In case you are still in the dark about the new buzz in the cryptosphere, Interactive Coin Offering is a collaborative protocol written by Ethereum’s Vitalik Buterin and Truebit’s Jason Teutsch. The main proposition of InteractiveCO is a responsible manner to tokenization. Interactive coin offering is borrowed out of game theory to create a fair procedure for token sales. In simple terms, the proposal is to ensure that everyone can decide what to buy at a buyer determined value. This will create a widespread participation of everyone in the token sales.
Currently, aside few ICOs that have instituted the interactive coin offering proposals, token sales are characterized by the following;
- Unequal chances of participation
- Uncertain valuation
- Unreasonable token liquidity
- Absence of regulation
These characteristics are what is making government regulatory agencies to seek to get involved in ICOs. What we have now is capped sales of tokens, hijacked by the whales to the detriment of small buyers. What we have as the new proposal of Interacting coin offering is the uncapped sales of tokens. This will be simply explained below;
- A personal cap will be introduced instead of the capping by the ICOs. This will help to determine the value of which each participant is willing to buy the tokens. With this in place, the value of tokens is no longer determined by the company offering the token but the buyers.
- The second aspect of this proposition is the ability of the buyer to withdraw their initial bid. A smart contract will be in place TO carry out a partial or total refund to the participant. Most importantly, the token sale will be within 30 sales during which the participant can withdraw their bid until the last days of the sales.
- Early participation is encouraged and rewarded as there will be a progressively decreasing discount in place. The proposal suggests a 20% discount on early participation which decreases to 10% until the withdrawal lock is in place.
- Transaction fee will be at a flat rate determined by Ethereum gas price.
What’s In It For Participants?
In theory, Interactive coin offering is meant to counter the four characteristics of the present capped sales of tokens. In this new era of InteractiveCO, both small and whale participant are treated fairly without discrimination. Using a 30 days sales period also, miners will be discouraged from censoring outrageous transaction fee. In reality, Interactive Coin offering share similarities with uncapped sales. However, being able to withdraw bids by participants at a value considered unreasonable stands out as the basis of the new protocol. So also is the inflation to be injected into ICOs.
In summary, there’s still a long time to see the compliance of future ICOs with InteractiveCO. If fully adopted and carried out, it will spell a new vaccine for curing the rat race and madness of ICOs. This will even caution ICOs from just churning out unrealistic whitepapers and ideas.
Also published on Medium.