Learnings from other coins/IPO's

Discussion in 'Economics' started by Jazzer, Jul 21, 2014.

  1. Jazzer

    Jazzer The Dutch connection Staff Member

    Hey guys, even though we are in a completely different situation, it's always good to learn from the mistakes of the competition. I ran into this article today, somehow I missed it in April. Founders beware!
    1. Don't artificially set fixed transaction rates between other coins through your IPO. We weren't planning that as far as I'm aware of, but still this is good to keep in the back of your mind. You'll end up messing up the market and hurting not just yourself but also other crypto ecosystems which is bad karma.
    2. Don't accept coins which have low transaction volumes. The MaidSafeCoin guys are now stuck with millions in MasterCoin, which they can't possibly cash out on without sending it through the floor because of the low MasterCoin volumes.
    3. Don't put a fixed amount of coins for sale, because you may run out! This is where the concept of eMunie truly shines. We don't care if there are more coins available than some pre-established cap. We can just fix the price per coin because we don't fix the amount of coins. Good stuff!
    4. Also, don't take 8 years to release.. Please, Dan? :D
    In general I think eMunie should be in a good place if the founders handle and market this properly. I´m liking the promo material that Hansen is cranking out. Personally, I do think we can improve on the message a bit more. If we want to go mainstream with eMunie we should do two things. First is have a mainstream vision/message, not a radical one. Second is have advantages over the rest that we capitalize on (we're pretty good there). The new Peercoin vid is a great example in both regards! Still don't think they'll realize their goal of being the backbone cryptocurrency though..
    Last edited: Jul 21, 2014
    Ryan.a85, Krabby, gbcholgi and 5 others like this.
  2. Jazzer

    Jazzer The Dutch connection Staff Member

    Big news today as Ethereum sneakily launched their IPO! It will last for over 40 days, so there should be interesting times ahead. Things we should definitely pick up on are that they "certainly miscalculated the sheer difficulty of navigating the relevant legal processes in the United States and Switzerland, as well as the surprisingly intricate technical issues surrounding setting up a secure sale website and cold wallet system". Apparently they were considering not launching in the US because of legal reasons. Some questions for the founders to ponder:
    1. Do we know what their issues were?
    2. Will we be affected by the same trouble?
    3. Does eMunie have skilled legal advisors?
    Something else to consider is that they based Ethereum in Switzerland, because it "is known for its cryptocurrency-friendly regulatory environment". eMunie is based in the UK, how is that going to play out in terms of regulatory environment? Summarizing the legal stuff, do we have any idea what eMunie will run into when launching the IPO from a legal perspective? Are we in a good position?

    It will be very interesting to follow the Ethereum IPO as it unfolds. They have chosen the peculiar combination of going through an IPO for funding, while at the same time going open source from day one. I have deep respect for that. People already announced that they intend to fork the project. Ethereum still managed to collect a ton of BTC even on the first day of the IPO (almost 5000 at time of post). They use an early bird discount, which starts decreasing two weeks after the start of IPO.

    Of course Ethereum is a distributed application platform rather than purely a financial platform. They specifically state that there is no guarantee whatsoever that ether will have/hold value. They go even further by stating this is not an investment offer, but the ether they sell are a 'product' which can be used to pay for services on the platform when it is launched. They say that buying ether for speculation purposes is not allowed (though judging from the rush to invest I guess in practice nobody cares about that).

    Oh, and they have a Python version, even a special one for participating in the presale. Impressive. As are the professionalism of their terms & conditions as well as purchase agreement documents. Personally I'm not quite as impressed with the intended use of revenue document, but at least there is something for reference! Founders take note, learn and make the eMunie IPO at least as smooth as the Ethereum IPO appears to be going (so far).
    madnn likes this.
  3. Fuserleer

    Fuserleer Radix Founder Staff Member

    Have you seen some of the clauses in that though?

    It just reads like an Apple agreement, only worse....

    "Purchaser understands that there is no warranty whatsoever on ETH, express or implied, to the extent permitted by law, and that ETH is purchased on an “as is” basis. Purchaser also understands that EthSuisse will not provide any refund of the purchase price for ETH under any circumstance."

    Under ANY circumstance.....I guess that also means, if it is never officially launched, due to whatever, tough....oh.....look....

