Cardano: Initial StakePool Offerings (ISPO) And The Exciting Times Ahead

I follow Cardano closely. A few months back as I was writing my previous articles on Cardano, I felt that it is important to follow the early-stage projects developing on Cardano. You don’t want to miss out on a new project that gets a grant from the Foundation. Such projects are usually thoroughly vetted by the community and the trust level and transparency are high. Cardano’s Catalyst voting is a rigorous process and the various steps involved in the process ensure that the decisions remain decentralized, simultaneously ensuring that the funding is based on strong fundamentals.

I covered the projects in Fund 2 and 4. It has been quite a journey. The earlier Funds were focused on fixing basics (Haskell/Plutus/Marlowe education, PoolTool platform upgrade, create a message-signing standard). In Fund 4, the Funding moved to a broader scale, the fund started rewarding Dapp projects which will contribute to the ecosystem. The tokens of such projects are not yet in the market and hence, as an investor, this is the right time to put your focus and pre-select the projects where you want to invest in the future. Add them to your Twitter and follow them, wait for the right news, and get your first-mover advantage.

With Fund 4 closed now, the Cardano projects are slowly evolving (still very early stage). Some of these projects were initially launched in Ethereum and promises to move to Cardano, eg. Cardstarter. Such projects do so to raise funds earlier, however, there are questions on whether they are a true adopter of the features that Cardano Blockchain provides. There are however projects who are building on Cardano. Such projects have introduced an entirely new concept of token distribution, the Initial Stake Pool Offering (ISPO).

These second type of Cardano projects will build their stake pools. The validators delegate their token with them, in return these projects distribute their token to the delegators at a pre-defined ratio. This is somewhat equivalent (not entirely similar) to the Parachain auctions in Kusama and Polkadot, where you need to lock your KSM or DOT to get the project’s token.

Positives of ISPO:

  1. You get free tokens of the Cardano’s project by just Holding Cardano.

  2. You continue to receive staking rewards (not possible in Kusama and Polkadot). Just check before the staking what %ge staking rewards is the Project retaining.

  3. Your token is not locked, you can withdraw and redelegate any time. Just know that you will only start getting rewards from the 3rd epoch. Each epoch is approximately 5 days.

Negatives of ISPO:

  1. Redistribution of Cardano to the Project’s pool might kill the smaller pools. There have been indications that projects have been creating multiple stake pools to accommodate new users. This might create a Whale Problem.

  2. Once the delegators feel that they have gathered enough tokens of the project they might move to the next project. Loyalty is not essential.

Projects Doing ISPO

MELD

MELD is a lending and borrowing protocol to be launched in Cardano. MELD is controversial. However, it is revolutionary being the first project (probably) experimenting live with ISPO. The MELD ISPO started on July 1st. Unfortunately with MELD, you will not get any staking rewards. MELD retains all staking rewards and will reward delegators with MELD tokens. For each ADA you will get 0.065 MELD.

More details here.

RAY WALLET

RAY is also a Defi protocol in Cardano. It has a wallet, staking solution, Swap, Kickstart, NFT Marketplace, etc. By staking your ADA in the RAY Pool you will get 1 RAY as a reward for every 50 ADA staked. You will also get your usual staking rewards in ADA. The project UI still looks like a WIP, but there is no harm in participating in decentralized staking

SUNDAESWAP

This is my favorite. Sundaeswap is very popular. It has promised that it will initiate an ISPO. The dates have not been announced yet. Watch out for it.

I will keep on updating you about newer projects in the future.


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