IDO
The first(?) Initial Development Offering. An elastic approach to funding blockchain projects.
What is it?
Hopefully an efficient way to fund development in a case when you have a little initial capital.
Unlike in ICO, the initial funds are not spent on marketing (can be hundreds and sometimes millions of dollars). Instead the crypto currency is locked in a smart contract as a reserve.
The same amount of ERC20 tokens is issued as the money in smart contract reserve.
However, only a small % of the tokens is assigned to investor (let's say 10% initially), the rest of the tokens (e.g. 90%) is sitting inside the smart contract, and founders decide who to assign these tokens.
Now the project needs contributors, marketing people, etc. Instead of paying contributors in fiat or crypto, the founder of the project may be paying in tokens that he controls. The contributors are guaranteed to exchange these tokens into crypto (ETH) with a 1:1 ratio.
Now the tokens can be exchanged into crypto (in case of ethereum - ETH) at any time with a 1:1 ratio. But if the contributors believe in the succes of the project they will likely choose to keep them. Or sell them on exchange.
If it is a project with hight expectancy of success, and these tokens are believed to be exchange into project's coins, there will be much more non-contributing community people willing to buy the tokens from developers at a premium.
When the token is exchanged back to crypto using the smart contract reserves, the crypto is sent to holder of tokens, and tokens are burnt. When 50% of crypto (ETH) reserves is burnt a next investment round kicks in automatically at a rate set by founders (that optionally can be set at any time, and could theoretically match market price of the token). At this point ETH is automatically converted to tokens at osme rate (let's say 20:1, meaning for every 20 ETH investor gets 1 token and 19 tokens stay within contract for founders to pay contributors).
It may so happen that the tokens never hit reserves in the smart contract, and there is always a demand for tokens that is greater than 1:1. in this case the project is complete totally with very little money of founders or their friends, which is returned after project is complete.
Summary
This approach to funding has a few advantages to traditional ICOs.
- it ensures that there is no over raise that many people witnessed with ICOs.
- more power over project to the contributors - the people who create it. Contributors may decide how much of their compensation to keep in tokens, rather than given a fixed amount.
- less risk of loosing the raised funds, since only a small amount of crypto is locked, not all the amount raised.
- there is less wastage of funds on marketing, pr and other bs that the current ICO craze has created.
- investors have a chance to return at least some of their investments.
Annihilat.io
Annihilat.io is a testground for IDO funding method.
It is a simple idea combining two working technologies. DPOS (of graphene) and Solidity smart contracts. At the time of the writing Ethereum's market cap is roughly 30 billion dollars. If our blockchain reaches 1/1000th of that success, the market cap of Annihilat.io will reach $28m. If we, as founders/investors keep 10% of that, we will make a little bit of money. But on the way to this success 90% that is distributed to contributors may make some good money too.
The point of this project however is not only to bring to market another smart contract blockchain, even though we expect it to be much faster. The goal also is to create a precedent for a way projects can be funded. The community of contributors we may gather around us may transform this idea into something completely different and improve the idea greately. Only test will tell.
On the other note we hope that the distribution of tokens as form of compensation will create a more or less even spread of stake among contributors and also investors.
@vladiuz