Is Tezos ICO Dead? by@ourielohayon

Is Tezos ICO Dead?

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Ouriel Ohayon

Tezos is under the spotlights because of an internal fight between the founding team and its governing foundation (well in particular with its head, Johann Gevers, allegedly accused of fraud) that could threaten the future of the project (already affecting Tezos “future” IOUs). This is newsworthy because Tezos is one of the highest profile ICOs on the market with close to $400m (technically $232m but with the ETH value helping now more since they have not yet converted the funds to fiat money…)raised before launch. Many already consider the project dead. I would not be so sure.

Tezos is clearly being put through a a set of tough and vital tests. I have several thoughts on this matter to share.


Tezos future getting hit, as expected.

Governance tested

First it is ironical that Tezos, whose core mission is to bring a blockchain where governance management and resolution is baked in the protocol, is threatened by its own governance body. How can you be credible as a better governed protocol if yourself are not able to self govern your own company. But on the other side this may be precisely the type of test that , if passed, would only reinforce the core mission and credibility of the company. Let’s remember than Ethereum came to a near death experience also in its early days with internal fights and we see right in front of our eyes the bloody fights the bitcoin community is having about the various forks it’s going through.

Resilience tested

Crypto protocols seem to have this organic characteristic to go through governance storms. But the best protocols and organisations are resilient enough to go through them. Bitcoin went through MtGox and Silk Road and recently China ban and even Jamie Dimon bright statements. Ethereum went through the DAO scam/crash and its own fork, leaving behind Ethereum Classic for the newly born and more valuable ETH.


This is a test for Tezos. One that will not only determine its future but whether the founding team is fit to carry and defend its core mission over time. Let’s call it a commitment test.

ICOs tested

I believe also this episode will have a major impact on past and future ICOs and let’s say it clearly the news are not good in the short term. In a previous post i anticipated the Crypto nightmare would be brought by the action of some regulating bodies targeting high profile ICOs.

Well only the second part was true. The bad news is not brought by regulators but by an ICO powered company itself. The Tezos imbroglio, that will not resolve overnight, will itself cast a shadow on the ICO space and maybe even speed up the interest from regulators to look closely on how ICOs architect their governing mechanisms and protect their backers. Right now i am sure all the backers of the project are wondering if they will get their money back if the project goes sideways. I am not even sure there are protections in the white paper for a case like this. But there should be. Beyond Tezos, all other ICOs will now be put to the test about how their governance is managed and what happens in case of problems.

The negative process already started. Too many ICOs don’t hit their goals and performance (ie immediate returns) are not what they used to be. Too much dumb money and quick flippers have flooded the space and i expect this Tezos thing to freeze even further the interest in ICOs in the short term. Money invested will go to “safer” bets, ie fat protocols and brand name ICOs, in particular those will better governance practices. New ICOs will have to be better at convincing backers in the case that things go sideways. For exemple what happens if an ICO raises way below the targeting goal, or if the token is not listed as promised on time (or with a reasonable delay) or if founders leave or fight. Those questions are mostly ignored and everyone invests in in the best case scenario state of mind because no one could imagine catastrophes could happen early. But Tezos just proved they do. For having seen in my own eyes ICOs go sideways i can tell you Tezos is not the first one to go through problems, but it is the most spectacular one.

Trust Tested

I am positive this will result in better practices and brighter future for the crypto space. Nay-sayers will go dark for now with “i told you so”, “glad i did not back this” but the music will play again. At this stage we need to wait and see if Tezos manage to sort out the relation with their foundation and the team seem positive they will manage. But the ultimate test is whether they will ship something of meaning respecting reasonable delays (the team announces Feb 2018). The main asset of any blockchain protocol is trust. Trust in the team, trust in the code, Trust in the throughput. If Tezos team, which trust score right now is on the ground, does not manage to build that trust by delivering, communicating and shipping at visible pace, we can consider the project dead.

But for now, it is not.

Patience tested

I backed early on Tezos ICO and obviously i want the outcome to be positive. I do believe their core mission is highly valuable. We see how painful the evolution of Bitcoin is and how long and tedious the road to a better more efficient ether is, even if managed more intelligently and elegantly than within the bitcoin community. Governance is not an add-on that come down the road of a protocol. To be fair and fluid it has to be baked in the core protocol.

Some will say that too much money too early is not compatible with better governance, because human beings are human. There is truth in that. The reality is that when building your own governance you need to be prepared for the worse from day 1. Apparently that was not the case here. It may not be too late to fix things. Blockchain companies should also understand also the value of having proper guidance brought by VCs in cases like those. It’s great to have raised lots of money, but you need also a trusted third party, committed to your project in the long term to help you make the right choices in terms of governance, set up and decisions. I know Tezos was backed by a few VCs, i wonder what was their role and impact in this process and i doubt this is something that was left in the hands of the founding team only.

To be clear i am worried but still hopeful they will come out of this. I prefer to consider my money lost today and only get good surprises if things change.

The other test we have to go through now, is that of patience. The ICO space can’t be healthy without patience. Those who are expecting a quick return will learn something with Tezos. That patience is as important as trust.

Wait and see.

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