I hope the 98% is a joke
Cryptoworld will cried scam for sure!
Give to a single person the control of 98% of the coins plus to a unknown guy
This is not a joke, this is total manipulation, it's the same as ripple. I doubt anyone would participate on a IPO like this, 2 % of the total coins No thanks!!
And nobody will buy after the IPO as all the money will go only to one person, The Dev.
Dont compare Skycoin to Ripple. At least half the coins will be distributed to the community over next five years (or over a reasonable schedule). We are doing a tapered distribution like Bitcoin. This is the best strategy for gradual appreciation over time.
Handling Speculators:There are speculators who will push massive amounts of Bitcoin into Skycoin. They can send the price 50x the IPO price for very little money, then hype coin, bringing in new money. They sell off until they have made more than the cost of the pump. Then they dump everything. Everyone who came in later is angry because they lost money.
We have studied the pump behavior of the NXT clones and we have studied every coin IPO. There is no perfect IPO. Every IPO is unfair to someone. There is no distribution strategy that will make everyone happy. No matter which strategy is chosen, there will be complaints. This strategy was chosen, so that
1> we can control the pump behavior to a reasonable range.
2> the distribution ends up being fairer and more evenly distributed
The more coins are distributed in the IPO vs over time, the more unequal the resulting coin distribution will be five or ten years from now.
Suggestions for improvement:It is not enough to criticize the IPO format, but you have to come up with a better distribution strategy and an argument for why that strategy is superior. There are trade-offs. The IPO that makes the most money for the people in the IPO may not be the best strategy for the long-term health of the coins or for stable price levels.
IPO Choices that were madeWe also made a choice to minimize the importance of the the IPO. The IPO does not matter, because it is such a small amount of coins. By the time 10% of the coins are distributed, only a fifth of them will have been from the IPO. The returns will be modest (we expect no more than 5x) over people coming in at 10% of distribution. A 5x return is nice, but its not a billion percent return like Bitcoin. A 5x return on 200k is only 1 million. So the IPO people will be ok, but they wont be billionaires while the people who come later are mere millionaires.
Even if the Skycoin IPO is completely unfair and a compete disaster, the amount of coins involved is so small, it is of little consequence in the long run. Five times as many coins will enter the market over the next year as during the IPO.
In Bitcoin, there inequality was immense. There were people who bought coins at 1000 Bitcoin per dollar and people who bought at $200 per coins. The average Bitcoin user may have 1 coins or 10 coins and there are users who own 500,000 coins. If the developers do not screw up and are responsible, the level of inequality in Skycoin will be significantly lower than in Bitcoin. A more widely and evenly distributed coin, will have lower volatility.
Psychological Aspects of Altcoin VolatilityThere are people who bought Bitcoin when it was at a penny and who slam 10,000 Bitcoins coins back and forth like a coked up day trader. Its monopoly money to them. If they lose 2000 Bitcoin, they do not feel psychological loss because the coins cost them nothing. They need to gain or lose 1000 coins for gambling to be exciting. They need volatility and need to create volatility to satisfy their gambling impulses. This is not
Minimizing Inflation:People have brought up concerns that going from 2% to 50% distribution of coins will cause inflation. This is true. A good rule, is that the percentage of new coins released as percentage of existing coins (inflation rate) should always be kept less than the long term appreciation rate of the coin.
We intend to do the distribution so that it does not put downward pressure on price. Distribution will decrease if it pushes price down. So going from 2% distributed to 10% will not be a 5x inflation, but will be like Bitcoin going from a cent to a dollar, while the number of Bitcoin itself has increased.
With this strategy, the market cap reflects a circulation of 100 million coins (100%) and not the free float. The inflation rate will always be lower than the rate of long term appreciation.
Developer Self InterestIt is best for the community if the developers are stingy and greedy, but not exploitative.
- coins which are more scarce, will have higher valuations. Developers who shower coins on everyone will make the coin worthless
- developers who plan to make all their money on the coin IPO are not invested in the long term growth. Raising a large IPO means the developers are already rich and they dont have as much as an incentive to increase the coin value. Most coins today are designed to make all the money at the IPO instead of being a long-term prospect.
- a developer selling most of the coins up front means the developer would rather have Bitcoin than his own coin. It shows they lack confidence or commitment in the long term growth of the coin.
- developers who are weak and cave into social pressure, are incapable of making sound or fair decisions. The best choice for the long term, will often make people unhappy. There is a difference between being reasonable and fair and making decisions based upon who can whine the loudest.
- If we only need $200,000 for immediate first year budget, should we raise $200,000 and spend it on the project. OR should we raise $2,000,000 and go and buy sports cars. Why not just sit on the money for five years and buy a castle when Bitcoin hits $10,000. Both other developers AND investors have told us that they dont understand why we dont take as we can get.
- The more coins we give out in the IPO, the fewer major contributors we can compensate. 1% of Bitcoin is 4 million dollars and may be worth 60 million someday. We can give out 1% stakes to key contributors making major contributions and 0.1% stakes to other contributor and so on and the rewards are more compelling if the coin is scarcer. We will be spending 10% of the market cap of the coin each year on development and driving user growth. The best developers want to work on projects they find personally rewarding, they need 40k to 150k/year compensation and they need enough equity to buy a house or retire (with castles and sports cars) if the project succeeds.
SummaryThat is the best long term strategy we were able to design
- a small IPO (so small that it is meaningless in the long term)
- a fixed number of coins per day, decreasing over time (tapered distribution)
That is the best possible strategy that we have seen so far.
So if there are 100 million coins and goal is 50% distribution, then a simple rule is "10 million coins per year for five years". In reality, this is a rule of thumb and we are going to do what maximizes the long term value for the stakeholders.
