A Look at the Status.im ICO Token Distribution
NOTE UP FRONT: I express my opinions here (at least at the end of the article). If you don’t like them and don’t have evidence to support your dislike, then go kick rocks.
MD: I definitely have evidence … and proof, so I don’t expect to be kicking rocks (or pounding sand). But I predict I’ll ultimately end up doing just that. Cognitive dissonance is the strongest force I’ve seen in human nature. It has sustained all religions and enabled new ones.
ICO (Initial Coin Offering) is a not problem when you have a “proper” MOE process. Only traders create money. They do it by making a trading promise spanning time and space and get it certified by the process.
It initially is just a record entry with the “score keeper” doing the certification. It usually quickly gets converted to a record entry in some other trader’s ledger or as currency or coin. In the case of the latter two, there are two instances of each: (1) physical media in circulation; (2) physical media in storage.
In both cases they ideally have HULs (Hours of Unskilled Labor) as their units of measure. These are universally known to never change trading value over time and space … you always get the same size hole in the ground when you trade one HUL for a hole in the ground.
In case (1) the HULs (money) serve in small simple barter exchange transactions … like buying a candy bar. In case (2) they are totally valueless … as long as they don’t enter circulation. They can be destroyed with no impact on trade what-so-ever. That is not true of those in case (1).
In any case, for this trading promise, no money exists before the promise, nor after final delivery (or mitigation of default by interest collection of like amount). And all money is just such a promise. From this emanates the guarantee of perpetual zero inflation. Start with 0; end with zero; 0 minus 0 is zero.
Things are moving forward quite rapidly in this space; I simply don’t have time to look at all the ICOs (ya know, full time job, podcast, wife, and stuff), but this one struck me as different while also being wildly anticipated.
MD: Multiple “proper” MOE processes can co-exist simultaneously and compete. The only front they can compete on is efficiency (and thus lowest cost and interest to traders using them in money creation).
This article digs into the Status platform ICO model, how it differentiated itself from other models, and what the results were. If you aren’t sure what they do, go read about em here.
MD: I see a case where the brilliant mind has complicated a non-problem.
You might want to start by reading their recap of the ICO. Ya know, cause they wrote it.
MD: I’ll defer on that for now.
Quick Obligatory Methodology Section:
This was all done using Project Jupyter notebooks and the Pandas package. The transactions were retrieved using my Python bindings to the Etherscan.io API (tagging Matthew Tan). The methodology is very similar to my previous articles mentioned earlier, and the Jupyter notebooks of all of it can be found in a new Github repo.
MD: I ignored Python from the first time I saw it. You can’t use “white space” as a programming element. It’s a fundamental concept … one that if ignored will come back to bite you over and over and over again. And I have some experience. I created GLEE (see WithGLEE.com).
In particular, I retrieved all transactions from the SNT Crowdsale contract address from Etherscan.io, and parsed out the ones that had an error or had a value of 0 ETH, for both external and internal transactions. The values refunded by the internal transactions are removed from the corresponding external amounts when grouped together. This is my dataset. All conclusions and numbers are derived from that. I don’t do an errored transaction analysis on this one, one may come afterwards if no one else does it, but people like CodeTract have been doing an excellent job of this for other ICOs. Go check out their stuff.
MD: See how complicated things can become when you’re totally confused about the problem to begin with? Think concepts! What are the concepts? KISS!!!
I’m happy to see that others are doing analysis of this space, so we can see more of the trends developing.
Status.im ICO Summary:
The Status platform prides itself on really caring about their community, the Ethereum community, and learning from previous ICO models.
MD: A “proper” MOE process cares nothing about the “community”. It has the requirement that “all” traders and “all their money creating promises” and “all their deliveries on those promises” and “all their defaults and immediate mitigating interest collections of like amount” are “always” totally transparent to everyone in any community … whether they create the exchange media or just use it in trade or are just watching. Noting is secret at the money creation or the money destruction stage of a “proper” MOE process. All “use” of the money is perfectly confidential.
By learning from previous ICO models, I mean attempting to widely distribute your token to those who are interested in its utility in the midst of a fever-pitched, FOMO induced, and irrationally exuberated (made that one up!) investor community ready to flip your ICO for profit.
MD: Contrast this nonsense with a widely recognized “proper” MOE process concept. To help, consider a Mutual Casualty Insurance Company. It is owned by the members (the users … the traders). CLAIMs perpetually equal PREMIUMS. Any money made on investment income in the meantime goes to reduction of premiums and application to costs of operation. A “proper” MOE process is only contrasted by having no investment income … there is nothing to invest. Thus, costs have to be recovered by interest collections.
But just like a Mutual Casualty Insurance Company, there can be any number of them … competing against each other. For all intents and purposes, in the risk community, they are all the same. They differ in efficiency (lower premiums, better claims service).
Proper MOE processes have a notable difference here. The exchange rates between them are perpetually 1.000. There is free exchange between them. There is no such thing as exchange of one insurance policy for another … except in the case of re-insurance which is an internal, not external, practice.
