GEMS’ Radical Approach to Investor Discrimination

Thanks to its true disruptive potential and much, much speculation, the crypto world has grown so fast that it is often very difficult to tell hype from value, with widespread misinformation threatening its stability. Nevertheless, in the desert of ICOs specifically designed to target misinformed investors with flashy designs and large discounts, there still are some hidden gems. This piece is about one of them and how its investor discrimination approach is what the crypto world needs.

In summary, GEMS is a decentralized protocol built on top of the Ethereum blockchain that makes microtask crowdsourcing:

· Cheaper by cutting out the middleman and connecting work “requesters” and workers directly

· More efficient by having workers stake a portion of their GEMS tokens to certify the validity of their work

· More inclusive by removing the need for financial intermediation for payments, allowing the unbanked to participate

If you want to learn more about the project itself and its stellar team, I encourage you to read the whitepaper and join the GEMS telegram.

Before talking about GEMS’ radical investor discrimination model, I will give an overview of the most popular model used by other blockchain projects. I find this to be an important feature to examine in any ICO as it says a lot about the intentions of the team and its attention to the community it’s trying to build.

No Discrimination (Uncapped Sales)

The model of uncapped token sales might have been effective in the past (Ethereum is a great example) when the crypto community was smaller, more educated and with a much longer-term orientation. Now that ICO investment size and the number of unreliable ICOs grew exponentially, uncapped sales represent in most cases a red flag for current ICO investors as they imply that the team is simply trying to raise as much money as possible.

Finger Speed

This model provides no discrimination other than how quickly the investors are able to send their ETH to the token sale address. High demand capped sales such as the Status token sale in June are problematic as they tend to clog the Ethereum network and potentially allow a single investor to obtain a high stake in the network, going against the objective of decentralization of tokens (the BAT token sale is an example).

Investment Size

This model has become particularly common in the recent months and is typically exemplified by ICOs which sell out in pre-sales with minimum investment requirements and ICOs which give disproportionate discounts to large buyers. By selling primarily to large buyers, teams fail to achieve a widespread distribution of tokens whereas by providing big discounts they fail to align incentives within the community (large buyers are incentivized to dump their tokens at the expense of the small buyers). These models are often designed by teams who do not understand or care about decentralization as much as they care about securing investments and should be regarded as red flags.

Early Interest

Some projects such as Kyber Network decided to discriminate investors based on early interest. The idea is to cut out last-minute speculators and benefit the more educated and informed investors, representing a step forward in terms of promoting a more educated community. Early interest is usually proven by registering in a whitelist within a deadline.

GEMS’ Active Contribution Model

The discrimination model adopted by GEMS brings the “Early Interest” model one step forward. It requires investors to actively contribute to the project and the community with new ideas and constructive discussions to be able to participate in the token sale. Among the ones discussed, this is clearly the model which embraces the decentralization narrative at its fullest, by onboarding members that are able and willing to have an active role in the empowerment of the community.

Final Consideration

A team that can afford to ask perspective investors to bring an active contribution and gains such traction in so little time is already a very positive sign (4000+ telegram users in 14 days without even announcing any ICO detail). What I find the most exciting, however, is the perspective of many other good projects adopting a similar model in the future. In an investor ecosystem driven by disinterested speculation, pump signals and memes, this radical approach towards more informed and active investor communities is what we need in order to shift back to the right direction.