Software Token Sale Best Practices

TLDR:
Software Token Sales also called crowdsales are adopting an increasing number
of best practices, including:

1. Having functioning (alpha stage) software before the beginning of the sale.
2. Keeping the sale open for at least a 30 day window of time.
3. Establishing multi signature security for funds collected.
4. Quantifying the number of tokens to be generated in the future.
5. Single currency pricing of the software tokens sold (BTC is recommended
given its liquidity and irreversibility).
6. Detailing technical milestones to be achieved to unlock funds collected
from the sale.
7. Recruting expert technical evaluators to verify milestone completions.
8. Hedging the funds collected during / after the software sale (removing
volatility risk).
9. Quantifying early labor and capital contribution in order to keep all token
creation transparent.
10. Rewarding multiple demographics (devs + purchasers + future miners)

Brief History of Software Sales

The market serves as the ultimate judge of value and price.
With this in mind, lets consider the lessons we can take when it comes to
interacting with the market in the realms of selling software, specifically in using
the crowdsale model.
Recently crowdsales of digital tokens that access software applications have
become an increasingly popular option for entrepreneurs and developers to gain
users and supporters for their projects.
J.R. Willett held one of the first crowdsales in August 2013 when he was
developing a protocol for smart property and a decentralized exchange built on
top of the Bitcoin Protocol. This project would later be known as the, Metadata
Archival by Standard Transaction Embedding Records Protocol or simply the
MASTER Protocol AKA Mastercoin.

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J.R.s crowdsale went on for a period of 30 days and raised more than 4,700
bitcoins (which were priced at the time around $100 each at the time). 91% of
the new digital tokens (MSC) went to the crowdsale participants and 9% went
to a core developer pool.
This first successful use of the crowdsale model on top of the Bitcoin Protocol
attracted many others to emulate it including, Counterparty, ProtoShares, and
NXT just to name a few.
Each project has tried a different model of selling digital tokens. For example,
Countryparty burned the bitcoin contributions made to their generation address,
and ProtoShares held an extended daily auction process for a period of 6 months.
The proposed distribution pattern of digital tokens has also moved away from
primarily rewarding the crowdsale participants, to that of rewarding multiple
demographics such as miners, third party developers, core developers, and others
that add value to these applications. This was evident in the MaidSafe crowdsale
where the majority (70%) of their tokens will flow to farmers that provide
storage space to the SAFE Network and then smaller pools of tokens for core
developers (10%), and third party developers (10%) and finally the crowdsale
participants (10%).
MaidSafe was also innovative in being one of the first crowdsales to take multiple
crypto currencies including bitcoin and mastercoin. However, it proved difficult to
avoid arbitragers seeking to take advantage of either price or liquidity differences
between the two currencies.

The State of the Art

With this history in mind, we come to the present and the state of the art when
it comes to structuring a crowdsale of software for digital tokens. This state of
the art can be described broadly as including:

1. Rewarding multiple demographics, such as, core developers, third party

developers, resource providers, crowdsale participants, and even users who
are adding to the network effect of the application.
2. Projects are focusing in on the 30-day time window as the best timeframe
for holding a crowdsale (as was demonstrated before by Kickstarter).
3. Many projects have opted for a capped number of total digital tokens
available in their crowdsale and that will ever exist in their protocol. This
is primarily in order to give the participants in the crowdsale the ability
to judge the price of what they are purchasing.
4. Many projects seem to be opting for accepting a single currency (bitcoin)
during the period of their crowdsale in order to avoid issues with arbi-
trageurs pushing around the prices of the digital tokens involved in the

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 crowdsale. Though it is worth adding that technical solutions for holding
multi digital token crowdsales have been proposed for both the Master
Protocol and Counterparty, however they have not yet been demonstrated
in practice.

Price Determined by Volume Method in Crowd-

sales
Some crowdsales are adopting the state of the art characteristics of rewarding
multiple demographics, a 30 day time window, capped numbers of tokens, and
single currency pricing, but are also seeking to improve on this model.
Two examples of this are SWARM (June 17th) & API Network June 18th).
http://www.swarmcorp.com/
http://www.apinetwork.co/
Both projects are rewarding a variety of demographics, have 30-day time windows,
have a capped numbers of tokens, and single currency pricing, but both also
include a new innovation in the way the price of their tokens is determined.
That is, both projects have opted to let the market decide the proper price of
their tokens. They are accomplishing this by setting a wide range of prices for
their tokens during the crowdsale determined by the volume of bitcoin that is
collected.
Firstly, for example the API Network is offering API Coins (XAP) at a rate of
1.6 mBTC per XAP for the first 500 bitcoins worth of sales. The price increases
to 2.13 mBTC per XAP during the sale of the next 1,000 bitcoins worth of XAP.
The price then increases to 2.66 mBTC per XAP during the sale of the next
2,000 bitcoins worth of XAP. Lastly, the price increases to 3.12 mBTC per XAP
during the sale of the last 4,692 bitcoins worth of XAP.
Secondly, for example with SWARM if you participated in their early part of
their crowdsale you would gain 5,250 SWARM coins per bitcoin you send in.
This rate of SWARM declines the more bitcoin collected until four thousand
BTC are collected and the price increases to 4,250 SWARM per bitcoin. This
generation process could continue all the way until twenty one thousand bitcoin
are collected and the generation rate falls to 3,750 SWARM per bitcoin.
It is worth noting that neither the SWARM team or the API Network team
expect to collect the maximum number of bitcoins by selling out all of their
tokens (though it is possible if demand has been radically underestimated).
Instead, both project have set a range of price points and are leaving it up to
the market to decide the proper price of SWARM and API Coins (XAP). If the
market decides these projects are highly valued, than the price of the coins will
reach a higher level during the crowdsale. Conversely, if the market decides that

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these projects are not as highly valued, than the price of the coins will not rise
as high during the crowdsale. Either way the pricing of these tokens is for the
market to determine.

