Quantstamp is proud to announce that we have conducted a manual audit of the Interactive Initial Coin Offering (IICO) smart contract implementation by Modular Inc.

The IICO is a way to conduct token sales designed to improve fairness for contributors, and was detailed in a white paper written by Jason Teutsch and Vitalik Buterin, Truebit and Modular Inc. Modular Inc.’s implementation is meant to serve as a template for projects wishing to conduct a fairer, more transparent token sale using the IICO model.

Limitations of Traditional ICOs

Hard-capped ICOs:

A hard cap is a maximum amount of funds a project is willing to raise during an ICO. This helps potential contributors estimate the value of the tokens they are buying and thus the growth potential of their investments before they make a contribution.

A hard-capped ICO comes with the disadvantage of excluding potential contributors once the hard cap is reached. Popular ICOs using this model are often oversubscribed, which can lead to network congestion as contributors compete on gas fees to get in on the sale. Whitelists and personal contribution caps are used by some ICOs in an attempt get around these issues, but each of these approaches is less than ideal.

Uncapped ICOs:

In an uncapped ICO, there is no limit on the amount of funds raised, so anyone who wants to contribute has the opportunity to do so. In this model, contributors are only aware of the valuation (total raise) of a project after the tokensale has concluded.

Although anyone interested can participate in an uncapped ICO, participants have no idea of the value of the tokens they have bought, and thus no way to estimate the growth potential of their investment .

Interactive ICOs

Interactive ICOs aim to improve on these two models, allowing more people to participate, while still letting participants estimate the potential value of their contribution. This is done by giving potential participants the ability to retract their contributions if a project raises more funds than they are comfortable with.

Similar to an uncapped ICO, an IICO lets participants contribute as much as they want during the course of the sale, however they also have the ability to add a condition that their contribution is withdrawn if the IICO is estimated to raise more funds than the contributor may desire or expect.

This ability to set a personal project funding cap, as well as an initial period where contribution bids can be submitted or withdrawn, allows IICOs to provide a more fair and predictable process for participants.

Creating a Healthier Token Ecosystem

Quantstamp has audited Modular Inc.’s smart contract implementation of the IICO concept. Our audit has found no serious vulnerabilities, and we generally found the contracts to be well designed and written. We’ve also provided Modular with security recommendations for their consideration to improve safety for real world IICO deployments.

Here at Quantstamp, we take pride in enhancing the security of projects that were created with an aim to directly benefit the crypto community. By auditing the security of the IICO smart contracts, we hope to encourage more projects to use them to create fairer, more transparent token sales.

The

https://github.com/quantstamp/IICO_Review