Status announced a token offering to the public at 2 p.m. GMT on June 20, 2017, raking in 299,902.24 Ether in exchange for the company’s token, SNT (Status Network Token). Status excluded investors located in the U.S. from participating, identifying them via IP address.
The executable distributed code contract governing the exchange of Ether for SNT did so at a rate of 10,000 SNT per 1 Ether, as planned. Status will use the funds to build its decentralized open source messaging platform.
In their enthusiasm, investors swarmed to the opportunity to get their hands on SNTs. Even before the sale went live, the Ethereum network began to show signs of transaction backlog. By the time the token offering was in full swing, the amount of congestion that the network had to handle was enough to compel the MyEtherWallet staff to bring it to light on twitter.
— MyEtherWallet.com (@myetherwallet) June 20, 2017
During the token offering, Status had ceilings put in place designed to deter the actions of big investors, instead favoring small contributions. The first hurdle was set at $12 million, after which “dynamic ceilings” came into effect. An example of how these ceilings work is provided in a reddit post by Status:
“To illustrate: consider at some ceiling 250ETH is left until the cap, and the ceiling max. factor (or slope factor) is 10. It means that the next tx cannot be more than 250ETH/10. Yet after some time, only 50ETH is left till cap. Max amount per tx for a ceiling will decrease further to 50/10.”
Those wishing to exchange fiat currency found aid in shareholder company Bitcoin Suisse and blockchain startup platform ICOage who allowed investors to participate in the token offering. To clarify any confusion regarding the presence of this issuance model, Carl Bennetts, co-founder of Status told ETHNews, “Via our allocation partners we have an additional 4,500 addresses, and many wrongly assumed this was a single ‘whale’ somehow gaming the system.” A pooled transaction from imToken has been greenlighted by Status in an effort to reduce the Ethereum network’s burden. Both of the distributions mentioned above did not affect the soft cap and were only calculated against the final ceiling, which triggered contract closure.
These factors weren’t enough to mitigate the strain that attention to Status’ offering drew from investors. The number of transactions during the Status token offering dwarfed those of other similarly successful offerings. The 299, 902.24 Ether that Status obtained was valued by some sources at around $90 million.
Status provided a breakdown of how SNT would be allocated following contract closure on the token offering in its white paper.
In addition, Status shows how the budget will be addressed.
Despite Status’ success, in the wake of the transaction overload, serious questions are arising as to how future token offerings will affect the Ethereum network.
Jeremy Nation is a writer living in Los Angeles with interests in technology, human rights, and cuisine. He is a full time staff writer for ETHNews and holds value in Ether.