XYO Network: Do as I say, not as I do
XYO Network is in the process of running an ICO aiming to raise $48m. It attracted my attention recently as, with just a week left, it was well below its target raise. ICOs which burn all unsold tokens (as XYO's site states they would) are always worth examining, particularly as my rough calculations estimated an initial market cap of c. $10m should it continue raising at the same pace.
One thing I am always wary of is the split of how tokens are distributed. XYO state their distribution as:
- Public sale: 39.3%
- Reserve pool 39.3% (matched to public sale on 1:1 basis)
- XYO team: 6.6%
- XY Company: 3.5%
- Advisors: 3.3%
- Enterprise partnerships: 3.3%
- Promotion: 3.1%
- Pre-sale tokens: 1.6%
Pretty standard, but the split for the pre-sale tokens seemed counter intuitive - obviously the tokens for the pre-sale have already been sold (413m) but the split % wise would rise dramatically should the 9.5bn tokens ear-marked for the public sale fail to sell (at time of writing this sits at 1.4bn sold, but this was nearer 700m just days ago).
This is the response I got when querying this in the Telegram group:
Let's look again at the figures, assuming XYO sell another 500m or so (which is probably generous).
- Public sale: 2bn
- Reserve: 2bn
- Team: 1.6bn
- XY Company: 850m
- Advisors: 800m
- Enterprise partners: 800m
- Promotion: 750m
- Presale: 413m
Taking the reserve and promotion figures out, that means the entire public sale amounts to under 30% of the total tokens in circulation. With them included, just over 20%.
Not only that, it means the team have given themselves more than the entire public will possess (if we combine the XYO team and the XY company) while their advisers currently own over half of the public's collective total.
This is particularly galling when XYO have the lack of foresight to post this on their website:
But surely with this slavish adherence to the principles of decentralisation the team would be in tune with these concerns?
I am also wary of any ICO which hides the amount it has raised. What benefit does it serve? One of the great things about fundraising on the blockchain is the transparency. Why the secrecy?
I wrote previously about the importance of avoiding situations where you put yourself at the mercy of powers who have the ability to swing the price. This is one such obvious situation.