Viable Alternative To ICOs — Introduction of The “Believers Reward Offering”(BRO)
Blockchain Technology is fundamentally changing the way of exchanging value and tokens are at the heart of it. Since 2017, we have seen the explosive emergence of a powerful token based fundraising mechanism: Initial Coin Offering (hereinafter “ICO”).
An ICO consists in proposing the acquisition of tokens in exchange of cryptocurrencies (eg : BTC or ETH) or in compensation for the realization of specific actions in favour of the project (promotion, audit, test, etc…). Token issuance allows to raised funds from worldwide investors in order to finance the development of a product or service.
The growing success of the ICOs reveals its attraction as fundraising method. However, ICOs still suffer from challenging issues for both project owner and investors.
What are the problems of ICO ?
First of all, the project owners suffer inevitably from the pump and dump phenomenon driven by major investors following the official listing of the token on a crypto asset exchange. In the vast majority of ICOs, token price will probably never return of its initial value and reduce the attraction of the project itself due to the important bonus given during the ICO crowdfunding. Currently there is no equal treatment between investors.
Secondly, high volatility of the cryptocurrencies such as BTC or ETH provides uncertainty for both investors and project owner, just take a look at the damaging bankruptcy effect during the bearish market, investors are exposed to the volatility of the cryptocurrency used for the investment and face to erosion of the initial capital invested. From the project owner side, amount of the capital raised in cryptocurrencies will vary from time to time because of the volatility which is a problem for the management of company’s treasury. Volatility weakens the structure of the fundraising method.
Thirdly, currently most of ICOs are conducted without transparency during the campaign by not publishing the smart contract address. Investors are not able to verify the total supply of tokens and their correct distribution. Moreover, they cannot check in real time the raised amount which prevents from FOMO/FUD effect and false statement. More than that, smart contract provides trust between parties by guaranteeing that the initial deal will not be modified in the future which allows also to verify there are no hidden deals.
Unfortunately, current ICOs mechanism doesn’t encourage alignment of interests between project owner and investors and provides uncertainty for both parties. That’s why we have designed a totally new token based fundraising mechanism called “Believers Reward Offerings”
What’s new with the BRO ?
The “Believers Reward Offering” (BRO) aims to offer a sustainable alternative to Initial Coin Offerings as new token based fundraising mechanism. The BRO allows to sharply decrease the pump and dump phenomenon, limit volatility, foster growth by providing equal treatments of all contributors called “believers”.
How ?
The BRO allows a company to finance its development through a loan of cryptocurrency. Investors will contribute with a stablecoin such as USDT/DAI and they will receive a payment of an interest and benefits of a complementary bonus for the trust on the project. They will be paid with a dedicated token on a quarterly basis between 12 and 18 months (the duration of the loan will depend on the borrowed amount). All the conditions of the loan are transparent and definitive. They are coded on the smart contract. No place for bad faith in the reimbursement and payment. Payments are automated and reflect the initial deal.
How we can limit the volatility of the token used for the payment of interest and capital reimbursement?
Firstly, the tokens distribution will be diluted over the time through the quarterly distribution.
Secondly, the starting date of each individual loan will not be the same which means that contributors will not receive in the same time the tokens. Indeed, the calculation of the start date will depend on the day when the contributor has borrowed the amount. As a new way to fundraise, we are better placed to be the first project to propose it. Our fundraising campaign will stay open during 3 months (or it could be more if the period is too short to target the fundraised amount).
Thirdly, we put in place a bonus reward mechanism which is a way to encourage its long-term holding by offering an additional reward for those investors who do not sell the tokens and hold them.
Finally, when you combine the use of stablecoin for investment, dilution of token distribution over the time and offers a reward for holding, BRO offers a sustainable new way to raised funds without suffering from challenging issues existing with ICOs. Moreover, every contributor who participate to this fundraising campaign will know the process which means that the project will only attract true believers on your project and not dumpers.
Like BROthers we consider that project owner and investors are part of the same family and have to share the vision of the family’s development.
More information will be given about our protocol in the coming weeks. Join us on this new revolution by following us on our social media.
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