This is an editorial by Loi Luu, Co-founder and CEO of Kyber Network. Needless to say, all statements below, whether of fact or opinion, are solely those of the author and do not represent an endorsement by Trustnodes of the project or of any other aspect.
ICOs are all the rage these days. There is no dearth of articles explaining their pros and cons as well as how to evaluate their ‘flipping’ potential. I do not wish to add to that already robust conversation in this piece, nor am I looking to comment on the political landscape and possible regulation. Instead, I want to focus on the invaluable lesson I learnt from running our token sale last year, a simple and thus often overlooked point – community.
Our community comprises investors, blockchain enthusiasts, and developers. They provide us with the capital and the chance to make good on our vision. They swarm our communication channels; they applaud our efforts when we do well, encourage us when we drop the ball; they post hilarious memes.
Sometimes they complain and criticize; sometimes they ask difficult questions that help us clarify our priorities and values. The community enables Kyber Network. It is only fair that we look out for them in return; not just through the increasing market price of our token—which we have little control over—but through other gestures, small and large, that show our earnest appreciation and care.
This is exactly what we sought to do during our token sale, which raised $52 million in slightly over a day. At the time, it was considered one of the most successful ICOs in history. Did we do something right? Were we simply lucky? How did we manage to pull off such a feat, right in the middle of the Chinese ICO ban and what would come to be known as the worst bear market of 2017?
Before I share some observations, a brief explanation of what we do: Kyber Network is a decentralized exchange that provides high-liquidity and instant token conversion services. Our trustless protocol allows users to securely and seamlessly send, receive, and exchange crypto-assets. Our long-term vision for this project is to increase token liquidity and ease of trading, which in turn will enhance the adoption of cryptocurrencies and blockchain technology.
I believe the value proposition of our project was what got investors interested in the first place, but there were many other steps that came in between that and the final success of our token sale on 16th September.
Back then, ICOs were still fairly new and unfamiliar, which led to considerable security risks. Knowing that this was the first token sale for many of our community members, we prioritized user security above all else.
We put a lot of time and energy into educating our users, ensuring that they were aware of potential scams and hacks. We uploaded many videos and published a series of blog posts that trained our users to identify phishing mail and provided step-by-step tutorials for contributing tokens to our ICO address.
We were also active and vigilant on our communication channels, hiring moderators and deploying bots and dummies to bait scammers and then ban them for good. Further, we implored everyone to enable 2FA for their accounts. Not only that, we insisted that they did not use SMS as their 2FA method or recovery option, since SMSes can be easily spoofed.
All of this happened while our community membership was increasing at breakneck pace, at one point growing from 3000 to 33,000 in the span of five days. We even created separate communication channels to cater to different languages and technical depths. This was extremely tricky to manage, and it meant that our team had to work round the clock to ensure that every security concern was adequately addressed.
On the legal front, we cut no corners and did everything we could to comply with existing regulation so that we could be accountable to our users at the end of the day. We sought the advice of prominent experts (including Vitalik Buterin, founder of Ethereum) and innovated new modes of identity verification which have now become industry standard.
In fact, we were one of the very first teams in the blockchain space to establish a whitelist as well as engage in full KYC checks for users. We even hired a KYC vendor – a measure that was certainly not the norm back then.
When the Chinese ban hit, 18,000 Chinese accounts had already been manually approved. We racked our brains and assessed all possible options. Finally, we had no choice but to exclude them from participating in the token sale, assuring them that all of their KYC information would be destroyed.
Nevertheless, we deeply regretted the unfortunate timing and wanted to thank our Chinese users for their support. We thus decided to issue them Kyber Genesis Tokens (KGT), a distinction that would grant them early access to our upcoming mainnet services.
I believe it was these measures, geared towards the interests and sensitivities of the community, that ultimately led to the success of our token sale and the continued growth of our project.
If ICOs are to stay, if they are to truly become a core means of fund-raising in the future, it is imperative that new teams continue to engage and pay attention to the needs of their users.
To this day, we still receive emails from community members thanking us for the way we professionally yet delicately handled the ICO situation. 52 million dollars goes a long way in developing a project and vision, but validation from the community is priceless.