Telegram: Details of the largest-ever ICO revealed

James Edwards 19 January 2018 NEWS

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New documents reveal price information, key dates and more.

Following the leak of the whitepaper a little over a week ago, encrypted messaging service Telegram has seen additional documents pertaining to its ambitious initial coin offering (ICO) and third-generation multi-blockchain leaked.

The new documents consist of two items, the first of which is a 23-page general investor prospectus that provides an easy-to-digest summary of the whitepaper, as well as new details surrounding the project's road map, use of funds, and the ICO – which will take place in Q1 this year. The second item is a short, but private proposal for venture-capital (VC) investors who are being offered exclusive discounts for early participation in the ICO of up to 79.4% less than the final token price.

The Telegram ICO is expected to be conducted in US dollars, a first for an ICO, with the company expecting to raise an unprecedented US$1.2 billion in the process. The ICO is being conducted to build the Telegram Open Network (TON), which will be a multi-blockchain proof-of-stake system that will host a new cryptocurrency and ecosystem that aims to facilitate a "truly mass-market cryptocurrency", "capable of meeting the needs of hundreds of millions of consumers" according to the prospectus. The ICO is believed to take advantage of Telegram's 200 million users to leverage success.

ICO details revealed

According to the VC investor proposal, the public sale will commence in March 2018, with the tokens, called Grams, expected to be deposited into all investors' accounts by December that year. This follows the private sale, which begins in January and closes in February. Telegram plan to split their fundraising evenly between the two rounds of sale, aiming to raise US$600 million in each, although the public sale has the potential to reach $800 million. However, the tokens will not be distributed in the same manner, with the private sale receiving the lion's share. The total supply of tokens available in the ICO will be 2,564.9 million, with prices varying for each investor group.

Private vs public sale

According to calculations based on the investor proposal, participants in the private sale will have access to 75% of the total token supply available within the ICO, paying US$0.308 per Gram. Of the remaining 25% available in the public sale, the price-per-Gram will start at US$0.700, over twice that of the private sale. As Grams continue to be purchased publicly, the price will increase, with the average price projected to be US$0.969, and the final price being calculated to be just shy of US$1.50, if the US$800 million cap is met.

While public investors will be faced with an inflationary Gram price as the token sale goes on, private investors will receive a growing discount compared to the public sale price, which Telegram project to be a minimum of 56%, an average of 68.8%, and a maximum of 79.4%, depending on how successful the public-side sale is.

Screen Shot 2018-01-19 at 5.49.30 pm

Source: Telegram Investor Proposal

The investor proposal does not provide any details on what will happen to the ICO if neither target is met, or if an underperforming private round will affect the public round. Such information is relevant, as this is projected to be the largest token sale in history, with the private round alone aiming to raise twice as much ($600 million) as the largest ICO concluded to date, which was $257 million raised by Filecoin in September 2018.

Further projections revealed in the proposal show that the TON blockchain is expected to be released in December, with tokens being issued to investors at the same time. Traders will have to wait until January 2019 to buy or sell tokens, when Grams will finally hit major exchanges. Telegram stipulate that in the event of a delay in distributing tokens to investors, if tokens remain undelivered by the end of Q4 2019, then "the company takes obligations to return the investments of at least the participants of the private sale", but does not mention anything about how the public sale investments will be handled.

Disclosure: At the time of writing, James Edwards has holdings in ETH, ICX, NEO, AION, QASH, ADA, LINK, XMR, XRP, XLM, IOTA, OMG and TRX.

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