    "Purchaser understands, that while the Ethereum Team will make reasonable efforts to complete the Ethereum software, it is possible that an official completed version of the Ethereum Platform may not be released and there may never be an operational Ethereum Platform."

    Reasonable efforts??? C'mon!

    "Purchaser understands that there is no assurance that, if the Ethereum platform is launched, the platform software will be stable, or that the Ethereum ecosystem will be robust."

    Notice again, not when, but IF, and even then, it could just be shit and thats ok because we say so in our "agreement"! I could go on.....

    I wouldn't invest in that with someone elses money let alone my own. That whole "agreement" might aswell say

    "Hey, dumb fuck with too much BTC, send us your money, we'll give you ETH if we can be fucking arsed to finish it, if not....well, fuck you!"
  4. Jazzer

    Jazzer The Dutch connection Staff Member

    Haha, indeed they dig in deep to protect themselves. What I love are not the conditions for investment themselves, but the professionalism with which these documents were drafted. There clearly was a legal professional involved. I hate lawyers. However I do recognize that in today's world you really should have your stuff written up properly or it'll be your ass on the line in court. :(

    I trust Vitalik enough that I believe he will do his utmost to avoid that 'there may never be an operational Ethereum platform'. But just in case things go properly South he is covered.. And clearly people still throw money at him even though the terms are pretty bad.
    Peachy likes this.
  5. Peachy

    Peachy Founders Staff Member

    Props and respect to you 1000 times over, but I wouldn't worry too much about the "ass on the line in court" aspect. That would have to be after a LOT of "ifs" happened which is highly unlikely.

    Effectively, it all comes down to the "people" you invest in. Investors came in droves for Steve Jobs which is why Apple rose to prominence. Vitalik seems to have likewise created himself an air of mystique that most are willing to suspend logic and just blindly invest.

    Personally, even before the IPO I couldn't get an ELI5 explanation that made any sense towards what they are trying to (or if they even can) produce. As such, it seems that it is targeted towards the nouveau riche BTC crowd or uneducated techno-wannabes.

    I'll stick with Dan instead as he is someone that has "proven" time and time again that he has an unwavering set of high standards, principles and true-north moral compass. And that's not even mentioning that we already have a solid core system near completion.

    Regardless, for those who've invested (or will) in the ETH, I wish them well.
    Ryan.a85, junsha and Jazzer like this.
  6. Jazzer

    Jazzer The Dutch connection Staff Member

    Thanks for the props Peachy! Much appreciated, and much respect from this end as well. :)

    Even though I am not at all advocating to invest in Ethereum, I do have to say that I think you are selling Vitalik short. He has a track record of competence in the field and as far as I can tell there is no reason to doubt his morals either. The fact that most people probably have no proper understanding of what on earth they are investing in is another matter entirely.

    Still, the question I posed in this topic was not about investing in Ethereum at all. It is about observing the way they handle the IPO and making sure ours is even better! From your and Dan's answers I pick up that the founders are not worried about the 'sheer difficulty of navigating the relevant legal processes' that Vitalik is talking about. Do we even know what kind of issues there are, and which risks are involved with ignoring them?

    My fear is that since both you, me and Dan (and probably most people in here) are techies, we are in way over our head when it comes to legal stuff. Not because we are not smart enough to grasp such things, but because it is often weird, open for multiple interpretations and even conflicting with our sense of what is actually 'just'. In my opinion even scenarios that we perceive as 'highly unlikely' should be properly covered. Did I mention I hate lawyers? I also hate the legal jungle that they created which only they can navigate.

    Maybe I'm overly cautious, but isn't it better to be safe than sorry, especially when the stakes are high?
    Ryan.a85, iRabbit and lou like this.
  7. Fuserleer

    Fuserleer Radix Founder Staff Member

    Having not met Vitalik I'm of course not going to make any judgement on him whatsoever.....the OTHER Etherium members I have met are a different matter entirely.

    Moving on, we (as in me and the Founders) have had many a long conversation/debate/arguments running into the night on the legal obstacles that we may face, and while none of us are lawyers, many of us have had various experience with a lot of the laws that touch on this domain.

    Further to that I have 2 qualified lawyers in my immediate family, one of which is corporate and finance qualified whom I have already had counsel on a few things.

