BOUNTY ICO MOGBV

Why ICO bonuses and discounts have a negative impact on the ICO market

Many ICO’s offer some kind of discounts and/or bonuses. And the more speculative the projects are the more are they giving away to attract interest from the crypto community. Vitalik Buterin, one of the founders of Ethereum, has warned against volume based bonuses as it is not in the spirit of crypto. We could not agree more, but there are more concerns than just the spirit of crypto.

Where traditional business follows rules and ethics the crypto world is the Wild West. In the real world you price your business based on documented expectations and/or actual revenue/earnings. When you raise capital there is one set valuation, which means a stock cost xx USD. The crypto world prices their projects on expectations as well, but this is where the similarities end for most projects. Offering bonuses and huge discounts cannot be justified in any other way than an attempt to convince some investors about a guaranteed profit. Buy early and you know your coins/tokens are worth 10% more after a day/week, in some cases 50 to 100%.

To be clear, volume based bonuses and discounts are not the same. Bonuses are a red warning signal. There are more and more scams entering the crypto world, these will use tools like bonuses to attract capital from greedy supporters. I would recommend people to stay away from all ICO’s which offer volume bonuses; it has no place in the world of legit crypto businesses.

Discounts, even if widely used, are in my option not much better than bonuses. The simple reality is that you sell in the idea that your early supporters have a guaranteed return on their investment, which is not good at all. Secondly, most of your supporters will contribute without discounts, how do you justify that the people who bring you the most money have to pay more? The simple reality is that your projected expectations from one day to another has not changed whatsoever, so how can you justify that some have to pay more than others?

Discount campaigns for supporters joining late are nothing more than a penalty. And since most supporters contribute later, and with the most money, they are given a penalty for funding most your project. How strange is that? There are people walking away from projects because of discounts, and I agree with them, why support a project that consider their biggest contributors idiots willing to pay extra for the same tokens/coins that where issued the day before at a lower cost? This is why discounts have no positive effects, and it is a practice that should be ended sooner than later.

I understand that pre-ICO’s has a lower price, so this is not what I address. Any project at an early stage is worth less than when it’s ready to raise money or when operational. That goes for crypto and the real world. But a project does not change valuation from one day to the next, and maybe even 10 times during a few weeks. That is not the way to operate a business, not even in the crypto world. In my opinion this is as close to a fraud you can come and still operate legally. I don’t get why any serious projects would want to balance this thin line, it will eventually backfire big time and create a lot of negative attention to the ICO funding model. As we all know, negative attention is not what the crypto community need, we need to try and stand out, try to be better than the rest of the business world.

MOG will shortly launch an ICO, for our gambling project. I will admit, we had internal discussions about discounts, would it benefit the project or not? We came to the conclusion that discounts are in no way positive for a project. Most investors will end up contributing without any discounts, and they will contribute the most. Why would we penalize our biggest contributors? It does not make sense.

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