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An $8 Million ICO Ran Out of Tokens. What's Next Is Anyone's Guess

“Scarcity” may be a crypto buzzword, but “shortage” has hardly made the footnotes – until now.

In early July, the developers behind U Network, a blockchain publishing protocol valued at around $8 million, abruptly announced that it had run out of its reserve of UUU crypto tokens, and that it planned to buy back some of the supply it distributed to early investors through its airdrop in February.

At the start of the project, U Network established a 10 billion UUU cap on its token supply (worth approximately $15.6 million), setting aside 40 percent of its total tokens (about $6.2 million) for the founding team and future development.

Yet, due to a rising number of strategic partners and interest in its token, the project announced on Medium, “The demand for UUU tokens has exceeded our current designated holdings.”

The post continued:

“The team now faces a problem: leaving our ecosystem tokens intact, how do we pursue these new opportunities to grow the U Network ecosystem?”

The result is a problem that seems to have little precedent.

The structure of ICOs and airdrops varies widely across projects, particularly with regard to the number of tokens minted, distributed and maintained by a given company or non-profit. While some projects do not limit the number of tokens that can be created within their blockchain ecosystem, others, like U Network, choose to implement a cap on the total supply.

For U Network, the 10 billion limit was implemented because the content-centered project, which aims to “help online content platforms better align with the interests of their users,” wanted to “provide sufficient incentives to community members.”

While U Network’s dilemma is currently an outlier in the industry, other blockchains that have implemented hard caps on their ICOs and airdrops may soon find themselves in a similar quandary as they begin building their ecosystems.

Likewise, U Network’s situation may force similar projects to confront an even more difficult question: what happens when your startup runs out of its own tokens?

Method to the madness

Incentives are especially important in blockchain systems, and so far, there is no established methodology by which projects can determine how many tokens to issue and keep.

That’s according to Joshua Gans, a professor of strategic management at the University of Toronto, who told CoinDesk: “There is no metric.”

“If you want to use tokens for incentives, the amount of the incentive is dependent on the price of the token,” he explained. “At the start, it is hard to predict that.”

Gans added that establishing the amount of tokens projects should keep is equally as unsystematic.

According to Catherine Tucker, a professor of management and marketing at MIT, projects face a doubly difficult situation in the highly scrutinized industry. Not only do they lack methodologies for determining token supplies and holdings, they must also consider the perception of their actions.

“I think this case illustrates the huge trade-offs founders face,” she told CoinDesk. “If they keep too many tokens in reserve, they are often accused of being greedy. But if they give away too many tokens then they lose a crucial lever they need to incentivize people to use their platform or service in the future.”

The buy-back

As such, remedying a shortage of tokens looks to be a precarious task. Solutions such as increasing the token supply of the network could influence the token’s price, angering investors and jeopardizing their trust in the project.

So instead, U Network plans to refurbish its holdings by conducting a token “buy-back.” In practice, this means it will re-purchase 1,000 ETH worth of UUU (about $284 million worth) from current token holders over the course of several stages.

“For the first stage we would be buying back 200 ETH worth of UUU between the price range of 0.004 and 0.005 USD,” U Network told CoinDesk. At press time, one UUU token was valued at $0.001569.

As for how the project determined the number of tokens to re-purchase, it explained, “We believe it’s a reasonable amount. Not too high to affect market price, not too low to affect the expansion needs.”

From Gans’ perspective, the buy-back is “a good way to go.” He went on, “You issue the tokens and retain some other currency to use for buy-backs if you make an error. The other option is to give yourself the ability to issue more tokens for incentive purposes but that is ultimately the same as retaining some tokens at the outset.”

And as for what the rest of the industry could do to avoid U Network’s dilemma, MIT’s Tucker suggested:

“If I had to give advice to founders, it would be to think about the uncertainty involved with the project. In those cases of heightened uncertainty, it might be best to limit the initial distribution of tokens until the business plan has evolved and been tested.”

