Refundable Token Offerings (RTOs) — The new era of investing in blockchain projects
Note: This article has been updated after the complete migration of the platform to smart contracts on the Ethereum blockchain — as a a trustless, autonomous and open source dApp built on the DAO principles, providing a solution to a problem that has been unsolved until now. Below you can read why it is one of the most significant and mature decentralized applications created to date.
The RTO decentralized platform utilizes the roles of all participants in the token sale and lifecycle of an early stage projects — owners, investors, and community, to provide maximum value for each. It’s a second-layer implementation for insurance of already made or yet to be made investment in ICO, STO or IEO — the insurance is made separately, independent from the investment.
It covers the investors against losses not only from clear cases of exit scams, like the lately popular centralized and predisposed to corruption IEO method, but from any kind of problem with the project or depreciation of its token value.
The investors themselves decide if a project needs to be refunded or not, not a single individual or a group of people in power. If they are unable to reach a consensus by themselves, the project status can be disputed publicly in front of the community as arbiters in a unique voting process handled by the dApp on the blockchain.
The dApp’s data storage and logic are written in Solidity, open-source, and live entirely on the Ethereum blockchain — transparent and immutable.
The platform’s main goal is to support and give more security the average non-institutional investor as we see increasing privileges of the larger investors, more private sales, and deals behind a closed door.
What, Why & How?
What is an investment insurance?
Secured with a refund option amount of funds, a percentage of the total investment made in a public sale of a project. If the project turns out to be unsuccessful — for example in case of abandoned, terminated or failed projects and token value drop — the secured amount of the insured investment is refunded to the investor.
The investment insurance is completely separated from your investment. The contributions to a project do NOT go through (is not made via) the dApp, meaning that you make it just like you normally do.
You can make your insurance request both before, as well as after you make an investment, but you must use the same Ethereum account that will receive the project tokens when they are issued.
Securing your ICO/STO/IEO investment with a refund option mitigates your risk exposure to scams, project failures, and drastic token value drop. This allows you to greatly increase your earnings by profiting from the successful projects and reducing the losses from the unsuccessful ones to a minimum.
As opposed to some of the previously proposed (and never successfully implemented) solutions for risk reduction of the ICO investing, the dApp takes into consideration and uses the efforts of all type of participants in the process — owners, investors, and community, allowing each side to benefit from the platform. It does not put all the burden on one or the other and implements the most important DAO characteristics.
It is one of the most significant & mature decentralized applications to date. It’s not flawed by centralization or predisposed to corrupt practices and other anti-blockchain principles like some of the existing experimental token sale methods — for example, the Initial Exchange Offerings (IEOs).
The dApp reduces not only your exposure to the risk of a clear-case exit scam but allows the investors themselves to collectively decide a project state and reach a consensus over a project status as a whole — if it has been failed or not.
How it works?
The investment insurances are covered by a collective pool of funds with high liquidity, managed by public, open source and completely transparent community-driven decentralized application built on the Ethereum blockchain.
The platform incorporates all of the “DAO” principles. It’s fully open source, managed entirely by smart contracts and all of the data is stored on the blockchain. It’s run by the participants in it and they have different roles, based on their actions and goals.
During the 2-year project coverage period (insurance policy), every investor that has investment insurance is able to vote that the project has failed and request a ‘refund state’. If enough investors vote, the state will be assigned and investments refunded.
The concept in its core is similar to that of the traditional insurance practices, but executed by public smart contracts and adapted for the process of investing in early-stage blockchain projects and the crypto environment.
Supported Platforms & Projects
As of right now
(v. 1.0.0) the dApp only covers projects built on the Ethereum blockchain. We are actively working on choosing the best possible solutions for adding more platforms while keeping intact the fully decentralized and transparent nature of the application.
In order for a project to be integrated with the dApp, its token must comply with Ethereum ERC-20/ERC-223/ERC-721 standard or one similar to (compatible with) them.
Read more details on the official Refundable Token Offerings platform documentation.
Get familiar with the dApp and try it out here with no real cost at the Rinkeby testnet demo version
Note: At the current time the public demo version is open only on a certain intervals of time for a limited number of users. The open periods are announced on the dApp’s Twitter profile.
You can take advantage of having ensured contributions to make a good profit from your investments in the successful projects, and to reduce your losses from the unsuccessful ones to a minimum.
We believe our community can make contributing to early stage blockchain projects a lot less risky without the need of excessive external freedom and privacy suppressing restrictions, government surveillance, and censorship.