We need resources and attention to build engines ready for production, not the fuel — money and hype — to launch our prototypes to the moon At VariabL (formerly StabL — proper announcement will follow in the coming weeks), we have decided from the very beginning to avoid classic ICO models for raising funds and generating hype. We believe that a token launch at a large scale would mislead investors into believing that our promising, yet early-stage project has solved its main challenges. We are realistic in our research and goals, and wish to promote transparency between our expectations and reality. We have been working for more than 1.5 years on stable tokens and derivatives with the StabL project, Our objective has been to steadily build a mechanism for such stable tokens, through iterative development based on market feedback, validating and adjusting the many legal, technical, and market assumptions we make in our private white paper. To be intellectually honest, the VariabL team cannot, as of today, commit firmly to a solution that would be extensively described in a white paper, as it would rely on too many assumptions regarding evolution of the technology, market validation, and the regulatory environment. With this focus on constantly iterating on our product, we have encountered challenges many other blockchain entrepreneurs will face. By deploying our VariabL derivatives trading platform on testnets and running alpha tests, we were able to gain insights from traders. Our incredible community identified problems we had previously overlooked, enabling us to refine our product and adapt accordingly. We believe that the real value of a project is not of an idea or a theory; it emerges through the team’s ability to formalize and iterate on complex concepts and to learn with trial & error. This includes testing different models, listening to feedback, adapting accordingly, and moving quickly.

To accelerate the development of projects like ours, we need a skilled and focused community of contributors that will enable us to learn and prove faster. Martin’s tweet reflects our opinion that projects using cutting edge technology need more skills and knowledge than money. Also, focus is critical, as the infinite curiosity of the ecosystem begets too many rabbit holes. Our needs there consist in a focused, skilled and well coordinated community that shares our values and challenges our vision: users, advisors, testers, bug hunters, smart investors, engineers, economists, financial analysts, hedge fund managers, field experts, entrepreneurs, marketers, and designers. The true value of tokens for Early Projects: Coordination The well-known Ethereum tokens sold during crowdsales are products that give owners access to services (like a membership or an API key), ability to work in an ecosystem (like a working permit) and/or to invest in a project : in this respect, I will call them utility tokens. But today, the services accessible through these utility tokens are not yet available. In practice, the only use case of those tokens today is speculation and investment. However, for the project and its community, these tokens already have an underrated value that should be emphasized: they form an incredible coordination tool. Tokens offer one of the best way to help coordinate and assign a value to the attention and resources devoted to a problem. Under the current implementation, people who own tokens can dedicate resources (time, skills, money) to the underlying project. Each contribution increases the value of the project, including its tokens and ecosystem. Though tokens mainly attract long-term investors and short-term speculators, the projects gain a handful of early adopters, enthusiasts, contributors, and smart money; these latter personas are the types of stakeholders we believe early-stage projects might prefer and benefit more from. However, current models for token distribution do not maximize the coordination effect of tokens — on the contrary, one could say that this effect is almost achieved by chance. Current ICO projects focus on the wrong things: attracting mainstream money and hype by hiding the hard challenges. Through tokens sales, ICO projects receive one specific type of resource — money — and a specific type of attention: speculation. This is due to the way tokens are promoted, valued and structured. Bad token designers only intend to attract mainstream investors and fill their bank accounts, which is not only unethical but also strategically dangerous. Tokens Fundamentals are more speculative than they look… The fundamental value of most of the tokens is based on their utility, yet owners still can’t use them, and token owners can only speculate short term or hold them in hope that they appreciate. They put their faith in narrative white papers that are in line with current hype trends and hugely ambitious in their promises. The main metric used today to value decentralized applications is the team’s ability to formalize and sell a theoretical protocol, its token distribution policies, marketing efforts, big announcements. It is not rare to see papers with no risk analysis, no technical roadmap, no legal strategy or working prototype. This tweet reflects the sentiment that what actually matters is the team’s ability to test, implement and learn as opposed to having an original idea and a good theoretical formalization of it. Token Issuance structure is not that important when nothing in production. When reading up on ICOs, it is clear that everything is set so that the token distribution appears interesting to investors, as if these tokens were stocks of mature projects with low uncertainty. As an example, early adopters who buy into this network effect are guaranteed to not be diluted — what is the real value of this kind of engagement for the project ? From a technical point of view this premature need is presented as a requirement to create a network effect, improve efficiencies, and maintain the effect on the service offered. But most of the time these networks are not yet in production. As a result, the effort spent on scaling and maintaining these networks through network effects and strict token issuance models may not be appropriate. A focus on developing the actual underlying product should be preferred. Current ICOs are often unethical for buyers Market manipulation