    Between all that we should be pretty safe for at least the short term, longer term I intend to have an army of lawyers Hollywood style :)
    Ryan.a85, Lloyd and Jazzer like this.
  8. lou

    lou Beta Testers

    On the technical side there seem to be learning opportunities, too. You may have noticed the BitShares launch a couple of days ago. IMO BitShares is one of the stronger competitors to eMunie. Among other features, BitShares is a distributed exchange and it provides anonymous transactions.

    The latter is apparently causing problems similar to the discussion in this thread.
    Jazzer likes this.
  9. Anima

    Anima Founders Staff Member

  10. hamiltino

    hamiltino Beta Testers

    I think ethereum could become an incubator for many useful decentralized apps. I will not be putting any btc into it though. Investing into so much hype does not seem like a smart move.
  11. Jazzer

    Jazzer The Dutch connection Staff Member

    How about open transactions? Haven't read anything about it on our forums. From what I read on their forums/wiki OT is ahead of eMunie in pretty much all regards/features, except for decentralization (which is, well, kinda critical). Still recommend checking it out to see what the competition is doing. It's open source under a license derived from the GPL, which basically means you can't reuse any code in a closed source project. :(

    Also nice: he does video updates (recommend watching the whole thing to see some cool features). Dunno if Dan is up for doing something like that, but I guess it helps connecting with the community.
    Last edited: Aug 4, 2014
  12. Ryan.a85

    Ryan.a85 Founders Staff Member

    Watching that video was like seeing an alt-eMu, or something, creepy o_O

    Jokes aside, I like how you're considering the competition's work.
    Never heard of this project before (OT specifically) and at first sight seems really similar to eMunie, aside from the centralization.

    GPL is the same kind of license Linux has, right?
  13. lou

    lou Beta Testers

    The linux kernel is licensed under the GPL, yes.

    Basically, the GPL allows anyone to use, copy, modify and/or redistribute the software as long as
    a) you provide the full source code (including modifications) on request, and
    b) when you redistribute the software, you must license it (including your modifications) under the GPL.

    Because of b) some people have called the GPL "contagious", in particular because using a piece of GPL software in your own software is in a way a modification of the original GPL software, which means that the GPL suddenly applies to your own software as well. Obviously, if you want to have control over the development and/or distribution of your software, or if you want to keep the source secret, you can't do that.
  14. dpc123

    dpc123 New Member

    Sorry for digging up an old thread. I was thinking about NXT the other day and it's problems. In my opinion NXT has some good tech and decent user traction for a newer coin. But I don't think NXT has a chance due to it's initial distribution and how so few people hodl so many coins. Regardless of the fairness aspect, which I don't care about, most non-crypto investors won't buy into NXT based on it's liquidity problem. It's a problem all cryptos have, but it's especially pronounced in NXT. So no matter how great NXT becomes it can never IMO become a currency or a safe store of value because a handful of people make the the market.

    I know emunie has a system of issuing new currency as demand increases which may totally solve this problem, but I was thinking about an additional solution. What if there were 2 or more rounds of fundraising/distribution?

    Round 1 would be a normal fundraiser, but buyers would know that they would be diluted in a known later round. To compensate for their dilution they would get a percentage of the second fundraise (50%, 90%...?).

    Round 2 would happen at a pre-determined date, hopefully after the concept was proven as solid and attention was gained. If the product is successful far more people would be interested and far more people would buy/own eMu in the second round. The round 1 balances would be reduced to 10% of the total supply and those owners would get some portion of the second round raise.

    This way the early adopters would be compensated for their early support, but the entire ecosystem wouldn't be poisoned by a large % of coins being held by such a small % of people.

    I don't know enough details about the eMu demand based distribution system to know if the above problem is already 100% solved, but I expect it does not. And yes my proposed solution has plenty of problems too. I just don't want to see another good project be doomed because of poor distribution/liquidity. I know being a proper currency rather than just a good transaction platform is a goal of eMunie.

    Thoughts? This might be a little late for eMunie since a few people beta testers already put in some BTC, but I thought I'd float the idea for inspection.
  15. Jazzer

    Jazzer The Dutch connection Staff Member

    Indeed, this is a challenge. The key observation you make is that the liquidity is low. The core underlying issue is that many people who have their coins simply hold them, rather than using them to buy stuff. Therefore, the circulation rate is low and it is difficult to buy/sell larger volumes of coin. The market capitalization is high as compared to the size of the actual underlying economy. This issue is present in all crypto currencies, though it is less severe in BTC.

