Tokens Run Out
There is never a shortage of surprises and new milestones in the Cryptocurrency industry. There is always something unexpected happening and this month it is no different!! July’s gift is the fact that an ICO actually ran out of tokens, unbelievably.
U Network – a new publishing protocol powered by Blockchain – made the unusual declaration that it had run out of tokens. The UUU tokens and project worth approximately $8 million announced the shock news at the beginning of the month and has since been trying to resolve the issue.
What Is Next?
The idea now is to actually purchase a percentage of the tokens that were airdropped at the beginning of the year. Primarily the hard cap for the ICO was set at 10 billion UUU, estimated at around $15.6 million. 40% of the tokens were ring fenced for the founders and for future plans for the product. However, tokens were all too soon allocated and expectations for the uptake were blown out of the window.
The team behind UUU got caught out and then faced a huge dilemma of what to do next. Their decisions will prove pretty ground breaking as there is little evidence of this happening before. Many of the ICOs that are available at the moment have a hard cap in place therefore restricting the number of tokens which can be made. Although this does offer complete control over the ICO and tokens, it is pretty apparent that more and more tokens will run out as ecosystems and projects grow. UUU chose the hard cap option specifically to incentivize its users however it is now realizing the error of its ways.
That Fine Line
Rewards are becoming increasingly popular with ICOs but for all teams working hard on developing their ICOs, it is very difficult to work out how many tokens should be made in the first place. Furthermore, it is tricky to estimate how many of the tokens should remain with the developers. There is absolutely no protocol in place and each new team developing an ICO is in the dark and playing a guessing game. The line is very fine between having too many tokens available for sale and keeping too many for incentives. This is also true about the dilemma that UUU is now in. There is the option to produce more tokens however this will no doubt have an effect on the price of the token. So buying back some of the tokens is the only real option for the management team.
The plan at the moment is to purchase approximately $284 million of the UUU tokens. This will be completed through a staggered process.
It will certainly be interesting to see how this process unfolds and where the ICO ends up. One thing is for sure that this will be used as a case study for any other teams finding themselves in this unlikely position. The Cryptocurrency industry still has a lot to learn and there will be many more mistakes made over the coming months which is only natural with such a young ecosystem. Things will fall into place eventually.