Ethic Token Generation Event Paper

Transcription

1

2 Ethic Token Generation Event Paper The ICOs (Initial Coin Offerings) or Token Sales, or Initial Token Offerings, are highly effective forms of financing because they eliminate intermediaries and allow for people anywhere in the world to participate by purchasing Startup s issued tokens since its beginning and in small amounts. Unlike Startups shares, these tokens have the advantage of being liquid and thus the investor is not forced to wait for years until a potential exit. For entrepreneurs on the other hand, this new financing forms allows them to access a global universe of investors and therefore obtain financing more easily and efficiently. Although Blockchain and the tokens issued in the ICO may give decentralized governance, not all projects have that vocation. Ethic Hub s roadmap wants to achieve this ideal. This form of financing has become a boom for attracting the best projects and it s helping to develop the so-called cryptoeconomy since tokens allow for business models that were unthinkable before Blockchain. We agree there is a hype so the ecosystem is plagued with bad practices and false projects (scams) attracted by such money abundance. But we believe the hype is not over yet; although many projects quotes crash the day after their ICO, it is the consequence of investors and projects bad practices; giving very important discounts to big (and not so big) investors who do not believe in the project and whose sole purpose is to sell the day after the ICO. As an investor, this is a short-term benefit that will end up causing the bubble to explode if good practices are not started anytime soon. According to Ethic Hub s values and the responsibility such a name requires, we renamed the ICO format to Ethical Token Sale. We hope in a near future many of these proposals may become a standard. Some of them simply mean transferring traditional VC s good practices to the crypto ecosystem. Constitutive good practices for an Ethical Token Sale To make several token sales throughout the company s consolidation phase, annually or biannually collecting resources and demonstrating year after year their good use, because collecting more than 100 million euros at once, makes absolutely no sense, unless you have a proven business model or you are setting up an investment fund. There may be projects with such a significant investment in physical assets, like building a network of sub-orbital satellites to build a parallel and decentralized Internet, that require hundreds of millions of euros, but this is the exception. What we find nowadays are projects without the capacity to spend those hundreds of millions within years and with a minimum probability of success. Wouldn t it make more sense to collect the necessary funds to cover for a couple years of development and prototyping, and then make another funding round, after gaining some real experience on product s market fitting?

3 This way projects may be more ambitious for last token sales will have a much higher valuation (if the project has been successful) so at the end much more funds could be collected. If you really want to disrupt a big market most probably you will need more than 100M but it is not reasonable to ask for them from the beginning. To request rational evaluations. Business Angels and Venture Capital look for traditional references valid also for cryptoeconomics, and these important know-how has not been considered when over 100M valuation for Startups were accepted. In addition, selling all of the tokens at an excessively high price will let the project in a difficult situation in order to obtain extra financing in case of unforeseen events, delays, bad investments, etc., because once the bubble explodes and the token s value adjusts at the project s own economic value, in most cases this value will drop significantly so nobody will want to invest again. It is healthier to start with adjusted valuations that are incremental. Discount difference between PreSale and ICO should be correlated with the added value: If a PreSale is meant to raise funds for the project s development, on traditional standards of non-ico financing, it should have a 75-80% discount at PreSale regarding its ICO. If there is only one month of marketing between PreSale and ICO and therefore there is no development nor product-market fit validation between one phase and the next, logically the discount should be much lower. Conditioning special discounts to vesting or releasing tokens in a staggered way to protect investors who really believe in the project. We will deliver tokens gradually during 100 days after each Token Sale for standard investors not subject to special vesting conditions. The mechanism proposed by Vitalik, the Interactive Coin Offering: It is an important improvement in many aspects since it allows to fix a price according to demand. We hope it is already proven when time comes to make our Token Sales. Mechanisms to free up resources: Releasing resources based on roadmap completed milestones, or funds made available through multisignature accounts with a third party specialized in this function. Due Diligence: Audit made by a prestigious third party prior to Token Sale. A.- About our token: The Ethix To access our lending platform, users will need to buy Ethix. It will be ERC20 compatible to be sold in three Token Sales. In the same way in FIAT world the money is created by commercial banks when lending, in EthicHub the token s value will be a product of granted loans and collected repayment. And since only projects of positive impact are financed, such value will also represent the positive impact generated by EthicHub.

