With the rapid growth of the ICO market, it has become increasingly apparent that there is a governance deficit in the ICO fundraising method. One issue stems from the capped vs uncapped token sale debate. Ethereum co-founder Vitalik Buterin and developer Jason Teutsch, the creator of smart contract scalability project TrueBit, published a whitepaper proposing a new ICO protocol.
Currently ICO token sales principally take two formats. Uncapped and capped. According to the whitepaper uncapped sales, " provide buyers little clue as to the fraction of total tokens their contribution will ultimately purchase," and capped sales, "can reach tens of millions of dollars and sell out in a matter of minutes, leaving buyers unable to participate, disappointed, and frustrated." The authors mention the sale models of reverse dutch auctions and hidden caps but qualify them as suffering from similar shortcomings.
The shortcomings of current token sale models can be summarized as their inability to create a process in which
1) A fixed amount of currency buys at least a fixed fraction of the total tokens, and
2) Everyone can participate.
The Basic Attention Token (BAT) ICO is one example where theoretically everyone was allowed to participate in a capped model but few were actually able to because a purchasing advantage was given to those with larger amounts of capital. The proposed protocol involves buyers submitting bids and specify maximum price criteria for their participation. The protocol would then permit buyers to withdraw and/or adjust bids within a specified time frame.
In the time following the withdrawal closing, the sale valuation can converge on an equilibrium value. Again, the main purpose of this protocol is to address the issues of ICO's granting purchasing privileges to large scale buyers and anonymity of the token valuation before the sale opens.
It's the first inkling we have of governance and structure coming to the ICO marketplace. In my opinion, it is badly needed and will add legitimacy to this form of fundraising.