EOS auction design worked to dampen the whales

in #eos7 years ago

HappyWhale.jpg

@rkreddy says some nice things at BURNING... but I think his suggestion that EOS got walloped by the whales is way wide of the mark.

It's always hard to predict and interpret any auction process because it is a way to bring certainty from chaos - we don't resolve the chaos, we just get a price out of it - but the early results are in. The design of the EOS coin distribution has done a lot to dampen the whales.

First 10 Rounds

Here's why. Let's divide the process into arbitrary three phases:

  1. 200 million were sold in Phase 0. And established a dollar price of about $0.67 (in today dollars, it was $0.85 on the day).

  2. Then phase 2: in the next round 2 million tokens were sold at a double price, and again - 2 million and it doubled again to around $4 (today).

  3. Then, from round 3 and on, it dropped back down towards current stable price as the excitement reduced and the arbitrage between exchanges and the auctions started to bite and set up a feedback loop to dampen price movements.

So interpretation. In phase 1 - uncertainty was controlled and a price was found - a price that was by definition OK because the first ever. Also doubleplusgood OK because it was gently cast over 5 days and that was plenty of time for the slowest of pokes to get their Ethereum into the pen. Uncapped meant there was no way for the whales to crowd it up to the cap and create the stampede to the secondary markets.

Then in phase 2, it "pumped" up to about (now) $4 in the second day round. Then in phase 3, it dropped down to about $2 (today).

The catch here is that , in phase 2, it only lasted between 1 and 3 days, and only included 2 to 6 million tokens max. Compared to the vast bulk of the 200 million tokens in previous week and even to the relative stability of the follow-on group of rounds 4 through 9 and 10 million tokens.

The absolute maximum that any supposed whale flopped in at was 3% by tokens, and more realistically only that one special up round at $4 of 1% of so far sold tokens. A bit more by price, say 2% to 6%?

That's not a whale beaching, that's a ripple on a calm day. This auction was not walloped, it was gently eased into continuing life. Kudos to the designer.

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