Legion launches merit-based platform for ICOs in Europe

As a seasoned crypto investor with over a decade of experience navigating the ever-evolving blockchain landscape, I find Legion’s new reputation system to be an intriguing development. Having witnessed numerous scams and pump-and-dump schemes, I believe that any measure taken to protect retail investors and startups alike is worth considering.

Legion, a crypto-focused fundraising platform, recently introduced a novel reputation system specifically tailored for individual investors and startups participating in Initial Coin Offerings (ICOs) that comply with European Union regulations.

As per Legion, the reputation system streamlines processes for teams by enabling them to present retail investors with chosen characteristics when dealing with early-stage offers or token sale assignments.

The system analyzes investor behavior based on factors such as onchain history, social clout, and developer activity. It leverages the open-source reputation algorithm for peer-to-peer networks EigenTrust — developed by Standford’s academics Sep Kamvar, Mario Schlosser, and Hector Garcia-Molina.

“Matthew O’Connor, co-founder of Legion, stated that they prefer not to let projects sell tokens to automated accounts (bots), fake multiple accounts (Sybils), and individuals who won’t contribute to the project but only create noise in their Discord community,” according to CryptoMoon.

O’Connor clarified that the platform provides an extra choice for fledgling businesses looking for crowdfunding substitutes.

“Once the token is sent to the investor, there is no recourse for bad acting or investors breaking promises […] without some kind of investor reputation system, the best projects will simply continue to avoid selling tokens to anonymous wallets, and raise from VCs.”

The system aims to replicate the way trust and reputation evolve within genuine human interactions, where an individual’s reputation follows their relationships with others.

Reputation tends to spread from individuals who are well-respected, such as Vitalik Buterin, towards those whom Vitalik has collaborated with. In turn, the people associated with those collaborators gain a portion of that trust, and so on, as O’Connor put it.

The startup aspires to function like Airbnb for cryptocurrency fundraising, connecting well-regarded individual investors who are passionate about Web3 ventures with fledgling projects that need financial support to launch.

“[Retail investors] is the segment that is currently underserved by existing options. Real users add value that top VC’s can’t — such as detailed product feedback, organic marketing support, and arguably the most important thing; a sense of community and belonging.”

ICOs under MiCA

The European Union’s Markets in Crypto-Assets Regulation (MiCA) establishes a consistent legal structure for Initial Coin Offerings (ICOs) throughout all EU member nations. Within this framework, tokens categorized as utilities, like examples given, are still subject to disclosure and transparency requirements, but they are not considered financial assets according to the regulation.

Legion intends to leverage the European Union’s regulatory structure for token sales, allowing transactions with EU residents. However, it will limit access to U.S. retail investors in these token offerings.

O’Connor mentioned that we follow regulations such as RegS and RegD in the U.S., which means at this time, non-accredited American investors are unable to join us.

Projects seeking capital, however, are not required to be based in an EU jurisdiction.

In the future, our platform intends to welcome venture capital firms, who will engage in a competitive scenario with retail investors when it comes to evaluating projects and assigning scores. The co-founder stated that they believe this competition fosters growth and benefits everyone involved.

2024-10-29 14:16

ICOs under MiCA

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