This article assumes you already know what Maidsafe, the SAFE network and safecoin are. If that’s not the case, read this.
Wow. Those MaidSafeCoins (safecoins) got snapped up like fresh cheese rolls.
I have the feeling that was something substantial. It begs the question, did I just put my money into an incredibly under-priced crowd sale, or did I put my money into an incredibly over-hyped crowd sale?
Before you get my biased opinion on that question, let’s cover some stuff, unfortunately it’s not all laughter and lollipops.
The crowd sale
The crowd sale was estimated to begin at 8.00am on the 22nd of April 2014, but actually kicked off at 8.38am. At this time addresses were announced for both bitcoin and mastercoin investment and people wasted no time sending their coins of choice in.
The crowdsale fundraiser had technically closed five hours after opening. I say ‘technically’ because MaidSafeCoins were still being offered for sale after this time for bitcoins, due to being bought and immediately resold by Maidsafe. This action closed the fundraiser on the mastercoin protocol, meaning no more purchases could be made with mastercoins.
This explains why mastercoin disappeared as a funding option from buysafecoins.com, only hours into the crowd sale, leaving bitcoin as the only method of purchase.
Why did Maidsafe remove mastercoin as a funding option?
Mainly because there were so many mastercoins flooding in. Mastercoins were able to be immediately exchanged for MaidSafeCoin, whereas bitcoin receipts had to be processed manually. It was quickly noted by the Maidsafe team that the coffers would be completely emptied before they had the chance to honour bitcoin investors with their promised MaidSafeCoin.
The decision was made to buy out the remaining MaidSafeCoins with the help of large mastercoin owners (BitAngels), and then resell these MaidSafeCoins back to bitcoiners. If Maidsafe hadn’t intervened, the sale would have been over in just over 5 hours, and all the MaidSafeCoins would have been allocated to mastercoiners, despite many bitcoiners having followed all instructions and investing early.
Maidsafe were in a tough position and made a snap decision in the interests of fairness.
Why did most people send mastercoin?
Maidsafe set a fixed exchange rate, days in advance of the crowd sale, which meant you got more MaidSafeCoin for your money if you used mastercoin instead of bitcoin.
Why was the exchange rate set in this manner?
Firstly understand that Maidsafe wanted to provide an option for investors to invest directly using bitcoin, even though the protocol only supported funds denominated in mastercoin. The Maidsafe team decided they could borrow mastercoin and process bitcoin manually, but they were concerned that the majority of investment would be denominated in bitcoin and thus they wouldn’t have enough mastercoin to support it. To combat this, they decided to make the mastercoin exchange rate favorable in order to provide incentive to purchase using mastercoin.
Boy oh boy did this provide incentive. Many potential investors went out and bought mastercoin especially for the purchase of MaidSafeCoin. There was economic incentive to do so, and it seems people reacted to this in a predictable, rational way.
Why did Maidsafe not see this coming?
I don’t know the answer to this question.
What is my opinion on the matter?
At the end of the day, Maidsafe may have had their heart in the right place, but they handled the situation poorly and were supremely unprepared. They should have been ready for any eventuality, and their lack of foresight concerns me as an investor.
Unfortunately, there will be a large number of angry mastercoiners that are now unable to purchase MaidSafeCoin, this will have no doubt destroyed some goodwill. Clearly this is not a good thing.
Anyway, moving on.
I’m pretty sure Maidsafe broke crowd sale records there
The sale was bowled over by a massive wave of insatiable demand, indicating significant amounts of faith and public support. What conclusion can we draw from this?
It seems the market viewed the stated crowd sale price as very attractive and invested accordingly. But does this view have merit, or were investors simply being irrationally exuberant?
What I’m trying to say is, was the pot stirred too much?
Maidsafe just emerged out of relative obscurity a matter of weeks ago, with a modest manner and promises that were backed by hard work and substance. Other than a bit of evangelism from yours truly and coverage on a couple of reputable websites, Maidsafe appeared to slip predominantly under the public radar. Before anyone knew it, the crowd sale was imminent.
This leads me to think, Maidsafe’s project SAFE was a long way from being over-hyped, especially when comparison is made to projects such as Ethereum. I’m thinking the crowd sale price was widely accepted as an absolute bargain.
There’s no disputing the fact that there is an unbelievable amount of support and confidence surrounding project SAFE. However, the speed of the crowd sale is a double edged sword.
Maidsafe didn’t raise as much monetary value as they thought they might. All the MaidSafeCoins got sold out well within the first week, securing every buyer the 40% bonus, despite Maidsafe expecting to give out closer to 25% in bonuses. This issue is compounded by the fact that Maidsafe got around 50% mastercoin funded and the current mastercoin exchange rate is less than half of what the Maidsafe team were expecting it to be.
What does this mean for investors? Basically, a lot less capital was able to buy a lot more MaidSafeCoin. Investors secured a large slice of SAFE pie with less cash than anyone expected. It’s amazing that massive demand actually managed to drive the effective price per MaidSafeCoin down!
Good: Investors got more bang for their buck, regardless of the fact that the community clearly values the project above the implied crowd sale price.
Bad: Maidsafe have less capital at their disposal to put towards the successful implementation of project SAFE.
I’m not sure what public sentiment on the offset of the above factors will be, we’ll have to wait for a MaidSafeCoin market price to be established through active trading on the mastercoin network. Would you like me to make a prediction? I think investors will be seeing profit right off the bat. If these investors hold fast, and Maidsafe delivers, this initial profit could start to look very trivial indeed.
Time will tell whether this statement holds any truth. Best of luck, Maidsafe.