Right now the ICO business is one of the most challenging fields that you can be working in. One of the biggest challenges is to create a coin that has a utility and a use case for as much people as possible. If you can develop a project like this, you are one of the better coins out there — but there is one big problem coming with this as well: If you have a non-limited supply of the coins that you are throwing on the market, it will make your coin worthless and your project will most likely be meaningless.
Here comes a mechanism into place that is being used by many successful coin projects that is called “vesting”. Vesting comes from the business economy, where employees or early investors are locked into certain agreements not to harm the company as a whole.
It works like this: the employee or investor is purchasing or earning shares of the company in an early stage — the stage where the share owner is accumulating a lot of shares with potential value, is the stage where the company is the most vulnerable in its business lifecycle — it is the start up phase.
In order to keep up the motivation of the employees and early investors, it is important to “lock in” the owner of the power (shares) into an agreement, that they will not use their power until certain circumstances have been reached. The circumstances can be company value, time delimiters or other custom agreements. These parameters are set by the founder of the company in symbiosis with what they want to achieve.
In the Mondo ecosystem where we are using the MNDCC as a founding instrument to build our vision of the future online shopping experience called Mondo Shopping.
As any start up we have founders, employees and early investors. The major difference to usual businesses is that we are not selling shares of the company. You as a customer can buy MNDCC which is a utility token that can be used on our Mondo Shopping in the future, the revenue we are getting from selling the coin is going into the development of the ecosystem like described in the whitepaper — 40% sales, 40% development, 20% operational costs.
Also we incentivize our employees or partners with MNDCC to help building this visionary project.
Now imagine you would have sold or gifted 90 million MNDCC and all holders would be able to move the coin in the total sum from the day 1.
What would happen? Every holder of the MNDCC with “weak hands” would go on any crypto exchange and throw his coins away — before we even started!
As our start up is not in a productional state — we would not have a lot of instruments to cover such dumps and those people would harm the hard working guys that we have onboarded and incentivized with MNDCC to help building us this project.
This is why we have used a time based vesting schedule — we lock all early holders into a phase of non-transferrable tokens for the first years of the business.
In order to sustain a steady growth of the system and to be able to develop a successful project, we do need a horizon 2–3 years until the ecosystem becomes stable and big enough to run under its full potential. This is why the founders of the MNDCC has introduced the vesting we call the “waterfall system”.
A buyer of coins is getting the full amount of the coins right into his wallet, which you can imagine as the first pool. This first pool is leaking like a waterfall little amounts of MNDCC each month into another pool. This secondary pool contains only the coins that are free to move.
One can transfer the free coins from the secondary pool to any other address. Since this token is almost a standard ERC20 token, it can be used with all compatible ERC20 applications: wallets, exchanges, DeFi, whatever.
The smart contract behind the ERC20 token is taking care of releasing the funds on an address fully automated. So the tokens are becoming free to transfer without any interaction from the issuer or anyone else — the Ethereum blockchain is taking care of calculating the starting point of a vesting and the amount that should be free.
The MNDCC has a build in time schedule of in total 29 months of vesting. Every month the contract releases 0,5% of the total bought amount, after 20 months (10% reached), the contract raises the monthly release to 10% of the total amount. In total 29 months of progressive vesting.
As a summary: a buyer of MNDCC has an obligation with his coins: maintain a longterm partnership with the ecosystem in order to allow the team to build what we have promised.
If you are curious how we’ve done this in an ERC20 token, stay tuned!
We’re preparing the Part 2 of this article which will explain in technical details how the token is programmed and how the mechanic inside the token works.