Designing Ecosystem Flows for a Responsible ICO

A few things you might not know about Holo’s ICO strategy.

Jean Russel: This week’s #Holochats theme is #responsibility. In that context, I want to share the strategy for Holo’s ICO, and how it is designed to support responsible flows in the ecosystem. [For those interested in knowing more about generating flows, Herman Wagter and I wrote a book, Cultivating Flows.]

Starting Assumptions

We want to build a thriving ecosystem. To jump-start it, we are choosing to run an ICO together with a crowdfunding campaign in order to support three primary capacities in relationship to each other.

We want reliable and widely distributed hosting capacity, which we create by offering hosting devices in the crowdfunding campaign.
We want to engage developers in creating Holochain apps which can then use that hosting capacity. We generate developer engagement through educational and networking events offered in the crowdfunding campaign.
We want an economy that rewards developers and hosts who build and support applications that the world uses on the web. To do this, we are creating a currency through an ICO.

Accomplishing this meant we had to answer several questions: How do we carry out our ICO responsibly so the ecosystem can thrive? Who are we being responsible to? How do we run the ICO in ways that honor the ecosystem as a whole? How do we reward both our initial community creating the ecosystem and the participants in the ecosystem?

Solving for Aspirations

In our ICO, the crowd’s participation is just as important to us as the funding we’ll be generating. We aspire to be an ecosystem of distributed participants. That means:

We want to make sure participation is widely distributed rather than ending up belonging to a few whales, which can often happen in an ICO.
We need to have a way to prevent a big crypto whale from buying up the tokens by paying a premium gas fee to jump in line.

We aspire to be an ecosystem of flows, where people are rewarded reasonably for engaging in ways that increase the health of the ecosystem. That means:

We want our team to rewarded for their time, talents, and commitment to growing this ecosystem.
But we must do so responsibly, balancing that with the whole. Therefore we must select a reasonable proportion for the team and put limits on “cashing out” after the jump-start of Holo.

We aspire to reward those with early faith in the ecosystem we are building. That means:

We can’t make speculation be the honeypot. We feel the best option is to get all participants to have some “skin in the game,” so to speak.

We aspire to raise enough funds to responsibly deliver on the promises, and the ideas put forth in our Green Paper (and other papers we created outlining the ecosystem). That means:

At the very least, we need one at least million euros to deliver on those promises to do work this year. As it says in the Green Paper, if the ICO raises less than that, then we will return ICO funds to the participants and seek other avenues of funding.
In order to have enough currency available for the ecosystem to flow people need to have Holo fuel to pay for hosting. In other words, the currency supply needs to relate to the size of the ecosystem. That is why the supply of the currency in our ICO is driven by the activity of backers (developers and hosts) in the crowdfunding campaign.

What that Means Strategically in ICO Design

Given our aspirations, how do we then design the shape, structure, flows, and opportunities of the ICO to fit those assumptions and aspirations?

Reasonable Funding: a small-but-functional ecosystem would need to be 2.5 million euros, so that is the supply we will launch with on day one of our ICO, January 23, 2018.
Supply Linked to Demand: After that, the supply of the ICO is calculated in proportion to the scale of the ecosystem. There is a supply formula we use to describe how each purchase in our crowdfunding campaign, whether a hosting device or a developer event, releases tokens in the ICO. We described this in our post, Attuning to the Crowd.
Reserved Tokens: People who have participated in the crowdfunding through Indiegogo get first dibs on the tokens their purchase released in the ICO.

Reserved Tokens: Tactical Details

We want our existing participants to have access to the economy they are participating in. So when the ICO launches, we will notify participants (except those in restricted locations) that the tokens that they have released into the ICO through their purchase are reserved for them. We know it takes some time to receive and read the notification email, get whitelisted, and purchase your reserved tokens so we have implemented a three-day waiting period before reserved tokens are added to the ICO’s available supply. They are available for purchase exclusively to the person who released those tokens for 24 hours. After that, they are openly available for purchase. The tokens created by purchases from locations that are restricted from participating in the ICO will be available for anyone (in non-restricted areas) to purchase.

We are quite excited to watch the movement of supply in Holo’s ICO. You can see the daily supply too at https://ico.holo.host.