Regenerative ICOs: Tokenizing Debt and Dividends

Project Information

Regenerative ICOs

Grant agreement ID: 101069377

DOI

10.3030/101069377

Project closed

EC signature date 16 June 2022

Start date 1 July 2022

End date 31 December 2023

Funded under

• European Research Council (ERC)

Total cost

No data

EU contribution

€ 150 000,00

Coordinated by

CENTRE NATIONAL DE LA RECHERCHE SCIENTIFIQUE CNRS
France

Periodic Reporting for period 1 - Regenerative ICOs (Regenerative ICOs: Tokenizing Debt and Dividends)

Reporting period: 2022-07-01 to 2023-12-31

Summary of the context and overall objectives of the project

The project “Regenerative ICOs” aims to provide a boilerplate of (smart) contracts and approaches to enable communities to invest in companies that have a capped profit model for investors and team, and manage equity allocation to contributors, with the help of blockchain technology.
The blockchain based part of these fundraises are launched with the platform Fairmint.com.
The approach we aim to implement to enable a Regenerative ICO is to create an investment vehicle that enables a company to have venture-like growth and investor profits while at the same time removing the harmful profit maximisation that comes from uncapped profit expectations of investors.
To achieve this, the Regenerative ICO approach foresees a company being able to buy back its own shares at the market value in about 10 years time, and raise their initial funding from Angels and their customer community which significantly increase their likelihood of success.
This approach is giving early investors and team the chance to grow big and fast with market competitive returns for investors, while removing the ability to indefinitely extract value, especially as in later stages such uncapped returns are not proportional anymore to the risk taken.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

With the help of lawyers and our community of token engineering practitioners we have significantly improved our approach since the start of the project.
In particular the model became much more suitable for the way current investment structures work, removing an important hurdle for long term adoption.
We’ve also developed the legal steps to take for Literary Machines, Inc, (and any other company) to launch the Regenerative ICO on the Fairmint.com blockchain platform, albeit the Regenerative ICO launch itself is still outstanding.
So far, this work has enabled the company “Literary Machines, Inc.” to raise its first Angel round of $275.000 with the capped profit model with a specialised version of the popular YC-SAFE agreement and a custom side letter outlining the rules of engagement and the profit expectations for the investment.
This was a major breakthrough because it enables the use of a contractual foundation that is commonly known by investors, requiring no additional knowledge or caution about contractual pitfalls.
Literary Machines also launched a “transferable lifetime plan” for its product “Memex.Garden” to test the readiness of the community to invest into the company with no profit maximisation possibilities, raising another $35.000.
Additionally our work has already helped 2 other projects to raise their Angel rounds with the Regenerative “YC”-Safe agreement we developed.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

We have developed the novel legal pathway for implementing the Regenerative ICO on Fairmint.com and with the help of blockchain technology, although the actual implementation and launch are still outstanding because we are awaiting a better timing for this.
The timing depends on Literary Machines, Inc., the company that acts as our testing ground for launching the Regenerative ICO, to be profitable in order to have the highest chance of financial success. This is important because the success of this launch will act as a reference for future companies to try it out themselves and thus increase the chance of maximising the results of this ERC project.
We aim to complete the implementation of the ICO on a blockchain based system, likely Fairmint.com by the end of this year.