Research Suggests Transparency is Key for Utility-Based Crypto Projects
Whenever a crypto transaction takes place, a part of the information is also shared with the stakeholders. But this is not the case with utility token issuers. Many researchers have concluded that the information shared with the public is not enough.
Transparent information can attract more customers and enhance the confidence of stakeholders. This research was conducted at the Duke University School of Law and the results were shown on the blog.
A group of 76 industry experts were present in the discussion and 83% of those agreed that the information shared is not enough by utility token issuers. The stakeholders can have a bit more information about the users to serve them in a better way.
Crypto industry experts pointed out that this is the only reason crypto has failed to immerse in the industry since its first bubble two years back. According to the poll conducted by Nicholas J. Krapels and Dan Liebau, there are seven actionable methods to present the information sufficiently.
What Is The Relation Between Crypto Price And Information?
A short case study was conducted on renowned crypto companies like Thorchain, Tezos, Algoraland, and Hedera. This study explained how information can impact the cryptocurrency prices. The results were positive when minimum information was disclosed. Prices of utility tokens and cryptocurrency were increased gradually.
Although showing the insider information cannot always be considered as a technique to become successful in the crypto industry. By sharing the “basic” information can be a good strategy to promote blockchain as a widespread technology.
What Is The Information Disclosure Recommendation?
Seven methods are derived from the poll conducted by the Duke University. These can be used by token issuers, intermediaries, buyers, and regulators. The recommendations are comprised of both, financial and non-financial decisions. Financial information suggestion includes:
- Information About Token Issuer – An issuer documentation should be shared upfront. This information can be helpful for the buyers to identify the motivation behind the tokens.
- Token Treasury Information – If the utility token and cryptocurrency issuer hold treasury towards the compensation, software development, or any other community development, it has to be shown. The token treasury information informs the parties whether a part of the purchase is allocated or not.
- Initial Cash Position – Instead of relying on a thirty party, the token issuer should provide initial cash position. This information includes the total amount of the initial amount of U.S dollars received. It also consists of the information about the amount in cryptocurrency as well as the amount converted into fiat currency.
- Current Cash Position – Cryptocurrency is not accepted by every supplier. Thus, it is essential to disclose the respective amount in fiat currency. This information will help the token buyers to take appropriate decisions.
The non-financial information includes the following information:
- Open-source Software – Open-source has become quite a useful constituent of cryptocurrency transaction information. If the token issuer uses open-source code, its information should be regularly updated on the platform. The users must be able to access the code along with its documentation.
- Contact Information – Appropriate information about the token issuer should be available at hand. Stakeholders may need two main contact details that include email and telegram. The token issuer must community managers that are available to chat 8 hours a day. The longest wait period for a token holder should not exceed 48 hours during the working days. This information along with the prompt response service can increase the confidence of the customer even more.
- Project Progress – Stakeholders should be provided with regular updates on the project progress. The network and protocol usage directly impact the value of the token. Therefore, the project team should update the information about the short term and long-term goal. When the exact data is available to the stakeholders, they feel connected with the project and it also increases accountability. The project progress information also elaborates the difficult technical details in simple words that can be easily understood by the stakeholders.