Risk Managed ICOs use Glue to provide a safety net for investors. By allocating all of the raised funds directly to the project's Glue, investors can fairly be secure about the percentage of risk on investing on an Asset, and if ICO ends without reaching the goal they can get back 100% of their investment.
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To better understand the advantages on Glue for your token and your business model you can find out in Understanding Glue
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Here's something magical: in a Glue ICO, investors can mathematically know their maximum risk before investing a single wei. Let's show you why!
At the start of the ICO, the total supply of the new Token is held in the ICO Contract while all ETH from investors is stored in the token's Glue.
Stakeholders (Team and KOLs) have their portion of the new Token supply allocated, but can only access these tokens if the ICO reaches its goal. If the goal is not met, these tokens are burned, reserving the total token supply for investors who can then withdraw their full ETH amount from the Glue.
The key insight is that risk in a Glue ICO comes from two sources:
Let's break down an example:
teamBurnablePercentage = 10%;// 10% supply team burnable, only for unglue
teamLockedPercentage = 5%;// 5% supply team vested
lpPercentageToken = 5%;// 5% supply to LP
lpPercentageETH = 5%;// 5% ETH to LP
totalKOLBurnablePercentage = 3% // 3% supply is reserved to KOLs, only for unglue
totalKOLLockedPercentage = 2% // 2% supply KOLs vested
In this case, investors risks 30% of their invested amount. If the ICO succeeds, they'll receive their tokens and can always withdraw 70% of ETH invested from the Glue, regardless of how the token and project perform. If the ICO fails, they can withdraw their full investment.
If the ICO is successful, the team and KOLs will receive their percentage of the token supply—but there's even more to it than that!