Ndau: An Innovative New Form of Digital Money
Ndau presents an innovative and groundbreaking way for us to use a new form of digital money that is transparent, aligns all user’s interests, and has an embedded mechanism which strives to create stability and sustainable price appreciation over the long term as user adoption grows. Ndau is governed by an annually elected group called the Blockchain Policy Council which is comprised of holders of ndau who are focused on advancing the project while adhering to the core principles of the ndau ecosystem.
Ndau is a “buoyant coin”, which is a unique type of stablecoin which aims to increase in value over the long term. There is a fixed amount of ndau (30 million tokens) which can be issued (currently there are about 4 million nadu in circulation). The 30 million ndau will be released along a fixed price curve with the issuance price increasing with each 1,000 ndau which are sold. The first 1,000 ndau was sold at a dollar price of $1 and the last ndau in phase 1 of the project will be sold at a price of $16,384. What is unique able ndau is the fact that new ndau are only sold (or issued from the “endowment”) if there is a willing new buyer to purchase them. For this reason, there isn’t an excess supply of ndau floating around in the early stages of the project which could weigh on the price of the token and increase volatility Additionally, the Stabilization Incentive Burn and the Price Floor are built-in features which aim to reduce volatility and benefit long term holders of the token.
In addition to the obvious list of use cases which include personal and institutional store of value, escrow and smart contract collateral, and inflation protection, I believe ndau could also play an important role in reshaping the ICO fundraising process, as well.
What if cryptocurrency projects that were doing an Initial Coin Offering (“ICO”) opted to hold a portion of their ICO proceeds in ndau (lets use 25% as an example). Most of the fundraising volume in the past few years has been raised using Ethereum — so after raising the proceeds from their ICO, the team would need to convert 25% of the proceeds from Ethereum to ndau, which would be relatively easy and straightforward. To take this a step further, what if these cryptocurrency projects agreed to have that 25% portion of their ICO proceeds (in ndau) held in escrow and only would be released to the founders of the project if the founding team meets certain goals and milestones over an agreed upon period of time?
This structure would create credibility for the founding team, generate stronger investor confidence in the project, and align interests between the founding team and the investors — all of which are well needed in the cryptocurrency industry this day in age.
The locked ndau would appreciate in value over the period which will benefit the founding team in the future as they will have more proceeds, it will diversify their holdings away from Ethereum which has been proven to be highly volatile, and it will signal to the market and their holders that they are serious about meeting the goals of their project. In the event the team’s goals are not met, the ndau proceeds would be distributed back to the original investors. This structure will ensure transparency, hold teams accountable, and align their interests with their investors, and also increase adoption of ndau — a win-win scenario for all.
The article is based on my own objective analysis of ndau and was subsequently submitted to its nlighten program (bit.ly/ndau-nlighten).
