Vitalik Buterin Suggest Improvements to ICO Model

 

 

Vitalik’s improvements

Vitalik Buterin suggested a new ICO concept should utilize two new mechanisms, these are the “Tap” and the “Refund” feature. The goal of both mechanisms is to provide investors more control over how their funds are used.
The “Tap” feature will allow token holders to set a monthly budget for the team or company’s expenses. The chosen amount will be embedded into the smart contract, which would store all of the raised ether tokens. Each month investors would vote on the next month’s budget taking into consideration the performance records of the previous month. If the team uses the allocated funds prematurely it is up to investors to decide whether to allow the use of additional funds or to suspend the funding. This is when the second feature: “Refund” comes into play. If the team fails to fulfil investors’ expectations, e.g. the work is progressing too slowly or they are consuming too many funds and producing only minimal progress, token holders could choose to terminate the process. If the majority of the holders would be in favor of a “Refund”, the remaining funds would be distributed among them proportionally to the initial investment. The “Refund” option is, therefore, the equivalent of the self-destruct button.