Specific Best Practices and Disclosures

Specific Best Practices
1. Developing an in depth whitepaper and specification
The whitepaper since the time of Satoshis bitcoin whitepaper in 2008 has been
the way in which a new decentralized application is proposed to the community.
Preparing this document to be as in depth, technical and peer reviewed as
possible is a good way in which to the lay the ground work a new project.
2. Setting Clear Expectations / Token Generation Guidelines
Bitcoin developers did an excellent job of enforcing and re-enforcing the exspec-
tations of its users by stricly keeping to the 21,000,000 token limit and the
expected rate of distribution. With any new open source project that has a token
assoicated the developers will have to develop this same trust with the commu-
nity. This should preferably be done through automating with cryptographic
mechanisms the distribution of the tokens as much as is possible.
Clear expectations should be articulated during the crowdsale by clearly listing
common disclosures about, friendly information, the nature of a token being
different than a stock or equity, no refunds, the mechanism for claiming their
tokens, and the low liquidity most tokens experience during their early stages.
3. Developing a wiki where the community can make contributions
Developing a corpus of knowledge that the community can contribute to is critical
for the long term development of any open source project and a decentralized
application is no different.
4. Terms and Conditions Document Outline the Details of the Sale That The
User Must Agree To

Example from Ethereum.org

Terms and Conditions of the Ethereum Genesis

Sale
The following Terms and Conditions (Terms) govern the sale of the crypto-
graphic fuel Ether (ETH) that is required to run distributed applications

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on the Ethereum open source software platform (Ethereum Platform) to
purchasers of ETH (Purchasers collectively, and Purchaser individually).
The Ethereum Platform is being developed primarily by a volunteer contributor
team many of whom will be receiving gifts of ETH in acknowledgement of
their dedication and will continue to be developed on a volunteer basis by
some developers as well as under a more formalized contracting or employment
relationship for other developers. The group of developers and other personnel
that is now, or will be, employed by, or contracted with, Ethereum Switzerland
GmbH (EthSuisse) is termed the Ethereum Team. EthSuisse will be liq-
uidated shortly after creation of genesis block, and EthSuisse anticipates (but
does not guarantee) that after it is dissolved the Ethereum Platform will con-
tinue to be developed by persons and entities who support Ethereum, including
both volunteers and developers who are paid by nonprofit entities interested in
supporting the Ethereum Platform.
This document is not a solicitation for investment and does not pertain in any
way to an offering of securities in any jurisdiction.
As described further below, distributed applications on the Ethereum Platform
require payments of a token to fuel every computational step and storage
operation on the system. Without requiring payment for operations, the system
would be vulnerable to attack, would not be viable, and would grind to a
halt. The payments, in the form of block rewards and transaction/computation
fees, are made to owners of computational resources (miners) in exchange for
securing the Ethereum Platforms network, for transmitting transactions and for
processing computations required by distributed software applications.
This document describes the Genesis Sale in which the fuel token (Ether or
ETH) is sold, as well as the perpetual coordinated spontaneous creation of the
cryptofuel. Parties may be interested in purchasing ETH (the cryptofuel) in
the Genesis Sale to build and power business applications, to pay for coming
distributed application services on the Ethereum Platform, to pay for other
tokens that may be created on the Ethereum Platform for various applications,
or to support the development of the Ethereum Platform. Individuals, businesses,
and other organizations should carefully weigh the risks, costs, and benefits of
acquiring the cryptofuel early in the Genesis Sale versus waiting to purchase
ETH on open, third-party exchanges once the system is operational and when
they or their businesses actually require the cryptofuel to operate.
IMPORTANT
Ownership of ETH carries no rights express or implied. Purchases of ETH
are non-refundable. Purchasers should have no expectation of influence over
governance of the platform.
By participating in the sale of ETH, you expressly acknowledge and represent that
you have carefully reviewed the Terms, as well as the Ether Product Purchase
Agreement and fully understand the risks, costs, and benefits of purchasing ETH

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and agree to be bound by these Terms. As set forth further below, you further
represent and warrant that, to the extent permitted by law, you are authorized
to purchase ETH in your relevant jurisdiction, are of a legal age to be bound
by these Terms, and will not hold EthSuisse, its parent and affiliates, and the
officers, directors, agents, joint ventures, employees and suppliers of EthSuisse
or our parent or affiliates, now or in the future and any other member of the
Ethereum Team (collectively the EthSuisse Parties) liable for any losses or
any special, incidental, or consequential damages arising out of, or in any way
connected to the sale of ETH.
WARNING: DO NOT PURCHASE ETH IF YOU ARE NOT AN
EXPERT IN DEALING WITH CRYPTOGRAPHIC TOKENS AND
BLOCKCHAIN-BASED SOFTWARE SYSTEMS
Purchases of ETH, the Ethereum Platforms cryptofuel, should be undertaken
only by individuals, entities, or companies that have significant experience with,
and understanding of, the usage and intricacies of cryptographic tokens, like
bitcoin (BTC), and blockchain-based software systems.
While the Ethereum Team will provide general guidelines for user usage and
storage of ETH before the Ethereum Platform becomes operational, Purchasers
should have functional understanding of storage and transmission mechanisms
associated with other cryptographic tokens. While the Ethereum Team will be
available to assist Purchasers of ETH during and after the sale, EthSuisse will
not be responsible for lost BTC or ETH resulting from actions taken by, or
omitted by Purchasers. Note, in particular, that ETH Purchasers should take
great care to write down their wallet password and not lose it so as to be sure
that they will be able to access their ETH when it becomes available after the
Genesis Sale.
If you do not have such experience or expertise, then you should not purchase
ETH or participate in the pre-sale of ETH.
WARNING: CRYPTOGRAPHIC TOKENS OF VALUE MAY EX-
PERIENCE EXTREME VOLATILITY IN PRICING
Cryptographic tokens that possess value in public markets, such as BTC, have
demonstrated extreme fluctuations in price over short periods of time on a regular
basis. A Purchaser of ETH should be prepared to expect similar fluctuations,
both down and up, in the price of ETH denominated in BTC or United States
dollars (USD) or other fiat money of other jurisdictions. Such fluctuations are
due to market forces and represent changes in the balance of supply and demand.
EthSuisse cannot and does not guarantee market liquidity for ETH and therefore
there may be periods of time in which ETH is difficult to buy. Additionally,
due to different regulatory dictates in different jurisdictions and the inability of
citizens of certain countries to open accounts at exchanges located anywhere in
the world, the liquidity of ETH may be markedly different in different countries
and this would likely be reflected in significant price discrepancies.