The promise of value in platforms built on nascent technology is very speculative and mainstream token buyers do not necessarily have the tools to understand what they are buying. Additionally, token markets have low volumes and the sale of those tokens is not regulated, which allow wealthy players to manipulate prices. The trading game around these tokens is not always fair, to say the least. No legal guarantee on the implementation of the project

The speculative nature surrounding these projects’ promises of utility also clouds the legal terms and contractual obligations for teams to deliver. In other words, the token value, which is tied to future utility, is directly derived from the team’s ability to deliver — but the legal terms of most of the sales indicates that they are not required to do so! Most token sales are indeed structured as “donations”; which is not in line with the expectations of the tokens buyers… Current ICOs generally attract wrong audience and collaborators. Community is noisy, fragmented

Short-term speculators, long term investors, wealthy market manipulators, tech enthusiasts, development teams, etc. — hold different beliefs and expect different returns on their tokens. A community coordinated via publicly sold utility tokens is fragmented, even though tokens should be used as a powerful tool to coordinate a community around a common goal, the long-term success of the project. They own part of the Brand and Identity, but sometimes they behave more like parasites than partners. It is okay to choose your partners, everything doesn’t have to be open and public.

Once a community has been formed, you have to manage it. But when a large community has incentives that are not in line with your goals, the stakeholders spoil resources collected and little value is actually created. Most investors are passive

Long term investors and funds invest in portfolios of tokens to gain exposure and diversification to the ecosystem. Short term investors look to profit from an under-regulated public market. The people investing resources into these projects artificially create momentum and their contributions are solely reduced to capital. Token sales exclude important collaborators.

Because money is the only way to gain ownership of tokens, many people who’d like to contribute other resources are excluded. This means that talented people who are not willing to trade speculative assets are de facto excluded from participating to the coordination game and lots of potential talent is lost. It is true that bounties and rewards paid out in tokens exist, but they remain a secondary aspect, often flooded by speculation. Current ICOs have bad strategic impact Teams are tied to a specific solution

Describing a detailed solution on a paper is important to the initial development and validation of a hypothesis. However, we believe that the team should not commit to a solution, especially when they have not formalized their main hypothesis and detailed a clear plan to test them unless they believe inflexibility and inability to adapt based on validations will help them succeed. With ICOs, the company’s business model is based on overgrowth and is ultimately unsustainable The problem of over funded companies is well known. Starting with too much money and little market validation is dangerous — there might exist deep flaws with the project that have not yet been exposed. The DAO is a good example of how easy it is to be blinded by inspiring theories. We believe that a market validation on the short term is the best way to determine the viability of the product under current market conditions and we are committed to bring real value to our customers; we do not feel that we need 50 millions dollars upfront to achieve this goal. Liquidity often means focus on short term

Tech startups do not immediately organize IPOs. Not only because IPOs are difficult to set up but also because being private allowed startup heads to choose their partners and remain focused on a common long term goal, incentivized by illiquid equity. On the other hand, with ICOs, liquid tokens allow for any contributor to leave. In a way, having liquid tokens is not appropriate when an early-stage project needs a community of focused partners. Legal issues will arise

Since there are very few regulations around these new forms of capital structures, the best we can do to make sure to avoid legal issues is to remain ethical and maintain a private relationship with investors. It is not just to protect investors and be ideologically transparent and honest; it is also important for the business itself to remain protected against future sanctions from regulators.