The entry of Initial Coin Offering into the business sector was phenomenal. With the success stories of several entrepreneurs who raised funds to launch new business models and blockchain-based decentralized applications, the concept of ICOs has grown into a revolution. However, This market with a heavy flow of capital attracted fraudsters who want to become overnight millionaires. The influx of fraud ICOs has made wary of every ICO investors, and they become reluctant to invest even if it is for a deserving cause. These are a lot of odds against the genuine and creative minds who are trying to change this world through decentralized applications.
The only way to save the concept of ICOs is to cleanse them from the hands of scammers and empower ICOs to overcome the high failure rates. By doing so, founders can regain the trust of the ICO investors and can bring back the excellent reputation it once had. Though it sounds effortless, making it practical is a big question.
General Tokenization Manifesto proposes a standard conduct ICO and STO to empower the ICO community to be self-policing so that the problems faced in the ICO domain today, such as scams and high fail rate of ICOs, can be solved. This whitepaper introduces the Milestone contract fundraising methodology, letting investors decide when funds will be released to the offerers/promoters. According to the authors, this methodology can solve exit scams happening in the ICO domain. In a milestone Contract token sale model, the funds raised with the ICO will be locked in a smart contract called the milestone contract or a third-party custodian. The contract releases the funds based on the completion of each milestone as pre-defined in the smart contract. The underlying idea is that the founders need to meet the milestone goals in their project to receive the funds raised in ICO.