In the past month, we’ve now seen three separate personal token offerings go live via Roll. Here’s a recap on those offerings for those who may have missed them.

Similarly, we’ve also seen the launch of platforms like Stake on Me and Microsponsors which allow users to tokenize their time and services.

While the sentiment around personal tokens was largely positive to begin, we’re now seeing a lot of discourse on crypto Twitter in which prominent community members are stepping up to question the legality and ethical nature of these sales.

 

In this article, we want to shine a light on both sides of the conversation, hopefully better informing our readers on the risks that come with the potential benefits of this new asset class.

Before we dive in, it’s worth noting that most of the heat is coming from the fundraising aspect of personal tokens. Prior to these raises, few criticized the notion of using a personal token for a claim on someone’s time and work. Alas, let’s see what the community had to say.

Roll Social Currency

Let’s start by identifying some of the common characteristics of the first wave of Roll sales.

  • Fixed 10M total supply
  • Roughly 15-25% being offered to the public in the initial offering
  • Raise targets in the 5 figure range ($20-50k typical hard cap)
  • “Backed” by a combination of reputation, products, and assets (Future income for $ALEX, NFTs for $WHALE, DeFi Weekly subscriptions for $KERMAN)
  • Redeemable for consultations and exclusive insights from the issuer
  • Declared governance rights over future decisions
  • Disclaimers that investing in these offerings is extremely risky

Perhaps the most contentious nature of these sales is that while issuers very clearly state the degree of risk, there is little to no diligence being conducted or legal filings being registered – largely due to the small scale of these rounds. For those unaware, standard securities offerings require participants to conduct KYC and limit specific jurisdictions (like the US) to accredited investors only.

 

As for the fillings themselves, they typically run between $1-20k in legal costs, eating up the vast majority of the target raise. Now, this does not go to say they do not need to be filed, it’s more so illustrating the sentiment of the issuers when approached with this question.

Taking this a step further, issuers have been very vocal that these tokens are meant to be utilities, thus obfuscating the need for securities fillings. This is not saying they are utilities, just stating how the issuers are presenting it.

Others have chimed in on this conversation with a harsher tone, illustrating very blatantly that these offerings are not being handled with the proper amount of diligence and compliance.

What it ultimately boils down to is the major reason why crypto got such a bad rep following the 2017 ICO boom. For those who weren’t around, we saw rampant amounts of issuers raising millions of dollars from uneducated investors with no legal repercussions when nothing of value was delivered. To many, this is reminiscent of a time in which token issuers would walk away with investors’ money, leaving them out to dry with nothing in return.

When asked for comment on this topic, Anthony Sassono – cofounder of ETHhub echoed that sentiment from his original Tweet stating:

“My main issue with personal tokens is that they are starting to look like 2017-era ICOs where people are investing in things that they don’t understand and the valuations are insane.” 

The Value of Social Capital

Security or not, there’s no denying that personal tokens come with an extremely high degree of risk. However, it’s also important to recognize that these offerings are exploring an entirely new form of value – reputation.

Perhaps the biggest differentiator between an ICO from 2017 and a personal token sale of today is that if any of the aforementioned issuers were to exit scam or fail to uphold their end of the bargain, their reputation with both investors and the wider Ethereum community would be tarnished forever. While many were willing to take this risk for millions of dollars, its far more unlikely that this first wave of issuers would sacrifice their future career for such a small lump sum of money.

 

Amidst the contention, the first personal token sale issuer – Alex Masmej – released his first shareholder report, giving participants access to a shareholder-only retrospective of his progress since the offering was conducted.

The Bigger Picture

As if crypto wasn’t already hard enough to regulate, this new wave of personal tokens is throwing a new wrench into the mix. If one thing is for certain, we’re definitely exploring largely uncharted territory which is exciting at the very least.

With this, we’d like to once again remind our readers that personal tokens are a very slippery slope and that we are almost confident many malicious actors will soon enter and try and ride the hype train. With this in mind, we strongly encourage users to proceed with caution and go above and beyond their normal crypto investment due diligence before investing in any personal token sale.

While it remains unclear how they will play out in the coming months, we’ll be sure to keep you in the loop on any important updates as they come about. In the meantime, enjoy a couple of the best takes we saw in the past 48 hours.

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