RE: First thoughts about the proposed EOS token sale
Recycling means that the dev team "contributes" ETH to the crowdsale that they've already earned in the crowdsale, buying themselves EOS for free in the process. It's actually not necessarily as sketchy as it sounds, but it should be audited.
It's not sketchy if this is how it works: suppose the dev team has employees and commits to paying them salaries. These salaries are paid out of the pool of ETH that's being contributed in the crowdsale. Once the salaries are paid, the employees are of course welcome to contribute their own funds to the crowdsale to obtain EOS for themselves. This is totally fine and ethical; it's equivalent to employees of a startup voluntarily forgoing their salaries and accepting a stake in the company instead.
I need to think about it further to think about possible sketchiness that could arise, though. This was one of the early scam accusations leveled against Dan and Stan in the early Bitshares days, because that's exactly how they ran the AGS crowdsale.
The level of sketchiness is determined by the percentage of crowdsale funds AND total EOS tokens that ultimately go to the developers. Timeframe is another issue. As developers it would be advantageous if there were no ability to short the tokens. They should be required to vest or lock the token to demonstrate long-term interest in the project. When the people involved in the project recycle ICO funds to then buy equity and then short it for gains in a native token on the competing platform, it doesn't demonstrate good project morale. Another thing to consider, is that as developers, are they already getting a percentage of total tokens, or not? If so, then that means they would be double dipping on every investment.
Actually, recycling was prohibited and the funds were left in public view right where they were donated - where they could be inspected by everyone.
But once people were paid for their services, they were free to spend their own money anyway they wanted.
Bottom line: funds were limited to covering expenses and paying developers and developers are people with rights to do what they want with the money they earn.
And despite that openness, AGS donations by team members were regarded with suspicion in the greater crypto community.
...and you use the term "greater" with all due respect.
:o)
Heh, "greater" here is only in the sense of "bigger." Not to be confused with "more open-minded" or "smarter" or anything like that. :)
But in my future discussions on this, rest assured that I won't paint AGS as a scam and I'll strive to distinguish between unethical recycling and ethical dev contributions.
Great response.
There is certainly opportunity for some sketch.