ICO 2.0 and Business Tokenization

Hi, habravchane! I am a programmer with 15 years of development experience. At one time, we managed to work on both accounting systems and financial instruments and websites. I found the developer the time when OpenSource was also called a waste of time and I watched from the very beginning its evolution into a key engine of technology.

Now there is a very high hyip around cryptocurrency and investing in ICO. Knowing how open technologies have influenced the development of this industry, we and my colleagues from our current work believe that ICO is the next step in the financing industry. With proper development and attention, this technology will facilitate access to financing for small companies and promising projects, charitable and non-profit organizations that are not interesting for large venture capital funds and institutional investors. This financing will be a breath of fresh air, will be able to combine the possibilities of crowdfunding and venture funds, as was the case with Microsoft, Google and OpenSource.

An idea and desire to implement a project that can simplify the procedure for accessing ICO to companies from non-IT and FINTEC industries, increase the safety of investments in these projects and, thereby, support the new stage of technology development on their own as much as possible.

I publish a part from a document in which we discuss and write down all the risks of investments and the possibilities of dealing with them, meaningfully removing from this passage tedious reasoning about the interface, monetization and other unimportant trifles.

I have a request to the community of habrasoobshchestvo as an audience, for the most part, meaningful, measured and sophisticated experience: to indicate which points you should pay attention to in the process of writing a document, what are the comments to our views and what else should complement our plans. After making all the changes and comments, we tend to ensure that the prepared vision will be given to the copywriter (to correct errors and more clearly describe some technical points), translate into English and put both versions online so that the community can prepare its implementation project, if there is such a desire. Since without an open description there would not have appeared such a standard as the ERC20, which made it possible to attract funding for new young projects.

  1. Instead of the preface

    In 2016-2017, with the help of ICO and tokenization, more than $ 4 billion was attracted from private investors, 80% of which (according to open sources) were attracted either by fraudsters or companies that could not achieve profit. Among these funds, less than 2% was attracted by various charitable and non-profit organizations.
  2. Advantages and disadvantages of ICO

    • Benefits:

      • They allow you to easily, comfortably and quickly raise funds from anywhere in the world to projects without the need to communicate with institutional investors.
      • They give an opportunity to an ordinary private person to get the opportunity to invest in projects on an equal footing with venture funds, investing exactly as much as opportunities allow.
      • Depositories (storing information about token holders) are public and easy to check, and also extremely difficult to interfere with.

    • Disadvantages:

      • The investor is not protected from fraudulent schemes, when raising funds.
      • Token release requires a high level of IT competence from a company (or enthusiast).
      • The investor does not have the opportunity to influence the decisions made during the expenditure of funds by a startup - attracted funds often become available to the project author for withdrawal in full immediately after appearing on the wallets.
      • An investor can earn on a startup only when using a token inside the application (if the token is utilitarian) or when the token begins to circulate on some stock exchange.
      • There is no phased issuance of tokens and opportunities for revaluation of tokens (for dilution of shares, for the second stage of investment and other purposes).
      • For charitable and non-profit organizations, access to this type of financing is very difficult, as experts in this field cost a lot of money, and costs are non-core for organizations.

  3. Issues that need to be addressed to simplify access to funding through the ICO

    • Reduce the number of fraudulent ICOs and individuals affected by their actions.
    • Simplify access to funding through ICO for non-technical projects and charitable / non-profit organizations.
    • Simplify access to authors and project participants from potential investors.
    • Give the ability to control the spending of funds by the project to investors.
    • To give the opportunity to monetize the income from participation in the project to the investor before the project is released on the exchange (if such is planned).
    • Increase investment through ICO in terms of format and management capabilities to investing in stocks.

  4. Ways and methods of improvement

    • When starting a project on the platform, the author describes the current needs for finance and the purpose of their spending, gives a description of his target audience and product, as well as the goal of raising funds: launching and starting the project, issuing a prototype for further capitalization on a different assessment, business development, hiring employees with specific skills to solve a range of tasks facing the company or anything. Such a description helps to understand the project to a potential investor in more detail and make sure that the author himself understands the project.
    • The author has the opportunity to add profiles of social networks of all team members, which can raise the reliability of the project among competitors, and also gives an opportunity to assess the competence of the whole team with the investor.
    • A potential investor and members of the project team have the opportunity to chat in the chat to ask some important questions, and on the faq page the author can post answers to frequently asked questions in advance.
    • When registering a new tokensale - the author fills in the legal data about himself and the project, and also - signs the contract, which in the case of fraudulent actions will allow him to be held accountable.
    • When creating a token, it is possible to indicate the stages of spending by the recipient, after his report on the previous stage and user voting on success - users vote to continue investing or returning funds.
    • Users can independently initiate the return of funds from the project by means of voting and in case of a successful vote - the balance of funds from investments will be returned to users.
    • The author may add to the contract the possibility of paying dividends. In this case, the amounts transferred to the contract addresses will be distributed among investors in proportion to their volume of participation.
    • If the author required additional investments, he can make an additional issue of tokens using a vote. And if the voting was successful, the required number of tokens will be additionally issued, the project investors will have a priority right to purchase tokens.
    • The investor has the ability to transfer / transfer tokens to an outside party within or outside the platform. Transfer of tokens (or assignment) will be available to the investor, regardless of the listing token on the exchanges.
    • The investor has the opportunity to publicly post a proposal to sell tokens, or vice versa - the desire to buy out project tokens from someone. In this case, all investors will be notified of the request.
    • The author of the project uses the contract setup wizard and does not need a large amount of technical skills from him, it’s enough just to follow the wizard’s steps to achieve the desired token configuration. In case there are mistakes - you can change the contract by voting on the changes and if the vote is successful (or immediately, if there are no users of the new token), the changes will take effect.
    • The author has the opportunity to create several types of contracts: a loan (in this case, the author undertakes to return funds with %% on debt after a certain period), funds are not returned by the author).

  5. Technology in the platform

    • The platform will use the web interface to create and search for the necessary contracts for investing or searching for investors.
    • All projects will undergo a KYC procedure to reduce the possibility of fundraising by scammers. The KYC procedure will be close to the exchanges procedures.
    • All contracts (tokens) will be developed with the implementation of the ERC20 standard based on the ETHEREUM blockchain and will be verified using etherscan resources.
    • The base contract code will be open source hosted on the github - platform project page.
    • For each project a chat room will be created where investors can talk among themselves or ask questions to its authors.
    • All decisions on the allocation of funds collected in the process tokensale will be made on the basis of investor voting.
    • Each project will have the opportunity to create their own page using the WYSiWIG editor.
    • The platform will allow the transfer of tokens and arbitration of transfer transactions in order to secure transactions.
    • The platform will provide sample contracts developed by lawyers, the signing of which will be necessary to hold a tokensail or his participation.
    • In case of illegal actions of the participants - the platform on the basis of contracts and user agreements will defend the interests of users in legal matters.
    • Realization of contract opportunities: shares (voting), dividend, charity, loans, ext. issue, transfer of tokens, cost management, early termination of funding and return of funds.

Thank you for reading to the end and wait for comments in the comments.

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