According to EOS.io FAQ:
Where do the proceeds from the EOS Token distribution go?
Proceeds from the EOS Token distribution will be the revenue of block.one.
This line in the EOS FAQ has been troubling me for a while now. Finally decided to put my thoughts in to words.
So here is my question. If all the money that will be raised by eos.io is going to be revenue for block.one (i.e. the company that is building it), how does that give the token any value? Isn't it like paying Canonical to develop Ubuntu? Lots of amazing applications can be built on Ubuntu. I also agree that Canonical (or EOS in this case) needs money to develop the platform. But do they really need 100s of millions to do so? If all that money (in liquid BTC and Ether, not eos tokens) is going to a corporation, what value does that leave in the token?
Then there is this (emphasis mine):
What features, uses or attributes do EOS Tokens have? Can the EOS Tokens be used on a blockchain adopting the EOS.IO Software?
block.one is building the EOS.IO Software but it will not configure and/or launch any public blockchain platform adopting the open source EOS.IO Software (the “EOS Platform”). Any launch of an EOS Platform will occur by members of the community unrelated to block.one. Third parties launching the EOS Platform may delete, modify or supplement the EOS.IO Software prior to, during or after launching the EOS Platform.
The EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS Platform.
Now, if all the bitcoins and ethers invested in the coin are going to block.one as revenue, and the tokens themselves have "no rights, uses, etc", then what are investors actually buying?
Conclusion
This is how I read it all
- The millions raised by the sale of the token goes to block.one who is free to do anything with it. The adoption of the platform and the value of the token does not impact this amount.
- The only thing they are committing to is building the software.
- If the tokens do end up being valuable, they will own 10% of those too.
In short, a massive payment upfront to build the platform, and a possible bonus at the end. I do not see how their incentives are aligned with the coin holders (except the lock in for their 10%).
Please understand that I am not questioning their ability to deliver, or the value of what they are building. I also believe that they fully intend to make EOS a success. My concern merely is alignment of interest with the token holders.
I genuinely would love to be proven wrong. It is possible that I am too grey haired to understand this ICO. If that is the case, I will be happy to improve my understanding.
Its demand and supply that will give the token value not block.one. The amount of money they collect in the ICO is not really relevant for the value of the project.
These statements regarding the token are similar to other ICOs. Indeed in theory they could say thanks for the money and have a nice life :) i dont believe this will be the case but legally they could...
:) Good to know that atleast in theory, my understanding is correct. I really look forward to see it evolve in practice.
Yes but dont give them any ideas :)
They're protecting themselves from the long reaches of the law by saying they're worth nothing, lawsuits are a bitch to fight. That's also why they are saying US and Chinese citizens cannot buy it, and block those IP addresses, to mitigate risk from lawsuits. But look at the big names involved in the project, do you think they will forever ruin their reputations for one big payday? I think they're going to build something incredible, and make it easy for devs to use their blockchain like a platform, building dApps that use EOS, and thereby generating a giant network effect like we saw with Ethereum.
They're using ETH token for liquidity, the EOS token doesn't exist yet, so you'll get it when it goes live. Trust and you will be rewarded, I believe.
Fair enough. Thank you for taking time to answer this. As I said, I do not doubt that they will create something incredible (hence the comparison with Ubuntu). Look forward to seeing how it all comes through in the future