ALL CAPS GREAT AND SMALL — WHAT WORKS BETTER?
Tags: Token Sale, Finance, Ethereum, Cryptocurrency, Blockchain

We have been asked why our project is not going for much larger amounts with its TGE. With the hard cap of $3,4 million, the X8 project can hardly be called overly ambitious in the crypto landscape. Let us look at some recent projects with larger and smaller hard caps.

SMALL VERSUS LARGE

One of the largest project raised $232 million in XBT and ETH in July this year. Initially the planned amount was $10 million, which raises the question of why this substantial jump? As the project founders explained, they raised the cap because of the positive response to the project and the rising price of cryptocurrencies in 2017. Basically the cap was raised because it was possible to raise it and not because the costs were grossly underestimated. Soon after the successful token distribution the project was marked by internal strife about the alleged misrepresentation of the team member’s bonus. Matters of internal governance seem to be preoccupying the project at the moment, delaying the delivery of the product at least until February next year. A project of questionable future. No names, no pack drill, but this particular project was hit with its third class action suit only just this week.

Another major project — EOS — took place in June 2017. It is still ongoing as it was set to last almost a year. By September this year $185 million in ETH had been gathered. The project’s token started to trade on exchanges in July this year. The team keeps the proceeds of the first block of the distribution procedure. Their mode of distribution includes flexible prices and amounts divided into several blocks. US citizens are restricted from contribution. What stands out in this project is the absence of a hard cap in monetary terms, which leads to one obvious question — how will excess funds be handled?

The common denominator of the above-mentioned projects is the absence of the precise fund distribution and purpose. Tied to this is the question of overvaluation.

Neblio completed its token generation in August 2017. They raised a little less than $1,5 milion. Their model was raise first, develop later. It seems they are managing to develop their product in accordance with the business plan. Their token is being successfully listed on new exchanges and it has appreciated around 300% since its issuance. It ranks 138 in market cap.

Metalpay issued their tokens in June this year to an amount of almost $1o million. The team took a bold step and decided not to release any roadmap for the project, which makes it impossible to say how well they are doing according to their own schedule. It is clear the team is developing a long-term story and has already delivered a fungible platform. The token ranks 75 in market cap having appreciated around 400% since its launch.

The last two projects have in common a modest cap and long-term commitment. It would seem that such smaller caps are likely to inspire trust with contributors to the point where they are ready to forgive the team the absence of such prominent project items as a roadmap. Smaller caps deter the pump and dump mentality and inspire confidence that the team is interested in long-term development. Contributors are also more likely to find their tokens lucrative in the long run, beyond the hype of the moment.

THE X8 PROJECT IN CONTEXT

The main factor why we have chosen a hard cap on the smaller side is the potential we feel our X8X token contains. We are speaking about the future when institutional players will start entering X8C. It is no secret that institutions are getting ready to tackle the crypto world. Disparaging words by Jaime Dimon of JP Morgan are offset by Goldman Sachs’ intention to set up trading operations with cryptocurrencies. This author even dares to suspect that the majority of negative rants about the crypto world by big players are attempts to drive down prices and thus enter crypto trading at a lower cost.

Banks, insurance companies, ETFs, pension funds and mutual funds are all eyeing crypto, be it because of the pressure of their clients or because of the attractive gains. Volatility seems to be the biggest drawback to their engagement. Which is great news for X8C as it will be recognized as the most stable performer in the markets. We are confident no entity concerned about portfolio risk management will be able to overlok it once its movement is regularly charted and available. We don’t expect this to happen overnight, though.

What does this mean for the gatekeepers of the X8 project, the contributors to our TGE who will hold X8X at the time? Institutions trade in considerable scales and there will be no way around the utility tokens for them. The larger the amount entering X8C, the smaller the relative amount of X8X tokens required. So, the gatekeepers will be able to price in additional value because those entering X8C on an institutional level will be able to afford it. This is explained in more detail in our blog post about the utility token business model.

SUMMARY

The latest developments in the crypto landscape make one query the strategy of collecting all the funds before the finalization of the product. Collecting hundreds of millions in ETH is no doubt very tempting to the team members as a relatively small amount can make you financially free for the rest of your life. We believe that it is more sensible for contributors to pick projects with smaller caps that display a capability of transparently building on the collected funds.