PonzICO: Let’s Just Cut to the Chase
Josh Cincinnati@acityinohio
https://ponzico.win
0x1ce7986760ADe2BF0F322f5EF39Ce0DE3bd0C82B
May 12, 2017

Abstract
Token sales—aka “Initial Coin Offerings” where the ‘i’ in Coin is optional—
are hotter than Instagram filters on Venus. But to date, nearly all of them
have presold non-functional products at ludicrous valuations.
The author is offended. Not at the scheme per se—kudos to the developers
for discovering a class of rich, pseudo-intellectual suckers willing to value thework they haven’t done at multipliers that would give a private equity partner
an aneurysm. But the inefficiency of it all! In this very legitimate, LATEXcomposed, long-planned[1] white paper, the author proposes a method toachieve the same goal with a magnitude less work and presents a productionready Ethereum smart contract address—where production-ready is as at least
as code- and concept-tested as The DAO’s Code is Law. As a bonus, thescheme doesn’t require tokens on top of Ethereum, which were a really fun
growth-hacky mirage for awhile but ultimately a distraction.[2]As a double bonus, if everyone stays irrational it might greatly enrich theauthor, providing future funding for blockchain performance art. If that sounds
groovy to you—or you just want to support “blockchain performance art,”
whatever that means—don’t bother reading further; just invest with your web3
browser at https://ponzico.win/.

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Contents
1 A Token Introduction: Chuck E. Cheese’s and the Yap People

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2 Tokens Today: #ScamThePlanet

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3 ICO-nomics is a Dismal Science5

4 Let’s Be Real Though, Everything’s a Scam

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5 I Barely Know Solidity, But Fuck It Let’s Build PonzICO

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6 Anticipating PonzICO Critiques

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7 A Dedicated Section on What I’d Do With All My Ether

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8 Conclusion

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1

A Token Introduction: Chuck E. Cheese’s andthe Yap People

Context—and wide margins—are the bedrock of every white paper. To understandthe modern crowdsale token, history matters. But correctness doesn’t—any particular liberal retelling of history can suffice.
The modern token crowdsale traces its origins to an unassuming corner of San
Jose, where in 1977 the first Chuck E. Cheese’s Pizza Time Theatre opened. Here
Nolan Bushnell succeeded in swindling youths to trade money for brass tokens ofquestionable value and aesthetic taste. The tokens were tightly controlled—indeed,
the first successful crowdsale netted Nolan something like $41.47 in 2017 dollars, andthe “crowd” consisted of one pimply adolescent.
But it was the first of many sales, and successes compounded. Soon its successenabled Chuck E. Cheese’s to expand into franchises and pump millions of R&D
dollars into the unholy creation of semi-sentient, human-sized animatronic rats.
After the creation of Chuck E. Cheese’s nightmarish robo-rat army of darkness, thetoken crowdsale skeptics were silenced. Whether by the weight of Chuck E. Cheese’s
overwhelming success or through surgical assassinations by the elite Munch’s Make
Believe Team Six1 is not germane to this discussion.
In any event, the future was cast in brass. The Token Crowdsale was here tostay. With the advent of cryptocurrency and the rediscovery of the Yap peoples’ Rai
Stones2 , crowdsales would become more decentralized...at least superficially.

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Tokens Today: #ScamThePlanet

Since the bygone era of exchanging rat tokens for freedom from Bushnell’s gulag
arcades, we’ve evolved. The platform is no longer brass controlled by a single entity—
but a distributed, decentralized, Web 3.0, blockchain, DLT platform, operating far
above the rat race: ETHEREUM. Ethereum itself is rather neat. It can reach1

https://www.youtube.com/watch?v=o5qfXHtkIWM
Rai Stones were unearthed by blockchain consultants to make oblique references in pitch decks
and TED talks, and I’m forcing it here under (questionable) advisement.
2

