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How to run a second ICOs and keep the supply* the same

September 28, 2017
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Storj is developing a next-generation cloud storage solution. They ICO’d on 19 May 2017 but they actually did one prior on the 18th July 2014. This is a summary tracking the supply of the old tokens to the new tokens.

Executive Summary

  • Total initial supply 500M
  • *The supply was actually reduced in the second ICO by ~75M as a sweetener.
  • Current total supply: ~425M
  • Distribution model? They’re working on it.

A closer look.

Here is a link to the original “crowdsale”.

Total Supply: 500,000,000
Distribution: 70% bitcoin sales, 15% for developers, 15% for the community

They accepted bitcoins and used Counterparty to create and manage the SJCX tokens.

  • Note that in their second ICO they did a conversion to ERC20 tokens. ie they used the Ethereum platform instead.
  • Reasons for  this change: 1)  Bitcoin fees were too high. 2) long transaction confirmation times.
  • The conversion from SJCX to STORJ was done on a 1:1 ratio.

They ended up receiving 910 bitcoins to this address 132aBrspLgL54cm9eQfGNFLGqXwBRQrugc worth ~$460,000USD. Bitcoin back then was around $500USD!

This meant that 910 btc x 38,500 stjx/btc = ~35M tokens created.

There were a lot of people on bitcointalk wondering what would happen to the rest of the tokens. Some said that Storj would be keeping the rest hence owning ~80% of the supply! ((350-36+75)/500). Some argued it was 90%!

What I’m yet to figure out is how the supply increased from 35M to 41M around 8th November 2014 and why the “remaining 350M million are idle at the moment“. 350M is the max supply available for the token sale (70% of 500M). The remaining tokens for sale should be 350M-41M = 309M.

Then before the second ICO, the SJCX tokens in circulation increased to 51M. This can be verified from this service obtained from their FAQ’s page. Again, not sure how this happened.

Bring on round 2

Storj released 2 migration plan statements.

The statement in part 2 tried to make this second ICO fair so as to not dilute initial investors in the first ICO. This is an interesting scenario because SJCX was already trading. It was $0.46 on Poloniex on 11 May, 8 days before the ICO.

The details of the second ICO can be found in the bitcointalk link here along with the Terms of Token Sales.

The planned raise of $30M at $0.50 meant around 60M tokens were to be created. The actual figure was 72M due to the discount offered in the presales. There is a great FAQ here.

Bitcoin and ether were both accepted. There’s a mini running commentary here.

To make matters more confusion, Storj stated in it’s part 2 migration plan:

In order to incentivize our supporters to participate in the sale, we will be burning one token from the outstanding reserves for every token sold in the sale.

This resulted in 75M STORJ being burned or destroyed bring the total supply down from 500M to ~425M. Here is the proof of the 75M STORJ being burned.

Note that all SJCX coins will be burned as well. ie destroyed. The way this occurs is to send these coins to an unspendable address.

Sales Summary

Here is a great summary of the token distribution and it’s status.

Notes:

  • The ~75M burned reduces the supply from 500M to ~425M.
  • The actual number of tokens sold in the second round ICO was 72M.
  • Only 29.35M of the 51M old SJCX have been claimed to date.

Distribution model?

The remaining supply held by Storj at the conclusion of the sale, burn, migration deadline, and not used as strategic reserve will be time-locked for no less than 6 months. During this time Storj will seek to develop a more transparent reserve management structure which may include programmatic distribution and/or a neutral foundation to help manage and support the ongoing growth of the Storj ecosystem.

From Token Migration Plan Pt. 2

Controversy

There are some questions around the price of the tokens during the presales. Especially around the $0.30 price. I haven’t quite figured this one out yet.

$30M was raised at the various prices indicated. The only way to make the maths work is for $0.30 to be presales 1 month price. (Note: I’ve assumed the presales no lock price was $0.50).

Summary

It is not a straightforward process to try and understand what the token supply is or how it is distributed. It is made even harder if there is a second ICO and a sweetener is added to reduce the supply. At least know everyone should now know the ball park and use this as a basis for further research.

Further references

  • https://www.reddit.com/r/storj/comments/6djvlz/sjcx_and_storj_a_faq/*
  • https://urbancrypto.com/storj-ico-preview/

* Storj Labs has promised to burn 1 additional SJCX for each STORJ sold during the crowdsale. is inaccurate. It should read: “Storj Labs has promised to burn 1 additional STORJ for each STORJ sold during the crowdsale” To avoid confusion with the old coins.

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