RE: Why Bancor is Such a Bad Deal for ICOs
Some things you got factually wrong.
Actually, you can activate a Smart Token post ICO. So your whole point about arbitrage damage during crowdsale is moot.
Smart Token creators can withdraw the connector they've deposited at any time. So your second point about funds being locked in is also moot.
Well yes, if there is an arbitrage opp, people & arbitrage bots will buy low and sell high. But this isn't downward price pressure, its just the way the usual market functions. A Smart Token is simply another node in a network of arbitrage and trading that ultimately determines an assets price.
You say that the smart token's connector wallets can be exhausted. They cannot, except in the nigh-impossible scenario where every single smart token in existence is liquidated in exchange for every single connector token. But merely through trades alone, the connector wallet can never be exhausted. So your point about what will happen when a smart token's reserves are empty is moot because in that case there will be no tokens in existence to trade anywhere.
Hi @eddya,
First and foremost - thank you for taking your time to familirase with my post and consideration provided by your comments. Now to your points:
The point is about social signalling - once you announce Bancor integration, you have to commit to it. And likely (coz it's blockchain) in code. Thus rationally one would exclusively use it during ICO process and not enabling it post ICO. Why? because in order to creditably commit to Bancor devs would right an invoke function in their ICO contract, implying all what I've said above.
2 If devs can withdraw the connector, that implies that price cushioning mechanism can be withdrawn at any time. If so what is the point for Investors to invest in such ICO and forgo price appreciation if on the way down the protection offered by Bancor can be removed at any time? This looks like a bad deal.
3 You've made repeatedly comment about arb play. The point of arb play is not that it is an invisible hand Adam Smith's style that seeks to find equilibrium in resource allocation (which it does). The point is whose money the trader would be arbitraging. If I as an Investor deposit X and % of that X goes to Bancor connector then arbitrageur by buying at lower price and selling the token to Bancor is effectively withdrawing some of % of X (mine contribution to ICO), that would have otherwise be directed to developing the product. Compare it to current situation - devs raise money and then they use it to advance the product (how effective they are at doing it is outside of the discussion).
4 I've reread the Whitepaper and I could not find a passage that says that Banocor's tokens are explicitly backed by all other Bancor's tokens, that you seem to imply ( universal insurance). The farthest I've gone is the passage, that states Bancor can accept as collateral any other token for connector wallet, meaning limited recourse on that wallet only. Feel free to correct me by pointing to the passage you derive your argument from. Finally,
Really? You seem to forget
September 15, 2008