What was their plan? Two-fold:
MD: I’m not going to comment further on this concept. It is a non-issue. With a “proper” MOE process, it never comes up. I’ll scan ahead to see if there is anything else I take issue with. It’s silly for me to nit pick details when the whole process is bogus and misguided in the first place.
- They created a pool of “Genesis Tokens” (SGT) to give to early contributors that clearly showed they wanted to help the platform grow, which were given out at the discretion of the core devs. This token pool corresponded to a maximum of 10% of the total token supply. After the contribution period, SGT could be converted to the ICO token (SNT) so early contributors could “get in” on the ICO token for being a contributor early. Basically, early disbursement of tokens that map to a given percentage of the total.
- As for the crazy investors, they implemented a soft-cap, and subsequent “Dynamic Ceilings.” What is that? Well, you should read it from the people who implemented it here like a smart person, and then frown at my shitty explanation here. My explanation of Dynamic Ceilings, just imagine that as time went on, large investments only got a portion of their investment accepted, and the rest was refunded. This was an attempt to increase the time window for smaller investors, and slowly make it more difficult for large investments to get in. The effect of this was for every transaction that got an amount kicked back, there is one regular tx and two internal txs, for example ( numbers are for illustration ):
1.) User attempts to send 100 ETH 2.) Over time, smart contract says "screw you big investor, give the little guys a chance!" a.) Smart contract accepts 20 ETH b.) Smart contract refunds 80 ETH 3.) User gets 20 ETH worth of SNT and 80 ETH refund
** Note that percentages changed as time went on.
Here are the stats I pulled from various sources, as well as my personal analysis of the transactions themselves.
- Start Block: 3,903,900
- End Block: 3,908,029
- Investment Time Period: 4,129 blocks or ~17.20 hrs
- Initial ETH Ceiling: 12M CHF (Franks, yo!)
- Total SNT Supply: 6,804,870,174.88
- Total ETH Contributed: 299,343.15177772392
So this one got a bit hairy when summing up investor amounts from the smart contracts. You’ll notice (you probably didn’t notice) that I’m off by ~559 ETH from the reported numbers by the smart contracts themselves. This is because of the dynamic ceilings they employed.
So my analysis got a few of these transactions mixed up when combining external and internal transactions, which make my numbers slightly off, sue me (don’t). This annoys the shit out of me, but I don’t have the time to fix what went wrong. The trends will be the same, which is the main point of this article.
Total Supply Distribution:
Below is the Status graphic from the previously linked Contribution article for your convenience.
Note that the Status Genesis Allocation is “up to 10%.” Well, they didn’t actually give all of their allocation out, so the real numbers are as follows:
Status Genesis Token Holders: 6.92894026 % Public Contribution: 44.07105974 % Status Core Dev: 20 % Reserved for Future: 29 %
Public Contributor Investment Distribution:
The remainder of this article is discussing that ~44% piece, specifically on how much of the total supply these investors control, and their distribution. In other words, we’d like to see how well the ICO did in “spreading their seed,” if you will. Were they premature like the majority of highly popular ICOs, or did they pace themselves well despite the crazy excitement?
MD: This is not an issue with a “proper” MOE process. There are no investors. There is no control. There is just federation of the process (like franchising of a restaurant when the franchisor … think PayPal without a linkage to banks … dictates operations and standards and otherwise has no interest).
With a “proper” MOE process, “all” franchisees must exhibit perfect transparency and thus exhibit perpetual perfect balance between the supply and demand for the money they certify. This means real time monitoring for defaults with immediate mitigation by interest collections of like amount.
Each unique address was summed up, giving its total contribution, and then placed into an “investor bin” that corresponds to how big of an investor they are. These bins are broken up by orders of magnitude of ETH, i.e.:
Investment (ETH): Bin: ----------------------------------- 0 - 1 0 1 - 10 1 10 - 100 2 100 - 1,000 3 1,000 - 10,000 4 10,000 - 100,000 5
Important Note: These value percentages are relative to the TOTAL SNT SUPPLY, which shows what type of investor has what control over the entire Status platform. Also, it should be noted that these numbers are only good for showing the distribution at the moment the ICO ended. More on this later. Here is the table of investors:
MD: I really can’t believe this much work has gone into a concept that is so easily dispelled as total nonsense. No wonder the cognitive dissonance is so strong.
and the plot:
- click the pic to blow it up
- click the link below to bring up an interactive version
We can see from the numbers that smaller amount investors have significantly more control of the token supply than previous ICOs that I’ve analyzed. This is a significant pullback from the trend of very few people controlling the vast majority of tokens, albeit the trend still exists.
It should also be noted that this does not take into account the extra ~7% of token holders that are early contributors to the platform.
Response Edit, thank you Nick Johnson and David Henderson:
A few responses reminded me to point out that a unique address is not indicative of an individual, and such assumptions should not be made. I have discussed this in my TokenCard article, and did not include such a discussion. I guess it is prudent to say something.
