It is not every day that you discover serious in-depth research on ICO projects and when I found the paper “Coin-Operated Capitalism” by Cohney, Shaanan and Hoffman, David A. and Sklaroff, Jeremy and Wishnick, David A. (July 17, 2018) I was excited! After reading it I became a bit sad though. Not because of the quality of the paper, which is very good, but by the conclusions the researched arrived at.
The researchers took a deep dive into the top 50 ICOs of 2017 and came to some shocking conclusions. I recommend everybody to read the paper (103 pages), or at least scan the first few pages and the parts that interest you. You can find it for free here.
For those of you that want the quick snacks, here are some of the most important parts and conclusions of the paper.
Image source
One of the authors, David Hoffman, sums up a few things quite nicely in his tweet:
“Of the 50 ICOs:
- of 37 that promised vesting, 80% didn't code it
- of 32 that promised supply restrictions, 25% didn't code it
- of 17 that promised burning, 35% didn't code it
- of 10 with tokens that could be modified (like Bancor), only 4 disclosed that right in English.”
That shocked me to be honest. I guess I assumed that vesting, lockups and burning were always defined in the code. Since I am not a technical person, I sort of trust projects to do so and other people with a technical background double-check stuff and raise red flags. Apparently we are still far away from being able to trust in this trustless industry.
An important quote from the paper:
“Our inquiry reveals that many ICOs failed even to promise that they would protect investors against insider self-dealing. Fewer still manifested such contracts in code. Surprisingly, in a community known for espousing a technolibertarian belief in the power of “trustless trust” built with carefully designed code, a significant fraction of issuers retained centralized control through previously undisclosed code permitting modification of the entities’ governing structures.”
That whole difficult to check insider self-dealing worries me as well. Should we just trust projects on their words? Of course, if something is not defined in the code, it does not mean that the projects team members will take advantage of it. But it is possible…
Food for thought I would say. Hopefully conclusions from this paper will reach the depths of the blockchain space so we can all be more aware of it and demand from new projects that this stuff clear and defined in the code.
By sharing this information with you I intent to make you aware of what is going on in the space. I am a big proponent of openness and transparency so I will share stuff with positive or negative sentiments with you. Be informed :-)
What are your thoughts on this paper? Let me know in the comments!
P.S. It is cool to see that some Steemit articles are used as a reference/source, like this post by @maxnachamkin.
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Disclaimer: I am not a financial advisor, trader or developer. I am just a blockchain & cryptocurrencies enthusiast. Make sure you do your own research, draw your own conclusions and do not invest any money that you cannot afford to lose.
There are plent of deception out there. High risk with high rewards. I guess it is apart of the growth of crypto where some will lie their way through it. Just hope in the future more people will leave a certain token/coin if promises are not kept. Thanks.
Indeed, that would be a natural reaction. The paper actually mentions that the market doesn't seem to be impacted by it and there is no clear pattern of people leaving those projects.
I would love to know the names of these ICO's ! Naming & shaming would be a good thing to protect people.
I also wonder if I am holding any of these failed projects. As usual my stash is increasing in amount of crypto's again.. and I can't imagine all of them succeeding in the future..
(p.s. about to apply for the job tomorrow - figured I'd make a decent review article first to link in the application :) )
Great for this informative post to aware and update us
No worries, my pleasure :-)
very deep research sir
Nice
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