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consensus on state between different, potentially adversarial parties using clever
incentives and cryptography. And yet it’s accessible enough for junior developers
to program smart contracts handling millions of dollars. This has posed someproblems—the EVM seems most efficient at transpiling developers who make bad
Node.js into developers who make bad Solidity.
A particular breed of these bad Solidity developers have pioneered the newest
iteration of the token crowdsale: “The Initial Coin Offering” (hereafter abbreviated
ICO—with all due apologies to the PlayStation 2 cult classic ICO, by all accounts
a far less tarnished product). Dozens of teams have unveiled amazing products thathave transformed the world. Nearly all lawyers have been replaced by a few lines ofSolidity. Venture capitalists have been forced to sell their fourth homes for liquidity.
Weathermen and Vegas bookies are trading war stories, wistfully remembering theera when they could just make shit up instead of demurring before decentralized
prediction markets. Democracy has melted under the bright light of blockchain
governance, petty nationalism is a dying religion, and we are one step closer to aquilted Singularity where every square’s a token.
...at least, that’s how these tokens are being priced. But reality is divorced fromthis vision—indeed, the destruction of value after most of these scams are revealed
will ironically employ more lawyers than Ethereum would otherwise claim to makeredundant.[3] You might be saying, “scam is a serious indictment.” Well:• The author would encourage you not to say anything while you’re reading awhite paper. You won’t grok as much and you’ll look silly speaking to youriPad.
• Vanishingly few of these tokens have any released products tied to them—letalone “disruptive” products—despite increasingly high valuations for increasingly frequent crowdsales.
We’re living in a world where developers are Kickstarting Pets.com every week. And
their customers are metaphorically preordering the failed Coin card[4], a productwith no use beyond its novelty...but it’s an (initial) coin (offering) instead of Coincard. And the coin is valued like Instagram. Inexplicably.3
3

At the time of this white paper’s publication, someone just raised $12.7 million for the
TokenCard, which seems to be “like Coin card, but Blockchain.” We are doomed as a species.

4It seems the only successful product of these token sales is Ethereum, which has
shown itself to be an excellent platform for repeated, rapid token sales. But thereinlies the cryptorub. Why would developers build tokens on top of Ethereum when
Ethereum already has a token called ether ?
Unsurprisingly the answer is, “because they can.”3

ICO-nomics is a Dismal Science

Like a Node.js developer downloading a gigabyte of dependencies to serve a static
20 kilobyte website, if you give a nefarious developer an inch, they’re going to scam
people out of billions.
These tokens have (pre)sold well, which is encouraging more and more interest,and less and less scruples. But for all their paper success, these tokens are sleightof hand. Nevermind that these tokens get pumped before the presales by even more
unscrupulous parties who get in on the ‘pre-pre-sales’—you can imagine this activity
like like an after-party in the hotel mezzanine, except it’s a pre-pre party with somemezzanine financing and it ain’t R. Kelly hitting the ignition.4
No, the pre-pumping is Christian Bale-level misdirection in the Prestige. The
real magic is when David Bowie gives Huge Jackman an ERC20 template. All ofthese tokens were exchanged for ether. Even if you opt to trade these tokens for fiat
directly—and even if these tokens somehow manage to offer some functionality notpossible by ether—trading for ether will always be the most direct, cheapest methodof exchange for every ICO’d token. Perhaps you don’t agree? No matter, because allof them require ether to engage in transactions. Cars don’t run without gas5 , andneither do tokens.
They are abstractions on top of Ethereum itself, extra layers that obfuscate
the truth: Ethereum is a state machine collecting transactions signed by private
keys and verified by public keys. Your key pair—and associated address—is whatmatters, along with the native token balance you hold (i.e., ether). As long as
Ethereum transactions require ether-denominated gas, this will not change.
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There’s a crass joke in here. I’m above making it, but not above making you think about it.
Although the Tesla I buy after PonzICO’s tremendous success won’t need gas.

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“But,” you may be saying smugly, “what about tokens with a limited treasury,or tethered to the physical world, like gold or USD? Or compute power? Or um,
like, predictive, reputational whosists? They could make an address tied to very
little ether worth considerably more.” Well:• What did the author say about speaking while reading an white paper? You
are the laughingstock at Starbucks now.
• Anything that requires a centralized treasury/authority to dictate a trade inphysical property within a decentralized system is going to have the same risk
profile as its weakest link: the centralized system.
• But say you make it more decentralized, somehow. Maybe through some wild
multisig scheme. The author posits that every attempt to increase decentralization will make the trade more expensive, until it reaches Parity6 with simply
exchanging ether for physical goods directly—ether is the most maximallydecentralized token that can possibly exist on Ethereum.
Ergo, while not all Ethereum developers are scammers, most tokens are scams.
Especially one where the developers keep 95% of the tokens. The author doesn’t
need a decentralized prediction market to tell you that’s got a 99% chance of beinga scam.

