0

In many places you see talk about tokens being listed on exchanges AFTER being sold in a successful ICO.

How was the token sold during the ICO? Did the buyers transfer ETH / BTC to some addresses and hoped to get tokens in return? Perhaps buying a little bit to test it and ramping up?

It seems ERC20 is just a protocol for ETH smart contracts that allow transfer of tokens. That doesn't seem to require any guarantee that the buyer will even get the token.

So in practice for successful ICOs, how dis the process of buying the token work without an exchange? Have any smart contracts been developed that can guarantee that if someone sends ETH to an address then they are guaranteed to get this new token sent to an address they control?

And finally, how do they get control of the address in the first place? If the issuer assigns them an address, then doesn't the issuer have the power to access it themselves later? If it's an ETH token, maybe they can use their own private key or something?

Basically I am looking for a complete technical explanation of what happened in successful ICOs on the level of the actual sale and issuance of the new token into some account.

  • 4
    I'm voting to close this question as off-topic because it's about ethereum and would be better asked on the ethereum stack exchange. – G. Maxwell Dec 31 '18 at 20:23
0

A token is worth what is perceived to be equal to the present value of all future cash flows into that token. If this number becomes large enough, people demand a market, so exchanges list it.

That is, tokens are listed only if they already have value.

Yes, those smart contracts exist, the functions of the contracts are set by the ERC20 standard and executed by the ethereum network, so that sending ether to them is guaranteed to return a token to the sender.

  • Cool but I don't understand one thing: if sending ETH to the contract issues the tokens automatically to someone then how do the issuers do KYC and AML and freeze tokens for up to a year to comply with SEC regulations? Does an ERC-20 token have to guarantee that the sender of the ETH receives the tokens automatically, and can pay others? And if so, at what address? Does the smart contract make new addresses basically, and let people pay each other? – Gregory Magarshak Dec 22 '17 at 6:32
  • I guess SOME ERC-20 tokens have a guarantee but the others do not. Is it possibls to make an ERC-20 token where the sendsd of the ETH is guaranteed to either be issued the toke within 60 days or get their ETH back? That way the KYC/AML can be done and the issue can choose one or the other per sender, while they can rely on not losing their ETH. – Gregory Magarshak Dec 22 '17 at 6:34
0

Have any smart contracts been developed that can guarantee that if someone sends ETH to an address then they are guaranteed to get this new token sent to an address they control?

I am fairly confident that this is how most smart contracts work. The contract is set up so that when you send the address eth, they send back the equivalent in tokens. This is why you cannot use an exchange for ICO's, as when the smart contract sends back the tokens they get 'lost' as the exchange wallet was not expecting this new token.

Here is a good article explaining a lot of what you are wondering.

Your Answer

By clicking "Post Your Answer", you acknowledge that you have read our updated terms of service, privacy policy and cookie policy, and that your continued use of the website is subject to these policies.

Not the answer you're looking for? Browse other questions tagged or ask your own question.