ICOs and Issues with ICOs | Komodo Platform as a Solution (Part 2)

Manipulations by Whales during ICOs

Current centralized nature of the ICOs also leads to the playing field being not equal and wealthy investors, also known as whales, having an advantage over the average cryptocurrency investor.

Presently, most ICOs accept funds from investors by using only one machine. The machine may be a website through which all the funds go through into the wallet of the project. While investors do most often send funds in cryptocurrencies and organizations accept funds in cryptocurrencies, there is still one point of exchange that processes orders one by one. This means that a person who submits an order first receives a large advantage over users who submit their order thereafter. If the initial buyer has a lot of funds and also uses trading bots, he or she can purchase a very large supply very easily and quickly before all others get to participate in the process.

Because of this, with the way things currently work in the markets, people that are interested most and would benefit the most from a coin offering are often not able to participate in the process at all. By the time they are able to buy tokens, the supply evaporates. At the same time, the whales that bought in early have a lot of power and can manipulate the markets to their advantage.

 

Human errors during ICOs

Human errors are a big problem for the same exact reason as manipulations by whales are a problem, which is that all transactions during an ICO go through some central point. When it comes to finances collected during the ICO, it means that a person with the access to the central system can potentially withdraw the funds and funnel them elsewhere. Because cryptocurrency transactions are not reversible, this would mean that in such an instance the money will be gone forever and it is very possible that even law enforcement authorities will not be able to do anything. Therefore, both malicious attackers and human errors can have a big negative impact on an ICO. The server that holds the records about transactions and the funds can be damaged or stolen. When this happens, it is not just the creators of the ICO that lose money. Investors lose money, too. Even more than that, negative news about an ICO can cause fear, uncertainty and doubts in the markets and cause a drop in prices of many various currencies. Therefore, it is not just one organization running an ICO that is at risk. All entities and members of the marketplace are.

The Komodo platform overcomes this and other issues with its implementation of decentralized initial coin offerings or dICOs. The platform provides entrepreneurs with technology and tools that allow them to create and share blockchain solutions in a decentralized manner.

To create a new blockchain on the Komodo platform, all a user has to do is install the software and allow it to do the work. The core technology of the platform will do the rest and the user will have a fully independent blockchain in which he or she can use a variety of built-in Komodo features, such as delayed proof-of-work and backups of the new asset chain on the Bitcoin blockchain or any other secure decentralized network.

Once a user creates a new asset chain, the user can then use Komodo’s decentralized exchange BarterDEX to obtain funding and trade tokens.

In the past, the creation of a chain was a long and complex process. With Komodo, there’s almost no coding, all a person needs to do is use Komodo’s Iguana technology and specify the name of the coin and the total coin supply.

The way Komodo works is similar to how website building suites work. In the past, website creation required a lot of coding and manual labor. Today, it is possible to use a software suite to drag and drop elements of the website around the screen and publish the website in a few minutes.

This is what Komodo does with blockchains. There is a special command with which Komodo creates a new coin and a new blockchain. The command has only two parameters, which are the name of the coin and the total coin supply.

Once a user runs the command, the Komodo ecosystem will verify that the suggested coin is indeed a new coin and there is no coin with the same name already and then Komodo Iguana Core will create the new coin and a new asset chain associated with it.

There will be several important differences between the new asset chain and the main Komodo chain. First, the new coin will not be generating a 5% annual return for its holders the way Komodo does for Komodo coin holders. Also, the asset chain will be creating backups not on the Bitcoin blockchain, but on the Komodo main chain. At the same time, the derivative chain is capable of receiving and seamlessly adopting all updates that Komodo development team creates for the main chain and the ecosystem. The asset chain also has functionality that allows its creators to introduce new rules solely to the chain, without affecting other members of the Komodo ecosystem or the main blockchain.

Blockchains that use Komodo don’t even have to use Proof-of-Work as their consensus mechanism. If they prefer Proof-of-Stake, they can use Proof-of-Stake. The scope of the changes that developers can introduce to their projects is very broad. The main requirement is that the changes need to allow the chain to stay smoothly integrated into the Komodo ecosystem.

An important difference between blockchains on the Komodo network and tokens such as ERC20 on the Ethereum network is that blockchains on the Komodo network are fully independent and will keep operating even if something happens to the main network. This fact gives incredible power to entrepreneurs who use Komodo to create their projects because the projects can have their own independent nodes that act according to the unique rules created by the entrepreneurs. The founders of new chains can also modify the rules and scale their chains in the way they see fit, without having to comply with restrictions of the main chain. This also means that if one of the new chains becomes extremely popular, this popularity will not affect the main Komodo chain and the ecosystem will not experience any congestion issues that Bitcoin and Ethereum networks have experienced in the past during the times of extreme demand. This independence of new chains is a huge benefit to both entrepreneurs who use Komodo to create their projects and to the Komodo itself.