There’s more than one way to fund a crypto project, but why do so many of those routes end in investor acrimony and regulatory censure?
2019’s IEO experiment showed that the ICO can be rebranded, but its inherent flaws can’t be evaded. Looking back at the glut of projects that launched via initial exchange offerings over the past 12 months, it’s clear that winners were few and far between.
Save for a handful of successes (notably Matic and a couple of Okex offerings such as Wirex), there’s little by way of a lasting legacy.
The US Securities and Exchange concurs, issuing a warning to investors last week about the perils of investing in IEOs.
In the eyes of the agency, exchange-hosted token sales are a wolf in sheep’s clothing, or rather an ICO under a new banner, with all the pitfalls and perils this fundraising mechanism entails.
“IEOs may be conducted in violation of the federal securities laws and lack many of the investor protections of registered and exempt securities offerings,” warned the SEC.
As crypto startups scramble to raise funds in an increasingly adversarial environment, where jilted investors are never more than a lawsuit away, they would do well to examine the success of LiquidApps, whose year-long token generation event is nearing an end.
During the course of the fundraiser, the EOS-focused scaling startup brought a string of products to market that have borne fruit, solving real world problems that affect major blockchains.
In the process, the project has demonstrated that it has the team and the tech to warrant the trust investors have placed in it.
There’s more than one way to bootstrap a crypto company
When the tide went out on 2017-18’s glut of initial coin offerings, projects that were late to the party faced a conundrum: how to raise funds without making the same mistakes as those that went before them?
The options appeared slim: either go down the VC route, and give up precious equity, or opt for an IEO and pray they were one of the lucky few whose token held value.
Given that most IEO tokens have lost over 80% of their value upon listing, the chances of hitting the jackpot via an initial exchange offering appear slim.
LiquidApps eschewed these options, plumping instead for a soft launch and a slow raise, staggered over the course of an entire year.
In this respect, the fundraising route mimicked that of EOS, whose ecosystem the startup is deeply immersed in.
Whereas EOS investors had to wait a year for the mainnet to launch, however, LiquidApps began shipping products straight from the start.
“Begin by shipping code” is the company’s motto, and it’s one that’s proven to be inspired. Most of the products that LiquidApps delivered in 2019 revolved around its DAPP Network, a sidechain for bearing the strain that has caused EOS resource costs to rocket.
A year of DAPP Network deliverables
Among the products that LiquidApps brought to market in its year-long courting of token-holders were the following:
- LiquidLink: two-way cross-blockchain communication network
- LiquidOracles: decentralized and trustless web oracles
- LiquidAccount: seamless and free dApp user onboarding
- vRAM: unrestricted decentralized and affordable on-chain memory
- vCPU: access to cheap, powerful computation
- LiquidScheduler: task scheduler and automated task services
- LiquidStorage: incentivized decentralized storage network
- LiquidHarmony: a transformative upgrade to LiquidOracles that enables an assortment of powerful plugins including vCPU computation and LiquidSQL decentralized relational databases
- DAPP Leasing: enables dApps to access DAPP Network services on a pay-as-you-go basis
It’s an impressive feat for any crypto company, especially one so young and that was simultaneously overseeing a slow-burning token generation event.
Admittedly, LiquidApps already had existing crypto networks – primarily EOS – to build upon, and was thus able to bring its products to market sooner.
Nevertheless, LiquidApps can be proud of its achievements in such a short space of time – and other projects can take a leaf from its book.
The year-long TGE that LiquidApps has perfected, if not pioneered, will not be for every crypto company. Some will require the instant injection of capital that only the deep pockets of VCs or private sale investors can bring.
The spirit and ethos that has characterized LiquidApps’ fundraiser, however, looks set to leave a lasting legacy. If more startups in 2020 can place code ahead of cheerleading, and solutions over spin, they might just survive long enough to etch their own legacy and leave their token-holders with something more than heavy bags and a bitter taste.
For investors, builders, and developers of the next generation of crypto protocols, that can only be a good thing.
Disclaimer: This is a contributed article and should not be taken as investment advice.