Vitalik Buterin: This Is How I Eliminate ICO Scams


The Ethereal Summit is currently taking place in Tel Aviv, Israel. One of the more interesting panels was that of Ethereum’s co-founder, Vitalik Buterin. Titled “Q&A On Ethereum 2.0 With Vitalik,” the discussion revolved around plenty of things concerning the future of the network, including scalability solutions – Vitalik Buterin: “This Is How I Eliminate ICO Scams”.

Discussing one of the hottest trends in the past months, namely, Decentralized Finance (DeFi), Buterin touched upon a matter which concerned plenty of people since back in 2017: the unacceptable number of scam Initial Coin Offerings (ICOs).

Public Interest Projects: Appropriate Spin on ICOs

ICOs were a hot topic back in 2017 and throughout most of 2018. Yet, as it turned out, the majority of the projects failed to deliver on their promises and couldn’t develop and deploy the product they raised money for. Hence, why a lot of people consider them to be rather scammy.

Commenting on the matter, Vitalik Buterin proposed a solution made possible by the concept of decentralized finance – something that’s been getting quite hot throughout the past few months.

He refers to the solution as “public interest projects” and gives the following explanation:

What this is a spin on the ICO idea that I had one and a half years ago. So the idea is instead of projects having ICOs where people will just send them the money, and they, well, go away, you have a scheme where people put their tokens into a smart contract. […] The developers don’t just have access to the tokens, they can’t take them. Instead what happens is the money gets put in Compound, or some other interesting thing […] and then the interest goes to the developers.

In other words, instead of people blindly trusting a certain project, they’d lock their tokens into a smart contract. That money will then be deployed into a DeFi solution which provides a certain interest rate and that’s how the project will be funding its future endeavors.

The idea is rather interesting, mainly because it takes away the risk for investors. Since their money is locked in a smart contract, this eliminates the risk of the project running away “in Indonesia or something,” as Buterin said himself.

The Power of Decentralized Finance

Decentralized Finance is perhaps one of the hottest topics among the crypto community throughout the past few months and it’s catching speed fairly quickly.

The main concept is that traditional financial systems would leverage the decentralized nature of blockchain-based technologies, hence making said systems faster, cheaper, and, more importantly, globally accessible.

Commenting on the matter live at Ethereal Summit in Tel Aviv, Buterin said:

I’m very excited about that DeFi offers in principal. The idea that anyone, anywhere in the world can just have access to a system that lets them pay each other […] and basically lets them choose their own financial exposure is very powerful to me. That’s something that a lot of people just don’t have access to.

Yet, Buterin also warned that people shouldn’t be heavily encouraged to put their money in DeFi protocols mainly because they are still untested and have a non-zero chance of failure.

ICO Scams

ICO Scams – A couple of years back, the term “exit scam” became synonymous with the crypto industry. This was at a time when the market (at large) was replete with a number of cash grab ventures that looked great on paper but had little to no substantive value to back them up.

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