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The importance of double checking your work

The importance of double checking your work

The issue with raising millions of dollars in funding is that people acquire, not unreasonably, an expectation of certain standards of professionalism. There are some projects that communicate in clear and concise manner, but there are also those who find themselves quickly in over their heads. 

Lamden, which raised $10m in its tokensale earlier this month, made a careless mistake in assigning bonus payouts. Instead of sending out a 22% bonus to presale participants, the team sent out a 220% bonus instead. Panic quickly ensued - I have screenshotted some of the pertinent moments. 

I appreciate the desire to show people you are working on a solution but there were a number of missteps that could and should have been avoided:

  1. Screenshot 4 + 5: "So option here is we didn't burn the tokens yet" and "So we can carry on because we have extra": At his point no-one knew how many tokens had been sent out erroneously, In a market where people, including myself, trade frequently on the market cap relative to other projects, no-one is going to be happy if the circulating supply increases just days after the close of the token sale. 
  2. Screenshot 7: Stu moots the idea - live in chat - of porting the token to a new chain. This isn't an idea without precedent but what this meant was that immediately the price on EtherDelta began to tank as people anticipated the fork being from before the payment was accidentally sent out - meaning that any tokens sold now were essentially worthless and it was free ETH for anyone lucky enough to find a buyer. 
  3. Screenshot 8: Mario confirms the timing of the port, sending the price spiraling further down to a low of 1/4 ICO price (I gambled on the team making right to the small number of people who would lose out thanks to this port by purchasing as many TAU at this price as I could - as Ive written before, situations like this are often ideal to take advantage of people overreacting). 

Following a proper audit, the team determined that a miniscule amount of tokens (just 20 ETH worth) had been sent out accidentally, meaning that a port wasn't necessary and everything discussed was essentially redundant. All the real time communication led to was panic and a mass sell off, meaning that some people (and normally I would have more sympathy for these people, except for the fact they were trying to dump their tokens on unsuspecting buyers believing it was free ETH) really lost out. 

The price has subsequently rebounded and the team made the right decision eventually - but the path to get there was fraught with mistakes. It is inarguable that investors in the crypto space are guilty of often focusing too much on marketing over delivery. However, inexperienced teams should consider investing some of their ICO windfalls in support to better prepare themselves for just such situations.

The Global Financial Crisis and cryptocurrencies

The Global Financial Crisis and cryptocurrencies

Microtasks move to blockchain

Microtasks move to blockchain

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