All major cryptocurrencies have had to come up with new ways to ensure their networks scale effectively. In the Bitcoin world, that solution is known as Segregated Witness, which paves the way for the Lightning Network. Ethereum has a similar protocol known as Raiden. Unfortunately, it seems the developers of this scaling solution are going a slightly different route than was originally assumed. Their plan to host an ICO has been getting a lot of negative feedback.

Raiden ICO Creates Plenty of Animosity

It has to be said that the Raiden project looks pretty spectacular on paper. Bringing this new degree of scalability to Ethereum is quite a significant development. In fact, it will likely rival Bitcoin’s Lightning Network. Whichever currency brings its scaling solution to the masses first will have a competitive advantage; that much is certain. However, such projects take months if not years of hard work. Most of that work is performed without financial compensation, but that is only to be expected when working on open-sourced projects.

It was therefore a surprise to everyone to learn that the Raiden team had some unexpected plans. Instead of developing this solution as originally planned, it has now been turned into a cryptocurrency ICO.  While it is only normal that the team would expect some form of compensation for their hard work, just seeing Ethereum succeed should be all the reward open-source developers need. Some people feel this ICO is only justified after all their hard work. Others, such as Charlie Lee, see it as a cash grab.

Both arguments are somewhat valid, and there is no right or wrong in this regard. Though everyone is entitled to their opinion, no one can deny that the way the Raiden team went about their ICO raises a lot of questions. After all, this project has been in development for some time now without ever asking for any money whatsoever. Such a sudden change of heart is pretty worrisome, especially considering how people will need to use a proprietary token to interact with this network. If the team had announced their ICO from day one, there would be far less friction over this decision; that much is certain.

It does appear the ICO tokens will be used as a way to pay network fees on the Raiden protocol. That’s an interesting idea, but it doesn’t necessitate a proprietary token whatsoever. In fact, one could just use gas like Ethereum does today. Rather than paying these fees to miners, they could be distributed to nodes providing payment channel functionality, among other things. Creating a new token out of thin air is a very controversial decision that may hinder the chances of Raiden succeeding in the long run.

What is even more intriguing is how the Raiden team claims they will not be actively marketing this token whatsoever. If that is the case, the whole ordeal of running an ICO makes even less sense. The price of tokens will also decline during the course of the sale, which means there will be no incentive to invest early in this token sale. In fact, there may not be any reason to invest at all in the RDN sale. Only time will tell how this situation will play out. It is evident these tokens will lead to speculation first and foremost, which is not necessarily something the Raiden team should be facilitating.

Rest assured the Raiden ICO concept will continue to spark debate among cryptocurrency enthusiasts for some time to come. In the world of Bitcoin and Litecoin, Lightning Network development has gone on for several years now without anything resembling an ICO or token sale. This shows that things can be done just fine without resorting to these controversial methods. Creating an ICO related to a scaling solution can be seen as a way to create a business, rather than a decentralized network.