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By purchasing ETH, you expressly acknowledge and represent that you fully
understand that ETH may experience volatility in pricing and will not seek to
hold any of the EthSuisse Parties liable for any losses or any special, incidental,
or consequential damages arising from, or in any way connected to the sale of
ETH.
WARNING: THE PURCHASE OF ETH HAS A NUMBER OF
RISKS
The purchase of ETH carries with it a number of risks. Prior to purchasing
ETH, you should carefully consider the risks listed below and, to the extent
necessary, consult an appropriate lawyer, accountant, or tax professional. If any
of the following risks are unacceptable to you, you should not purchase ETH. By
purchasing ETH, and to the extent permitted by law, you are agreeing not to
hold any of the EthSuisse Parties liable for any losses or any special, incidental,
or consequential damages arising from, or in any way connected, to the sale of
ETH, including losses associated with the risks set forth below.
1 What is Ethereum, the Platform?
The Ethereum Platform combines a peer-to-peer networking platform with a next-
generation blockchain architecture to deliver a decentralized consensus-based,
full-stack platform for developing, offering and using distributed application
services. A consumer-facing application, called the EtherBrowser, integrates the
front and back ends to create an environment in which developers of varying
degrees of sophistication can relatively easily and relatively rapidly build secure,
scalable and interoperable decentralized applications.
2 Overview of Genesis Sale of Ether
The Ethereum Platform requires, for proper operation, and comprehensive
utilization, a cryptographic fuel called Ether (ETH). EthSuisse will produce
and market a quantity of ETH in a pre-sale event called the Genesis Sale,
to be conducted on its web site at https://www.ethereum.org (the Genesis
Sale). Purchasers in the Genesis Sale will acquire ETH in exchange for BTC
at predefined sale prices over a period of forty-two (42) days. Purchasers of
ETH in the Genesis Sale will be awarded cryptographic receipts in the form of
a downloaded wallet that will enable them to claim their purchase once the
product has been developed and is ready for delivery. All ETH pre-sold in this
manner will be delivered to Purchasers in the Ethereum Platforms Genesis Block
the initial block of the the Ethereum Platforms blockchain which constitutes
the inception of operation of the system which is expected to be created during
the winter of 2014-2015, although there are no guarantees that this will occur
according to such a time-frame or at all. Purchasers may claim their ETH at
any point after such time by taking control of their assigned Ethereum account
which holds the ETH.
3 Creation and Sale of ETH
ETH will be created through two processes: (1) a pre-mining process, at the

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instant the system becomes operational, that will create and place a sum of
ETH in the Genesis Block of the blockchain used for the Ethereum Platform,
and (2) the ongoing mining process which secures the Ethereum blockchain. The
Genesis Sale is directly related only to the first process.
Ether will be created on an as-ordered basis for the Genesis Sale. The exact
amount required by EthSuisse to fulfill all Genesis Sale commitments will be
created by a pre-mining process in the Genesis Block for allocation to Genesis
Sale Purchasers of ETH (the Genesis Sale Quantity of ETH).
In addition to the Genesis Sale Quantity of ETH, the pre-mining process will
create and place a second pool of ETH in the Genesis Block. This second pool of
ETH will be directly allocated to early contributors who have worked to develop
the ideas, implementations, and supporting structures of the Ethereum project
up to the time of the Genesis Sale. The size of this pool will be 9.9% of Genesis
Sale Quantity of ETH.
In addition to the Genesis Sale Quantity of ETH and the second pool of ETH,
the pre-mining process will create and place a third pool of ETH in the Genesis
Block. This third pool of ETH will be directly allocated to the Ethereum
Stiftung (Foundation) for payment of future expenses to be determined in its
sole discretion. The size of this pool will be 9.9% of Genesis Sale Quantity of
ETH.
Anticipated ETH distributions at different points in time are presented in
graphical form below. These projections are only intended to be illustrative and
actual percentages may turn out to be different than depicted herein.
anticipated ether distribution
4 Growth Rate of ETH
Once the Ethereum blockchain is operational, new ETH is expected to be
spontaneously created at a constant annual linear rate exclusively via the mining
process pursuant to a target annual rate. The annual target rate of new ETH
creation will be set to 26% of the Genesis Sale Quantity of ETH. Although
EthSuisse does not intend to change the annual rate of new creation at this
time, for technical reasons EthSuisse may need to change the annual rate of
new creation to a value lower than 26% to account for changes to the Ethereum
mining algorithm or to address other issues that may arise. There is no guarantee
that this percentage will be accurate or that this rate will continue at the same
level.
ether supply
5 Timing of Sale
The Genesis Sale will begin at 22:00 GMT on Tuesday July 22, 2014.
(00:00 Midnight Central European Summer Time on Wednesday July 23, 2014)

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The Genesis Sale will run for 42 days and will end at 21:59:59 GMT on September
2, 2014.
EthSuisse reserves the right to change the date when the Genesis Sale will
begin and further reserves the right to extend the sale duration for any reason,
including the unavailability of the website https://www.ethereum.org or other
unforeseen security or procedural issues. Though it does not currently anticipate
doing so, EthSuisse also reserves the right to shorten the sale duration for any
reason.
6 Pricing and Initial Discount on Price of Ether
The baseline retail price of ETH will be set by EthSuisse at 0.0007479 BTC (the
Retail Price). A discount will be offered in the first 36 days of the Genesis Sale.
At the time of the start of the sale, the Retail Price of one ETH is approximately
0.42 CHF (Swiss Francs).
In the first fourteen-day period of the sale, ETH will be offered at a discount
from the Retail Price. As a result of the discount, during this initial period,
ETH will be priced at 0.0005 BTC. During this period one BTC can purchase
2,000 ETH.
At the end of the first fourteen-day period, the price for ETH in BTC terms will
increase daily. The quantity of ETH that will be purchasable for 1 BTC will
decline by 30 ETH per day for twenty-two days, starting at 1,970 ETH (i.e. 1
ETH = 0.000508 BTC approximately) on day 15 and ending at 1,340 ETH (i.e. 1
ETH = p 0.000746 BTC approximately) on day 36.
The Retail Price will be offered for the remaining six days of the sale. A graphical
representation of the sales price for ETH is set forth below:
ether price EthSuisse will not place a cap on the number of ETH that can be
purchased by the community.
EthSuisse reserves the right to change the duration of any affected dis-
counting period for any reason, including the unavailability of the website
https://www.ethereum.org or other unforeseen procedural or security issues.
7 Disclosure of Purchases
In the spirit of openness, and to enable ETH Purchasers to have as much
information as possible to guide their decision making process, EthSuisse has
developed an ETH purchase mechanism that enables purchases to be tracked on
the Bitcoin blockchain.
Each Purchaser has the option to calculate the total number of ETH sold to
enable the Purchaser to develop an understanding of the size of the existing
ETH pool at the time of their ETH purchase. EthSuisse will make all purchases
publicly visible on the Bitcoin blockchain at the following multisignature genesis
address:
36PrZ1KHYMpqSyAQXSG8VwbUiq2EogxLo2

