Crowdfunding a Better environment
Crowdfunding and its issues
Crowdfunding is a method of building capital for a concept or business by collecting many smaller contribution, mostly via an online sourcing platform. This form of alternative financing has become very popular with online platforms such as Kickstarter and Indiegogo. In 2015 a whopping US$ 34 billion was raised by crowdfunding (Statista, 2018). Kickstarter alone has launched almost 400,000 projects in total as of this year (Kickstarter, 2018).
However, there are some risks tied to this form of financing an enterprise. The use of smart contracts and programmable tokens can limit these risks.
One of the largest issues with crowdfunding is the public fear of abuse and distrust. Take this failed crowdfunding campaign as an example. A product named Crystal Wash posted on Kickstarter for funding, promising to be able to clean your laundry without any detergent. However, they reused the idea of a 20-year-old multilevel ‘trick’. They tricked people by using fancy scientific words to praise their product. Because we all know when companies use difficult terminology it must be true! The company got away with thousands of dollars and all Kickstarter and crowdfunding received was bad publicity. The world of crowdfunding, sadly enough, is filled with bad campaigns like this one. This is making people doubt and distrust even very beneficial big potential projects. Now, what if we can take away this doubt?
The use of cryptocurrency and blockchain provides a variety of security protocols that would help minimize potential risk. The open form of a ledger records transactions between the parties in a permanent way and that data cannot be erased or altered without the approval of the network majority. This protocol would make it quite difficult for fraudulent organization to haul in an easy payday and disappear into the sunset because it records every event or transaction into a new encrypted block. Sooner or later these frauds get caught, and rightly so.
New form of crowdfunding – Meet ICOs
An initial coin offering is a more modern version of crowdfunding via cryptocurrency. Since 2016 ICOs have attracted a lot of investors’ attention. In 2015 there were 7 coin offerings according to Coindesk.com (Coindesk, 2018) in 2016 and 2017,43 and 343 respectively. This is an increase of 800% in 1 year. With crowdfunding campaigns, raised money is basically a donation. Let us look at Kickstarter for example. You choose to donate x amount of money; some projects have different brackets in which you get something in return, what you receive varies with how much an investor donated, but these are one-time only ‘gifts’. However, with ICOs investors are motivated by a prospective ROI in the form of equity, profit share or even revenue share.
Due to the high volatility and passive profits that cryptocurrency offers many fin-tech investors are thinking about how to save their funds or actively make money with them. Early investors in token offerings buy tokens in the hope that the platform becomes widely successful after their launch and they can use their tokens. At a later point in time investors might also sell their tokens for a higher price.
The downside to an ICO lies within their volatility and risk. The market of cryptocurrency doesn’t have a global regulatory system in place which does make it vulnerable and prone to fraud.
There is a better way
However, some tokens have been designed with a usage and potential in mind. Take green initiatives or ecological projects. Environmental issues are one of the most pressing matters in the world at this moment. Technological advancement and ecological projects help resolve these issues. 17 % of the world’s CO2 emissions by 2020 will be produced by the largest transportation industry in the world, Shipping. Governments are trying to resolve these problems by regulating everything and pushing proposals to reduce CO2 emission. But every other year these quotas are not met, and a new proposal is made, this is not the solution, projects with innovating ideas could be. But most of these advancements happen behind closed doors and a lot of projects are funded on a global or governmental level. This is where an ICO could be the solution.
As explained earlier traditional crowdfunding has some flaws that can be helped with the use of blockchain and smart contracts. A lot of green projects are supported with crowdfunding, but these offer no mutual economic benefits, a coin offering does. You can make a profit with the offered equity or profit share, while helping to save the planet.
CryptoLeaf is Europe’s first eco-cryptocurrency. It is an initiative with support of partnerships from private investors and experts. It is a business founded in 2017 after years of experience in management and investment. They want to help SMEs and entrepreneurs reach success and turn their visions into a reality by creating a new cryptocurrency. Providing everyone on the planet with an opportunity to support these people and fund environmental projects all around the world is their mission.
“Where Environment and digital finance meet”.
Trying to combine the benefits of traditional financing and cryptocurrencies. They decided to create Leaf tokens (CLF) as means to that end. The token creates liquidity and allows people to participate and even benefit from existing, approved and listed ecological projects. Their initiative is to guarantee security, due diligence and democratising wealth.
Step 1 Due diligence
The first step is to make sure that projects that require funding undergo extensive background checks and a due diligence process, conducted by independent experts on the team in their respective areas of expertise. This assessment is based on multiple criteria: – Impact on the environment – Financial feasibility – Team composition Only after the first step is completed a project will be listed on the website, at this point it can begin to receive funding from the contributors.
Step 2 Listing
Here begins the next step. After the assessment the project is listed. From now on a token holder can fund any project they like and can even support multiple projects at the same time. All information about any project and a final advisory report will be provided with full transparency to ensure investors can make informed decisions.
Step 3 Milestone based funding
Reducing risk. An ICO as stated before can be a risky investment because once a token sale is completed by reaching its soft cap, companies usually receive all these funds at once. This increases the possible risk of a project running off with the collected funds never to be heard of again. Cryptoleaf ensures that contributors fund listed projects on a milestone achievement basis to prevent this exact thing from happening. Concretely this entails that projects must give information about their plans and the timeframe in which they want to complete these plans. When the project reaches their first milestone they will receive a first stage of funding. Every contributor is contacted when a funded project reaches a milestone and they can choose to invest in the next stage or stop contributing. In the latter case all remaining funds are returned. This system gives contributors a democratically proportional way of voting together. If the majority wants to continue funding the next stage will be made available. Whenever contributors decide to withdraw their support and the funds are returned, you will NOT benefit from revenue sharing.
Step 4 Revenue sharing and terms and conditions
The next step is a big one, revenue sharing. Every listed company must agree to share a portion of their revenue with the projects’ contributors. The reason for this is simple: Startup companies have a low net profit because they tend to reinvest a large portion of their profits into the project itself. They deduct this reinvestment as an expense hence the low net profit. Each project agrees on a set percentage of revenue they will share with cryptoleaf contributors. This information will all be included in the terms and conditions.
Step 5 Token payout
The revenue share is paid out over time in either LEAF token or ETH this is the last step. Contributors receive 80% of the payout, cryptoleaf receives 20%. All the individual terms and conditions are provided on the platform for full transparency. And important thing to note is that the token payout is always pegged to current token prices.
Leaf (CLF) is an ERC-20-standard-based Ethereum token.
Token Cap: 80 000 000 LEAFs
Made available for public: 40 000 000 LEAFs
Token Price: 1ETH = 2000 LEAFs
Pre-launch duration: 3 weeks
Token Sale duration: 2 weeks For more information please visit: www.cryptoleaf.io
Everyone can contribute and profit from a greener tomorrow Crowdfunding is a fantastic initiative to give smaller enterprises the option to get funded without having to go through several rounds of meetings with VCs. Listing company projects on a platform with an innovative and secure structure, guaranteed by the usage of blockchain and smart contracts, that could shape a greener world and economy.
Imagine if even only a small portion of the US$ 34 billion was conveyed into funding like this. People didn’t stand to make (any) profit on crowdfunding and supported it anyway. Because they believe in it. Here, they support CryptoLeaf while at the same time they receive economic benefits. This is a new opportunity no one should miss out on.