Tezos Tickets: The Next Hottest Fundraising Method In Crypto?
Initial Coin Offerings, popularized by Ethereum, have been hugely successful. ICO’s were partly responsible for Ethereum’s meteoric rise in 2017/18. However, the party came to an end as regulators made it more difficult for developers to run ICO’s in the US and the market went flat.
Lately Ethereum has been riding high on the success of defi or decentralized finance. Defi has some clever fundraising mechanisms that appear to avoid the legal problems associated with ICO’s. (Certain ICO’s sold security-like instruments — people hoping for a profit though passive income — to the non-accredited general public.)
Defi raises funds in a different manner, usually though yield farming. The tokens are mined through liquidity mining, which occurs by providing trading pairs on a decentralized exchange or dex, receiving a liquidity token and staking that token to receive the new token. The development team or dao will sometimes retain some of the tokens and subsidize further development through token sales (on the dex). Some projects like YFI retain none of the supply but bootstrap themselves through the products they have built and with a community led DAO, create funding channels. These novel fundraising methods have led to an explosion of new projects and tokens on Ethereum, greatly enhancing Ethereum’s powerhouse network effects.
Tickets are an element of the Tezos Edo upgrade coming in Feb 21. The idea here is — well to create tickets just like in the real world. For example, when you go to the fair and give your ticket to get on the bumper cars your ticket is torn in half and thrown in the trash. Same here, after you use your ticket to receive some permission from a smart contract it cannot be used again. Apparently this will make development much easier for certain aspects of smarts contracts. But it also appears this might be a great fundraising method.
Why? Well, because the tickets are used and then voided folks really can’t be expecting a speculative profit from them (which can be the problem with running an ICO — the tokens can turn into speculative instruments). All in all, a ticket has less of a chance to be a speculative instrument. Could it still be one? Well yes, think of ticket scalpers, reselling baseball or football tickets. But that is a small and finite speculation (a token can be traded forever) and no one is hunting down scalpers for security violations. Obviously teams will have to consult with lawyers, but it could be the case that selling tickets (for future access/permission to a protocol) could be a great way for Tezos teams to raise funds — and a fundraising method unique to Tezos! As Ethereum has shown first with ICO’s and then with defi, effective fundraising is key to building smart contract protocol network effects. Perhaps post-Feb 21 Tezos will experience its first fundraising bonanza.
