Instaraise — The First-Ever Fully Decentralized IDO Launchpad on Tezos
All of the Funds, None of the Rug Pulls
Instaraise is a governance-backed project-listing platform built on the Tezos ecosystem. They aim to eliminate the risks and lack of equal opportunity often associated with DeFi & crypto-based project fundraising. With innovative features like automated liquidity locking and weighted pool scores, Instaraise is empowering both DeFi projects and retail investors to raise funds and safely invest in a truly democratic, decentralized, and transparent fashion.
Tezos vs Ethereum — The Consensus Protocol Showdown
Before we delve further into the Instaraise ecosystem, let’s take a step back and consider the contrasts between the Tezos and Ethereum blockchain networks. Tezos was built on a pure proof-of-stake consensus protocol, while Ethereum was built on proof-of-work. This largely outdated system relies on computing power to solve complex algorithms, leading to slower transactions, higher mining fees, and the use of much larger amounts of energy than proof-of-stake.
The OG blockchain network, Bitcoin, uses proof-of-work consensus. Considering the infancy of this technology at the time, Vitalik Buterin understandably mirrored this protocol when building Ethereum. These were the early days of blockchain and the primary objectives were more based on security and transparency than efficiency, environmental impact, and mining fees.
The Ethereum network has since been planning to convert to a version of proof-of-stake with a continued focus on security. Unlike its predecessor, proof-of-stake consensus is based on the number of coins that are “staked” by the individual miner for a specific blockchain. Put plainly, the old version rewards blocks to miners for utilizing their computing power while the newer option rewards fees based on the number of coins the consensus giver holds. Put even more plainly, proof-of-work is not truly scalable, while proof-of-stake appears to be.
Instaraise is the first platform of its kind built on the Tezos network. Right from the jump, they can offer several advantages that their Ethereum-based counterparts are still eagerly awaiting. The primary benefits include lower fees, faster transactions, and a lower barrier to entry for consensus providers. That all equates to efficiency, scalability, and the further democratization of the DeFi ecosystem.
ICO vs IEO vs IDO — Too many acronyms!
Don’t worry! There’s a legitimate and easy-to-understand reason behind the ICO, IEO, and IDO differentiations. Basically, an ICO is a fundraising venture wherein the project at hand manages and facilitates all transactions. The investors pay the project directly and they receive tokens directly in return. An IEO is an evolution of the ICO which relies on a centralized exchange like Binance or Coinbase to facilitate those same transactions. And finally, an IDO is just the decentralized version of the IEO, making everything much more transparent and fair.
Ok… So What’s a Rug Pull?
Scams abound in the world of DeFi and crypto project fundraising. One of the most common forms of crypto-finance exploits is known as a rug pull. While there are countless variations of this issue, a “rug pull” typically refers to a situation in which a so-called “backer” hypes up a project or coin in order to attract more investors and inflate the token value. They then liquidate their holdings at the peak of profitability, leaving the average retail investor holding the bag.
We’ve all seen this before and we’ll all see it again and again. Fortunately, Instaraise is combatting this issue with automated and trustless liquidity locking systems using their innovative smart contracts. This eliminates the ability for bad actors to liquidate their holdings until a predetermined time, effectively removing the option to “pull the rug”.
Automated Liquidity Locking
Liquidity locking refers to mechanisms that force an investor to hold their funds for a predetermined amount of time. These days, most DeFi and crypto projects attempt to assure their investors that they’ve “locked” their internal tokens until a specific date. This helps alleviate fears that the project creators or other bad actors won’t just take the money and run once the public offering launches.
The problem is, those are usually manually-placed “locks” that can be easily disregarded by the developers or influential people close to the project. Instaraise solves this issue by using custom-built Smart Contracts to automate the liquidity locking process, making it as transparent, efficient, and decentralized as possible. That means every investor and user can see when the liquidity lock is set to release and they can feel secure knowing that there’s no way for those holders to craft an early exit.
Democratizing IDO — Weighted Pool Scores
Whether it’s an IPO, ICO, or IDO, the average retail investor rarely has the opportunity to invest in a company or project at the optimal time. This is because the early stages of fundraising are usually designed to attract big investors looking to make a fast and guaranteed profit. In most cases, you either have to know a project owner or offer a sizeable amount of liquidity in order to even be considered for a presale.
With the ultimate aim of democratizing the DeFi project investment paradigm, Instaraise is utilizing weighted pool scores to determine token allocation during fundraising. This mechanism has slightly different functionality depending on whether the project is in a private or public round. The project owners effectively determine how the weighted pool system will work at each stage of their fundraising.
For private rounds, your weighted pool score is based on the number of $INSTA tokens (Instaraise’s utility token) you stake in the project plus the interval at which your tokens are staked. Obviously, the more $INSTA you stake and the faster you stake it, the more allocation you’ll receive. Still, this provides an equal opportunity for all community members to receive tokens during private fundraising based purely on the amount they’re willing to invest.
As of the Instaraise V1 launch, the public round uses a fixed pool size, rather than the weighted pool score. This means that each participant is able to invest in the fundraising, but they will have a predetermined limit that is set by the project owner and automatically regulated by an Instaraise smart contract. Upon the Instaraise V2 launch, the weighted pool score will apply again, but the individual will be allotted a potential investment pool size based on the number of $INSTA tokens they hold, rather than the number that they actually decide to stake in the project.
Fixed Swap Pool
Most liquidity pools are volatile by nature. They offer an open exchange of tokens for liquidity which can dramatically alter the market price for those tokens. In line with the IDO model, Instaraise uses a fixed swap pool, which sets a concrete price for all token swaps. Utilizing smart contracts, this system can get much closer to predetermined outcomes and ensures fair transactions between all participants.
The downside to this model is that there is a lower likelihood that a token price will increase significantly within the liquidity pool. The obvious upside is that a fixed price will attract more investors and ensure a safer and more transparent investment ecosystem. At the same time, the project owners can utilize Instaraise’s smart contracts to control maximum investments per user and the number of total investors allowed in each pool, making sure new token holders have a truly equitable experience.
Organization and Tokenomics
Instaraise is currently in the second phase of its project roadmap. They successfully completed their Community Presale of their $INSTA token and are on track to release the Instaraise Launchpad V2 in Q4 of 2021. They have a robust team of cryptocurrency veterans and are consistently reaching all of their technical and financial goals. At this pace, it’s very likely we’ll see a number of innovative DeFi projects raising funds on their platform by the end of this year.
The $INSTA token has a total supply of 100,000,000, with 17,500,000 allocated to fundraising for the project. The community presale tokens that were just sold unlock at 50% immediately, while the remaining unlock 45 days after the event. For the seed sale (initial) and private sale (upcoming) rounds, the tokens vest on a monthly basis for 12 months. You can take a closer look at their tokenomics here.
TLDR;
Essentially, Instaraise is utilizing custom smart contracts to offer automated and transparent control over the mechanisms of fundraising for DeFi projects listed on the Tezos blockchain network.
Problems with Current DeFi Fundraising
- Rug pulling
- Unequal opportunity
- Volatility
Instaraise Solutions
- Automated liquidity locking
- Weighted pool scores
- Fixed swap pools
Bonus Points:
- Instaraise is the first decentralized IDO launchpad built on Tezos, which itself is built on proof-of-stake. That means faster and more efficient transactions, lower fees, and increased scalability. It also means that Instaraise is poised to dominate the IDO ecosystem within the Tezos network.
Instaraise has built a fully decentralized and democratically-minded fundraising and incubation platform on the Tezos blockchain. They aim to empower individual investors while elevating project owners with automated and transparent controls over their fundraising.