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8 Purchase of Ether from the Ether Store on the Ethereum.org Web-
site
EthSuisse will maintain a store interface, which can be used to purchase
ETH. The store interface will be available on the Ethereum website
(https://www.ethereum.org). Instructions for purchasing ETH with BTC using
the store interface will be embedded and available for review on the Ethereum
website during the duration of the Genesis Sale.
Failure to follow these instructions may limit, delay, or prevent a Purchaser from
obtaining ETH. Any questions about these instructions should be directed to
[email protected].
9 Obligation to Determine If Purchaser Can Purchase ETH in Pur-
chasers Jurisdiction
The Genesis Sale constitutes the sale of a legal software product under Swiss
law. This product sale is conducted by EthSuisse, a Swiss company, operating
under Swiss law. It is the responsibility of each potential Purchaser of ETH
to determine if the Purchaser can legally purchase ETH in the Purchasers
jurisdiction.
10 Acceptance of Terms and Conditions of the ETH Sale
As a first step in the purchase process, EthSuisse will present the Purchaser with
these Terms, and associated documents, along with a checkbox. By clicking the
checkbox, the Purchaser: (i) consents and agrees to the Terms and the Ether
Product Purchase Agreement; (ii) represents and warrants that the Purchaser is
legally permitted to purchase ETH in the Purchasers jurisdiction and is legally
permitted to receive products of Swiss origin; (iii) represents and warrants that
the Purchaser is of a sufficient age to legally purchase ETH or has received
permission from a legal guardian who has reviewed and agreed to these Terms;
(iv) represents and warrants that the the Purchaser will take sole responsibility for
any restrictions and risks associated with the purchase of ETH as set forth below;
(v) represents and warrants that Purchaser is not exchanging bitcoin (BTC) for
ETH for the purpose of speculative investment; (vi) represents and warrants that
the Purchaser is acquiring ETH for the use of decentralized application services
or the purchase of tokens specific to forthcoming decentralized applications on
the Ethereum Platform, or to facilitate development, testing, deployment and
operation of decentralized applications on the Ethereum Platform; and (vii)
represents and warrants that the Purchaser has an understanding of the usage
and intricacies of cryptographic tokens, like BTC, and blockchain-based software
systems.
11 Independent Confirmation of Purchases
During the purchase process on the https://www.ethereum.org website, EthSuisse
will provide Purchasers with a unique intermediary BTC address. Using this
address, Purchasers can track and confirm that the Purchasers BTC has been
received at that address and has been subsequently and automatically sent to

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the genesis address. Additionally, EthSuisse will lodge a small coded transaction
into the Bitcoin blockchain to serve as an additional purchase confirmation.
Knowledge of the unique intermediary BTC address does not constitute a
purchase receipt or indicate in any way that any party possessing such knowledge
has rights to or ownership of the purchased ETH.
12 Purchasers Loss of the Purchase Password Will Cause the Loss of
the Purchased ETH
As part of the purchase process, and in order to purchase ETH, the Purchaser will
need to provide a password (the Purchase Password). The Purchase Password
will be used to load the unique address and private key to the Purchasers
Ethereum account (which will store the purchased ETH) into a wallet in the
EtherBrowser when the system is operational.
Purchaser must keep the Purchase Password safe and not share it in any way
or with anybody. The Purchase Password is essential for accessing the Pur-
chasers ETH. Purchasers loss of the Purchase Password will cause the loss of
the purchased ETH. Unauthorized access by any party to a Purchasers Pur-
chase Password along with access to the downloaded wallet, will enable that
unauthorized party to access the purchased ETH and the ETH will be lost.
By purchasing ETH, and to the extent permitted by applicable law, the Purchaser
agrees not to hold any of the EthSuisse Parties liable for any losses or any special,
incidental, or consequential damages arising out of, or in any way connected to,
Purchasers failure to properly secure and keep private the Purchase Password.
13 Receipt of ETH and the Purchase Email
As part of the purchase process, and in order to purchase ETH, a Purchaser will
need to provide an email address (the Purchase Email). The Purchase Email
will be used to email the Purchaser a wallet file containing a unique address and
private key to the Purchasers Ethereum account, which will store the purchased
ETH.
Upon receipt of a Purchase Email, the Purchaser agrees to save the Ethereum
wallet file to their computers file system (an example of a saved wallet is shown
below), store the applicable wallet file and backup copies of the wallet in a secure
location on that computer as well as on some other device, and then delete the
Purchase Email from the Purchasers email system.
By purchasing ETH, and to the extent permitted by applicable law, the Purchaser
agrees not to hold any of the EthSuisse Parties liable for any losses or any special,
incidental, or consequential damages arising out of, or in any way connected
to, Purchasers failure to properly secure the Ethereum wallet file or delete the
Purchase Email.
wallet
14 Purchasers Loss of the Purchase Wallet Will Cause the Loss of
the Purchased ETH

