How Can We Make Freelancing Actually Free (And Fair)? —Freela Has the Answers
The Freelance Industry is (Still) Exploding, Yet the Current Landscape is Ripe for Disruption
Freelancing provides workers with the opportunity to build a career at their own pace without being tied to a single company. The origin of the term actually dates back to medieval mercenaries who would use their “lances” (weapons) to fight for whichever army could pay them the most. They were “free” in the sense that they didn’t have to be permanently attached to any faction. As it often goes, once the battles were over and the work had already been done, these early gig-workers were constantly cheated out of their pay by Lords or deceptive middlemen.
As the concept of freelancing evolved, so did marketplaces for connecting freelancers with potential employers. In our current timeline, centralized platforms like Fiverr, Upwork, and Toptal that connect workers with employers have been touted as progressive solutions that help alleviate the issues surrounding matchmaking and mediation. Workers need to find work, employers need to find workers, and they both want to do so in a professional and safe setting.
Great! So we’ve solved all of those early problems and the freelance economy has reached perfect homeostasis!
Not so fast…
Unfortunately, the commissions that these centralized platforms charge to provide their matchmaking and moderation services are exorbitantly high. For the high fees that both freelancers and employers are facing, one might expect state-of-the-art, professional mediation, and top-quality matchmaking. Instead, both parties are frequently left uncertain and uncomfortable committing to contracts and are often forced to fend for themselves when those contracts go unfulfilled.
On top of that, the barriers to entry for many of these platforms are often frustrating and occasionally insurmountable. This walled-garden mentality is designed to weed out “unfit” workers, but it’s a low-tech, shotgun approach that’s unsuitable to the current gig economy landscape. If these centralized platforms relied on newer technologies to develop proper arbitration methodology, their communities wouldn’t need to be so thoroughly gated.
A Booming, Bounded Industry
Wages and participation in the “Gig economy” have grown by 33% in the last year, taking the total addressable global market from $1.2 trillion to $1.7 trillion. The US freelancer market alone is expected to reach $455.2 billion by 2023. A large part of that increase can be attributed to 80% of US companies reporting an expected significant increase in their reliance on freelancers in the next 2–3 years. Of course, the remote-work revolution that’s been taking place during the COVID-19 pandemic has also accelerated freelance adoption.
99% of the estimated market share for freelancer/employer matchmaking is owned by major centralized platforms like Freelancer, Fiverr, Upwork, and Toptal. These companies do a decent enough job of providing intuitive user interfaces, broad-spectrum listings, and facilitating traditional payment transactions. Their castles begin to crumble when we look at their average 20% freelancer commission fees, their ineffective arbitration methods, and their walled-garden approach.
The Problem(s) at Hand
If centralized freelance platforms are going to charge 20% commissions for workers IN ADDITION TO 5–10% commissions for the employers with each contract, that’s inevitably going to drive the cost of business higher and higher. If these platforms are going to create gated communities where only “proven” individuals can be listed then they’re inevitably excluding potentially viable candidates from contracts solely based on some arbitrary and opaque analysis protocols. And if the same platforms are going to leave both employers and freelancers to fend for themselves when contracts go south, then they’re bound to dissuade an unknowable number of disillusioned companies and freelancers from connecting.
Several decentralized freelance marketplaces have sprouted up in light of the drawbacks associated with their centralized counterparts. Still, these more recent solutions come with their own sets of problems. They’re often too niche and focused on the crypto world, they lack the ability to facilitate both traditional and non-traditional payment options, their mediation methodologies are insufficient, and they house everything within clunky interfaces that don’t take non-technical users into consideration.
Freela to the Rescue
Recent tech advances have opened up several new doors in the freelancer marketplace industry. New financial integration tech is bridging the gap between crypto and traditional payment gateways. Scalable blockchains like Polygon are enabling dApps to function as they were originally promised, aka fast, economical, and efficient. And the onset of DeFi liquidity pools is opening up the doors for more and more decentralized models to expand and flourish.
Freela has seized on this opportunity for market disruption by creating a “DeFi powered, commission-free, P2P self-governing DAO that matches skilled freelancers to job postings worldwide.” Their mission is simple: remove the middle man, create a self-governing ecosystem for workers and employers to match, and provide incentives for professional arbitrators to mediate any disputes or conflicts. They’re achieving this mission by utilizing scalable blockchains to run their platform, DeFi liquidity, and staking pools to ensure fast and efficient payouts, and intuitive design principles for a more friendly and robust user experience.
What is the Freela System?
Freela has a weighted-tiered system for ranking freelancers and employers so that each can have access to suitable job listings and talent pools. Unlike centralized platforms, Freela’s reputation system is based on transparent and fair methodologies that allow anyone to join the platform and begin to grow their career or business.
The ranking system relies on identity verification, arbitrator involvement, job rating, and tokens staked. Each employer and freelancer is given an initial ranking based on KYC, social media & online presence, and relevant certifications or qualifications. On top of that initial onboarding rank, both parties begin with a perfect arbitrator score that is equally reduced each time arbitration is required during a contract dispute. A weighted 5-star rating is also mutually provided by both employers and employees. The higher-tiered parties impact the other’s overall ratings more significantly.
The Arbitration Incentive
One of the main solutions that Freela is providing involves their state-of-the-art arbitration system. Each arbitrator must present relevant qualifications to prove that they are an expert in the domain that they plan to mediate. They’re incentivized to settle disputes by being rewarded with tokens that are pulled from a separate, self-balancing staking pool. These rewards are completed automatically and entirely outside of the transaction facilitated between the employer and the freelancer.
If there are no disputes between the employer and the freelancer, then the payments are fulfilled and the arbitrator is not utilized. If an arbitrator is needed, then the payment they receive will NOT be tacked on as a commission fee for the original contract. This is how Freela is leveraging DeFi systems to create highly efficient contract mediation in a truly self-governing and commission-free ecosystem.
Putting the “Free” Back in Freelance
Looking at their tokenomics, it seems that the Freela team truly has their eyes set on the future. They’ve blocked out only 25% of the available finite token supply (1B in total) and that amount is locked until December 2021 with a linear vesting schedule for the following 3 years. They clearly understand the current growing pains of the booming gig economy and they’re applying the latest developments in the DeFi landscape to alleviate those problems. With their successful private presale of $1.4M in the last week, it’s also clear that investors in the DeFi community have faith in this new and robust freelancing system.
Freela is designing a marketplace for “truly free freelancing”. It’s a simple enough idea, but it’s taken us hundreds of years to get to this place. Those early medieval mercenaries are giving two thumbs up from their graves.
