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Fractal Ownership, Part 2: Implementing Value-based Ownership

This article establishes the theory and application of a new financial and business model for networks — or digital ecosystems — through tokenization, i.e. monetization of qualitative & quantitative data about network value.


In the following we give a short explanation of

  • why we chose the term “fractal,” and how Fractal Ownership relates to the underlying fractional asset representation through tokenization. We will then get on with
  • legal & governance framing: We combine the most flexible — hence most abused — business and financial engineering practices (Special Purpose Entities and Asset-backed Securitization) with the most abuse-resistant governance structure available today: Steward Ownership. Until legal and regulatory domains also become digital, this is what we have to work with.
  • mechanize the degrees of freedom that structured finance enables with a set of smart contracts and radical transparency through open source development. These mechanics, currently only applied in the financial economy as “Decentralized Finance” or “Open Finance,” will become even clearer in their application on the real economy in the second half of this article. However, before diving into application we will also explain why we propose:
  • holacracy as the autonomy-focused organizational principle for the ones in the ecosystem who fully opt-in. Other ecosystem participants can keep their current strategy & organization or transition to Fractal Ownership at any time. In the Conclusion, we discuss briefly how such transition can happen.
  • The second half of the article aims to clarify Fractal Ownership by applying it to the ElectraSeed Fund ecosystem and using pictures from a table top game that is fun to play and understand the cryptoeconomics behind: ElectraSeed Fun!

In Theory

What’s in a Name?

Presume, the ecosystem consists of networked organizations, and individuals with their networks. We use the term “fractal” to emphasize that Fractal Ownership applies at all levels within that ecosystem — when the ecosystem participants opt-in. The value of the network is fractionally shared. Fractals are self-similar geometric objects that do not have a whole numbered dimension, but a fractional one.

Legal & Governance Framing

In order to realize Fractal Ownership within an ecosystem, we establish a Special Purpose Entity (SPE) under the legal/governance framing of “Steward Ownership,” i.e. a “self-owned business.

Radical Transparency & Smart Contracts

In order to shine direct sunlight on the financial transactions of the SPE public smart contract platform and whenever transactions happen in the existing financial system open banking is to be used. Radical transparency doesn’t mean that all parties and their identities are known when this is absolutely not required. On the contrary, we must strive for self-sovereign identity avoiding centralized lookup tables into the privacy of individuals. However, every transaction to and from accounts associated with the SPE, i.e. the network value, will be known and fundamental part of the set of smart contracts for value accounting and sharing.

Strategy & Organisation

Fractal Ownership as a new financial and business model aims to incentivize and coordinate common action on global scale with a dedicated purpose within a global ecosystem. The purpose will be engraved in the DNA of a Special Purpose Entity, that is “self-owned” and only exists for that purpose. The SPE is the legal representation of the network value. Through so-called “Steward Ownership,” it cannot be sold, bought, or inherited. The stewards are people who directly connect to the operations or mission of the SPE.

Whilst Steward Ownership is a concept that applies to one organization, Fractal Ownership is a tokenized implementation of that legal and economic concept within a digital ecosystem which consists of many organizations and individuals.


Now, the ecosystem is made up of organisations and individuals who will create value, and curate value — these are the stewards of the SPE that will then come to represent that network’s/ecosystem’s value. The means of “voting,” however, is not a mere copying of shareholder voting rights of traditional organizations. As we interpret it in Fractal Ownership, the value creators and curators, “vote” by putting skin in the game — namely by staking their earned tokens to determine the direction of funds. If they are right and value is created through their directing, then their tokens now accrue more value and they earn more tokens by delivering that value.

Holacracy with Skin in the Game

The unit of value are so-called “bounties,” i.e. structuring, describing and advertising what can and/or needs to be done in order to increase network value and achieve the purpose of the Special Purpose Entity. The bounty creator earns network tokens, which are directly offered as an incentive share — a strategy called query incentive networking. Participants in the circle who take up the bounty and deliver will split the reward, i.e. the tokens. If the proposal is not implemented & used than the staked tokens get redistributed to other bounty (query) creators and their circles who did create value. These network tokens ultimately only can accrue value by adding value to the network through aiding value creators in the network.

The Application

Let’s start with the part we left of In Theory: Bounties for developing and maintaining ElectraSeed Fund, the open source software, and the SPE as its legal person, say ElectraSeed Fund SARL.

