[Gas]

When a dapp or platform is launched, what is the incentive for teams to continually maintain/improve/update the product over the very long term?

AFAIK once the initial ICO funds run out, no further money is received from the userbase. Tokens are used in the community P2P, not paid to the team. There is no core entity/owner receiving consistent revenue to compensate team members. That means after the ICO, the sole financial incentive for the team is to get the token price to appreciate.

If a CEO decides to cash up and dump his tokens (example: Charlie Lee), what remaining incentive does he have to maintain/advise/develop the product?

(I have many more questions about this, but I'll save them for now in case my above assumptions are all wrong).

[SamuelBRoberts]

The funds are in lockup (usually) and they have a bunch of coins that they want to go up in value.

Really, nothing.

[True Balla]

I think its the same for every company. Why does Zuckerberg stick around when he's a billionaire? Why not cash out? Essentially, people want to create a legacy. They want to make an impact on the world. Same thing for why rich people don't retire and keep going

[Gas]

(01-26-2018 09:29 PM)True Balla Wrote:  

I think its the same for every company. Why does Zuckerberg stick around when he's a billionaire? Why not cash out? Essentially, people want to create a legacy. They want to make an impact on the world. Same thing for why rich people don't retire and keep going

I don't think it's the same at all.

Facebook is a centralized company, it has a constant stream of many millions of dollars in cash coming in daily that is then distributed to the staff and owners through either dividends, salaries, bonuses, perks. Stocks also indicate ownership: Zuckerberg owns 28% of Facebook, meaning if Facebook gets wound up tomorrow he is entitled to 28% of the net cash in the Facebook bank account. That is why he doesn't cash out. There is a clear incentive for him to keep growing Facebook and bringing as much money into the company as possible.

More importantly, even if he sold all his stock tomorrow, there would still be incentive for him to continue on as an advisor/director/executive because he will still be rewarded by way of salary, bonus, options or even more stock.

It's different for a crypto CEO; if he sells all his tokens, there seems to be zero incentive for him to keep doing anything.

Take Flixx for example. We'll assume in the next 10 years everybody hates Youtube and everyone is now using Flixx. Imagine it's the most successful dApp in the world.

If I'm the CEO and founder of Flixx, all I'm sitting on is a bunch of Flixx coins. If it's fully decentralized and the whole ecosystem is running peer-to-peer, there is no revenue flowing to me or a company I own, unlike Facebook. Even if a billion people use Flixx every day, zero income is coming into my bank account, unlike Zuckerberg. I am not earning a salary, I am not getting a bonus, Flixx users are paying and being paid, but none of that money is coming to me or a Flixx bank account.

The only thing I have are Flixx coins that are going up in value. If I need cash, I need to sell a Flixx coin. Eventually, all my coins will be sold. When that happens, what incentive will there be for me to maintain/update/develop the dApp?

I feel like I'm missing something(s) important, because the model of most dapps seems unsustainable.

[SamuelBRoberts]

Why would you feel like you're missing something?

[Gas]

Because if this is the model it has too many holes. Return to the Flixx example:

> I'm the CEO of Flixx and I die. They need to hire a new one. If ICO funds and reserve tokens have all been used up, which they inevitably will be at some point, where do they get the money to pay him? Same goes for other team members. Does the team disband? Work for free? Rely on the community for all the upkeep?

> I'm the CEO and hodling coins. I die and nobody knows my private keys. Do my coins just disappear from the liquidity pool forever? What happens when this has occurred over many years and a large percentage of the coins are lost? Most dapps say the cap is fixed and no more tokens will be made.

I had a handful more, I will type them up when I get home.

[SamuelBRoberts]

No, you've pointed out some real issues.

My question is: why do you think you're missing something, and these issues aren't real issues?

[[email protected]]

It seems like the devs get all the money upfront so there is not much incentive to keep plugging away after the ICO other than appreciating the value of the tokens. For some devs it is their life mission to make an innovative product that changes society and this coupled with wanting to be recognised and acknowledged as a tech god drives them forward. I imagine that most devs are in it for the quick money and this has been acknowledged as a source of concern with the many ICOs.

Most of the issues pointed out seem like non-issues to me. ICO give enough funding for a lifetime of operations. There's lock up of coins or slowly cashing out appreciating portions of coins to keep you going. There's nothing stopping you from just accepting fiat as payment for your dapp. In the case of whenhub app, this is the case.

There are third party escrow services that give our private keys to inheritors in cases of death. Even if it doesn't happen like this you can treat lost coins as burned and taken out of circulation. The remaining coins become more valuable.

[Valentine]

Lots of coins have long-term income streams if you are a coin holder, and founders usually keep a large % of them:
- PoS coins are effectively dividends e.g. DASH masternodes, PIVX staking
- HORSE, DICE etc give you a cut of the dApp gambling pool
- COSS, KCS, BCO etc give you a cut of the exchange revenue

If you dump all your coins like Charlie Lee however then of course you have no financial incentive for the project to succeed.

[Pinocchio]

If it’s a platform there are transaction fees. Vitalik said ETH makes half a mil a day from transaction fees.

[Gas]

(01-27-2018 01:22 AM)SamuelBRoberts Wrote:  

No, you've pointed out some real issues.

My question is: why do you think you're missing something, and these issues aren't real issues?

I felt like I was missing something because nobody ever asks about this. And you would think people who are putting six and seven figures into an asset class would ask about this.

