Ethereum price (ETH/USD): Key ERC-20 developer proposes safer ICO method

RICO will allow investors to ‘reverse their funding commitment’

Ethereum price (ETH/USD): Key ERC-20 developer proposes safer ICO method

Fabian Vogelsteller, who played a key role in the development of Ethereum’s ERC-20 standard, has proposed a new approach to initial coin offerings (ICOs), aiming to make the controversial fundraising practice safer for investors, industry website Coindesk has reported.

Speaking at Ethereum’s annual developer conference on Tuesday, Vogelsteller proposed a ‘reversible ICO’, or RICO, that would allow token investors to take back their funds at any stage in that project’s lifespan. Vogelsteller envisions a special type of smart contract that allows investors to "reverse their funding commitment”.

“You are able to withdraw the funds you committed at any point of time and you do this by simply sending back your tokens,” he said, as quoted by Coindesk.

The refunded Ethereum tokens would then be available for purchase to other investors, Vogelsteller explained, adding that since this was likely to lead to fluctuation in the underlying value of a project, start-ups would need to secure some base funding from private investors outside of the ICO.

Vogelsteller believes that this approach would make scams unlikely, as it would incentivise start-ups to commit to their promises. It would also allow projects to “fail naturally”, without the risk of token investors losing money as a project collapses.

The developer also levelled some criticism at the ICO sector, arguing that many firms that pursuing token sales deviate from Ethereum’s vision of decentralisation. He also argued that ICO issuers are more interested buying “lambos rather than doing something useful”.

Vogelsteller also told the audience that he would initially test the RICO concept within his own startup, a fashion-and-design industry blockchain dubbed Lukso.

In today’s trading, the Ethereum price stood at $197.85, as of 16:22 GMT. The digital coin has gained 0.3% in the past 24 hours, according to data from digital currency tracker Coinmarketcap.

For further information on how to buy and trade Ethereum, see our comprehensive Ethereum guide.

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