ICO or NO? Ep. 2 EOS

6 min read

ICO or NO is Blockchain WTF’s video series analyzing new ICO projects with host, Jeremy. Join him as he explores the ICO called EOS, “an open source platform for scalable decentralized applications.” See what he thinks about the project, and then give us your opinion about EOS to let us know what you think!

What is EOS & what problem does they hope to solve?

EOS is trying to be a commercial-grade operating system capable of building and running decentralized autonomous applications. Basically, it’s trying to be Windows or Apple for the blockchain.

When investing it’s always important to look at a companies Whitepaper to figure out what the project hopes to accomplish. Whenever you take part in an ICO, you are entering into an agreement made by the token issuer. These details can be often found in the company’s Whitepaper. That is also where much of the fine print is found, and let me tell you, with EOS there is a lot of fine print that needs to be paid attention to.

Here’s our first example, and this is taken right from Whitepaper compiled and released by EOS:

“NOT A PURCHASE OF EOS PLATFORM TOKENS. EOS Tokens purchased under this Agreement are not tokens on the EOS Platform.”

So they are a separate token? Is EOS and EOS platform tokens two different things? If it doesn’t work on the platform, then what exactly are the coins and what do they do? Or the value of even having it….

Well we’re in luck, because EOS’ Whitepaper answers this question for us. Bear with me, this one is a little bit longer, but very important to know. Again straight from the Whitepaper:

“EOS TOKENS HAVE NO RIGHTS, USES OR ATTRIBUTES. The EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, expressed or implied.”

So I know a little bit about contracts and the importance of protecting yourself and your project from litigation. No one wants to get sued, and that’s why lawyers are hired to write and review these parts of the document. However, there are ways to do this without completely alienating the consumer by essentially guaranteeing them nothing. If the token had no function, it will become valueless.

So that being said after answering question one, I’m not really sure what the difference is between me investing in this ICO and throwing money into the trash can…

Is the idea viable? Can it get into market, and when?

Again, let’s consult the Whitepaper:

“Buyer acknowledges, understands and agrees that Buyer should not expect that the EOS.IO Software will ever be adopted, or even launched.”

So there is no guarantee that product will come to market. Ok, I get that. There’s risk in any investment. But is there a guarantee that the team will make a halfway honest attempt to even bring the product to market? The language laid out in the Whitepaper does not give me much confidence.

The EOS project has some pretty lofty goals, and no one is really sure when or if the project is close to market. Additionally, there are several more well established platforms with the same goals as EOS, so it may be tough for them to gain a foothold in the market.

Who’s the team behind EOS?

So here’s the confusing part. The top brass of EOS has successfully built two blockchains in the past. But just because they have proven they could do it, doesn’t mean they intend to complete the project in its existing form.

The team has made some interesting decisions concerning their advertising. They opted to use billboards to establish awareness about their product and ICO. Fair enough, but they didn’t choose any old billboard. No, they got a billboard in Time Square, some of the most expensive advertising.

However, when you are conducting an ICO in the format EOS has chosen, you have to ask is the ICO designed to fund the future project, or to recuperate the massive advertising costs they have (willingly) incurred.

It’s also important to note where the company offering the ICO is based, because those are the securities laws that have to be followed. EOS is registered in Grand Cayman, which has pretty lax laws.

What is the design of the EOS ICO?

So this is kind of an unusual format for an ICO. EOS is offering daily crowd sales for 341 consecutive days. Now this is quite the far cry from ICOs like District 0x, which has a 10 day cap sale on their crowd sale.

Something I like to look for when evaluating an ICO additionally: is the ICO capping off contributions that they’ll receive during their funding period? Do they get theirs and then step away from the funding table? Or do they
just sit at the funding table and get as much money as they can?

Anyways, the ICO is on-going, and will continue for another 300 days or until a cap of one billion is reached. At press time, one token is trading for $1.44.

So there you have it, a few red flags came up, so let us know how you feel about them in the comments below.

ICO or NO covers some of the hottest tokens sales from the coolest projects! Jeremy, though his patented Four Question System*, dissects each project to help you better understand the token sale! Check out more of our ICO or NO episodes here, and subscribe to our YouTube channel for future ones!

*Patent Maybe Pending