Don’t invest in the Dragonchain ICO (yet)

I am a Dragonchain fan. The team has previously worked with Disney, building open-source software which they are now effectively commercializing. The company vision is strong; they aren’t attempting to “solve everything” (like ARK is, for example), but instead they offer a short and sweet list of features.

So why not invest right now?

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The ICO —

What’s wrong with the ICO?

I was eagerly awaiting the token-sale start date on Oct 2nd. My alarm was set. My wallet was funded with ETH, ready to send. But then I read the token-sale details.

In my (albeit limited) experience, ICOs usually offer a fixed number of tokens. These can be sold at a fixed fee or a variable fee depending on how early they are purchased. An example of a variable-fee model would be to offer the first 10% of tokens at the lowest rate with rates increasing at every 10% interval thereafter.

Dragonchain has fixed the total token supply at ~433 M, but ICO investors will not know the cost per token until the sale ends in November. You just dump your $$ into the pot, and the tokens will get split up after. And, in fact, only about half of the tokens (55%) are being distributed during this sale. So the actual market cap of the company will be nearly twice the amount raised in the ICO.

I’ll illustrate this with a simple example where the ICO ends having raised 100 M in funding:

100 M / (433 M tokens * 55%) = $0.46 per token

100 M / 55% = $180 M market cap

This would currently put Dragons in the top 40 crypto currencies by market cap.

Final Verdict

Looking at the above example, I can asses the market cap and make an investing decision. However this information will not be available until the token sale is (nearly) over. And since there is no benefit to buying in early, I will not be putting any $$ into the Dragonchain pot until I have at least a rough idea of the market cap.

I’ll wait until the end of October and see how the fundraising has gone. I think this has the potential to quickly become a top-20 crypto currency, and I’ll use that as a basis to asses my risk / reward.

Thanks for reading 👏.

Get in touch with me on twitter here:

This is not investing advice. Stay skeptical and DYOR.

Written by

Python Data Engineer, MSc. Physics

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