Announcing ERC Grant for Regenerative ICOs

We are working on a new project called Regenerative ICOs that will enable organisations to run Initial Coin Offerings with capped investor profit models. This work is funded by the European Research Council’s €150,000 “Proof of Concept” grant, which is intended to help “bridge the gap between the results of pioneering research and the early phases of its commercialisation.”

How will it work?

Say you invest €100,000 in a Company and get an equivalent of €500,000 in their tokens. To pay you back, the company agrees to put 20% of their profits to buy back and burn the tokens you hold. In a given month, the company makes €1m profit and pays you €200,000. Now you have 300,000 tokens left. You decide that you want to sell the remaining token before their payback through the company for €200,000 on the open market to another buyer. This buyer will ultimately get €300,000 and thus make a profit of €100,000. 

What enforces the capped investor profit is the fact that the buyer wouldn’t pay more than €300,000 because they wouldn’t make any profit on it when the company’s profit share is paid out and their tokens are automatically burned. The discount of €100,000 you give to the buyer is what will produce market signals about the current health of the company and enables price discovery.

The anticipated business model of the Regenerative ICO SaaS platform is to offer every organisation to raise €20,000 for free and from then on take a percentage fee on the total investment sum. This fee is paid in tokens of the token-issuing organisation to increase alignment between the long-term success of the company and the Regenerative ICOs team. 

What good will come from this?

The project could make it possible:

  1. for cooperatives, businesses, communities, and individuals to raise funding from a diverse set of supporters, while avoiding mission drift and profit maximization incentives. 
  2. to support businesses that aim for sustainable profitability instead of growing-at-all-costs and that have the economic freedom to invest in alleviating societal challenges without lowering investor profits.
  3. to experiment with different contractual agreements and governance models with economic incentive structures potentially leading to higher decentralisation of power, transparency,  accountability and support of public interests. 

What are the next steps?

The project has three phases:

  1. Research the legal constraints and opportunities to develop basic (smart) contract templates for capped profit investments.
  2. Develop the software prototype for organisations to create & distribute their own tokens and smart contracts, customisable with a set of predefined parameters (not extendable yet), and enforcement of profit sharing to token holders.
  3. Validate product market fit with the Zebras-Unite community of capped profit organisations and productive communities.

Stay tuned to learn more and get involved!

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