Komodo Platform has been leading the blockchain industry in decentralization for years. From pioneering atomic swap technology to developing the world’s most advanced decentralized exchange, Komodo is paving the road on which all other blockchain projects will follow. This trend continues today and will continue well into the future.
We are proud to showcase our technology with the world’s first fully-decentralized initial coin offering: Utrum. The Utrum project was launched with Komodo’s decentralized initial coin offering (dICO) dApp. The dApp is neither an abstraction nor a future goal. It is available now and it’s fully-functional, as demonstrated by the Utrum's dICO.
So, what do we mean when we say our dApp allows for “fully-decentralized” initial coin offerings? For the sake of comparison, let’s first have a look at how ICOs normally work.
The Problem With ICOs
With traditional ICOs, new blockchain projects that hope to raise funds by selling their coins or tokens to the public must do so through some point of centralization. In other words, everyone who wants to invest in the crowdfund has to send their funds to a single account housed on a single server. At that point, the funds are transferred a second time to the creators of the project that's being crowdfunded. This system creates three problems.
First, it creates a single point of failure for the ICO. If the server goes down for any reason—a coordinated attack, hardware failure, or any form of human error—the ICO is at risk. Hackers may compromise the funds of ICO participants, or the funds may not be properly received in the event of malfunctioning equipment.
Second, because all ICO participants must send funds to a single account, the crowdfunding process is often very slow. The leaders of an ICO must sort through all the transactions and send off payments, one-by-one. Meanwhile, the investors must wait for hours, days, or even weeks to receive the tokens that they’ve already paid for. This waiting period is inconvenient and undesirable.
Third, centralization means that whales—super-wealthy investors—have the chance to buy up all the tokens before anyone else can purchase any. This creates artificially high demand for the tokens, thus boosting the price. Once the price becomes inflated, the whales can sell the tokens to the public and reap enormous profits. After the whales dump all the tokens, the price often collapses, as demand for the tokens evaporates. Those who bought the tokens from the whales are left holding a depreciated currency. It’s a classic case of market manipulation.
Komodo's Solution: dICO dApp
Komodo’s dICO dApp solves all three of these problems. The dApp is powered by our cutting-edge atomic swap technology, so all trades are performed wallet-to-wallet. There is no third party in between. This means the funds are not being sent to a single location, thus eliminating the first two problems described above. Participants send funds directly to the project and receive the tokens they’re buying within minutes. And, because the funds are spread out over many servers around the globe, the chances of the funds being jeopardized by hackers, hardware failure, or human error are drastically reduced.
Finally, this dICO model prevents the crowdfund from being manipulated by whales, as no one individual can buy all of the tokens in one fell swoop. Each server is executing atomic swaps with many participants at once, and there is a cap to how many tokens can be purchased in a single buy order. So for someone to purchase a majority of the tokens, they would need dozens or hundreds of computers around the world, all placing as many buy orders as possible at the same time. It’s theoretically possible but extremely difficult and practically infeasible.
In summary, Komodo’s dICO dApp allows blockchain projects to sell their tokens to the public with superior security, increased efficiency, and greatly reduced vulnerability to market manipulation.
The Komodo Platform dICO dApp is a white-label technology, meaning it’s available to any developers or entrepreneurs who wish to build upon Komodo Platform. All projects that launch their blockchain on Komodo receive a native and independent blockchain. What happens on one chain cannot and will not affect other chains in the ecosystem. At the same time, all blockchains built in our ecosystem are endowed with all of the same privacy and security features of the KMD main chain.
In addition, our dICO dApp is customizable. It can be adjusted to meet the specific needs of individual projects. This provides the flexibility and adaptability that many projects require.
If you’re interested in learning more about launching your own dICO, get in touch with Komodo General Manager Ben Fairbank at [email protected]. And if you’d like to get more involved in the Komodo community, sign up for our weekly email list and join our community on Discord. Come join us on the front lines of the blockchain industry.