An Open Framework for Self Correction for the ICO Marketplace

Abstract

ICOs look like securities, waddle like securities and quack like securities; however, ICOs have one particularly interesting advantage over IPOs. They exist in a community that favors openness. This means that sufficient transparency can lead to adequate data to analyze ICOs for possible volatility. This would of course be a tool for due diligence; but it might also stave off the probability of impending regulation. Being able to boast an existing platform for self correction would be a much more favorable outcome. This might also provide risk management measures that might make intentionally risky ventures more difficult to initiate. This could result in a relatively large degree of self correction in the ICO culture as a whole. What this all seems to boil down to is how brokerage is to be dealt with: with more community oriented methods.

Volatility:

There has been a history of lessons learned with securities exchanges that have been left to their own devices. These lessons are being relearned with ICOs in current times. V.C.s have sternly warned of over speculation in the ICO marketplace; and the outcomes are vindicating them. It’s very clear that volatility has become a serious issue. There is plenty of competition in privatized ratings; however historically it’s been very corruptible, not only in spite of competition, but also because of it.

Risks of Regulation:

Large numbers of highly speculative and / or fraudulent ICOs that result in court cases or even investigations is likely to promote government regulation. This is probably considered an unfavorable outcome for those interested in ICOs; as it is intentionally a securities market for the people. Government regulation is in essence a large loss; as part of it is taken away. The culture taking responsibility in the nascent stages, building tools, platforms and communities to mitigate risk and thus volatility in the market might be a possible way to keep ICOs as securities for the people.

Distributions of Interest and Aptitude:

One of the main advantages of distributed intelligence is the variety of skills that it employs. One of the disadvantages for ventures is that it limits interest and aptitude to a small percentage of a population. This also limits the amount of wealth that can be redistributed via derivatives. Solving this issue could have many favorable effects. For instance, if there were an open platform for analyzing and sharing data about specific ICOs and a rating of sorts, then the marketplace might be more accommodating to more patronage. This might allow the average person to more easily invest in the things they care about; for instance, green technologies etc.. This could result in added coherence and representation in the economic system itself.

An open community working on the possible and probable issues is likely to employ a wide variety of skill sets toward solutions via distributed intelligence. This might result in the creation of a host of resources for not only mitigating risk, but also solving issues such as ease of access, solving emergent issues or even creating novel implementations of the technology. It doesn’t necessarily need to be focused on maintaining the technology.

Community Rating Services

Data Sharing:

This would require that ICOs be transparent with their statistics. Where this is not the case, it could effect their rating. This shouldn’t be a problem if it’s properly anonymized statistical data where more potentially sensitive data is needed. This would probably be edge cases though. Of course personalized data shouldn’t be openly shared. Analysis would probably entail searches for flags like spikes in token prices; meaning sharing of token price history, the value of which is obvious. It might also entail partnerships and their ratings as well. The main objective however is for the community to work out what is useful. An open ended model is likely to be more agile with respect to emergent dynamics.

Instrumentalism vs Proceduralism:

Those in the community that are more knowledgeable and insightful with respect to due diligence, who wish to help rate ICOs, would be an Epistocracy of sorts. It stands to reason that the more knowledgeable of the community be tasked with it. This Epistocracy would also have to be an institution that is somewhat self correcting as well. Instrumentalism and Proceduralism may in fact be a false dichotomy where they can be played off of each other.

If there were a way for patrons of such an institution to rate their performance, it might create an environment of checks and balances. This might promote proficiency in the Epistocracy. Of course there is always a chance for signal noise or even fraudulent ratings. This would probably require a bit of care in creating the rating systems; or in more extreme circumstances, maybe even the patrons themselves could carry some sort of rating as well. The latter may not be an entirely favorable solution though.

Providing questionnaires that are created by consensus, which ratings are then derived from, when a patron wishes to rate their experience with a rating service, might be a method for consistency in ratings. It might also help to mitigate signal noise; by giving ratings services the opportunity to contest individual data points. There may be much more effective ideas that surface via the collective intelligence of the community; but the main goal is meritocracy in ratings.

Open Source Tools:

Access to the tools needed for research and analysis is likely to be better promoted with Open Source wares. Where a community of people are essentially donating their time and effort toward risk management in the market, the cost effect of open tools is likely to be more reasonable. The distributed intelligence involved in open projects might also, but not only rapidly create and maintain the tools, but also would be open to security and bug testing. Open Source tools are also more likely to be tailored to the needs of the community; much like industries have industry standards.

Principles:

Overall it seems very important to be as hands off as practical in modeling for community organization. The community requires liberation in order to self-govern. This is the basis of the model itself. Influence beyond a suggested framework with explained principles would be somewhat selfdeprecating. The framework itself needs to be nonrigid or even up for debate in order for the effort to be a community effort. That being said, the Poliocratic model and the principles associated with it are just suggestions; that are essentially arguments for the feasibility of a community based marketplace

* The community needs to be open to possible solutions from the community. Those who show skills and aptitude for argumentation should be taken seriously; otherwise, distributed intelligence is hindered.

* All subsystems need to be treated with equal importance. If one subsystem is not properly represented in the model, it becomes a bottleneck; and the system as a whole loses function.

* Transparency about issues that the systems faces is an imperative. Salesmanship can become a liability when community solutions are needed. The community needs to be privileged with knowledge of the state of the system. It’s important to promote this; for the sake of distributed intelligence.

* The community needs to be open to augmentation and change. We humans are intrinsically poor at this. Open ended models are more likely to be agile, innovative and dynamic. The result is longevity over models where more rigid systems replace each other. It’s transcendence over extinction in an evolutionary sense. Of course solutions are likely to be replaced, but it’s not wise to create a community that is essentially destined to be replaced by another. A community that transcends itself over time seems to be a much more favorable result.

* Of course there is an i in community. Communities are composed of individuals. The relationship between individual and collective has been the subject of study for what is probably beyond the advent of written language. This is very complex; however it’s expected that there be game theoretical behaviors, chosen leaders and dissent. These are all normal; and workable with systemic solutions. Rigid rule sets have never changed such behaviors in any system in history. The belief in them is pure dogma; that is more likely to compromise the agility of the community than to do anything else… except maybe punish the innocent. Law already exists; and we all know the possible consequences of not obeying it. Authoritarian solutions are not your friend. Leave it to the professionals.

Closing:

Centuries have been expended on endeavoring to create a free market with legislation. This not only has failed miserably and repeatedly, but doesn’t have the efficiency to keep pace with modern, community based, grass roots novelty. Decentralization has been a beneficial trend that has only become more prevalent since the times of Feudalism. Higher standards of living, access to educational materials and global communications etc. have brought about novel ways for communities to influence economic trajectories. ICOs are direct benefactor of such decentralizing advancements. ICOs also appear to have the potential to enable much more decentralization as well.

Without added support for the potential that ICOs boast, the risk that even efforts toward legitimacy is dialing back the technology to something that essentially already exists. Efforts to network ICOs in novel ways could be accompanied with attempts to enhance it’s efficiency and functionality within the system; and further adding to the overall complexity.

In times where there are concerns of the future effects of automation, and talk of constructing social safety nets as a solution, maybe universal access to derivatives is a more positive outcome. With the tools and resources available, this may be possible. Utilizing distributed intelligence to cast a wide net for solutions would likely produce more novelty than could be expected.

In the past, markets have become aggregated, and have become increasingly dysfunctional due to that lack of diversity. This is the type of top down influence that all new endeavors can expect to be leveraged against them. This thing is obviously happening. Who do you want to run it? It may be that an open market is the best we can do for the time being