  1. Ecosystem Canvas & Seeding
  2. Ecosystem Financial & Business Model Simulation
  3. Token Design, Modeling & Smart Contracts Development
  4. UX/UI Design of Ecosystem Portal(s)
  5. Legal Counsel & Codification in (each) one Jurisdiction
1. Ecosystem Canvas & Seeding: Mapping our networks of value towards Clean Energy Access — with the Ecosystem Design Toolkit (adapted from Platform Design Toolkit, and Elinor Ostrom’s governance principles)
  • The smart microgrid operators and their customers. They are the clean energy access providers, and the users of energy determine the impact of clean energy access.
  • People and organizations who find and onboard value creators: be it a community in the suburbs or sub-Sahara, you are a value creator/curator if you can help them get access to clean energy through a solar smart microgrid. If you can onboard impact investors, who value the social, environmental, and local economic impact of that clean energy access, you are an impact curator.
  • As mentioned above if you can curate code (legal and smart contracts), model & simulate to facilitate understanding (based on data, or table top games!), design for instant gratification: both the user and developer experience; architect IT systems, data pipelines, as well as business with underlying bonding curve parameters etc. you help make value visible, actionable in this network, you are a value curator — and you have created value through data and code, your intellectual property that you have shared through AGPL.

So, how is this ecosystem value created & accounted for?

First of all, the notion of Fractal Ownership gets rid of one main inhibitor of true collaboration: borders. The notion of ownership becomes borderless — no nations, no corporations, no KPIs — no other than the common goal: Clean Energy Access Globally.

When you contribute to the network you earn the network’s token.

This contract and its associated accounting methods are computed on any virtual machine capable of doing so — today this is the Ethereum Virtual Machine, that is run on any computing node with sufficient CPU/GPU, RAM and bit/s. You can access that contract from any internet connected device and use it. You can be a value creator, curator, or “cash” contributor.

ElectraSeed Fund has an accountant: it’s algorithmic

Any contribution of value either is data or passes through a filter that creates meta-data (data about the value contribution), e.g.

  • project curation through user-generated content on ElectraSeed Fund portal(s), incl. staking
  • project data committed for continuous modelling & optimization [next phase e.g. on Ocean Protocol], incl. staking
  • code/data curation through GitHub, Slack, and other forms of collaboration documenting
  • cash contributions towards funding the projects/bounties.

The Algorithmic Accountant

The accountant, an augmented bonding curve contract on a blockchain — does three things:

  1. “bond-to-mint:” the provided data and the shape of the token bonding curve(s) determine how many tokens are to be minted and logged to the associated accounts. The data itself is logged in The Reserve, a portion of the cash flow data is logged in The Funding Pool for funding projects/bounties. This translates to buying the token through tangible and intangible contributions. The bonding curve determines the price of token, which valuates both the “revenues and impact” data collected in The Reserve. People buying-in at those prices, and the amounts they buy, and the rate at which demand increases enable an aggregate subjective, a more objective valuation of intangible assets such as positive impact at a given point in time.
  2. “burn-to-withdraw:” at any time you could send any amount of tokens back to the bonding contract, which will trigger the process such that you receive the appropriate portion of The Reserve according to the bonding curve. Depending on the amount to be cashed out, a tribute is diverted into The Funding Pool. This translates to selling the token to pre-determined, balanced conditions according to the parameters of the curve.
  3. “bond/burn-to-donate:” by burning tokens without withdrawing cash from The Reserve you effectively increase the value of remaining tokens in circulation. This translates to donation of contributions that minted the amount of tokens now burnt. Subsidies, explicit subjective valuation of intangible assets such as social, environmental and local economic impact can be realized in this manner.

Collective Intelligence & Web of Trust — instead of an Asset Manager with an IT division

Bounties are created through finding matching funding opportunities and defining the bounty, tasks such that remote teams can form. Hackathon participation, EU/national R&D funding, sponsored PoCs and pilots are one form. As-a-service offerings and creating a feature for and paid for other parties, and submitting those as bounties beforehand or as pull request will mint tokens.

Experience Design

This is by far the most critical, and experimental aspect of ElectraSeed Fund. Bootstrapping an ecosystem of strongly motivated participants towards one goal: Clean Energy Access (through application of this new form of finance), is one thing. Making it super smooth for them to contribute is the other. Contributions are cash, code, data.

“Tell me and I forget. Teach me and I remember. Involve me and I learn.” We’ll be playing ElectraSeed Fun! in ETHCC in Paris on 3rd March, and Napels on 5th/6th March!

The game, first and foremost, brings about meaningful conversations about what we value as a society, and how data-driven technologies can help us engineer our digital economies anew around those values!

Now whilst storytelling reduces one source of mental costs for people who will contribute cash to projects, the other is the mental cost of self-sovereignty: key management. 90% of internet users have no clue about encryption online. This is mainly thanks to the 90’s era weak encryption policies of US, but also keeps continuing in an effort of nations’ need for control over “their” people.

How do we (legally) organize this value creation and curation network?

When we bootstrapped the network of revenue & impact creators, curators, supporters — we will all become stewards of the steward-owned special purpose entity ElectraSeed SARL

We share both the risk and the upside as “a crowd.” With whatever contribution you make you become part of the “common enterprise” to scale access to clean energy at digital speed.

Join ElectraSeed Fund, a crowdsourced & crowdfunded network of Clean Energy Access for More Impact & Less Risk.



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