Empty gas image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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An $8 Million Airdrop Ran Out of Tokens – What's Next Is Anyone's Guess

“Scarcity” may be a crypto buzzword, but “shortage” has hardly made the footnotes – until now.

In early July, the developers behind U Network, a blockchain publishing protocol valued at around $8 million, abruptly announced that it had run out of its reserve of UUU crypto tokens, and that it planned to buy back some of the supply it distributed to early investors through its airdrop in February.

At the start of the project, U Network established a 10 billion UUU cap on its token supply (worth approximately $15.6 million), setting aside 40 percent of its total tokens (about $6.2 million) for the founding team and future development.

Yet, due to a rising number of strategic partners and interest in its token, the project announced on Medium, “The demand for UUU tokens has exceeded our current designated holdings.”

The post continued:

“The team now faces a problem: leaving our ecosystem tokens intact, how do we pursue these new opportunities to grow the U Network ecosystem?”

The result is a problem that seems to have little precedent.

The structure of ICOs and airdrops varies widely across projects, particularly with regard to the number of tokens minted, distributed and maintained by a given company or non-profit. While some projects do not limit the number of tokens that can be created within their blockchain ecosystem, others, like U Network, choose to implement a cap on the total supply.

For U Network, the 10 billion limit was implemented because the content-centered project, which aims to “help online content platforms better align with the interests of their users,” wanted to “provide sufficient incentives to community members.”

While U Network’s dilemma is currently an outlier in the industry, other blockchains that have implemented hard caps on their ICOs and airdrops may soon find themselves in a similar quandary as they begin building their ecosystems.

Likewise, U Network’s situation may force similar projects to confront an even more difficult question: what happens when your startup runs out of its own tokens?

Method to the madness

Incentives are especially important in blockchain systems, and so far, there is no established methodology by which projects can determine how many tokens to issue and keep.

That’s according to Joshua Gans, a professor of strategic management at the University of Toronto, who told CoinDesk: “There is no metric.”

“If you want to use tokens for incentives, the amount of the incentive is dependent on the price of the token,” he explained. “At the start, it is hard to predict that.”

Gans added that establishing the amount of tokens projects should keep is equally as unsystematic.

According to Catherine Tucker, a professor of management and marketing at MIT, projects face a doubly difficult situation in the highly scrutinized industry. Not only do they lack methodologies for determining token supplies and holdings, they must also consider the perception of their actions.

“I think this case illustrates the huge trade-offs founders face,” she told CoinDesk. “If they keep too many tokens in reserve, they are often accused of being greedy. But if they give away too many tokens then they lose a crucial lever they need to incentivize people to use their platform or service in the future.”

The buy-back

As such, remedying a shortage of tokens looks to be a precarious task. Solutions such as increasing the token supply of the network could influence the token’s price, angering investors and jeopardizing their trust in the project.

So instead, U Network plans to refurbish its holdings by conducting a token “buy-back.” In practice, this means it will re-purchase 1,000 ETH worth of UUU (about 284 million tokens at press time) from current token holders over the course of several stages.

“For the first stage we would be buying back 200 ETH worth of UUU between the price range of 0.004 and 0.005 USD,” U Network told CoinDesk. At press time, one UUU token was valued at $0.001569.

As for how the project determined the number of tokens to re-purchase, it explained, “We believe it’s a reasonable amount. Not too high to affect market price, not too low to affect the expansion needs.”

From Gans’ perspective, the buy-back is “a good way to go.” He went on, “You issue the tokens and retain some other currency to use for buy-backs if you make an error. The other option is to give yourself the ability to issue more tokens for incentive purposes but that is ultimately the same as retaining some tokens at the outset.”

And as for what the rest of the industry could do to avoid U Network’s dilemma, MIT’s Tucker suggested:

“If I had to give advice to founders, it would be to think about the uncertainty involved with the project. In those cases of heightened uncertainty, it might be best to limit the initial distribution of tokens until the business plan has evolved and been tested.”

Empty gas gauge image via Shutterstock

Correction: This article has been updated to indicate the approximate value of U Network tokens in ETH.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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It’s Free! NEO and ONT Join Forces for a Second Round of a 40M USD Airdrop!

