Are pools killing ICOs? Or ICOs taking undue advantage of pools?
India: ICO pool is no more secret anymore. Till nov last year there were few with very limited members. Since jan these pools mushroomed all over the place and almost everyone in crypto is member of them. Any Tom, Dick and Harry can join pool without KYC/ Whitelist and without selfie with passport.
In normal case ICOs arrange money in private sale before crowdsale. In private sale, money arranged broadly by 2 ways. First is through venture capital, HNI (High Net worth Individuals), Angel investors etc. For them there are proper KYC and legal contracts, vesting periods. Vesting period is the period before end of which investor can’t sell his stake. Usually it is more than 6 months. These investors are seasoned, well informed and very rich. They are not flippers. Last year any good ICO could easily arrange 10 million through this route. Remaining 10 to 15 million used to be arranged from crowdsale easily. It was not so difficult for this 20~25 million ICO to go 3~4 times on listing.
Since 3 months ICOs turned their eyes to pooling groups. This is second way of arranging money before crowdsale. Now they want to raise 40/ 60/ 100 millions. Their appetite has increased. In this new formulae everyone is benefited.
Benefits to ICOs:
ICOs can raise 60 million instead of 25 million. They are smart. They don’t disclose their hardcap early. Monitor the response and open their card at last moment. Other major advantage they get free lancers to advertise their projects through pool community. They don’t need to advertise everywhere like before. Already Facebook stopped them for advertising. I have posted below screenshot of telegram discussion between co-founder of ICO and Pool owner.
Benefits to Pool owners:
Pool owners are benefited the most. They charge 3 to 5% fees depending upon their popularity and past record. Even if ICO is dumped to 50% on listing, pool owners don’t lose anything. They have already earned cool minimum 3~5% on money they raised. For 500 ETH pool they earn 15~25 eth free from single pool. I was removed from two prominent pool groups when they come to know I post upcoming promising ICOs well in advance in Bharatafinance group. However, some of my well-wishers again brought me back with different name and account.
Benefits to Pool dwellers:
Tom, Harry are also happy because they get 30~80% bonus without KYC/Whitelisting/Gas war. Best part is tokens are not locked and free to trade on listing unlike big investors whose tokens are locked initially.
If all are winners then someone has to be loser?
Who is loser?
The one who buys this garbage during crowdsale with proper KYC/Whitelist, Selfie with passport and Gas war !!!
At the moment new investors are not coming in ICOs. Flippers are jumping from one ICO to other after dumping first with 30% profit they earned in the form of bonus because every ICO opens at ICO price at least in initial few minutes. We always blame whales for dumping on listing. Whales are not stupid to dump in loss. That is why they are whales in first place. These Tom, Dick and Harry from pools are the real dumpers who are ready to take even 50% loss if they are unable to cash in on right time.
Arcblock, Credits and Tomocoin without any pools succeeded even in bear Market. In case of Tomocoin all private/ presale tokens are locked.
There are some hopes for ICOs getting over in pools/presale itself. Because now bonus is negated as there is no crowdsale so ICO base price comes to level of pool purchase price. No benefit is left for pool contributors as no bonus to earn in profit so they don’t dump immediately on listing. However returns are not substantial again due to pools.
Join as much pool clubs you can through Discord, Telegram channels. List the ICOs going for pools. List the ICOs not going for it. Catch those who restrict pooling and less than 30 million cap. Invest in those if you liked the project during crowdsale. Nex, Atonomi and NuCypher are only one which I know at the moment are going without pool. If you really impressed with any project then better buy on idex after 1 week of listing at 50% discount.
I am not against pools and not saying outright avoid it. You can still profit through pool. Provided you get at least 30% discount and you are smart enough to dump it as soon as it opens for trade. I have invested in Endor and Edenchain through pools to test the waters.
Next time before going for any crowdsale, no matter how solid the project is check.
- Whether it had any pools?
- How many pools participated for ICOs?
- How much maximum bonus they offered to pools?
- Whether the tokens bought in presale are locked or not?
Don’t become garbage holders of pools.
Like me there are many who are holding bags of Remme, Instar, Bee, We power, Devery, Dadi and many more. What can we do?
Just wait for next bull run and offload some of your bags. No point in selling in loss. Lesson learnt hard way. Don’t bother about the theory “If your losses are 50% / 70% , then you require 100% / 200% profit to come at break even.” This theory applies in equity. In cryptos during bull market coins can shoot 400% to 1000% in 2 days.
Investment life is continuous journey of learning. Nobody can claim he is master. We all are still learners.