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As part of the purchase process, the Purchaser will need to receive and store
a Purchase Wallet. The Purchaser must download the Purchase Wallet in the
web browser during the purchase process and/or download or extract the wallet
from the Purchase Email. The Purchase Wallet will be used to load the unique
address and private key to the Purchasers Ethereum account (which will store
the purchased ETH) into a wallet in the EtherBrowser when the system is
operational.
Purchaser must keep the Purchase Wallet safe and not share it in any way or
with anybody. Purchaser must make copies of the Purchase Wallet and securely
store backup copies of the Purchase wallet in multiple locations. The Purchase
Wallet is essential for accessing the Purchasers ETH. Purchasers loss of the
Purchase Wallet will cause the loss of the purchased ETH. Unauthorized access
by any party to a Purchasers Purchase Wallet along with access to the Purchase
Password, will enable that unauthorized party to access the purchased ETH and
the ETH will be lost.
By purchasing ETH, and to the extent permitted by applicable law, the Purchaser
agrees not to hold any of the EthSuisse Parties liable for any losses or any special,
incidental, or consequential damages arising out of, or in any way connected
to, Purchasers failure to properly store, secure and keep private the Purchase
Wallet.
15 Ether Will Only Be Available For Sale on the Ethereum Website
EthSuisse will only sell ETH through the Ethereum website, available at
https://www.ethereum.org. To the extent that any third-party website or service
offers ETH for sale during the Genesis Sale or facilitates the sale or transfer
of ETH in any way during the Genesis Sale or at any time up to the release
of the Genesis Block, such third-party websites or services are not sanctioned
by EthSuisse or its parents and affiliates and have no relationship in any way
with the EthSuisse Parties. As a result, EthSuisse prohibits the use of these
third-party websites or services for the purchase of ETH prior to the end of the
Genesis Sale.
Purchasers should take great care that the site used to purchase ETH has the
following universal resource locator (URL):
secure Please ensure that the URL of your web browser indicates that it is using
a hypertext transport protocol secure connection (https) as depicted in the
image above and that the domain name is correct.
By purchasing ETH, and to the extent permitted by applicable law, the Purchaser
agrees not hold any of the EthSuisse Parties liable for losses incurred by any
person, entity, corporation, or group individuals or groups who uses a third party
service to purchase ETH.
The only official and authorized ETH sale website URL is https://www.ethereum.org
16 Limitations on the Purchase of Ether

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In the interest of fairness and inclusiveness, EthSuisse will apply certain limita-
tions on the sale of ETH.
In order to give as many interested parties as possible the opportunity to
purchase ETH in the Genesis Sale, EthSuisse will restrict any single entity,
person, corporation, or group from controlling more than 12.5% of the total
ETH sold by the end of the Genesis Sale. The purpose of this limitation is to
ensure broad, global participation in the Genesis Sale.
Any individual, group, corporation, company, entity, or groups of legally con-
nected entities (e.g., multiple entities with the same owner, or multiple entities in
which one owns one or more of the others, or multiple entities who have entered
into a joint venture) wishing to purchase more than 2,000,000 ETH must contact
EthSuisse directly at [email protected] to clear the purchase.
When using the Genesis Sale web site for purchasing ETH, each Purchaser agrees
that, to the best of the Purchasers knowledge, and after all necessary inquiries,
the Purchaser will not cause any entity, person, group, company, corporation, or
group of associated entities to control more than 2,000,000 ETH.
17 Fraudulent Attempts to Double Spend BTC
EthSuisse will monitor all potential transactions for fraudulent attempts to
double spend BTC. Any detected double spend of BTC will result in no ETH
being generated in the Genesis Block for the associated wallet address.
18 EthSuisse Will Not Purchase ETH During Genesis Sale and Until
the Creation of the Genesis Block
EthSuisse warrants that it will not purchase ETH in its own sale. Furthermore
EthSuisse warrants that it will not purchase ETH from any third party, or
acquire ETH in any manner, or acquire future control of ETH, during the period
of the Genesis Sale and until the creation of the Genesis Block.
19 Certain Risks Associated with the Purchase of Ether
The purchase of ETH carries with it significant risk. Prior to purchasing ETH, the
Purchaser should carefully consider the below risks and, to the extent necessary,
consult a lawyer, accountant, and/or tax professionals prior to determining
whether to purchase ETH.
19.1 Risk of Dissolution of The Ethereum Project Due To a Dimin-
ishment in the Value of the BTC Sale Revenue
All Purchasers are paying BTC to purchase ETH. In the past few months the
price of BTC in United States dollars has been relatively stable. However, despite
recent price stability, it is possible that the value of BTC will drop significantly
in the future, depriving EthSuisse of sufficient resources to continue to operate.
In order to guard against this risk, EthSuisse intends to periodically convert
proceeds from the sale of ETH into fiat currencies instead of BTC.

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19.2 Risk of Losing Access to Ether Due to Loss of a Wallet File or
Password
As noted above, ETH will be stored in a wallet, which can only be accessed with
a password selected by the Purchaser. If a Purchaser of ETH does not maintain
an accurate record of the Purchasers password or losses the wallet file sent by
EthSuisse in the Purchase Email, this will lead to the loss of ETH.
As a result, Purchasers must safely store their password and the wallet file sent in
the Purchase Email each in one or more backup locations that are well separated
from the primary location. Additionally the password and the wallet should
never be stored together.
In order to access ones ETH, both the wallet file provided by the sale application
and the password that the Purchaser entered are required; loss of either, or
leakage/theft of both, will lead to the loss of a Purchasers ETH.
19.3 Risk of Unauthorized Access to a Downloaded Wallet
Any third party that gains access to the Purchasers Purchase Email will be able
to download the wallet file and potentially access the wallet by deciphering or
cracking the Purchasers password. To guard against any improper access to
the wallet, the Purchaser should: (i) select a highly secure Purchase Password
for the Purchasers ETH wallet; and (ii) promptly delete the Purchase Email
shortly after receipt, as expressly required by these Terms.
Purchaser must take care not to respond to any inquiry regarding their purchase
of ETH, including but not limited to, email requests purportedly coming from
the ethereum.org or similar looking domain.
19.4 Risk of Regulatory Action in One or More Jurisdictions
Cryptocurrencies have been the subject of regulatory scrutiny by various reg-
ulatory bodies around the globe. The Ethereum Platform and ETH could be
impacted by one or more regulatory inquiries or regulatory action, which could
impede or limit the ability of EthSuisse to continue to develop the Ethereum
Platform.
19.5 Risk of Alternative, Unofficial Ethereum Networks
Following the Genesis Sale, and the development of the initial version of the
Ethereum Protocol and User Clients (i.e., version 1.0), it is possible that alterna-
tive unofficial Ethereum-based networks could be established, which utilize the
same open source source code and open source protocol underlying The Ethereum
Platform. The official Ethereum network may compete with these alternative,
unofficial Ethereum-based networks, which could potentially negatively impact
the Ethereum Platform and ETH. EthSuisse may gain a competitive advantage
being the party that developed the Ethereum Platform, but such advantages are
far from absolute.
19.6 Risk of Insufficient Interest in the Ethereum Platform or Dis-
tributed Applications

