I propose a new utility token ICO model, which can serve as a blueprint for adaptation to different business models/plans, to create more substance based on commercial realities, rather than pure hype. The model uses macroeconomics to create stability for a token, so it grows based on controlled supply & demand, has genuine token usability for a community and prevents inflation within the community.

A key factor is that the token gains protection against wild speculation, with the token supply acting as an effective market maker. I’m making the assumption that anyone who uses this blueprint understands blockchain is a community based technology, they also realise that creating a currency has many similarities to creating a central bank and their business idea must fit with blockchain technologies and the need to create an economy with purpose for a community.

A significant mistake made by ICOs is they have failed to understand they are both a central bank and a business model in the making. So they must adhere to macroeconomic principles, chief of which is allocating tokens in a manner so the economy can thrive.

The business model must have other sources of revenue aside from the token, ideally FIAT currencies, for the same reasons a country must have export money coming into the economy and, as a developing economy, leverage the advantages of a stronger, more stable currency. Otherwise, you will have a closed economic system and start to look like North Korea.

It is a common practice that token allocations are focused only on the ICO event and shortsighted ploys, such as massive discounts to artificially create FOMO, while squandering the bulk of the token supply on the ICO, with upwards of 50% — 70% earmarked for early sale. Sophisticated investors look at the practice of discounts with disbelief, because it sends a clear signal that the team behind the ICO have no clear idea about how much money they actually need. Read more from hackernoon.com…

thumbnail courtesy of hackernoon.com