A new model for Initial Coin Offering (ICO) was proposed by the Ethereum Developer who co-authored the ERC-20 standard protocol being used to conduct ICOs on the blockchain. Fabian Vogelsteller who is also the main developer for Dapp browser, Mint revealed this at the Ethereum’s annual Devcon conference in Prague Oct. 30.
According to a Czech local news source, Fabian believes that the new approach will reduce the number of fraudulent ICOs since it will be built with one eye on investor protection.
The new model dubbed, Reversible Initial Coin Offering (RICO) is a fundraising model that allows investors in an ICO project to return purchased tokens and be refunded at any stage of the project. A special purpose smart contract that will be embedded in the ERC-20 protocol to make this possible.
With such a smart contract in existence, risks will be decreased for investors while startups who issue ICOs will be more committed to fulfilling their promises.
Fabian said at the conference,
“You are able to take your funds back at any point in time and do it simply by sending your tokens back.”
RICO Will Decrease Funding Possibilities
If ICOs were to be conducted under the RICO model proposed by the developer, then ICOs will have to deal with unstable funding amount while executing its project. This is because investor funds could be withdrawn at any point in time, especially when the project has to go through some difficulty.
Vogelsteller suggested that ICOs running under the new model will have to use the “core funding” model of getting private investors in order to get by. However, a reversal initial coin offering will ensure that other investors could still purchase returned tokens.
While it is just a proposal, it is one that could finally put an end to the increase in the number of fraudulent ICOs being launched daily. ICOs have continued to rake in millions but will be more accountable to investors under the RICO model.
What do you think about introducing a Reversible Initial Coin Offering on the Ethereum Blockchain?Never miss out on our daily crypto news, stories, tips, and price analysis. Join us on Twitter | Telegram | Facebook or subscribe to our weekly Newsletter.