If you know what to do for launching an ICO, you might have already written your whitepaper or at least have planned for it. But, did you know that having a yellow paper is equally important these days? Very few blockchain projects had thought about a yellow paper until quite recently.

A yellow paper is actually a second, more technical whitepaper, which can provide an added edge to your project. It is usually associated with more sophisticated crypto or blockchain companies. Ethereum published a detailed yellow paper during its ICO, which proved to be a great way to establish credibility.

In the near future, token offerings will require details of this level in order to differentiate themselves from the competition.

How is a Yellow Paper Different from a Whitepaper?

Whitepapers contain all the details about the project for which the ICO is being held. It usually describes the concept; the technology; team members; token economics; the future roadmap and more, all written in a simple way that everyone can understand. A yellow paper, on the other hand, addresses the more tech-savvy investor, providing crucial technical details.

Think of a whitepaper as being more of as a marketing document, where you are proposing an idea, which will solve an existing problem in the market. On the other hand, a yellow paper is the scientific details of your project, being more specific in nature and very concise. It will contain the specifications of your protocol, which is a little difficult to decipher for those who are not proficient in mathematics and technical terminologies. Often, companies get their technology tested or peer-reviewed, details of which are also included in this document. The whole idea is to establish the business’ viability, while building technical trust in the project.

In the past, we have often seen how companies raise money through ICOs, with lots of promises made to investors. However, soon enough, their technology fails, and investors end up losing their money. It is precisely for this reason that yellow papers should be included in your ICO checklist, so that investors have more confidence in your token launch.

The Original: Ethereum Yellow Paper

Developed by Dr. Gavin Wood, a British Programmer in 2014, the Ethereum yellow paper is the first-ever of such documents to be written. It outlines the formal definition of the Ethereum protocol, currently maintained by Nick Savers, along with contributions from people around the world.

As you might know, Ethereum’s protocol is a free source code, where anyone can contribute or take help from. It defines how “smart contracts” can analyse the performance of transactions, without involving any third party. It can be related to any form of computer programme and is widely used in the world of cryptocurrency. In fact, smart contracts are responsible for a majority of token launches as well as innovations in the blockchain space today.

The document is an apt example of a team that takes its work, community, investors and reputation very seriously.

Flaws in the Ethereum Yellow Paper Today

Although a defining document, it does have its share of problems that have surfaced in recent times. If you are convinced about including a yellow paper in your ICO strategy, make a note to address these issues in your document.

  1. As the Ethereum network keeps expanding, it is facing scalability and speed issues. However, the yellow paper, which is the primary document that developers use for coding reference, has not been recently updated to address such issues.
  2. During the update in 2017, through the Ethereum’s Hard Fork, called Byzantium, consensus errors arose because developers did not find any precise points or guides in the yellow paper. Developers in the network have to rely on community consensus in order to confirm that things are working properly. A yellow paper should be a very precise and clear guide.
  3. The language of the yellow paper is highly complex with mathematical connotations. So much so that the average developer doesn’t understand it. Keep in mind that many developers would prefer specific programming language.
  4. The complex language limits the entry of new participants in the network. Not many people know the language well enough to suggest any significant changes to it.
  5. Gavin Wood’s own relationship with Ethereum is controversial now, given that he has left the team.

So, the next time you are wondering what to do for launching an ICO, do not forget to include a yellow paper that is devoid of all these problems but elaborates your project’s tech.