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It is possible that the Ethereum Platform will not be used by a large number of
external businesses, individuals, and other organizations and that there will be
limited public interest in the creation and development of distributed applications.
Such a lack of interest could impact the development of the Ethereum Platform
and potential uses of ETH. EthSuisse has contracted with developers to help
build the Ethereum Platform and is working with other third-party developers
around the world to create an interest in the Ethereum Platform. However, it
cannot predict the success of its own development efforts or the efforts of other
third parties.
19.7 Risk Associated With the Development of Other Platforms For
Decentralized Applications
EthSuisse is one of several organizations, companies, and groups, attempting
to build a platform which would facilitate the creation and deployment of
decentralized applications. It is possible that different technical paradigms
than the ones being used in the current Ethereum Platform implementation are
optimal.
While EthSuisse anticipates being a leader in the development of this technology,
competition from these alternative platforms for decentralized applications may
impact success of the Ethereum Project and the ability of EthSuisse to operate
and sell ETH in the future.
19.8 Risk that the Ethereum Platform, As Developed, Will Not Meet
the Expectations of Purchaser
The Purchaser recognizes that the Ethereum Platform is presently under de-
velopment and may undergo significant changes before release. Purchaser ac-
knowledges that any expectations regarding the form and functionality of the
Ethereum Platform held by the Purchaser may not be met upon release of the
Ethereum Platform, for any number of reasons including a change in the design
and implementation plans and execution of the implementation of the Ethereum
Platform.
19.9 Risk that the Ethereum Platform May Never be Completed or
Released
Purchaser understands, that while the Ethereum Team will make reasonable
efforts to complete the Ethereum software, it is possible that an official completed
version of the Ethereum Platform may not be released and there may never be
an operational Ethereum Platform.
19.10 Risk of Theft
Hackers or other groups or organizations may attempt to steal the BTC revenue
from the Genesis Sale, thus potentially impacting the ability of EthSuisse to
develop the Ethereum Platform and operate EthSuisse. To account for this risk,
EthSuisse has and will continue to implement comprehensive security precautions
to safeguard the BTC obtained from the sale of ETH.

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Multi-factor security measures will be taken to protect BTC and ETH including
physical elements, Shamirs Secret Sharing Algorithm, multisignature keys, BIP
32, anti-spear-phishing procedures, splitting of funds, hot/cold wallet partitioning
and diversification. Moreover, regular security audits of hot and cold wallets will
be conducted by internal and external teams.
19.11 Risk of Security Weaknesses in the Ethereum Platform Core
Infrastructure Software
The Ethereum Platform rests on open-source software, and there is a risk that the
Ethereum Team, or other third parties not directly affiliated with the EthSuisse
Parties, may introduce weaknesses or bugs into the core infrastructural elements
of the Ethereum Platform causing the system to lose ETH stored in one or more
Purchaser accounts or other accounts or lose sums of other valued tokens issued
on the Ethereum Platform.
EthSuisse has taken steps to build, maintain, and secure the infrastructure of
the Ethereum Platform, and will continue to do so after the Genesis Sale. For
example, EthSuisse intends to hire external consultants on a periodic basis to
assess and audit the security of the Ethereum Platform and will work with
cryptography and security experts to develop and employ best practices to audit
the Platform.
19.12 Risk of Weaknesses or Exploitable Breakthroughs in the Field
of Cryptography
Cryptography is an art, not a science. And the state of the art can advance over
time Advances in code cracking, or technical advances such as the development
of quantum computers, could present risks to cryptocurrencies and the Ethereum
Platform, which could result in the theft or loss of ETH. To the extent possible,
EthSuisse intends to update the protocol underlying the Ethereum Platform to
account for any advances in cryptography and to incorporate additional security
measures, but cannot it cannot predict the future of cryptography or the success
of any future security updates..
19.13 Risk of Ether Mining Attacks
As with other cryptocurrencies, the blockchain used for the Ethereum Platform
is susceptible to mining attacks, including but not limited to double-spend
attacks, majority mining power attacks, selfish-mining attacks, and race
condition attacks. Any successful attacks present a risk to the Ethereum Platform,
expected proper execution and sequencing of ETH transactions, and expected
proper execution and sequencing of contract computations. EthSuisse intends to
limit the risk of mining attacks by creating a blockchain proof-of-work security
algorithm using a unique implementation of a GHOST-like protocol and possibly
an implementation of hybrid proof-of-stake that could reduce the risk of mining
attacks.
Despite the efforts of the Ethereum Team, known or novel mining attacks may
be successful.

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19.14 Risk of Rapid Adoption and Increased Demand for ETH
If the Ethereum Platform is rapidly adopted, the demand for ETH could rise
dramatically and at a pace that exceeds the rate with which ETH miners can
create new ETH tokens. Under such a scenario, the entire Ethereum Platform
could become destabilized, due to the increased cost of running distributed
applications. In turn, this could dampen interest in the Ethereum Project and
ETH.
Instability in the demand for ETH leading to oscillations and instability in the
price of ETH as denominated in currencies that Ethereum-based businesses use
to pay operating costs could result in Ethereum-based businesses being unable
to continue to operate economically. This would represent losses to businesses
or worst case, cause business to cease operations.
19.15 Risk of Rapid Adoption and Insufficiency of Computational
Application Processing Power on the Ethereum Network
If the Ethereum Platform is rapidly adopted, the demand for transaction pro-
cessing and distributed application computations could rise dramatically and at
a pace that exceeds the rate with which ETH miners can bring online additional
mining power. Under such a scenario, the entire Ethereum Platform could be-
come destabilized, due to the increased cost of running distributed applications.
In turn, this could dampen interest in the Ethereum Project and ETH.
Insufficiency of computational resources and an associated rise in the price of
ETH could result in businesses being unable to acquire scarce computational
resources to run their distributed applications. This would represent revenue
losses to businesses or worst case, cause businesses to cease operations because
such operations have become uneconomical due to distortions in the crypto-
economy.
20 All Purchases of Ether Are Non-Refundable
ALL PURCHASES OF ETH ARE FINAL. PURCHASES OF ETH ARE NON-
REFUNDABLE. BY PURCHASING ETH, THE PURCHASER ACKNOWL-
EDGES THAT NEITHER ETHSUISSE NOR ANY OTHER OF THE ETH-
SUISSE PARTIES ARE REQUIRED TO PROVIDE A REFUND FOR ANY
REASON, AND THAT THE PURCHASER WILL NOT RECEIVE MONEY
OR OTHER COMPENSATION FOR ANY ETH THAT IS NOT USED AS
CRYPTOFUEL OR REMAINS UNUSED.
21 Taxation of Ether and Taxation Related to the Genesis Sale
EthSuisse makes no representations concerning the tax implications of the sale of
ETH or the possession or use of ETH. The Purchaser bears the sole responsibility
to determine if the purchase of ETH with BTC or the potential appreciation or
depreciation in the value of ETH over time has tax implications for the Purchaser
in the Purchasers home jurisdiction.

