Before you decide whether to buy into token sales, it’s important to understand what you’re getting. Only then can you evaluate the risk you’re prepared to take. Here’s 10 takeaway points about Ether.Camp’s sale.

If you only want the TL;DR, just read the bits in bold.

Ether.Camp have already run successful events and projects.

Ether.Camp’s strength is trying to create a community of users around and within startups. They’ve earned a lot of good faith within the community for this, and other projects, so have done far more to earn ‘credit’ than other recent crowdfunders. Ether.Camp are not trying to raise $50m

Contrary to how it may appear, the $50m thrown about is not a target but a limit. According to Ether.Camp, it’s for safety. However, this is far higher than the recommendation of the Ethereum Foundation IIRC therefore calling it a safety feature is a mistake and it’s obviously mislead people. Ether.Camp is for any startup, including Rootstock and non blockchain companies.

This is not an investment in the Ethereum space. In fact, the whitepaper says “Year 2016, we are starting the Virtual Accelerator (VA) to provide transparent and true acceleration to blockchain developers around the world” and a Slack response yesterday goes further: “Romanj: @keat we very much want to see people from different places joining hackathon, naturally the crypto guys were first to know… but any startup innovative idea ia very welcome”. This is not a bad thing — it gives Ether.Camp longevity. However, it should be clearer. Ether.Camp receive the money, not the startups.

The funding only goes to Ether.Camp. None of it goes to the startups other than via prizes or to a decentralised system. Note that prizes can also potentially come from sponsors. In essence, the fundraise is for Ether.Camp to run a set of online hackerthons using their framework. There is no discussion of how the exchange rate risk will be handled and how much regular currency (e.g. USD) is required for operations. Read the whitepaper. It won’t take long because it’s incomplete.

One day before the sale and “// TODO: add source code” is still prevalent and there’s a lack of detail throughout. Be aware that the crowdsale will be funding its own design. Understand how the HackerGold token works and how it may or may not provide an ROI.

The token is given to startups in exchange for the right to vote against an expenditure request. The donor receives a token from the startup. This token is undefined. Note that startups (DSTs) cannot just issue tokens. Token issuance (unless Kickstarter reward style perhaps) needs to be carefully planned and with lawyers engaged, because of securities law, security, gameability, and use case. I can see the token may have some value given good startups but it’s very hard to say how much because of the definition issue. HackerGold may have design flaws with regard to voting rights.

If I understand correctly, the current design allows for startups to pay themselves HackerGold, thus allowing them (unknown to others) to control the expenditure blocking vote and the team impeachment vote. This would be near impossible to spot or stop, thus rendering the vote design critically flawed. It’s particularly important because the vote will also control those investing ether after the camp. In addition, there is no discussion on how impeachment could actually work, what happens to funds prevented from being spent consistently, or discussion of the voting success rate (even the dao allowed this to be changed). Requiring 55% of the vote to block expenditure will inevitably break down at some point, even for bad actor companies because eventually people will get bored. I feel these problems should have been fixed before a crowdsale as they’re quite fundamental. Kudos can be Sybil attacked.

Kudos are the voting system used in Ether.Camp and are directly tied to prize money. Anyone can vote — it appears unrelated to HackerGold. The voting system is trivial to Sybil attack. In the AMA, Roman suggested they would throw out companies they see doing this. However, 1) hard to spot, 2) hard to conclusively prove, 3) an easy way to get another team thrown out, 4) what happens to the HKG people gave, 5) who is responsible. As we all know, voting systems are hard. In this case, however, we already have a set of judges so the simplest solution (and there will be better) is to use Kudos only as a signalling mechanism and let the judges decide. Since Kudos are not directly related to the crowdsale token, they can easily be fixed later. There is no published business model for Ether.Camp.

HackerGold value relies on the continued existence of Ether.Camp but there is no business model published beyond the crowdfunding. If Ether.Camp are awarding prizes, they could be taking equity or some tokens IMV. This is actually better for everyone who invests in HKG as Ether.Camp need to be sustainable. Ether.Camp is a traditional uncapped (effectively) token sale.

Similar to other crowdsales in this respect.

In conclusion, the Ether.Camp project is one I support, the crowdfunder in present form not so much. It’s being rushed in the face of others from lesser known companies who have lowered the bar of expectation rather than raised it (post DAO). This may all work out in the end but I genuinely wish Ether.Camp would have given this more time.

Tomorrow I may launch AlexCoin. Next week I may even tell you how it works.

/Sarcasm