Why is de cap based on ETH? That makes zero sense. The price of Ethereum dropped $100 in just a few days. In just one month the price even dropped from almost $400 to $150. How can you even fund a project based on cryptocurrencies when they are so volatile?
It seems to me that raising funds this way is based on nothing. If the hard cap is 200.000 ETH you can potentially raise $76 million when the Ethereum price hits $380 or $40 million when the ETH price hits $200. You have no clue in advance what the price of ETH will be at the time of the ICO.
So how can a hard cap of 200.000 ETH be justified? The hard cap should be based on actual dollars needed and then recalculated to the amount of ETH needed.
Besides, how does the public know how much money will be raised? How much of those 200.000 ETH will be sold for dollars right away? I doubt every single ETH will be sold right away.
Also, the white paper only uses percentiles. For example, 25% of the funds go to licensing and partnerships. And how much is 25% of the funds exactly? No one knows. This is based on the price of ETH which may drop or rise significantly in a matter of days.
Don't get me wrong, its sounds like a great project but funding ICO's based on cryptocurrencies makes no sense at all. I see this happen with a lot of ICO's.
Millions of dollars are raised but no one knows how much. And if all these millions are actually needed. The white paper only talks about ETH. That makes zero sense.
What will happen in the following scenarios:
- Hard cap is 200.000 ETH.
Scenario 1: price of ETH falls to $250 on the day of the ICO: $50 million is raised
Scenario 2: price of ETH raised to $400 on the day of ICO: $80 million is raised
Scenario 3: On the day of ICO the price is $400 but drops to $280 a month later: how much money is raised?
On a side note, these amounts are only raised if all ETH received in the ICO are directly converted to dollars. Which I doubt will happen.
Putting a hard cap based on cryptocurrency basically means there is no hard cap. Because you might raise $50 million, $20 million, $100 million, etc.
The only right way of funding an ICO is based on the amount of money you need. If you need $50 million then the hard cap should be $50 million. Then the amount of ETH needed should be based on the amount of $50 million. Meaning the hard cap based on ETH will change every day until the ICO takes place. And all raised ETH should be sold for dollars right away. But that does not make any sense at all either. Because if the market is dipping, it would not be wise to sell all ETH right away.
Maybe I'm missing something. But I have zero understanding how funding a project based on volatile cryptocurrencies can work.
It seems to me that raising funds this way is based on nothing. If the hard cap is 200.000 ETH you can potentially raise $76 million when the Ethereum price hits $380 or $40 million when the ETH price hits $200. You have no clue in advance what the price of ETH will be at the time of the ICO.
So how can a hard cap of 200.000 ETH be justified? The hard cap should be based on actual dollars needed and then recalculated to the amount of ETH needed.
Besides, how does the public know how much money will be raised? How much of those 200.000 ETH will be sold for dollars right away? I doubt every single ETH will be sold right away.
Also, the white paper only uses percentiles. For example, 25% of the funds go to licensing and partnerships. And how much is 25% of the funds exactly? No one knows. This is based on the price of ETH which may drop or rise significantly in a matter of days.
Don't get me wrong, its sounds like a great project but funding ICO's based on cryptocurrencies makes no sense at all. I see this happen with a lot of ICO's.
Millions of dollars are raised but no one knows how much. And if all these millions are actually needed. The white paper only talks about ETH. That makes zero sense.
What will happen in the following scenarios:
- Hard cap is 200.000 ETH.
Scenario 1: price of ETH falls to $250 on the day of the ICO: $50 million is raised
Scenario 2: price of ETH raised to $400 on the day of ICO: $80 million is raised
Scenario 3: On the day of ICO the price is $400 but drops to $280 a month later: how much money is raised?
On a side note, these amounts are only raised if all ETH received in the ICO are directly converted to dollars. Which I doubt will happen.
Putting a hard cap based on cryptocurrency basically means there is no hard cap. Because you might raise $50 million, $20 million, $100 million, etc.
The only right way of funding an ICO is based on the amount of money you need. If you need $50 million then the hard cap should be $50 million. Then the amount of ETH needed should be based on the amount of $50 million. Meaning the hard cap based on ETH will change every day until the ICO takes place. And all raised ETH should be sold for dollars right away. But that does not make any sense at all either. Because if the market is dipping, it would not be wise to sell all ETH right away.
Maybe I'm missing something. But I have zero understanding how funding a project based on volatile cryptocurrencies can work.
The reason ETH is chosen is because it solves the problem of multiple currencies. I think investors all over the world are interested, so using ETH as a base currency makes it easier/safer/faster to contribute than using Bitcoin or our own federal currencies. Also, Eth has a lot of potential to grow right now, so they're probably fine with raising money this way. I'm sure they prepare for the worst (ETH drops back to 100$) and hope for the best (ETH shoots past 400$), so i'm guessing they need around 20 million to keep things rolling.
Last, they add the hard cap to make their product more scarse, it's a well known marketing tool. Setting a cap of 20 million seems a lot less scarse than setting a cap of 200.000 ETH
