Oversubscribed ICOS – How to Get Ahead

Oversubscribed ICOS – How to Get Ahead

It is becoming an all-too-familiar story. An ICO generates a flurry of enthusiasm that has thousands of potential investors lining up just minutes before the official launch of the ICO sale.

Some cannot quite hold their patience enough and release their transaction onto the network perhaps a few seconds before the official start date, or perhaps even a few minutes before, in the hope that this, somehow, will bring an advantage.

It won’t. Transactions are time-stamped. And transactions which are stamped before the official start date of an ICO are generally programmed to be ignored by the ICO’s own Smart Contract fund management mechanisms. The only winners here are the miners who pick up gas fees for transactions which are ultimately rejected.

Otherwise, the outcome is the same each time – a flooded network with knock-on effects for disappointed investors, not to mention more general users of the network who are having to live with deterioration in network performance that can sometimes last for hours.

Understanding the problems and finding workaround solutions

In order to apply and understand the solutions we propose here, it will help to understand the structural problems with the Ethereum network during periods of high demand. We will deal with each of these in turn.

The Structural Problem

At the time of writing (October 2017), the Ethereum network clearly has scalability issues. Firstly, there simply is not enough nodes out there to handle the overload during periods of frenzied ICO activity. Furthermore, the number of ICOs is set to increase exponentially in the near future. More nodes are simply required. We will follow up on this point further below.

Secondly, Ethereum, like Bitcoin, currently employs a Proof-of-Work consensus algorithm. For those who are unsure as to what that is, in practical terms this simply means that the nodes which participate in the network are expected to perform lots of intensive calculations in a bid to win the rewards for mining the next block of transactions that will be committed to the Blockchain. In other words, processing transactions is currently a relatively slow process, and this becomes particularly problematic during periods of high demand.

There are plans in place for Ethereum to migrate to a new consensus algorithm (Proof-of-Stake), a much more robust and less resource-intensive approach to mining, but how and when this will be implemented exactly still remains unclear. In the meantime, we are likely to suffer the same network congestion issues during periods of over-subscription.

The Strategic Solutions

This, then, is where individual investors need can and need to adopt strategies to get ahead of the crowd for high-demand ICOs in order to ensure that their investment gets accepted and processed by the network.

Firstly, you may simply want to consider avoiding common online wallet clients – such as MyEtherWallet and MetaMask. If everyone else is using these wallets, that simply means that everyone else is also submitting their requests to join an ICO through the same subset of nodes within the Ethereum network when submitting their ICO purchase requests. Evidently, these nodes will need to queue these requests and process them one by one – assuming they haven’t been overwhelmed.

There are two alternatives – one, submit your request through a less popular Ethereum wallet client technology which will be hosted on a node that is less likely to be over-subscribed. Examples of these are jaxx and exodus. However, these are proprietary wallets, at least in part, and therefore not open to community scrutiny.


Ethereum Node

Going Full Node

The alternative – and the best solution, moreover – is to download the official Ethereum Wallet. This also allows you to download and manage your own Ethereum network node. The upside is that, when it comes to submitting a transaction to participating in an oversubscribed ICO, you can simply submit the request to your own node without risking your request having to queue behind thousands of others.

Having your own node means that your request will be processed immediately and then propagated  through the Ethereum network. It also means that you are making an active contribution to expanding and supporting the Ethereum network itself.

What all of this means, however, is that you will need to download a full copy of the Ethereum Chain. That is a LOT of data and will likely require a separate hard-disk, as well as the time and dedication necessary for mastering node management. This option, really, is one for those who take their commitment to ICOs very seriously, and who want to immerse themselves in the Ethereum project more generally.

If that’s the case, you may want to check out Rajeev Sakhuja’s best-selling Ethereum Development course on Udemy.

Udemy Ethereum Guru Rajeev Sukhaja

Note, however, that this course has a pre-requisite level of technical literacy – if you have dabbled in coding previously, and have some experience with playing around with command line environments along with some web-development, then you should be able to follow along. If that’s not the case, and you still want to give the course a go, give it a try (there is a thirty-day refund policy anyhow) if you enjoy a challenge.

Paying More For Your Gas?

Some out there will advise you to pay a higher price for your gas. The reasoning is that miners will prioritise your transaction over others who are paying less for their gas. All else being equal, this is generally true.

However, paying a higher fee for your gas will be of no help if you are submitting your transaction to an over-subscribed node which, by definition, will be unable to process your transaction amongst the myriad of other requests that are submerging it.

That said, if you combine the higher gas fee strategy with that of submitting your transaction through a less commonly used wallet service that is hooked up to a subset of relatively under-used Ethereum nodes, then you have given yourself every advantage.

It should be pointed out here, however, that people – understandably – will confuse increasing the gas limit associated with your transaction with paying a higher fee. Simply take note that the Ethereum network will simply process a pre-set, fixed amount of gas in relation to your transaction – this is dictated by the nature of the transaction. If you set a higher gas amount, you will simply be refunded the difference.

However, the price you pay for that gas is entirely up to you – and it is here that you should apply a slightly higher fee if your wallet client offers the ability to do so.