ICO insights. Part 1. Money compensation for the team and board

Being involved in the blockchain and crypto world as a practitioner and speaker since 2016, I was refusing to join any token-based project for a long period of time because of the following reasons:

1. I don’t like crypto as it is main incentive today is to be used for the black market and to avoid taxes / AML for cross-border operations while paying taxes is a MUST and I blame everyone who doesn’t understand this
2. In most cases, the internal token economy can be easily replaced by traditional fiat operations and blockchain usage is totally useless, i.e. doesn’t bring value to business / clients but not for project stakeholders
3. Teams / ideas / projects who were trying to involve me can’t convince me their projects are solid and money from the ICO are really needed in tens of millions of USD
4. Being a guy from the classic VC world, I understand the worth of money while what I see in the world of ICO totally ruins my understanding of startup economy.

The latter point is a thing I would love to elaborate more on this article being finally involved in the project which has stolen my heart — DIAMCO

The usual approach for money flow in ICO teams

Spending money wisely is not a case for the ICO

The most common conditions (let it name «the market») today for involving «advisors/partners» into any ICO project include the following terms:

1. Regular (operational) payments. May be up to 2–7k USD/monthly depending on the region (I wouldn’t elaborate here about a bunch of scam people who take the money and do nothing but this is a different story)
2. Fundraising fee — 10–30% (!!!)
3. The additional token bonus is always included and varies from 20% to 200% in addition to monthly salary, i.e. if the adviser involved in the project for 5 months with salary 5k USD/month he can get added up to 50k USD in project tokens as a must and this is not a limit
4. A lot of contractors are being partially or fully paid by project tokens with a special rate. Project teams think that it proves the trust in their token by contractors but in fact, it forces them to immediate dump since listing to get real (fiat) money onto bank accounts to buy food and rent

These facts (in addition to other expenses) make project teams allocate for bonuses/rewards up to 30–40% of the total fundraising budget which is a sort of criminal from my perspective. Just imagine: 3 out of 10 mln. USD are gone immediately which means for the project execution only 7 mln. USD are left in the best case scenario. The undervalue of own tokens makes them «yet another one coin» without a solid business model and economy having over-flooded free float just «because we can print own money».

How is DIAMCO different at this point?

All our stakeholders have a previous business traction and can’t understand the sense of such practices described above.

Money, taken from investors, are in fact «a loan» and a piece of trust investors give to the team but not even for the project idea: the right team may pivot many times during the project execution. In addition, we completely changed the token distribution strategy without any bonus given for free because we value our tokens even more than fiat money: they are under everyday inflation while our tokens are a strictly limited thing.

In our opinion, money must be spent on the project execution but not for scouting. So what are our rules (which are even stated mostly in the project White Paper)?

1. The basic fundraising fee varies from 2 to 3% as a maximum for partners/advisors and doesn’t exist at all for the team members. The fee is paid exactly in money brought by partner investor
2. The team and advisory board have special purchase conditions from the option pool for DIAM tokens which is 2% for the team and 4% for the advisors from overall distribution. Moreover, there is an obligatory lock-up period for 12 months with the additional limitation on free sales after lock-up period is expired
3. No free tokens exist on the market at all: with all our contractors and operational team we work via official contracts and official fiat wire transfers
4. We reimburse all operational expenses which are agreed in advance including direct time spent on an hourly basis

Do you believe someone will work with you while market is completely different?

Of course nobody, who expect to take money out of the pockets of project investors and run away exactly when the token sale is ended.

That is why we are taking people on board who share our values, have real business experience and understand these concepts. They understand that it is better to have a small share in something real and perspectively «big» rather than having a huge piece of nothing which is difficult to sell to anybody even with 30% reward.

We are building the team not for three months but for a long period of time: everyone has special talents to contribute on the long run (and I definitely will make separate releases about our involved team members and their talents like Zhanel in the project official Facebook or Instagram).

These people understand who are the founders and why DIAMCO can disrupt several industries: diamond, traditional alternative investments and crypto market.

Their projections are for 3–5 years and such investment of time will definitely pay off during the long distance.

These people trust in the team, trust in themselves, trust in the business we build.

In DIAMCO and my other projects (Yorso, Innosoft) we really believe that people are a key success and the key investment for the project to grow. Of course, we break up sometimes but definitely, it doesn’t change the whole long-term business strategy implementation.

If you want to argue our approach — feel free to join our telegram chat and discuss — https://t.me/diamco

More business insights from me are available in my author telegram channel — https://t.me/bizinsides

DISCLAIMER: everything is written above is just my personal point of view and personal insight and can’t be threatened as an official DIAMCO project opinion