Ethereum has experienced a massive increase in price in 2017 thanks to the rise of ICO. Finally a use case was found, the ability to offer a permissionless way to do crowdfunding. However things are now changing because of the involvement from regulators but also because of the increased competition.
Regulators require KYC/AML and the cost of compliance is now very high (you need at least $100k in legal fees to be compliant). On top of that the marketplace is so crowded that only the projects with the biggest budgets would be able to afford the marketing costs required to reach their audience. Last but not least, there is also a technical barrier as you need an experienced solidity developer in order to create your token on ETH.
I still believe ETH will remain the platform of choice for large-scale ICO because its market capitalization is big enough so that it’s possible to easily raise very large amounts of money. Also large-scale projects have no issues with legal fees and marketing costs.
Small projects however are going to struggle in this new environment. That’s where I think Starbase will find its niche as the new platform for ICO.
The benefits of the new platform for ICO:
- Creating the token is very easy
- KYC/AML is provided by the platform
- The platform will also choose projects based on the merit rather than the budget giving a chance to the best projects
- The best projects will get visibility regardless of their budget, the platform is giving everyone discoverability based on a metric different than money
Over time if small projects are successful bigger and bigger projects may decide to use the Starbase platform instead of Ethereum.