Since Ethereum and Blockchain in general experienced such rapid growth, we have seen an explosion of new projects. This increase in interest increased also a lot the traction we as Ethereum and Blockchain developers get.
As I’ve worked on, and build a few of Ethereum’s most known projects, like the Mist Browser, the Ethereum Wallet, web3.js and especially proposed together with Vitalik the ERC-20 Token Standard, many projects approached me to help them with my technical knowledge and advise.
Until recently I helped as much as my time allowed with questions and advise, but I rejected any request for official advisory or engagements. This was mostly because I can’t split myself and help every project and many of those projects didn’t ring with me in the first place.
Recently I decided to officially advise two projects which is see a lot of potential in: NeuFund and the Protos Fund. The reason to put myself behind those projects is because I think they are a good idea and I want to help them going in the right direction, towards a useful project for the space.
I’ve met Zoe Adamovicz and her team at the TOA Berlin in 2016. She and her team came up to me with that idea of a tokenised VC Fund. I told her to look into decentralised models and build a smart contract ecosystem rather than a company controlled VC fund on the blockchain.
Since then I’ve met them a few time and followed their progress towards a more decentralised version of their initial idea. Today I’m convinced they build something quite unique!
NeuFund is a platform to make actual equity investments using blockchain. Something many of the current ICOs actually want, but rather invent some dodgy token, which shouldn’t be there in the first place.
NeuFund does this by having a company behind it called Fifth Force GmbH which will tokenise real equity, which then is held by a trustee for the respective token holders. This legal structure allows real equity with all its benefits and rights to be tokenised and sold via ETOs (Equity Token Sales). All this is done via their smart contract system, and they plan to ETO the majority of the Fifth Force GmbH itself in the future.
To make the platform interesting for companies to offer their equity, they will do a ICBM (Initial Capital Building Mechanism). This is something I am personally very excited about, as it can change the way ICOs are done.
Today most ICOs are simply collect a bunch of money to start a project. Over the last year many ICOs tried different forms of how to collect this money, but almost none of them tried to tackle the incentive problem itself. Currently the there are almost no aftermath checks and the incentives are mostly opposite aligned to the investors. Investors want the project to succeed fast, while most ICO’ed teams feel they succeeded after raising that money and give themselves time to develop their project. In some cases they are even right out scams.
NeuFunds ICBM is an event in which investors commit capital. This means they still control their funds, but they lock it into the NeuFund smart contracts to invest it later on the NeuFund platform.
In this process they mint NeuMark – the platforms token, and half of all minted NeuMark will go to the Fifth Force to run the legal backing of the tokens and the admission of ETO projects to the platform. This means in the ICBM itself Fith Force will not receive any money, but rather a stake in their own platform. This aligns the incentives quite well with those of the investors, as they all want NeuMark to become valuable.
In Neufund all ETOs will pay a small fee of 5% (3% in money and 2% in the ETOs tokens) to all NeuMark holders. This means the more ETOs running on the platform, the more each NeuMark holder will receive.
I think with this system they balanced well the incentives between the stakeholders, as well as created a platform for most future ICOs to run on.
I was introduced to the guys from Protos through a meeting here in Berlin. I got a very positive impression about the team and their outlook on the space. I was approached a few times already from Funds, but rejected all of them before. The team behind Protos is a good set of people who work for the right reasons.
As Protos is a tokenised Fund it is not itself as decentralised as i want to future to be, but it allows people that stand outside of the Blockchain space – willing to invest – to have an experienced team to do that for them.
On the other side it is also interesting to existing cryptocurrency traders, as they can let other people do the trading and assessing. I wrote before the space grew a lot. It is hard to keep an overview over all the new ICOs, Blockchain projects and Cryptocurrencies popping up. Choosing every ICO and cryptocurrency themselves is time consuming and always comes with difficulties managing and securing all those assets.
Most of the current existing tokenised Funds are rather index funds, which accumulate certain tokens in their portfolio. As Protos is actively managed it will be able to hedge down trends and benefit from up trends in the cryptocurrency space.
Protos (PRTS) will be tokenised, which means people will be able to sell their share of the Fund at any time. It is also planned to have the whole portfolio and its assets visible in real time to make it as transparent as possible.
The token will use 10% of its gains to buy back PRTS token on the market to decrease the existing supply over time. The fund will invest 65% of its holdings into the top protocols and cryptocurrencies, and 35% into new upcoming ICOs and Blockchain projects.
Next to putting money into Protos myself, I will help as an advisor to choose the right projects to support and invest in and steer the right technical decisions as my time allows it. I want to make sure that this money is invested wisely and projects that improve the space get the right exposure.
Protos has a complete Offering Memorandum you can read here.
In the future I maybe support other projects, but I will not take on more shoulders than my time allows. My work at Ethereum is still the most important for me! but I am also thinking of starting my own projects in the future, so stay tuned 🙂