NEO, one of the main blockchain projects in China, has joined forces with ONT to carry out a significant Airdrop to increase not only the volume but also the number of users of both cryptos. Yesterday, the official NEO blog announced that NEO token holders are going to receive $40 million worth of ONT tokens on a free airdrop.

This kind of tactic is common in the world of cryptos. Also, the famous giveaways and flash sales are methods successfully used by Chinese entrepreneurs to gain massive exposure to their products, and of course, Asian cryptocurrency does not escape this reality.

A clear example of this culture is Tron (TRX) a promising blockchain that, on the occasion of the launch of its mainnet, made a series of airdrops that had a positive effect on its assessment.

As can be seen in the official announcement, a had already been made previously. In February the decision was made public, and on March 1st, 2018, all NEO token holders who held NEO during the snapshot got 0.1 ONT per 1 NEO stored on their NEO address.

The second part of this move is the one announced today and will be available to all ONT users as long as they use the same private key they had for their NEO before the mainnet release.

It is important to know that NEO and ONT are projects which have a particular relationship. In the beginning, ONT was a token that ran on the NEO Blockchain. Recently, however, the ONT team announced its “independence” by moving to its own mainnet.

On the occasion of this event, prior to the airdrop announced by NEO, the ONT team commented that they would donate 100 million ONT to the NEO Council for “relevant cooperation and to support NEO community feedback. This amount represents approximately 10% of the total number of ONTs available on the market

The support between the two projects has been evident. Both are related to OnChain; a Shanghai-based company specialized in the development of DLTs systems. According to Neo News Today, the Ontology project was presented by Onchain at the Next Generation Blockchain Networks for Distributed Trust event in Shanghai on November 18, 2017. Likewise, NEO and DNA are two of the most ambitious projects of this Asian company  so it’s a great signal to see two different cryptos (now two different blockchains) collaborating

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Large Global Payments Processor Unveils Airdropping Campaign Among Users

CoinPayments, a global cryptocurrency payment processor, has announced an airdrop  launch of its own utility token – the CPS Coin. The company also plans to lower its transaction and conversion fees for token holders and enhance its user interface in 2018.

Founded in 2013, CoinPayments is a global cryptocurrency payment processor with a reach of over 1,000,000 vendors across 182 countries, says the company’s blog. CoinPayments offers a cloud payment solution allowing merchants to accept Bitcoin and hundreds of other coins through their plugins, APIs and point of sale (POS) interfaces.  

“CoinPayments has created a special place in the world of cryptocurrency users with intuitive digital wallets, which include shopping cart plugins that can be easily integrated by online merchants making it appealing to their customers” said Alex Alexandrov, founder and CEO of CoinPayments in an interview with Insight Success.

The company is set to launch two mega projects in 2018. Firstly, CPS Coin – the CoinPayments token – will lower transaction and conversion fees for merchants. Secondly, a revamped version of their existing user interface – called CoinPayments 3.0 – will provide online merchants and wallet holders with “even more user-friendly experience” company representatives said.

Airdrop to all users

The CoinPayments team reported to Cointelegraph that the company launched an airdrop of 100 CPS Coins to all current users, as well as new signups on the CoinPayments platform until August 1, 2018. The value for the 100 CPS coins is €10. Any user who purchases CPS coins starting on May 4th will receive two CPS coins for the price of one, or three for one on orders totalling over €500,000 within a 24 hour period.

The CPS Coin is a utility token used within the CoinPayments platform, and provides discounts and rebates for using various CoinPayments services. Users wanting to buy CPS Coins can buy directly from CoinPayments at a rate of €0.10 per token.

There is a wide range of discounts and rebates available for CoinPayments services, including merchant fees, conversion fees, withdrawal fees, initial coin offering (ICO) participation and as a preferred payment method in their own decentralized marketplace.

