The EOS ICO starts tomorrow and boy does it have me feeling like an idiot.  Really, either they are full of crap or I am an idiot. I am not one to claim to understand the technical aspects of the blockchain beyond a beginner level, but I have been following and writing about Initial Coin Offerings and their structures and this one has me scratching my head.

I apologize in advance as I am going to be quoting content from the Whitepaper and terms of coin purchase for the ICO, but feel free to skip to my comments if you like because most of what I quote will be crap.

EOS – What They Have to Offer

I will quote two parts of the whitepaper here and I am going to assume that what they are telling us is the truth.  I am not saying that the technology that they claim they can provide is not achievable.  So here is the abstract from the beginning and the conclusion of the whitepaper:

“Abstract: The EOS.IO software introduces a new blockchain architecture designed to enable vertical and horizontal scaling of decentralized applications. This is achieved by creating an operating system-like construct upon which applications can be built. The software provides accounts, authentication, databases, asynchronous communication and the scheduling of applications across hundreds of CPU cores or clusters. The resulting technology is a blockchain architecture that scales to millions of transactions per second, eliminates user fees, and allows for quick and easy deployment of decentralized applications.”

“Conclusion: The EOS.IO software is designed from experience with proven concepts and best practices, and represents fundamental advancements in blockchain technology. The software is part of a holistic blueprint for a globally scalable blockchain society in which decentralised applications can be easily deployed and governed.”

From what they are saying in the abstract and conclusion, they have a real project that may revolutionize the blockchain in the future.  By the way, the whitepaper was not written for the average Joe as I couldn’t understand most of it. (But like I said, maybe I’m just the idiot.)

TOKEN PURCHASE AGREEMENT

Here are a few quotes from the token purchase agreements with my quick thoughts in-between.

“EOS TOKENS HAVE NO RIGHTS, USES OR ATTRIBUTES. The EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS Platform. The company does not guarantee and is not representing in any way to Buyer that the EOS Tokens have any rights, uses, purpose, attributes, functionalities or features. Company will have no control over when, how or whether the EOS.IO Software is adopted or implemented, or how, when or whether the EOS Platform is launched.”

So let me try and understand this, you are asking me to purchase tokens in a project that will revolutionize the blockchain world, but the tokens have no rights, purpose…..  Also, by the way, don’t forget that the company makes no claim as to whether or not the platform will ever be launched or implemented.  Let’s read on:

“NOT A PURCHASE OF EOS PLATFORM TOKENS. EOS Tokens purchased under this Agreement are not tokens on the EOS Platform. Buyer acknowledges, understands and agrees that Buyer should not expect and there is no guarantee or representation made by Company that Buyer will receive any other product, service, rights, attributes, functionalities, features or assets of any kind whatsoever, including, without limitation, any cryptographic tokens or digital assets now or in the future whether through receipt,”

Sounds like more protecting the company from the buyer expecting anything, just in case nothing comes of the project.  So far sounds like a great plan.

Acceptance of Agreement and Purchase of EOS Tokens
(Please excuse the CAPS, that’s how they wrote it.The Bold is mine)

“Article 1: ACCEPTANCE OF AGREEMENT AND PURCHASE OF EOS TOKENS

Buyer acknowledges, understands and agrees that Buyer should not expect and there is no guarantee or representation or warranty by Company that: (a) the EOS.IO Software will ever be adopted; (b) the EOS.IO Software will be adopted as developed by block.one and not in a different or modified form; (c) a blockchain utilizing or adopting the EOS.IO Software will ever be launched; and (d) a blockchain will ever be launched with or without changes to the EOS.IO Software and with or without a distribution matching the fixed, non-transferable EOS Token balances. Furthermore, EOS Tokens will not have any functionality or rights on the EOS Platform and holding EOS Tokens is not a guarantee, representation or warranty that the holder will be able to use the EOS Platform, or receive any tokens utilized on the EOS Platform, even if the EOS Platform is launched and the EOS.IO Software is adopted, of which there is no guarantee, representation or warranty made by Company.”