MD: This does imply an issue that a “proper” MOE process has. At the money creation point, no trader is anonymous, no trader has more than one identity, no two traders have the same identity, and all traders are individuals … partnerships, corporations and governments need not apply. Common AAA principles (Authentication, Authorization, and Accounting) are strictly adhered to throughout.
Due to the way the ICO was structured, the savvy investor was incentivized to break up his desired large contribution amount into many smaller addresses, and spamming them into the ICO to try and see what sticks. If enough of this happens, then you basically sybil (not quite sybil, but you get it) the ICO into a DoS situation, which is what we saw. I don’t have enough data to say how much of the network congestion was due to this, maybe someone else will do a sweet analysis of that.
MD: With a “proper” MOE process there are no investors … savvy or otherwise. And there are no incentives. It’s all about trade and traders (like you and me). Further, there is no “time value of money”. Inflation is guaranteed to be zero. Thus, the cherished factor (1+i)^n is 1.000 for all “n” (“i” being always zero). Gamers in finance will need to find other work
There are some indicators that this was not the entire case, which you can read about in my response to Nick Johnson below, if you’re interested. There is another simple plot in there, for the people who just want eye candy.
Ultra Massive Exoneration Time! (a.k.a. opinions section)
People are hating on Status for various reasons, which are mainly driven from garbage understanding of how the Ethereum network works, and misplacing blame.
MD: You’re going to get that when you have a totally bogus concept with brains and no experience at the helm. KISS is unknown to them.
It was clear the fervor was there. They were aware of it, and managed to raise a bunch money while still allowing “the little guys” en masse. You can’t really argue with that… look at the distribution.
MD: Ponzi had no trouble getting takers either. Heck, his scheme was doubling their money in two to three months. And none took their money out. They couldn’t afford to. It was destined to double again in two to three months.
This is a good time for me to introduce the definition of a capitalist and the proof:
Definition: A Capitalist is two years and an elite privilege.
Proof: Give a person a privilege of starting a bank with $1M. They can then create 10x that in money which they lend to traders at a 4% spread. That gives them 40% per year return. It doubles their money in less than two years. They take back their $1M and let the other $1M which they made ride forever after (or for their remaining 28 year career). 30 years later they can cash out at $24,000M … and for 28 of those years they had no skin in the game at all!
What’s not to love about capitalism … if you have the privilege!
You’re not going to have capitalism (or its alter-ego, communism) if you institute a “proper” MOE process.
So I believe that Status took steps in the right direction of both allowing smaller investors to contribute to an ICO, as well as being sure of putting tokens directly into the people that contributed early. This allowed people who actually helped build the system also take advantage of the ICO craze that is clearly going on. Full disclosure, I received SGT tokens for early contributions, which made me personally not inclined to participate in the ICO. I would predict that other SGT holders also felt this way, thus removing our would be transactions into the clusterfuck that was the contribution period.
MD: More full disclosure required. What did you give for those SGT tokens? Here again, you have issues that only exist because you’re working with a bogus concept!
The Dynamics Ceiling approach worked to keep a constant supply of incoming transactions of lower value over a longer period of time. The network congestion that people blame Status for is not their fault, unless you can blame them for building something MANY people wanted to contribute to.
MD: I’m an atheist but “OH MY GOD!!!” “Dynamics Ceiling? KISS!!!!
I talk at length about these network congestion issues raised from the ICO craze with MyEtherWallet’s Taylor one of my recent podcasts, take a listen:
Just as a side calculation:
MD: Why in the world would anyone listen if they know what a “proper” MOE process is … let alone if one was in actual operation? Would you listen?
Of all the transactions that tried to participate, the smart contract refunded 111,161 attempts for a total of 347,154 ETH.Status refunded back more ETH than they raised.
I’m not sure you can call that “greedy.”
MD: A “proper” MOE process only has one opportunity for greed by the franchisee (and none by the trader … and there are no investors). He can load interest collections with exorbitant costs. But then he wouldn’t be competitive with the other franchisees. No one would come to his store. With a “proper” MOE process, “all” traders enjoy zero inflation … and responsible traders (those who never default) have zero interest load … unless they go to a greedy franchisee … which of course they never would. You have to be smart to be responsible.
Holla at ya Boi!
I do this because I’m curious, and feel this type of information is lacking. We need to keep an eye on “where the money comes from” as we build this community out.
MD: You “need to come to your senses”. Grasp the concepts of a “proper” MOE process and it should be impossible for you to give this nonsense another thought … period.
As always, come listen to The Bitcoin Podcast and BlockChannel to hear me talk to people in the space about what they’re doing. Our slacks (TBP and BlockChannel) are always welcome to the community as well. I’m always present in them to talk.
MD: You think they would tolerate having their Money Delusion shattered? People this sharp are masters at their own cognitive dissonance. Look how many really smart religious leaders there are. Follow the money in all cases.
If you don’t like slack, hit me up on twitter at @corpetty or email me at petty.btc@gmail.com
Throw me some duckets of you like what I’m doing, and have some to spare. The donations definitely help me stay motivated to do these:
MD: Duckets? Amazing. English has abandoned me in one short lifetime!