Now Ethereum is also marking people

Tokenization has just become postmodern. So-called members of the DeFi community highlight themselves on the Ethereum blockchain.

These tokens, which are stamped with the name of the person who created them, are started as actions by the brands or “digital communities” of their tokens. If they do not promise a Tokenizer salary dividend, these tokens can be exchanged for services such as talking to the Tokenizer or renting their professional time.

Instead of asking for cash for these services or ETH or BTC, or borrowing when they need the money quickly; These intrepid tokens start selling “personal tokens”. What one of them calls a “useful tool for your digital community”.

This maneuver is similar to the worst behavior that triggered the ICO boom in 2017said David Hoffman, COO of the RealT Token real estate platform. Aside from the fact that this “self-glorifying” token sales model is even worse because people buy a token that has even more dubious profits and guarantees than the so-called utility tokens that flooded the Ethereum ecosystem in 2017.

These tokens are supported by someone’s reputation. It’s the exact opposite of what the entire cryptocurrency industry is about. where trust is deliberately removed. The value of these tokens is secured by trust in the individual.

David Hoffman, COO of RealT.

A token with no guarantee

Take the KERMAN token of content developer and creator Kerman Kohli as an example. It can be exchanged to access your telegram group, subscribe to your DeFi news channel, request your professional time or request a retweet on your Twitter account.

Profit is essentially about paying Kohli to talk to himor even pay for your most important life choices, how to buy a car. Alex Masmej’s token, like his own name, guarantees users access to their time and voting – without compromise – on their life choices.

At least for Kohli, the other selling point, besides buying the privilege to speak to its creator, is creating artificial scarcity. Kohli said he would burn the used tokens to buy his time, and He also plans to buy back circulating tokens with 5% of his earnings from the news station.. In his blog, Kohli explains that his token “is not an investment or security contract and that it is only the redemption of its time”.

Masmej was more daring in his blog post. A share in ALEX, Masmej promised in the announcement, will give you “15% of all earnings you will make over the next three years with a limit of $ 100,000,” distributed quarterly in DAI or equivalent in stablecoin. He promptly describes the personal token as: “a mix between a revenue sharing agreement and a human IPO.”

Maybe very successful, Hoffman thinks. Masmej’s promise and Kohli’s claims seem to be investment language. As he said, “This is literally an illegal offer of securities.” One that offers “no regulatory guarantees, investor protection or resources of any kind to its buyers,” he said.

When using Bitcoin or Ethereum, you rely on blockchain guarantees. When you buy a security, you rely on the guarantees of the US regulatory system. With personal tokens, however, the billing guarantees are based on trust, which is the exact opposite of real cryptocurrencies. The entire system is based on trust in the Tokenizer.

David Hoffman, COO of RealT.

The creation of “social money”

Even if the tokens could pose a security risk, that hasn’t stopped DeFi platforms from creating them. Roll, a DeFi platform that a representative says users can use to launch “a digital community offering” Don’t think that these tokens represent any type of investment or security contract.

Rather, they are a crowdfunding mechanism that allows token buyers to access Tokenizer content on platforms like Patreon. Basically after roll, is a platform for self-monetization.

“The web economy is tending to content creators,” they said, adding The mission of his platform was to give these creators a place where they could label their time as “social money”. and use this “user-generated currency” to build their communities. They also revealed: “The user-generated currency is the next chance of more than $ 100 billion, and the future of the market will be deeply integrated into the social network, hence the name of social money.”

Both Tokenizers started their self-proclaimed experiments at the start, and Roll bought shares in both tokens. A representative from Roll said that they are “the main liquidity provider for ALEX in Uniswap and do the same for KERMAN.

At its recent token sale, Kohli sells 1,500,000 KERMAN in hopes of raising $ 30,000 at a price of $ 0.02 per token. Alex reached his goal of $ 20,000 during his token sale in early April and sold 1 million tokens to “30 shareholders” at a price of $ 0.02 per token. His outstanding offering of around $ 4.2 million also includes a large offering of $ 10 million.

Buyers need to be careful

Self-tokenization is a relatively new concept. In one of his first iterations, spankchain founder Ameen Soleimani released a token that people can redeem for retweets from the productive Ethereum developer. an obvious forerunner of a utility proposed by KERMAN. Hoffman noticed, however, that Soliemani’s token was different as it shows clear benefits. offers no guarantees and, above all, is not requested as an investment.

Even Spencer Dinwiddie’s plan to label his contract, possibly a source of inspiration for others, is another case. Dinwiddie not only plans to sell the tokens as a regulation D securities offering, but would actually pay dividends to its holders, and if it did not, the Securities Act would intervene.

Hoffman returned to the main issue with the personal token model and reiterated this Guarantees and utilities that come with Soleimani and Dinwiddie tokens do not apply to KERMAN and ALEX holders. “The risky thing about this investment is that it is completely defined by Kerman. In his disclaimer, he says, “This is a very risky investment and you could lose all of your money,” Hoffman says, adding later, “This is terrible to say because the” personal token “issuer has full control over it how risky the investment really is. It very much depends on them whether there are risks or not.

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Translated version of Colin Harper’s article published on Forbes.