but there must be at least a few good ones in a sea of scams (semi-scams). Just like during the dot com bubble, there were still Yahoo's and Amazon's of the world that prospered!

I would like to see details about how fast and much do these ICOs dump their ETH. Is this available anywhere? Also, future ICOs need to step up and be more transparent about their use of proceeds. Lock-in periods should be added to their Whitepapers.

Why do you think that?
That is like saying there is *good pyramid schemes.
Nope.

They are crooked by design for one thing.
This has been explained in a myriad of ways infinitely so does it need rehashing? Or will common sense suffice?

And my response to this topic is uhhh ohhhhhh.. A nooby is asking questions.
A bad sign hahhahahha

Ever heard of a company being transparent or accountable?
I do believe I have posted about that every single day here non stop.

Further more these are not companies nor are they suppose to be.
Know why Bitcoin is considered good?
Because it's decentralized.
ICO's are not..
They are a perverse scammy downgrade from Bitcoin.

Who buys into a scheme coin run by often small children using nameless forum accounts then does not hold their corporation accountable?

Oh I have a forum account here.. SPOETNIK INC.
WILL YOU ALL GIVE ME 100 MILLION DOLLARS NOW?

In the old days if a coin had a 2% premine everyone screamed scam..
Even if they had a basic ledger showing what the money was *allegedly* spent on..
Now we don't even have a simple bullet point fake list.

This shit is so fucking absurd it's astounding any of you bother even trying to defend it.
There is literally no aspect to any of this ICO bullshit that is defendable.

Yet again.. Some idiot NOOB screeches cawing like a crow..
Ohhhhhh but "some" are good..
Oh yeah? Well, which one?

No ICO has been successful at all in any way.
The closest any have come is Ethereum itself and that has been proven to be scammy in every way possible and with an adoption level that consists of nothing more than it being used as an ICO SCAM coin creation platform.. And if that was the intention of it then it's even more scammy then I ever imagined.

In other words your metric for success for an ICO is Ethereum.
Which by all accounts is a scammy gimmicky failure.
What makes Ethereum a "success"?
It's market price?
All of you out there know that means sweet fuck all.
Any scam coin can be pumped up in price.

This topic shows a guy asking questions..
AKA: He's a FUD'er Trolling... Get him!  

Actually it's a sign the facade is being exposed.
The ICO charade is cracking.
Just wait for the momentum to swing in the other direction.

[Hamphser]

Lol you're starting to understand this  

Here's what happens.  Ethereum pumps to 25 billion.  Hundreds of new millionares.  Eth makes ICOs easy like a commodity.  Grandpa can do it.

New millionaires buy ICOs.  People buy Eth just to buy ICOs.  It's gonna be the "new frontier of investing."

Most ICOs tokens go up with caps (for a little bit) since they were raised with a cap.

ICOs cash out eth.  Eth has selling pressure from 30% miner inflation + probably another 30% ICO inflation.

Eth tumbles down the hill.  ICOs tumble down the hill.  Last one out loses the most.  

Very nice explanation and this is also the thing whats on my mind too which its somehow all do have a plan just to complete the cycle all over again and i agree the one who would be the last to get out would surely lose most of its money.Its normal to think off that there would be new millionaires and there would be a new wrecked man in terms of financial.

[3months18w]

After ico, some dev teams ran away with raised money,their projects were abandoned .
some teams keep on working , lead projects going, maybe some times later, there will be a large valuable projects which may change the life of people.
So ICO equal to  gambling.

[Ctn]

For me it is just way of earning quick bucks with ICO project development. Some of them (or may be just few) will create a physical product to sell and used by their customers. The products includes credit cards, or smart apps which are funded by the USD raised with ICO token sale. So its like they use our money to develop their project and give us the profit which was earned back with the sell of those products. May be its just the way to works and of course some of them loose the profits as they are last in the race to buy and sell their token.