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purchasing ETH, and to the extent permitted by law, the Purchaser agrees not
hold any of the EthSuisse Parties liable for any tax liability associated with or
arising from the purchase of ETH.
22 Privacy
Although EthSuisse requires that Purchasers provide an email address, EthSuisse
will not publish any identifying information related to an ETH purchase, without
the prior written consent of the Purchaser.
Purchasers may be contacted by email by EthSuisse regarding a purchase. Such
emails will be informational only. EthSuisse will not request any information
from Purchasers in an email.
23 Disclaimer of Warranties
THE PURCHASER EXPRESSLY AGREES THAT THE PURCHASER IS
PURCHASING ETH AT THE PURCHASERS SOLE RISK AND THAT ETH
IS PROVIDED ON AN AS IS BASIS WITHOUT WARRANTIES OF ANY
KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIM-
ITED TO, WARRANTIES OF TITLE OR IMPLIED WARRANTIES, MER-
CHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE (EXCEPT
ONLY TO THE EXTENT PROHIBITED UNDER APPLICABLE LAW WITH
ANY LEGALLY REQUIRED WARRANTY PERIOD TO THE SHORTER
OF THIRTY DAYS FROM FIRST USE OR THE MINIMUM PERIOD RE-
QUIRED).
WITHOUT LIMITING THE FOREGOING, NONE OF THE ETHSUISSE
PARTIES WARRANT THAT THE PROCESS FOR PURCHASING ETH
WILL BE UNINTERRUPTED OR ERROR-FREE.
24 Limitations Waiver of Liability
THE PURCHASER ACKNOWLEDGES AND AGREES THAT, TO THE
FULLEST EXTENT PERMITTED BY ANY APPLICABLE LAW, THE DIS-
CLAIMERS OF LIABILITY CONTAINED HEREIN APPLY TO ANY AND
ALL DAMAGES OR INJURY WHATSOEVER CAUSED BY OR RELATED
TO USE OF, OR INABILITY TO USE, ETH OR THE ETHEREUM PLAT-
FORM UNDER ANY CAUSE OR ACTION WHATSOEVER OF ANY KIND
IN ANY JURISDICTION, INCLUDING, WITHOUT LIMITATION, ACTIONS
FOR BREACH OF WARRANTY, BREACH OF CONTRACT OR TORT
(INCLUDING NEGLIGENCE) AND THAT NONE OF THE ETHSUISSE PAR-
TIES SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL,
EXEMPLARY OR CONSEQUENTIAL DAMAGES, INCLUDING FOR LOSS
OF PROFITS, GOODWILL OR DATA, IN ANY WAY WHATSOEVER ARIS-
ING OUT OF THE USE OF, OR INABILITY TO USE, OR PURCHASE OF,
OR INABILITY TO PURCHASE, ETH.
THE PURCHASER FURTHER SPECIFICALLY ACKNOWLEDGES THAT
ETHSUISSE PARTIES ARE NOT LIABLE, AND THE PURCHASER AGREES

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NOT TO SEEK TO HOLD ANY OF THE ETHSUISSE PARTIES LIABLE,
FOR THE CONDUCT OF THIRD PARTIES, INCLUDING OTHER PUR-
CHASERS OF ETH, AND THAT THE RISK OF PURCHASING AND USING
ETH RESTS ENTIRELY WITH THE PURCHASER .
TO THE EXTENT PERMISSIBLE UNDER APPLICABLE LAWS, UNDER
NO CIRCUMSTANCES WILL ANY OF THE ETHSUISSE PARTIES BE
LIABLE TO ANY PURCHASER FOR MORE THAN THE AMOUNT THE
PURCHASER HAVE PAID TO ETHSUISSE FOR THE PURCHASE OF ETH.
SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF CERTAIN
WARRANTIES OR THE LIMITATION OR EXCLUSION OF LIABILITY FOR
CERTAIN TYPES OF DAMAGES. THEREFORE, SOME OF THE ABOVE
LIMITATIONS IN THIS SECTION AND ELSEWHERE IN THE TERMS
MAY NOT APPLY TO A PURCHASER. IN PARTICULAR, NOTHING IN
THESE TERMS SHALL AFFECT THE STATUTORY RIGHTS OF ANY
PURCHASER OR EXCLUDE INJURY ARISING FROM ANY WILLFUL
MISCONDUCT OR FRAUD OF ETHSUISSE.
25 Jurisdiction of the Sale
The legal entity conducting the Genesis Sale, Ethereum Switzerland GmbH, is
organized in the Canton of Zug, under the laws of Switzerland.
26 Dispute Resolution
All disputes, controversies or claims arising out of, relating to, or in connection
with the Terms, the breach thereof, or EthSuisses sale of ETH or use of the
Ethereum Platform shall be finally settled under the Rules of Arbitration of the
International Chamber of Commerce by one or more arbitrators appointed in
accordance with said Rules. All claims between the parties relating to these
Terms that are capable of being resolved by arbitration, whether sounding in
contract, tort, or otherwise, shall be submitted to ICC arbitration.
Prior to commencing arbitration, the parties have a duty to negotiate in good
faith and attempt to resolve their dispute in a manner other than by submission
to ICC arbitration.
The arbitration panel shall consist of one arbitrator only, unless the ICC Court
of Arbitration determines that the dispute is such as to warrant three arbitrators.
If the Court determines that one arbitrator is sufficient, then such arbitrator
shall be selected from Switzerland. If the Court determines that three arbitrators
are necessary, then each party shall have 30 days to nominate an arbitrator of
its choice in the case of the Claimant, measured from receipt of notification of
the ICC Courts decision to have three arbitrators; in the case of Respondent,
measured from receipt of notification of Claimants nomination. All nominations
must be from Switzerland. If a party fails to nominate an arbitrator, the Court
will do so. The Court shall also appoint the chairman.
All arbitrators shall be and remain independent of the parties involved in
the arbitration. The place of arbitration shall be fixed by the ICC Court, but

