This Is How I’d Eliminate ICO Scams

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The Ethereal Summit is currently taking place in Tel Aviv. One of the more interesting panels included Ethereum’s co-founder, Vitalik Buterin. Titled “Q&A On Ethereum 2.0 With Vitalik,” the discussion touched on plenty of things concerning the future of the network, including scalability solutions. 

Discussing one of the hottest trends of the past few months, Decentralized Finance (DeFi), Buterin touched upon a matter which has generated plenty of concern since 2017: the unacceptable number of scam Initial Coin Offerings (ICOs). 

Public Interest Projects: Appropriate Spin on ICOs

ICOs were a hot topic back in 2017 and throughout most of 2018. Yet, as it turned out, the majority of the projects failed to deliver on their promises and couldn’t develop and deploy the product they’d raised money for. Hence, a lot of people consider them to be rather scammy. 

At the summit, Vitalik Buterin proposed a solution made possible by the concept of decentralized finance, something that’s become quite hot throughout the past few months. 

He refers to the solution as “public interest projects” and gave the following explanation:

“This is a spin on the ICO idea that I had one and a half years ago. So the idea is, instead of projects having ICOs where people will just send them the money, and they, well, go away, you have a scheme where people put their tokens into a smart contract. […] The developers don’t just have access to the tokens, they can’t take them. Instead what happens is the money gets put in compound, or some other interesting thing […] and then the interest goes to the developers.”

In other words, instead of people blindly trusting a particular project, they’d lock their tokens into a smart contract. That money would then be deployed into a DeFi solution providing a certain interest rate, and that’s how the project would fund its future endeavors. 

The idea is rather interesting, mainly because it takes away the risk for investors. Since their money would be locked in a smart contract, this would eliminate the risk of the project’s team disappearing “in Indonesia or something,” as Buterin said. 

The Power of Decentralized Finance

Decentralized Finance has been perhaps one of the hottest topics among the crypto community throughout the past few months, and it’s catching on fairly quickly. 

Essentially, traditional financial systems would leverage the decentralized nature of blockchain-based technologies, making said systems faster, cheaper, and, most importantly, globally accessible. 

In Buterin’s words: 

“I’m very excited about what DeFi offers in principle. The idea that anyone, anywhere in the world can just have access to a system that lets them pay each other […] and basically lets them choose their own financial exposure is very powerful to me. That’s something that a lot of people just don’t have access to.”

Yet, Buterin warned that people shouldn’t be encouraged to put their money into DeFi protocols given that they are as yet untested and have a non-zero chance of failure.

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