4 On the long term, when borrowers have general access to the internet, it is intended for Ethix to be commonly accepted as means of payment within the rural communities receiving the loans, helping them to reduce the problems derived from handling cash (loss, theft, depreciation, etc.). B.- Presale Started on Q With 15% of total Ethix, 2% for bounties. To set the following objectives: -500ETH Objective -2000ETH Hard Cap PreSale goal is to raise the necessary funds to develop the platform in 6 months, validate the business model hypothesis and open the first Token Sale with an already operational platform. An important part of the funds will be used for marketing. Previous expenses incurred will also be covered, since their payment has been conditioned to PreSale s success (Marketing, Landing Page design, Presale SmartContract Development, lawyers, etc.). Cash surplus will be used to finance first loans in order to generate the initial credit histories for first borrowers and consequently Local Nodes and system s rating. C.- 1st Ethical Token Sale Estimated date Q For this financing round we will present a fully functional prototype, with an investment projects portfolio and an investors pool. 15% of the tokens will be sold, reserving a part for bounties. The funds raised in this sale will serve to develop functionalities not included in the beta version and to scale the platform by introducing new crops and new countries. The starting price will be 0.64 USD/ethix. D.- 2nd and 3rd. Ethical Token Sales Expected dates Q and Q Starting price for each Token Sale will be based on current market price and it will be adjusted according to the Interactive Coin Offering mechanism proposed by Vitalik Buterin.

5 E.- Token distribution: presale 1st. Token Sale 2nd. Token Sale 3rd. Token Sale Investors 13% 26% 39% 52% To be sold 45% 30% 15% 0% Reserve 20% 20% 20% 20% Promoters 20% 20% 20% 20% Bounties 2% 4% 6% 8% *Reserve tokens could be used to give liquidity and stabilize Ethix price, to help guarantee fund, to help make collaborations, or/and to make an additional token sale. *Promoters, founders and advisors will get their tokens with 2 year vesting, liberating 25% every 6 months. F.- Token economy We want our token buyer s main motivation to be their identification with EthicHub`s values and their willingness to contribute to the proposed positive impact. Ethix will be the only means of access to the platform s. There will be a fixed number of tokens: Demand will depend on the usage of the platform. Some tokens will be accumulated in the guarantee fund and on speculators hands, reducing the amount in circulation. When a project starts on a low valuation and low token supply, the probability of a healthy and sustainable token price more related to the real evolution of the project in the long term is greater than projects starting on very high valuations without solid foundations. The fact of gradually releasing the tokens will limit the massive speculation to which most projects are subject once their token starts trading. In any case, not yet operational projects should be open to changes and the token functionality can not be an exception.

6 Ethix Flow G.- The need of Ethix - The project s main objective is to generate wealth by incorporating people currently excluded from the financial system. We want this created value to be reflected on Ethix s valuation; if Ethers were used instead, the contribution of the project could not be assessed so clearly. - A reference value for the platform is needed since the objective is for users to be borrowers and investors from all over the planet, each with a different reference currency. It makes more sense for reference value to be created by the project itself. - If the business model of the founders and Ethix buyers is based on the token (directly linked to project s success), the incentives are better aligned compared to a profit based on commissions system. This way the ecosystem have the smallest possible commissions in order to be competitive. - An own token allows us to be better prepared to face future developments that may involve a blockchain change or even the incorporation of technologies that currently do not exist. - Greater capacity of adaptability to future laws: Ether will most likely be officially recognized as currency in many legislations, which will lead to greater regulatory requirements for platforms using them. - Best control of the ecosystem. Ether s own path could have a negative effect on the project. The evolution of the Ethereum ecosystem itself could affect all projects using its token. An own token helps control its evolution with less influence from third parties. - Having an own token helps motivating early collaborators to make the project stronger when going alive.

7 H.- Governance We defend the ideal of decentralized governance. There are still few projects executing a decentralized governance in an effective way as to use them like reference in order to make a definitive proposal. It is something so complex that we put it as the last milestone in the roadmap. In a first phase the team needs a margin of confidence to make decisions every day since we will be in an environment of total uncertainty adapting the theoretical business model to a real framework. In two years we hope the project is more stabilized so we will be able to consult more decisions to the community. Giving governance to Ethix holders may allow for attacks from large corporations trying hostile takeover bids. True believer users could propose a hardfork but in any case EthicHub would be weakened. So our idea is to give governance to the community as a whole, not just to investors. In addition, giving governance to Ethix buyers would approach the Ethix to a security. For all these reasons, we propose a GNZ token to provide governance rights generated upon REP tokens (borrowers and Local Nodes ), contributions (team and collaborators), and Ethix loans (investors). The balance between these three axes is difficult and achieving it will be part of the work before an effective implementation of decentralized governance. Giving effective governance to users will make the project stronger and more resistant to any kind of attacks from third parties with interests different from those of the community.

8