April 1, 2018 was unique in two ways: it was Easter Sunday, and eerily, fool’s day.
The team at AVARC in conjunction with a long time friend, who is big on Ethereum and the blockchain at large, worked on a small fun project – AVARC ICO. For the uninitiated, an ICO – Initial Coin Offering – is the sale of a token/coin/promise(s) [similar to the technology behind cryptocurrencies such as Bitcoin] to willing buyers for several reasons. The coins could be used to fund open source or futuristic products that may not exactly attract traditional methods of financing.They could even function as shares into the companies without the involvement of expensive intermediaries such as the lawyers and accountants, overseen by hawk-eyed of regulators. Or the tokens could present some sort of utility into the network such as special access or discounts.
An ICO is modelled after the traditional IPO – Initial Public Offering – where companies/firms go to the public markets such as the stock markets to raise significant amounts of capital through sale of shares/equity. Unlike the public markets, an ICO can be executed by anyone through deployment of a smart contract on the Ethereum blockchain. While this capability redeems ‘ICOers’ of the punishing due diligence processes demanded by the public markets, it has been abused by fraudulent parties in recent times. Investing in an ICO is a huge risk, if not gamble.
Of course, we were aware how little people knew about the blockchain ecosystem, besides fuzzy ideas about Bitcoin and its abuse by criminals and scammers. Needless to say, the idea of decentralizing production of sports apparel might not have seemed the most optimal given that a basic web or mobile app can serve the purpose of enabling users to participate in value creation, dare I say, in a decentralized way, without much ICO fanfare.
However, the excitement around pushing envelopes and working at the cutting edge of technology led us this way. We envisaged what it would look like to breathe the preeminent ideals of the blockchain into the creation of sports apparel. And what benefits could arise for users and those interested in the value creation.
It took us a couple of meetings to define the problem at hand, carry out research, and build whatever was required to have a ‘mock ICO’. We defined strict parameters that would enable us to avoid the crosshairs of the law by instituting an on-the-fly due diligence procedures and limiting how much could be contributed per user.
At the end of the day, we had a minimalist website (thanks to GitHub pages) and a whitepaper and a public Ethereum address. However, we received 0 ETH. As anticlimactic as we had imagined, and hoped, collecting zero funds on the account was what we needed. What we deserved.
Fair enough, we had gone through at least 80% of what is required to have an ICO – the remaining 20% is where the real hard work is. Getting buy-in from strategic partners, advertising and marketing, but most importantly refining the idea (whitepaper) and showing a prototype.
Moving forward, the 3 week investment or so in a fool’s day campaign wasn’t a fool’s errand after all. We deeply explored the potential of decentralized markets on the Ethereum blockchain and also learnt how we could attune the product to solve and tap into today’s and hopefully tomorrow’s challenges and opportunities. We hope to document some of the learnings and also explore the initial idea to its objective conclusion. The journey begins now.