Crowdfunding Goes Web3
Introducing Crowdfund NFT — a 100% on-chain alternative to Kickstarter
The first recorded successful instance of crowdfunding occurred in 1997 when a British rock band funded their reunion tour through online donations from fans. Inspired by this innovative method of financing, ArtistShare emerged as the first dedicated crowdfunding platform in 2000. Then along came Kickstarter in 2009, which brought this funding model — fans raising funds for a project would receive a benefit/reward if the project was successful — into the mainstream. The results were hugely profitable. Kickstarter reported revenue of $9.5M in 2021. As per Statista, the crowdfunding industry is projected to reach US$1.02bn in 2022.
Although crowdfunding has created substantial opportunities for many individuals and small businesses, the industry has been criticized for lax copyright protection and hollow investor benefits. But the biggest criticism of crowdfunding centers on its lack of transparency and trust. Currently, the entire crowdfunding life cycle depends on one central entity (Kickstarter) to raise, manage, and disburse funds, which gives them too much power and control over the funds of millions of small investors and entrepreneurs.
The future of crowdfunding will be shaped by blockchain technology, with transparency and trustlessness at its core.
Also, the entire premise of crowdfunding has much in common with the goals of Web3; for example, a project builds a community of enthusiasts who support a project (built on a blockchain) in return for some benefits if the project succeeds (tokenization). Perhaps this is the reason that Kickstarter announced in 2021 that they would begin to build on the blockchain; however, nothing has been released as of yet.
What the crowdfunding industry needs is a complete overhaul of the entire value chain, where smart contracts serve trustless functionality.
With Crowdfund NFT — a 100% on-chain crowdfunding platform built on the Internet Computer blockchain, the industry is getting reimagined as we speak. Already, more than ten Web3 startups have raised funds for their projects with full transparency and ease. Since it’s built on-chain, each step of the process — fundraising, escrow, and disbursal — is publicly verifiable and traceable. There is no central authority determining the fate of each transaction, which makes the whole process decentralized and trustless.
Using the power of smart contracts and NFTs, Crowdfund NFT brings transparency and gamification to investors. Project backers don’t only receive a t-shirt, a cool hat, or a product sample, they receive an NFT which can be traded freely in a dedicated marketplace. Currently, the platform utilizes the $ICP token; however, it will soon become multi-chain, meaning that projects will have the ability to raise funds in $ETH or $BTC.
“The whole process is run on a network of smart contracts — the system is fully automated so that funds disbursement, reimbursement, and NFT minting happens automatically. With our blackhole escrow canister model, there is no human intervention — which makes our system tamper-proof and safe. It is also possible to raise globally, with no fiat restrictions on crowdfunding rounds, which means there is a larger pool of potential participants,” says Luke Dugdale, CEO @CrowdfundNFT
Crowdfund NFT has live projects across multiple segments such as art, gaming, music, charity, and others. The highest percentage of “fully funded” projects have been in the gaming segment, a shining example being Cubetopia — a multiplayer RPG sandbox game, where players can own a unique island on the blockchain while they showcase and sell NFTs before and after live gameplay. Cubetopia was successful in raising 3000 ICP in its initial phase using Crowdfund NFT. The reward for backers was a “Founders Pass” NFT, which came with benefits like:
- Crowdfund in-game armor
- “Founder” title for Discord and in-game use
- One mountainous-style island of a random size
For the project backers, this NFT represents, not only a pretty gift and an “access token” for current and future benefits, but a tradable investment that may appreciate in price.
Crowdfund NFT gives new Web3 projects the power to raise funds in a fashion that is transparent and trustless, with zero risk or dilution of equity. At the same time, through the novel use of NFTs, their founders can build large communities around their projects. The Web3 disruption of Kickstarter has begun.
Originally published 100% on-chain at Fastblocks
https://wnftq-taaaa-aaaaf-qahca-cai.raw.ic0.app/talkingweb3/66/crowdfunding-goes-web3
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