For example, merchant fees may be reduced by half. Merchants have the option to pay the 0.5 percent processing fee with CPS Coin by checking a box on their account. If they choose this option, they will only have to pay a 0.25 percent processing fee in CPS Coins based on a €0.10/CPS Coin rate. If their CPS Coin wallet doesn’t contain enough CPS Coins to pay the fee then the required amount of CPS Coins will be purchased automatically from the CoinPayments pool using the fee collected at the time of the transaction.

As for conversion and withdraw fees, users will receive a 50 percent rebate if they pay from CoinPayments directly into the user’s CPS Coin wallet.

Regarding ICO participation, CoinPayments will negotiate an allocation of tokens from hosted ICOs at a discounted rate from the public ICO price and CoinPayments users will have the option to participate in this allocation using CPS Coin.

 Additional tokens

“As an extra incentive, users can collect an additional 25 CPS Coins every time a new user signs up through their affiliate link” said a company representative.

The CoinPayments affiliate program pays affiliates 25 percent of transaction fees collected from all referred users for a duration of 5 years. This includes merchant transaction fees, commercial deposit fees and ICO signup fees. In the future, this will also include debit card transaction fees, fiat settlement fees and much more.

Users can register at the company’s website and follow the affiliate help link to easily start the referral process immediately.

 

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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TRON (TRX) 30 million Token Airdrop to those that are Holding Ethereum

Developed as an ERC20 token on Ethereum blockchain network, Tron has designed plans to say goodbye to Ethereum and launch its mainnet on June 21 with the target to become one of the most competing blockchains.

With the TRON ERC20 phase being close to the end, there is going to be an airdrop of 30 million TRX Token to Ethereum holder which is estimating a value of around $1.5 million with its price of $0.05 per token.

The airdrop will be happening as an effort to attract Ethereum users to TRON network. While characterizing the event as a show of gratitude toward Ethereum, Tron Labs remains critical of the Ethereum network:

“Ethereum played a vital role in TRON’s early stage development, and we want to express our appreciation through this airdorp, However, we have also discovered many issues and bottlenecks during our time on the Ethereum platform. When we see a problem – we will set out to solve it.”

Eligle recipients for the TRON airdrop will show a balance of over 1 ETH. The amount will be randomized between 10-100 TRX.

The founder of Tron Foundation, Justin Sun, has stated that a $100,000 Tron loan has been earmarked for the ‘Discovery of Your Brilliance’ in the community to enhance Tron Foundation.

In a message shared on socio-blogging platform, Medium, Sun said the Tron Loan will reflect the team’s unflinching support for the community, it will also boost the ecosystem of Tron.

“If the project completes a new round of financing, the loan of $100K will be converted to its equivalent in equity at 80% of the company’s new valuation amount,” the message reflects.

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Quick! Look up! fund0x GUP Airdrop starting soon!

Don’t miss out, people – we’re giving out free Guppies.

As we gear up to launch our new crypto crowdfunding platform, fund0x, we’ve decided to give new users the opportunity to get even more involved in the Matchpool GUP (Guppy) ecosystem. Early subscribers to fund0x will receive an airdrop of Guppies – yes, that’s right – real Guppies!

The first 25K subscribers to fund0x will receive 15 GUP of credit within the crowdfunding platform via airdrop. We encourage users to use their newly acquired Guppies to fund projects on fund0x. The funds will of course also be available later on for withdrawal to private wallets.

The airdrop will go live by the end of this week, followed by a 14-day period during which early adopters can subscribe to the fund0x platform. Once the 14 days are up, the first 25K fund0x subscribers will receive their Guppies and fund0x will be live!

It gets better though – we’re hosting a lottery as well! Here are the details:

  1. 1 winner will receive 10,000 Guppies
  2. 20 winners will receive 500 Guppies
  3. 100 winners will receive 150 Guppies

Subscribers can also earn lottery tickets. What do we mean?

All subscribers receive 1 lottery ticket automatically, but the first 500 subscribers will receive not one, but three tickets. And the first 5,000 subscribers will receive 2 lottery tickets. Increase your odds by signing up as soon as the airdrop launches.

