#19 - Blockchain Investing - Olaf Carlson-Wee and Aaron Harris

Crowdsale Strategies

Crowdsale strategies in blockchain fundraising are pivotal in shaping the market dynamics. Olaf Carlson-Wee explains that uncapped crowd sales, like Tezos, allow for massive capital influx but can attract short-term speculators rather than long-term investors 1. This method can lead to a market where the initial investors gain a free trade advantage, potentially undermining the project's integrity. Aaron Harris suggests that extending the time before a project becomes liquid could filter out speculators, leaving only committed developers and users 1.

The power of these crowd sales is that, yes, you can raise money this way, but in a sense, crowd sales were originally a solution to token distribution problem.

--- Olaf Carlson-Wee

Olaf also highlights the historical context of crowd sales, noting their evolution from token distribution solutions to major fundraising mechanisms 2.

   

ICO Dynamics

The dynamics of Initial Coin Offerings (ICOs) reveal a rapidly evolving landscape where capital flows at unprecedented speeds. Olaf observes that the global coordination of capital towards breakthrough projects is astounding, often surpassing traditional seed funding in dollar terms 3. This trend, although in its early stages, suggests a long-term shift in how innovative projects are funded. Aaron Harris agrees, noting the mind-boggling speed and volume of investments in ICOs, which often outpace traditional venture capital models 3.

We're seeing these things happen much faster and we're seeing huge amounts of capital be coordinated by just pure incentives around projects.

--- Olaf Carlson-Wee

Despite the hype, Olaf remains cautious about the sustainability of this model, emphasizing the need for genuine technological innovation to match the financial influx 3.

   

Value Distribution

Value distribution in blockchain projects often skews towards traders rather than developers or long-term users. Olaf criticizes the current model where traders capture more value than the developer teams, arguing that this dynamic can exclude genuine participants from the ecosystem 4. He believes that the excess value should ideally support the project's development rather than speculative trading. Aaron Harris challenges this view, questioning whether the scale of investment truly changes the proportion of speculators versus developers 4.

I would much rather have Tezos have $200 million than $20 million. I don't know why that 180 million should go to traders.

--- Olaf Carlson-Wee

Olaf distinguishes between long-term speculators, who might align with project goals, and those seeking quick profits, advocating for a model that better supports authentic engagement 4.