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Let’s Be Real Though, Everything’s a Scam

Let us level with one another, reader. The author does not intend to cast disrepute
upon these token developers—in reality, they are simply short-circuiting a processthat has existed since the dawn of securitization. Most tokens are scams, sure—butthen again, so is everything. The Efficient Market Hypothesis is a scam drapedwith bad math. To play the stock market is to play musical chairs under the chord
progression of a bid-ask spread. Individuals may win, but in the long run we’re alldead. And as the average lifetime of companies and products continues to shrink
geometrically, the long run isn’t so long anymore. In today’s age, it seems betterto promote the plausibility of future profit rather than waste energy on actually
delivering.
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Don’t grimace. You love the wordplay, or you wouldn’t have read this far.

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Figure 1: The trajectory of every company that has ever existed or will exist, where “Present” corresponds to thetime of a company’s peak valuation. It contains no units to bolster its accuracy relative to GAAP accounting andinvestment banker analysts.

The world of physical capitalism concerned itself with scamming enough people
for long enough to eke out a modicum of societal progress. The system functions
well enough, though clearly—as evidenced by the continued existence of Chuck E.
Cheese’s—it’s far from perfect.
But token capitalism constrains the timeline considerably. With freedom tostructure token sales in complex, pump-and-dump-friendly terms—and pre-pumpmarketeers greasing the wheels—token makers can dispense with the illusion of future
intrinsic value and build castles in the distributed cloud.
The author does not begrudge this behavior. We are all consenting adults here—
we can play musical chairs whenever we damn like; it’s what separates us from thechildren. But the least we can do is exchange honestly, and treat each other withthe mutual respect we all deserve.
That is why I’m urging you to invest your life savings into my revolutionary new
concern, PonzICO.

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5

I Barely Know Solidity, But Fuck It Let’s Build
PonzICO

PonzICO is the first ICO to respect your intelligence by calling a spade a spade.
Here’s how it differs from your everyday ICO:
• It dispense with tokens entirely—we all want that sweet, sweet ether.
• There is no limited time window for “investment.” Time is an illusion.
• PonzICO also dispenses with the notion that it needs a meaningful productattached to its future earning potential. It is the product.
• All profits from PonzICO are carried in balances linked to prior participants inproportion to their prior investment on a transaction by transaction basis...witha trivial, 50% service fee for yours truly, as nominal recompense for spending
a solid couple of days re-learning LATEXand Solidity.
That’s it. With every new transaction into the PonzICO invest method, PonzICO immediately balances that ETH to prior participants based on their current
proportion of ownership (minus my extremely minor, entirely fair 50% service fee).
Upon updating the balances, the new participant is added to the list to receive future
disbursements, and PonzICO dilutes everyone else’s stake accordingly. When they
are ready to receive their balance, they simply use the withdraw method. Preexisting holders can always put more ETH into PonzICO to reduce their dilution—
especially with the convenient reinvest method—at the cost of that transaction
being disbursed to current stakeholders. PonzICO elegantly distills an ICO to its
barest essentials, and this author believes it will prove more sustainable than any
other ICO on the market.7
Still confused? Not sure why, honestly it’s frightfully easy to understand compared to literally every other ICO white paper. But fine, let’s use our favorite sockpuppets Alice and Bob.
Suppose Alice is the first brilliant investor to PonzICO. She’s conservative, so
she sends a paltry 1000 ETH via the invest method.
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So long as every ETH holder participates at least once and Ethereum’s monetary supply remains
ambiguously infinite.

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AliceInvested
1000 ETH
Returned0
PonzICO Owned
100%

Josh
Incalculable Intellectual Energy
500 ETH
0% Because It’s His Gift To The Community

As the first investor, Alice now owns 100% of PonzICO, while the author takes his
modest fee—a mere pittance in the grand scheme. Now consider our second investor
Bob. Bob isn’t some weakass punk like Alice; he’s a real believer in the transformative
power of PonzICO. He sends 3000 ETH.

Alice
Invested
1000 ETH
Returned
1500 ETH
PonzICO Owned
25%

Bob
3000 ETH
0 ETH
75%

Josh
Incalculable Intellectual Energy
2000 ETH
0% Like All Those CEOs with $1 Salaries

Despite Alice’s complete lack of faith and her modest investment, she’s already madeher money back by collecting Bob’s full investment...minus the author’s very meager
fee as PonzICO’s symbolic Keeper of the Flame. But in the process, her stake wentfrom 100% to 25%, and Bob’s ownership went to 75%—a move that will surely
reward Bob in the future. At this point Alice could reinvest her returns to reduce
her dilution against Bob’s, but that’s up to her. In the mean time, PonzICO ismaking huge waves, and Carol comes along and invests a whopping 5000 ETH justto show Bob who the fuck is boss.

