My previous post about Vanity Headlines not being the goal for Civic’s upcoming Token Sale at 6am PDT on Wednesday 21 June was well received from the community as the right way to conduct a crowd sale of tokens. We are breaking new ground here and there are no best practices yet in our industry, but we hope that our learnings will be adopted and improved upon by other companies, and even better —hopefully our technology will be used to develop closer relationships with other buyers of token sales.
I wanted to follow it up with an explanation of the thinking behind some of the decisions that we have made. Tammy Camp gave an excellent writeup about how we have already sold $33m in tokens, without spending any money on marketing or advertising!
Civic’s token sale is very different from any other token sale out there. By design. We wanted to focus on optimizing the network for success — not headlines, so every decision is made in the best interest of the network.
Let’s go through what these key decisions were, and why:
- Unlike other crowd sales, you will need to use the Civic app to make a purchase. This gives us unique advantage as this ensures that we can track purchases to a Civic account — linked to a valid mobile number and more importantly, to the email address, which gives us a direct line of communication back to the purchaser. This is important when building a network — the last thing we want is a bunch of disengaged holders of our tokens that we cannot contact. The success of the network is going to be dependent on us engaging and leveraging the network — why would anyone want an army of anonymous, uncontactable buyers versus a group of engaged ones? Yes, there is more friction but it gets people using our app and creates a communication line with them going forward. We are also in the enviable position where we know that demand > supply so we don’t believe the friction will hurt us in terms of sales, and we would rather do it right.
- One of the principal complaints of tokens sales is that a single buyer can create/run automated bots and scripts, making multiple or excessively large purchases and skewing network ownership. Even the largest buyers were limited to just $500k in our pre-sale, of which only $333k is guaranteed in the event of a sellout of the crowdsale — this would amount to only 1% of the tokens being sold. This means that the network will be highly distributed. By forcing smaller buyers to now use the Civic app, we are also leveraging our technology and methods to ensure that if the same user tries to abuse the system, that it would be considered a breach of our terms and we will disallow their purchases and refund their coins after a review. The incentives to cheat are now substantially reduced.
- Encouraging wide distribution is something that we have really focused on because we are trying to build network effects. We have carved out $11m from the total token sale and make it available to the public during the crowdsale. We have set a limit of $25k per purchase, BUT we have also created a distribution schedule of purchase tiers from $50-$25,000. There are only a limited number of $10,000-$25,000 packages for sale, and the majority of the allocation of tokens will fall in the under $10,000 bracket, down to as little as $50. The reasoning behind this is that we have to consider people in countries like South Africa, where $50 is R700 — and as a global network, we believe that everyone in the world should have some level of access to participate in what we are building. With this model, we won’t sell out in 30 seconds either — by design!
- In order to make sure the tiers aren’t abused, we have hidden the caps on them. So we are not disclosing how many $25k, $10k, $1k, etc packages there are. Once they are gone, it will display as sold out and users can choose to purchase a different tier. This is also important because it’s not a mad rush to hope the Bitcoin or Ethereum network will clear your transaction on a first come, first serve basis. Once you have purchased a package, as long as you send the funds within 6 hours, it will be kept for you. This is fair, we believe as it also doesn’t require people to pair high transaction fees in order to make a small purchase and it also allows us to manage the total cap efficiently.
- Buyers who participated in the presale ($50k-$500k tiers) will not be allowed to participate in the crowdsale. This is in the interest of fairness again, as these buyers were given guaranteed allocations of 66% of the total tokens on sale. In order for the network to succeed, it needs to be widely adopted and this is why broader distribution in the crowdsale is so important, and we believe that the presale buyers in particular understand this.
By participating in the crowdsale, you will be signing up to be a part of the Civic Network and we hope that you see the vision for the future as we do. Identity is very personal to all of us, and at Civic, we are making it our goal to ensure that our network is global & inclusive of everyone!