    The challenge is to get merchants to accept it, and subsequently to get people to use their eMu to buy stuff with those merchants. When that starts happening for real, liquidity will increase tremendously. I believe holding a second IPO won't actually solve the problem. Effectively you allow people to buy more fresh coin from the system, rather than buying from holders. The result will be that there will be more holders with coin, but still no larger economy.

    The approach eMunie takes is to actually make this a coin that might be used in everyday applications. The speed of confirmation is fast such that you don't have to wait for ~1h to be sure your transaction is secure. There are stabilization mechanisms which hopefully will keep the price roughly constant such that eMu can actually be used as meaningful currency. In this way we hope to establish a platform which creates the conditions favorable for cultivating a real eMu economy.

    However, certainly in the beginning the eMu will have the same issues as all the other coins have. A lot of speculation, few items actually being sold for eMu. As a result low volumes and high volatility. So I don't expect it to be much different early on for eMunie, but the way out is to help us get eMu established as an actual flowing currency! Help develop point of sale software, NFC stuff, get your local merchants to accept it, spread out coins to your friends, get this thing going! :)
  16. Anima

    Anima Founders Staff Member

    Jazzer, i think you misunderstand dpc123 on what the isssue really is: unfair distribution.

    The solution behind emunie is that the system ai matches the supply of new eMu according to demand. There is no fixed amount of eMu made. Hence, people with large holdings will not get a static share of the currency that will appreciate in value and thereby get an unfair portion of the wealth in the system. Essentially creating a "pyramid scheme" like bitcoin, where people getting in early will profit from people getting in later on.

    With emunie, new currency in the system will be created when there is more buy-orders than sell orders. Distribution of new coins goes to existing coin holders and new users. Existing users will earn coins based on their %-holdings of the total supply. They will be compensated for the inflation of currency within the system. Since new users will create more eMu in the system, which increases total supply, the distribution goes from relatively few people holding large portions of the total supply to more and more people holding an ever reducing size of the total supply. Hence, distribution will be much fairer and no single entity will be able to hold a large % of the coins for extended periods of time.

    If you try and model the inner workings of the inflation model, you will see that as more and more coins are created, the smaller the %-of the total supply will be held. This means that if someone who owns 10% of the emu in the genesis block does not reinvest, his/her share of the total supply will become less and less. The only way to stay "on top" would be to keep reinvesting large sums of money, which is not really feasible.
    junsha likes this.
  17. starik69

    starik69 Banned

    Has this statement mathematical proof? :rolleyes:

    How can we model closed source and not fully described mechanisms? :confused:
  18. Anima

    Anima Founders Staff Member


    I tell you what happens IF you try and model the inner workings. The above is how it works. It's not an encouragement for people to sit and model emunie.
  19. starik69

    starik69 Banned

    Where is it?:) PONH :mad:
    So it is question of belife in your words? New religion?:D
  20. Fuserleer

    Fuserleer Radix Founder Staff Member

    One important point to remember is that over time the system will become the largest holder of eMu because it will hold a reserve of eMu (and other assets too). That reserve account is subject to the same rules as everyone else, in that, it will receive INTEREST on it's balance! I'm sure some people will baulk at that, but there is a reason for it.

    Assume the demand is mega high and the supply is low, no one wants to sell, demand keeps increasing,

    If the reserve account did NOT get interest the system dumps all of its reserve trying to keep everything steady and runs out...in the mean time demand stays high and everyone thats holding gets more and more eMu, still no one sells, the reserves are empty.....no longer can it keep the value stable, we get a bubble..etc etc

    If the reserve account DOES get interest, things change a little. In the cases of high demand the reserve account will get a hefty portion of the new eMu to top up its coffers (in addition to any other income streams it has). Because part of that new demand is not going to be bag held, the system has a much better chance of being able to manage the value in times of low-fluidity, as (unless the system has to dump its entire reserves) there will always been some supply guaranteed for the demand.

    Hopefully that makes sense.

    Also before this gets taken and FUDDED...there is not a private key anyone can hold or crack for the reserve accounts, I for example, cant decide to move 10M eMu from reserve to "fuserleer". The code is the key to access it and any movements of currency to and from it need to have a network consensus.
    dpc123 and lovely89 like this.

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