So there is no guarantee that the software will ever be adopted, that I can understand as many ventures don’t succeed. But, if it is success full then there is no guarantee that your tokens will allow you to utilize the platform.  Again, I am really sorry if I am missing something, and I must be as I am confused.

“Article 3: NO OTHER RIGHTS CREATED

3.1. No Claim, Loan or Ownership Interest. The purchase of EOS Tokens: (a) does not provide Buyer with rights of any form with respect to the Company or its revenues or assets, including, but not limited to, any voting, distribution, redemption, liquidation, proprietary (including all forms of intellectual property), or other financial or legal rights; (b) is not a loan to Company; and (c) does not provide Buyer with any ownership or other interest in Company.”

So what do the tokens represent?  If the whitepaper was clear on that, maybe I wouldn’t be so confused.

This may be my favorite one:

6.2. No Representation or Warranty. (A) COMPANY DOES NOT MAKE AND EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED OR STATUTORY; AND (B) WITH RESPECT TO THE EOS DISTRIBUTION CONTRACT, THE EOS TOKEN CONTRACT AND THE EOS TOKENS, COMPANY SPECIFICALLY DOES NOT REPRESENT AND WARRANT AND EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION, ANY REPRESENTATIONS OR WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, OR AS TO THE WORKMANSHIP OR TECHNICAL CODING THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT.

Just in case we haven’t already mentioned that you have no rights, claims, etc, anything that may have seemed like a representation is not and don’t think that you have any rights at all.

EOS Token Sale

So here are the terms of the token sale taken from EOS’s documentation, which will last for 341 days with no price quoted per token!

EOS TOKEN DISTRIBUTION

The EOS Token Distribution will take place over 341 days starting on June 26, 2017 at 13:00 UTC. One billion (1,000,000,000) EOS Tokens will be distributed according to the schedule below:

1. 200,000,000 EOS Tokens (20% of the total amount of EOS Tokens to be distributed) will be distributed during a 5 day period beginning on June 26, 2017 at 13:00 UTC and ending on July 1, 2017 at 12:59:59 UTC.
2. 700,000,000 EOS Tokens (70% of the total amount of EOS Tokens to be distributed) will then be split evenly into 350 consecutive 23 hour periods of 2,000,000 EOS tokens each beginning on July 1, 2017 at 13:00:00 UTC.
3. 100,000,000 EOS (10% of the total amount of EOS Tokens to be distributed) will be reserved for block.one and cannot be traded or transferred on the Ethereum network.

At the end of the 5 day period and at the end of each 23 hour period referred to above, the respective set number of EOS Tokens set forth above will be distributed pro rata amongst all authorized purchasers, based on the total ether (“ETH”) contributed during those periods, respectively, as follows:

20 EOS Tokens are available during a period.As an example:

1. Bob contributes 4 ETH and Alice contributes 1 ETH during the period. The period ends.
2. As a total of 5 ETH were contributed for 20 EOS Tokens during the period, 1 EOS Token will be distributed for every 0.25 ETH contributed. Therefore, Bob receives 16 EOS Tokens and Alice receives 4 EOS Tokens.

If an EOS Platform adopting the EOS.IO Software is launched, the default EOS.IO Software configuration developed by block.one will lock new founders tokens distributed pursuant to such EOS Platform in a smart contract and release 10,000,000 (10%) of such tokens to block.one at the end of each one year anniversary of the genesis block over a period of 10 years. The EOS.IO Software configuration of the EOS Platform will be ultimately determined by a third party who initializes a genesis block and starts the EOS Platform.

My Conclusion

In Summary, I have no idea what is going on.  The project and technology truly may be the best thing we have seen in decades but what has been represented and explained leaves me feeling like an idiot.  I hope its them not me.:-)

Resources

Website

Whitepaper

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