Topic: ICO Strategy (Buy-back or Dividends) (Read 1563 times)

Yeah, seems so obvious ... maybe too much obvious to be true?

For me buy back is preferred because buy back generally limits the number of that particular tokens in circulation thereby causing more people to chase less tokens which on turn raises the value of the token in the market.

Interesting discussion; I love much more the buyback option since it will impact directly on the value of the token.
Dividends can be a bad beast, unless paid in ETH or BTC directly.

I am pretty sure a dividend model would somehow be "managed" by SEC or other regulators coz dividends imply securities or a debt obligation. unless the token strategy clearly stays clear on both characteristics.
Argon capital claims to provide the necessary due diligence and legal opinion for any ICO they assist and making sure the tokens/coins does not contravene current SEC regulations but nothing is stopping the regulators from coming up with new rules.

If you have an idea, best just seek legal opinion of the current rules coz it is almost impossible to future-proof your tokens without a crystal ball.

The major concern is the law pertaining to the model. It would be best if someone can share us the issue with dividend and buyback in terms of legal aspect of view. Actually this has to be looked right now, because in the long run someone is going to be busted and it is going to affect the investors for such models (dividends,buyback). Anyone with legal experience can shed some light? Maybe with that we can find a new model. The SEC is definitely a pain in the ass.

I have an idea of a token business model which i have to put off temporarily to see what is the next course of action by SEC. I do not want myself or any of my investors get into trouble just because of homework is not done properly. If it is me, i am saying.

there have been some development recently on the ICO space, in particular the recent announcement by SEC as well as MAS (Singapore).

Howey test is a good indication if it classified as a securities in US, however the guidelines from Singapore's central bank is alittle vague and even if the ICO is not regulated now, it will be a matter of time the "big brothers" will come swooping in.

As for your point on legally binding the dividend payment, we could do it via a trust structure and clearly define who are the beneficial owners or the mandate of the trust.

Problem is there is nothing legally binding to hold them to this. So buy back becomes the easiest and most accepted way to give something back to the investors.
No one can say their coin is going to provide a dividend because you will end up going to jail in the U.S. I know in the future this will be a possibility but only when crypto starts to become regulated. Although I'm not sure about the technicality behind how to distribute dividends as some coins will be held in exchange wallets that make it difficult for ICO companies to guarantee that the stock Paying for the exchange of wallet actually goes to the right holders.

thanks! i read Iconomi's post as well and it makes perfect sense, however was just thinking, there must be a way to work around this and delivering better value to the tokenholders. Unless we insist on all tokenholders to "stake" their claim for dividend by X date and with the stake, we payout thru the wallet address (allocation) after taking a snapshot at X time.

Unfortunately I don't have any idea on dividends distribution. Earlier this year Iconomi published a post introducing their repayment program using buybacks and explained why:
https://medium.com/iconominet/iconomi-introduces-repayment-programme-54bfa449d458

I have been thinking about this and did some research but the problems pointed by Iconomi's team really make distributing dividends difficult. This is another good analysis:
https://hackernoon.com/the-iconomi-burn-crypto-buybacks-f9edb30530fe

As they wrote, problems include:
 - Exchange cooperation: "Dividends create a variety of problems in the digital asset space, one of the primary concerns is paying dividends to tokens held on an exchange. Dividends would be sent to the exchange’s custodial address, not the individuals who should own them, as they are the custodian(holders) of assets on their exchanges."

 - Transaction fees: "There is also the transaction cost of sending dividends to ICN holding addresses, as there are currently thousands, and it is likely there will be MANY more in the future."

 - Regulation issues: "Having a dividend pay out pretty much guarantees that an asset will be considered a security according to regulators - which means heavier regulation concerns and government interference."

 - Lost addresses: "The case of lost ICN holding address keys/passwords is also important. The infant cryptospace is filled with the unfortunate mishandling of important data. It seems that almost daily there are new stories of people who lost their passwords, accidentally deleted important files, or their computer broke and they didn’t have a backup of their wallets."

So I would stick with buybacks, as did Iconomi.

trying to bump this up to see if we can get any suggestions on dividend distribution model for ICOs.

Dividend look promising if the ICO was very successful

I would prefer a dividend strategy with a proper mandate to the trust holding the "investment/asset" of the ICO company. however, i do not see a clear and efficient manner of distributing dividends.

I am not technologically inclined, more of a business-focus person, so maybe someone with the tech experience could share a more efficient manner of distributing dividends if the altcoins are all over the place (cold wallet, exchange, etc). How could we distribute the dividends? One particular ICO, i saw the requirement to transfer the altcoins back to the ICO company's wallet to distribute the dividends. This is not efficient and unsafe as well (especially with the recent parity wallet hack), openly announcing that all the coins are coming back to the company's wallet doesn't seem to be a sound move.

Any tech guru to share?

I prefer dividend. But as I know USA based exchanges don't list those tokens.

buy back will attract investors assuring them that they can get received their investment in no time after the ico finished, i think dividends will help but for sure there's a lots of newcomers which only looking for quick profits and not really looking for the project itself.

Thanks Topesis, that's a very good point, however how would you address the regulatory constraints as well as the technology hurdle?

I would think developers prefer buy-back coz it's a cleaner way of doing things?

To me dividends payment is the best for investors while buy-back is the best for the developers because they will use the profit to buy back the tokens and burn the investors tokens and with time this leads to centralisation of tokens in the hands of the developers because they are only burning the investors' tokens and not the majority of tokens they are holding

Thanks JeffBrad12,

Some investors prefer the distribution model as they can "see" the returns via dividends of coins which increase their stake in the company and the compounding effect of dividend strategy encourage coin-holders to continue holding on to the coins. However, i am not sure about the technicality behind how to distribute the dividends as some of the coins would be held in exchange wallets which make it difficult for the ICO company to guarantee that the dividends paid to exchange wallets actually goes to the right owners.

On the other side, buy-back strategy supposed to decrease supply and theoretically increase demand (economics 101) thus an increase in NAV of the coins.

Not bad strategy, this is my favorite strategy I usually use with ICOs I follow, 60-70% the price of token from ICOs in first time listing to exchange are pump for people want take profit soon, but this is best time to sell and waiting the price correction to buy extra token for long time if this project promising and really

buy back is a nice method because it cause instant deflation, which is you are a holder is great. No one can say their coin is going to provide a dividend because you will end up going to jail in the U.S. I know in the future this will be a possibility but only when crypto starts to become regulated. In the mean time you can "share profits". Problem is there is nothing legally binding to hold them to this. So buy back becomes the easiest and most accepted way to give something back to the investors.

I will vote for the buyback method. Too many the project used the dividend can't develop it for real, Vslice is the one that has develop the dividend to the investors. Xaurum also included on that dividend token. But you can see how the iconomi token increase on its price due to the change of the dividend into the buybackl method. The profit has generated by the company will be used to buy back the coin from the hodlers and that makes the price increase.
This way will be so fast to make the price will worth a lot in the future.