It doesn’t end there – we appreciate our community’s loyalty and so we’re adding another reward to those who refer members of their own networks.

By spreading the word about fund0x to their networks, early subscribers will receive even more lottery tickets, and 1 more GUP per referral (up to 5). We will award 1 lottery ticket for each referral.

To top it all off, users will receive 1 ticket for being a loyal member of the fund0x Telegram group before this announcement was made.

By participating in the fund0x airdrop, users are automatically registered on fund0x and can back projects on the crypto crowdfunding platform with their newly acquired Guppies.

We’re ready. Are you?

Subscribe to fund0x!


This is a paid press release. Ethereumworldnews does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. Readers should do their own research before taking any actions related to the company. Ethereumworldnews is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.

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NEO Crypto-Holding Individuals Will Receive Free ONT Tokens

Traders and crypto-investors who are holding NEO in their wallet will be getting grasp of free ONT [Ontology] tokens as the NEO Council declared that it would hand out 20 millions of them.

For starters – the network called Ontology is a public blockchain structure that give the opportunity developers to find use of the decentralized ecosystem and make dApps reality. The infrastructure is supported by a Chinese based blockchain tech firm – Onchain.

The NEO Council is in fact distributing ONT tokens received as a donation from the Ontology team, and for each NEO a person holds, they will receive 0.2 ONT, 0.1 of which will be available immediately while the other half will be locked until the Ontology MainNet goes live.

ONT is a divisible NEP-5 token for now, but after the Ontology MainNet releases in the second quarter this year, NEP-5 tokens will be exchangeable for MainNet ONT. For the NEO ONT airdrop, a snapshot will be taken at block height 1974823, which is expected around March 1, 2018.

The free tokens should be available to be collected by users as long as the-last mentioned are keeping their NEO in a non-exchange wallet. It is understandable that various policies will be announced out by different exchanges, however for the moment KuCoin did put out supportive stance for the airdrop.

As per time of the writing, the pair NEO/USD is performing quite well in the crypto-market as the token value was able to break above the major $100.00 level and stabilize in its recovered trading ground while it is gaining 7.7 percent in the last 24-hours. Even with the correction taking place for many other coins, the ONT token drop could support the path even further.

NEO trading

Source: coinmarketcap

The 8th largest cryptocurrency by market capitalization has been added [its token] on the Omicrex trading platform as a choice to pair NEO/BTC since January 15. Along with NEO, pairs like XMR/BTC, IOTA/BTC and XRP/BTC have been included. The event has been announced in a writing by Omicron Crypto Market.

After the NEO ONT airdrop, we are also expecting the Ethereum Classic (ETC) Callisto (CLO) airdrop on March 5, 2018, and it will be interesting to see how both these tokens react.

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Bitcoin Gold Sets Sunday Date for Cryptocurrency Release

Bitcoin gold is set to launch this weekend, its development team announced today.

In a new blog post, those behind a yet-to-be-officially-released fork of the bitcoin blockchain said that they would release the bitcoin gold client for download at 7:00 PM UTC on Nov. 12.

Originally set for a public launch on Nov. 1, the project is backed LightningASIC, a seller of mining hardware based in Hong Kong, as well as a broader open-source community of relatively unknown developers. The idea behind bitcoin gold, according to its supporters, is to restrict the use of specialized chips for mining, or the process by which new transactions are added to a blockchain (while also creating new tokens as a reward).

It’s also the latest example of an airdropped cryptocurrency that shares a transaction history with the primary bitcoin network – that is up, up until the date the ledger of transactions starts to differ. Yet in a move criticized by some observers, the team behind bitcoin gold has been mining blocks in insolation since the new network formally began last month, with that “premined” amount of coins being set aside to support development.

“We are extremely grateful for the community around the world who have been contributing hash power to our testnets; besides patiently testing their own mining process, they allow exchanges, pools, wallet developers, and all other service operators to implement and test their support of BTG so that the Bitcoin Gold community can have a full suite of services at launch time,” the project’s backers said in a statement.

Gold nugget image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.