Alice
Invested
1000 ETH
Returned2125 ETH
PonzICO Owned
11.1%

Bob
3000 ETH
1875 ETH
33.3%

Carol
5000 ETH
0 ETH
55.5%

Josh
Incalculable Intellectual Energy
4500 ETH
Amazingly Still 0%

Alice has nearly doubled her investment, while Bob has nearly made his money back.
But Carol is in the lead for ownership stake, and her profits will surely make Bob andAlice’s gains look weak by comparison. The author continues to scrape by on purely
symbolic fees—but don’t weep for him, it is a simple pleasure to see his creation
prosper in this hypothetical world.
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The author will not dive into the details of the Solidity but rest assured it’s beenbattle-tested by his web-based IDE and formally verified (that it does, in fact, run in
the EVM). You can probably find the ABI somewhere if you’re really curious. The
main point here is that it works, and nary a token in sight but ether.
Lest you think the author does not believe in his beautiful creation, consider hisskin in the game. The author has put a significant portion of his ETH holdings into
PonzICO, constituting many trillions of wei, not to mention staking his considerable
reputation on this innovative endeavor. If you are concerned about the author’s
potentially lucrative fees—you shouldn’t worry. The author has graciously capped
his maximum fee disbursement to 100,000 ETH within the contract; after that, he’ll
have to participate in PonzICO just like everybody else. Additionally—to prevent
less sophisticated investors and encourage the most subtle tinge of pretension—
the contract requires at least 0.1 ETH investment per transaction, using a very
responsible AccreditedInvestor modifier.

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Anticipating PonzICO Critiques...is an irrelevant section, because there is absolutely nothing wrong with any of this.

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A Dedicated Section on What I’d Do With All
My Ether

Assuming PonzICO returns the maximum amount of fees to the author—a safe
assumption, given the many improvements over traditional ICOs—the author expects
to earn 100,000 ETH for his considerable efforts to reform the space. While the longterm value of ETH is uncertain, $1000 per ETH is a fair wild-ass guess. That would
place his gains somewhere south of $100 million.
In the name of full transparency, the author would like to outline his plans
for these funds. First, he’d exchange 70% of his ETH into a cryptocurrency witha monetary policy that doesn’t scare the living shit out of him. He’d keep 20%
in ETH just in case he’s completely wrong on the whole monetary policy thing.
With the final 10%, he’d invest in other ICOs because the VC-codified 70-20-10
10Pareto Hallucination haunts him like a ghost. After that, he’d probably get a Tesla,maybe a two bedroom condo in San Francisco, and (most expensively) a ticket
to Consensus. If there’s any money left (unlikely) he’ll focus on his considerable
blockchain research efforts, including the much-anticipated investigative follow-up
into Accenture’s shenanigans to make a “reversible blockchain.”[5]8Conclusion

The author proposed a continuous, tokenless ICO that dispenses with all the fanciful
illusions pervading the space. He demonstrated the soundness of his approach withselective history, a hand-wavy graph, tables, self-referential citations, and vague
commitments to show his smart contract code eventually. He anticipated no critiques
to this approach, and fully commits to ignoring critics who emerge on social media bylabeling them trolls. Still more honest than 99% of the hucksters who have trapped
us in this darkest-timeline dystopic token bubble.
Please contribute at https://ponzico.win/. In some seriousness, the author willview the fees generated from these disbursements as validation for his blockchain
satire, and your generous investment will undoubtedly encourage him to make more.
Don’t want him to make more? Fuck you.
PonzICO. With win as the TLD, you can’t possibly lose.8 If you’re long onother tokens, there’s absolutely no excuse for skipping on PonzICO.
8This claim has not been verified by any investment specialists, lawyers, or priests, but is thesole perspective of the author—who practically embodies the classic lone genius archetype.

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References[1] Cincinnati, ...honestly I may code this. Or write a sardonic manifesto. Both seem
productive, https://twitter.com/acityinohio/status/735251297494913026[2] Cincinnati, The only tokens that matter are native. Abstracted tokens are amirage, https://twitter.com/acityinohio/status/859159773077413888[3] Cincinnati, At its current rate of unbridled exuberance, Ethereum will lead to more
employed lawyers for post-ICO shenanigans, https://twitter.com/acityinohio/
status/860720787489136640[4] Cincinnati, One Card Instead of All Your Cards, https://www.youtube.com/
watch?v=0YjIrHZOwf8[5] Cincinnati, The Upside of the Internet: I Can Correct “The Downside of Bitcoin:
A Ledger That Cant Be Corrected”, https://medium.com/@cincinnati

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