[Gas]

(01-27-2018 04:04 AM)[email protected] Wrote:  

Most of the issues pointed out seem like non-issues to me. ICO give enough funding for a lifetime of operations. There's lock up of coins or slowly cashing out appreciating portions of coins to keep you going. There's nothing stopping you from just accepting fiat as payment for your dapp. In the case of whenhub app, this is the case.

They might be non-issues in the medium term but they are definitely issues when thinking long-term or indefinitely. If you have a fixed pool of funds that can never be replenished, that's not a long term plan.

Facebook raised $16b in their IPO. Imagine if that meant the team could never receive any more money - to pay staff, develop the product, pay expenses, make upgrades - $16b was everything they could raise, forever. Logic tells you that those funds are going to dry up one day, it is inevitable. When that happens you're either relying on the goodwill of the community to fund maintenance, or Facebook disappears forever. That doesn't seem like a good long-term plan to me.

Also most of these ICO's are only raising around $10-$30 million, and only a small percentage of that is going into a reserve fund. That is not a lot of money. This is a huge hole that is putting me off crypto long term.

(01-27-2018 04:04 AM)[email protected] Wrote:  

There are third party escrow services that give our private keys to inheritors in cases of death. Even if it doesn't happen like this you can treat lost coins as burned and taken out of circulation. The remaining coins become more valuable.

Also seems like a poor long-term solution. It's highly possible that very large percentages of private keys and coins will be lost, and they aren't replenished. Say every week a handful of coins get lost, because an owner dies and nobody has his wallet info (like myself), or people just lose their private keys etc. Just using the law of probability, on a long enough timeline, and it might not be as long as you think, you will start approaching zero. What is the solution then?

If I'm not missing anything and this is really the reality of these projects, I'm far more bearish than I used to be. I think the only projects that have a chance of surviving long term are those with incredibly strong communities to the point of being fanatic (example: Bitcoin) and ones where ongoing development/upgrades/maintenance are not essential (also Bitcoin). But all these projects that require upkeep on fancy websites/apps/programs to interact with the blockchain (Power Ledger, cryptobanks, Bee Token etc) seem to be on a road with a clear dead end somewhere down the line.

[Gas]

[quote] (01-27-2018 10:18 AM)Gas Wrote:  

[quote='[email protected]' pid='1726589' dateline='1517043890']
Most of the issues pointed out seem like non-issues to me. ICO give enough funding for a lifetime of operations. There's lock up of coins or slowly cashing out appreciating portions of coins to keep you going. There's nothing stopping you from just accepting fiat as payment for your dapp. In the case of whenhub app, this is the case.[/quote]

They might be non-issues in the medium term but they are definitely issues when thinking long-term or indefinitely. If you have a fixed pool of funds that can never be replenished, that's not a long term plan.

Facebook raised $16b in their IPO. Imagine if that meant the team could never receive any more money - to pay staff, develop the product, pay expenses, make upgrades - $16b was everything they could raise, forever. Logic tells you that those funds are going to dry up one day, it is inevitable. When that happens you're either relying on the goodwill of the community to fund maintenance, or Facebook disappears forever. That doesn't seem like a good long-term plan to me.

Also most of these ICO's are only raising around $10-$30 million, and only a small percentage of that is going into a reserve fund. That is not a lot of money. This is a huge hole that is putting me off crypto long term.

[quote] (01-27-2018 04:04 AM)[email protected] Wrote:  

There are third party escrow services that give our private keys to inheritors in cases of death. Even if it doesn't happen like this you can treat lost coins as burned and taken out of circulation. The remaining coins become more valuable.[/quote]

Also seems like a poor long-term solution. It's highly possible that very large percentages of private keys and coins will be lost, and they aren't replenished. Say every week a handful of coins get lost, because an owner dies and nobody has his wallet info (like myself), or people just lose their private keys etc. Just using the law of probability, on a long enough timeline, and it might not be as long as you think, you will start approaching zero. What is the solution then?

If I'm not missing anything and this is really the reality of these projects, I'm far more bearish than I used to be. I think the only projects that have a chance of surviving long term are those with incredibly strong communities to the point of being fanatic (example: Bitcoin) and ones where ongoing development/upgrades/maintenance are not essential (also Bitcoin).

In 10 years if all the Flixx team has sold up their tokens and is no longer doing any work on the project, and the Flixx app is outdated and shitty, who's going to fix it? You're relying on the goodwill of some random Flixx-using stranger to develop it for free out of the goodness of his heart. Not a very safe bet. To me it looks like all these projects that require upkeep on fancy websites/apps/programs to interact with the blockchain (Power Ledger, cryptobanks, Bee Token etc) seem to be on a road with a glaring dead end somewhere down the line.

[yaku]

You make a great point, Gas. I'm not worried about coins vanishing when the holders kick the bucket...certainly anyone with crypto is going to provide a way for family to get that crypto. But a brain drain down the road is certainly a danger for most coins; one reason why probably 90% of these coins eventually will fail.

[yaku]

The coins that offering staking rewards, or some other type of passive revenue from owning the coin, are more likely to succeed. OmiseGo's developers future revenue will come from staking, so that makes me confident that their interests line up with mine. That's what you want from a coin IMO. The coins that have developers who only realize profit when they sell that coin are dangerous to own.

[Samseau]

Any coin that is open source has no leader to worry about. If the leader starts slacking or disappears, then the hungrier underlings can fork the project and take it over quite easily.