[dimanyc]

And my response to this topic is uhhh ohhhhhh.. A nooby is asking questions.
A bad sign hahhahahha

No need to get personal here. Some noobs are less nooby than others. They might ask good questions and try to figure stuff out. So if you want to help - help, if not - move on. Interesting question actually. Sounds like you are onboard with Bitcoin, but hate everything outside of it. Which is fine. Then what the heck are you doing on this forum? Just buy BTC and hold, right? Why does all the altcoin BS matter to you?

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One more thing I forgot to mention in the first post. When an ICO raises money and cashes out, they have zero incentive to continue developing product except their reputation. And even that does not matter as much (example, Charlie Shrem). They have zero responsibility to the investors. Company's success is not directly correlated with the management's personal financial success (at least not clearly). So there's really quite little motivation to keep going after they reap huge benefits of the ICO.

[Pab]

Coins from scam ico's willbe sold,legit one will be pumped dumped untill project realisation,that what wil deliver what thay have promise will be worth small fortune and will be stable if his tokens will be in use,very few will survive.Genarated from scam ico's money will create few dark milionairs

[CuriousInvestor]

Lol you're starting to understand this  

Here's what happens.  Ethereum pumps to 25 billion.  Hundreds of new millionares.  Eth makes ICOs easy like a commodity.  Grandpa can do it.

New millionaires buy ICOs.  People buy Eth just to buy ICOs.  It's gonna be the "new frontier of investing."

Most ICOs tokens go up with caps (for a little bit) since they were raised with a cap.

ICOs cash out eth.  Eth has selling pressure from 30% miner inflation + probably another 30% ICO inflation.

Eth tumbles down the hill.  ICOs tumble down the hill.  Last one out loses the most.  

Everyone listen to this guy.

[pigheadbig]

After ico, some dev teams ran away with raised money,their projects were abandoned .
some teams keep on working , lead projects going, maybe some times later, there will be a large valuable projects which may change the life of people.
So ICO equal to  gambling.

I agree with you. That is the risks of the participating in an ICO project. And in order to be a clever investor, you should do some deep research before buying any ICO tokens.

[Spoetnik]

And my response to this topic is uhhh ohhhhhh.. A nooby is asking questions.
A bad sign hahhahahha

No need to get personal here. Some noobs are less nooby than others. They might ask good questions and try to figure stuff out. So if you want to help - help, if not - move on. Interesting question actually. Sounds like you are onboard with Bitcoin, but hate everything outside of it. Which is fine. Then what the heck are you doing on this forum? Just buy BTC and hold, right? Why does all the altcoin BS matter to you?

------------------------
One more thing I forgot to mention in the first post. When an ICO raises money and cashes out, they have zero incentive to continue developing product except their reputation. And even that does not matter as much (example, Charlie Shrem). They have zero responsibility to the investors. Company's success is not directly correlated with the management's personal financial success (at least not clearly). So there's really quite little motivation to keep going after they reap huge benefits of the ICO.

I was not being personal.
Being a NOOB means you are a NOOB.
I worked my ass of to get my rank.. You didn't.
And when I show up at a new forum I tread lightly knowing then I am now the NOOB.
It is not a personal insult.
It is a fact.

You NOOBS know fuck all.
But you speak the loudest.. About things you know nothing about.
All so you can profit off of scammy garbage.
Few NOOB account are sensible about this but when they are I have no problem giving them their props.

I have never seen a forum where people show up shooting their mouth off like experts with their very first post.
That is unique at this forum.

You NOOBS here don't show us older users a shred of respect.
I get told off with swearing and insults regularly by your kind.
It's been happening for years too.

NOOBS... MOST OF THE TIME YOUR OPINION IS WORTHLESS.

When I started here I was stuck in the nooby jail section.
I was blocked from showing up in ALT Main spewing bullshit with a sig campaign.

Want personal.
How about you NOOBS are not liked or wanted here?
That is how I feel.
I don't like you.
You bring nothing of value to crypto.
You are selfish short sighted greedy little piglets.. Pissing all over crypto for some quick chump change whale scraps.

If you want your opinions to be valued then you are going to have to work at it.
You will NOT be given the benefit of the doubt.
You are a noob.. So know your place.

[dimanyc]

ok, great insight. Keep being a pissy narrow-minded hatred-spewing loser.