19
the arbitral tribunal may conduct hearings, meetings, and deliberations at any
location it considers appropriate. The language of the arbitration shall be
English. In deciding the merits of the dispute, the tribunal shall apply the
laws of Switzerland and any discovery shall be limited and shall not involve any
depositions or any other examinations outside of a formal hearing. The tribunal
shall not assume the powers of amiable compositeur or decide the case ex aqueqo
et bono.
In the final award, the tribunal shall fix the costs of the arbitration and decide
which of the parties shall bear such costs in what proportion. Every award shall
be binding on the parties. The parties undertake to carry out the award without
delay and waive their right to any form of recourse against the award in so far
as such waiver can validly be made.
27 Force Majeure
EthSuisse is not liable for failure to perform solely caused by:
unavoidable casualty, delays in delivery of materials, embargoes, government
orders, acts of civil or military authorities, acts by common carriers, emergency
conditions (including weather conditions) incompatible with safety or good
quality workmanship, or any similar unforeseen event that renders performance
commercially implausible. If an event of force majeure occurs, the party injured
by the others inability to perform may elect to suspend the Agreement, in
whole or part, for the duration of the force majeure circumstances. The party
experiencing the force majeure circumstances shall cooperate with and assist the
injured party in all reasonable ways to minimize the impact of force majeure on
the injured party.
28 Complete Agreement
These Terms along with the Ether Product Purchase Agreement, sets forth the
entire understanding between each Purchaser and EthSuisse with respect to the
the purchase and sale of ETH.
For facts relating to the sale and purchase, the Purchaser agrees to rely only on
these two documents in determining purchase decisions and understands that
these documents govern the sale of ETH and supercede any public statements
about the Genesis Sale made by third parties or by Ethereum Team or individuals
associated with any EthSuisse Parties, past and present and during the Genesis
Sale.
29 Severability
The Purchaser and EthSuisse agree that if any portion of these Terms or the
Ether Product Purchase Agreement is found illegal or unenforceable, in whole
or in part, such provision shall, as to such jurisdiction, be ineffective solely
to the extent of such determination of invalidity or unenforceability without
affecting the validity or enforceability thereof in any other manner or jurisdiction
and without affecting the remaining provisions of the Terms or Ether Product
Purchase Agreement, which shall continue to be in full force and effect.

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30 No Waiver
The failure of EthSuisse to require or enforce strict performance by the Purchaser
of any provision of these Terms or the Ether Product Purchase Agreement or
EthSuisses failure to exercise any right under these agreements shall not be
construed as a waiver or relinquishment of EthSuisses right to assert or rely
upon any such provision or right in that or any other instance.
The express waiver by EthSuisse of any provision, condition, or requirement
of these Terms or the Ether Product Purchase Agreement shall not constitute
a waiver of any future obligation to comply with such provision, condition or
requirement.
Except as expressly and specifically set forth in this these Terms, no represen-
tations, statements, consents, waivers, or other acts or omissions by EthSuisse
shall be deemed a modification of these Terms nor be legally binding, unless doc-
umented in physical writing, hand signed by the Purchaser and a duly appointed
officer, employee, or agent of EthSuisse.
31 Updates to the Terms and Conditions of the Ether Genesis Sale
EthSuisse reserves the right, at its sole discretion, to change, modify, add, or
remove portions of the Terms and Ether Product Purchase Agreement, at any
time during the sale by posting the amended Terms on the Ethereum website
(https://www.ethereum.org). Any Purchaser will be deemed to have accepted
such changes by purchasing ETH.
The Terms may not be otherwise amended except in a signed writing executed
by both the Purchaser and EthSuisse. For purposes of this agreement, writing
does not include an e-mail message and a signature does not include an electronic
signature.
If at any point you do not agree to any portion of the then-current version of
the Terms, you should not purchase ETH.
To the extent the Terms conflict with the Ether Product Purchase Agreement,
the Terms shall govern.
32 Cooperation with Legal Authorities
EthSuisse will cooperate with all law enforcement inquiries, subpoenas, or
requests provided they are fully supported and documented by the law in the
relevant jurisdictions. In accord with one of the core principles of the Ethereum
project transparency EthSuisse will endeavor to publish any legal inquiries
upon receipt.
33 Further Information
For further information regarding the Ether sale, please contact [email protected].
Dated July 21, 2014

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Disclosures
Its worth making disclosures as part of your crowdsale in order to avoid confusion
on the part of new users of these technologies or those that might be unfarmilar
with crowdsales and what they are buying.
1. Friendly Information:
The views expressed in these statements and websites (while intended as neutral
and informational), should be taken as friendly to the project and its success
given it was prepared by those close to the projects development.
2. This Is Not Stock or Equity
Participation in the crowdsale will not provide you with a security or equity
stake in this project. The digital token known as XYZ is only useful for
accessing the API Network software after its development is complete.
3. No Refunds
No refunds will be made to purchasers of token XYZ, should they change their
mind at a later time, as the creation of the XYZ tokens is locked in. Of course,
once the purchaser receives his or her tokens after the crowdsale, they are free
to send or sell them to anyone of their choice.
4. If You Send BTC From Coinbase or Any Wallet You Dont Have The Private
Key Then You Cant Claim Your XYZ Coin
If you send the crowdsale address BTC from a wallet that you do not control the
private key for (example Coinbase), then you will not be able to claim the XYZ
Coins you purchased and the seller will be unable to generate new ones for you.
5. Low Liquidity / Ability to Sell These Digital Tokens Will Be Limited
If you purchasing token XYZ in order to hold it as a store of wealth or value
please understand that this project is in its early days of development and that
the market for these tokens will be very shallow and thus make it will be harder
to buy and sell these tokens without effecting the price on the market.

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