A decentralized messaging app called Status — built on the Ethereum blockchain — raises over $60 million dollars during its initial coin offering campaign. However, as soon as the sale started the network became congested, and the Status team was unable to immediately provide everyone with their promised tokens.
The coin generation event imploded as a result of too many transactions being sent to the smart contract address simultaneously. Even more individuals tried to purchase tokens after that, causing the network to become engorged and unusable. This great mass of activity led to many transactions stalling or freezing or failing. A myriad of complaints by would-be token buyers then came flooding in en masse.
Overall, based on the Ethereum block explorer, the current number of Status tokens created sits at 1.68 billion. The number of token holders rests at 20,389 at the time of writing. A reddit post provided details about the ICO, saying total market cap value of the Status token will be $275 million. This makes it more valuable than The DAO at the time of its ICO. It is still unclear who was able to complete transactions during the ICO and which transactions failed entirely.
A trustnodes.com article covered the bedlam and chaos rather eloquently:
The sale was planned to last until 4th of July, but the cap of 300,000 eth was quickly reached during a frenzy period which broke down ethereum’s network, creating much congestion, backlog and some shenanigans.
Ethereum’s Network Overload Causes Service Suspensions; Its Transaction Price Also Climbs
This issue turned out to be a huge problem for the Ethereum network as a whole. As a result of the massive amounts of Status ICO transactions and other Ethereum transactions taking place, the system essentially failed. Coinbase even placed Ethereum transactions on hold until its blockchain can function properly again.
Other sites and exchanges have been affected by the congestion as well. Shapeshift.io recently tweeted they are taking down Ether and ERC-20 tokens as a result of the delays. Exchange platform Bitfinex halted transactions, too. They tweeted, “We are suspending all ETH withdrawal until the network backlog subsides and we are able to reliably post transactions to blockchain.” Lastly, myetherwallet.com tweeted they are tired of fixing ICO related problems, and are moving on to continue building features. Without doubt, more trading centers and services have crawled into red alert mode, ceasing Ether transactions until the system begins functioning again.
Frankly, we really don't feel like spending another 200 hours trying to support ICOs.
I think we're going to get back to building features.
— MyEtherWallet.com (@myetherwallet) June 21, 2017
Another issue with Ethereum’s congestion is it has increased block sizes, which in turn causes the gas price of transactions to soar. This occurs as a result of all the transactions taking place in rapid fire succession. It can be seen as a new charge for the extra transmissions occurring on the network. This is another downside to the system being jammed up and backlogged.
Ethereum’s Price Begins to Plummet; Ecosystem Greed, and Healing the Network
No telling when Ethereum will be back and healthy online, but the consequences of the mad rush for ICO speculation have been severe. According to Coinmarketcap stats, the price of Ethereum has begun a descent. It is sitting down at 12.04% and still falling, at the time of writing.
Some people believe the prior Ethereum price surge has been a result of rampant speculation and greed on the market, which were sparked by ICO feeding frenzies. Dogecoin founder Jackson Palmer recently made a video where he expressed concerns regarding the current environment of greed.
He said, “The real reason the [ether] price has been going up something like a hundred dollars per week for the past month is really just greed: greed from developers, greed from investors [and] greed from everybody in this speculative market.”
No one can be certain pure greed contributed to the recent Ethereum bull market…but there was certainly so much cash floating around that all the excitement may come to a grinding halt. That is not surprising, however, when today’s coin generation events or ICO’s are pulling in millions of dollars within minutes. And for the Ethereum status quo to continue forward uninhibited, the network congestion issue would have to be addressed. Until then, the price could enter into a nasty ferocious bearish saddening trend.
Do you think Status will recover? Will Ethereum continue spiraling downward? Share your thoughts below!
Images courtesy of Shutterstock, tokenmarket.org, and ethereum.org
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