Zuckerberg Media and Blockchain technology backing up The Next Generation of Crowdfunding - Pledgecamp
Introduction
Pledgecamp is securing the future of crowdfunding with blockchain protected investments and taking the worry out of crowdfunding for both backers and entrepreneurs. By addressing the critical problems of trust and accountability in the industry, they will create a new generation of crowdfunding which they call Crowdfunding 2.0.
The idea to create Pledgecamp rose from a simple fact: the current method of crowdfunding for startups is broken. Current platforms only care about the quantity of listings instead of providing the moderation, incubation, and support of projects that will increase the likelihood that funded projects will deliver.
The current platforms are incentivized when projects raise money and not when they deliver, so they do not hold creators accountable to their promises. They do not oversee a project's performance, nor do they mediate disputes between users.
The lack of oversight mechanisms right now leads to huge failure rates in the industry: up to 85% of projects fail to accomplish their roadmap goals in time and from my personal experience, some are not able to finish accomplish their vision at all. According to the stats, as much as 14% of projects will under-deliver or fail to deliver at all.
Partners and Advisors
Pledgecamp is a project that has raised 17 million in seed and 700k in public round to solve these issues through their experienced team composed from people who know what is necessary to run a successful crypto-related business in 2019. If you take a look at them more closely you will see a team about which you can say that this is not their first rodeo.
The project is backed up by big names like Randi Zuckerberg (CEO, Zuckerberg Media), Matt Curcio (VP, Data Ripple), Keith Teare (Founding shareholder, TechCrunch), Prince Abdullah (Saudi Royal Family), Alan Chang (Operations Lead, Airbnb), and more.
Pledgecamp has also teamed up with MetaLab, the UX/UI firm responsible for designing Coinbase, Slack, and Oculus , among others.
Regarding the problems mentioned above: Is there a motivation which will make teams work hard to obtain the crowdfunded money they have collected? The solution where you will lock them a portion of gathered money until the team delivers what they promised in their whitepaper seems like an ingenious albeit straightforward idea. Here we can sense that Pledgecamp is building their solution on the rich base of experiences gathered from their previous actions.
The Pledgecamp team has previously raised millions of dollars on Kickstarter and has become among the top 1% most-funded crowdfunding experts on the platform. The design objective of their economy is to align the incentives of all participants in the network:
- Backers gain a decentralized escrow mechanism which protects their funds
- Creators receive wide-ranging project support and lower platform fees
- Platform Users can earn token rewards as they help the platform succeed
Use case
Problem - Crowdfunding is messed up right now for three reasons.
- Less than ⅓ users on Kickstarter back a second campaign 85% of projects delays and 14% fail to deliver.
- Kickstarter or Indiegogo has 0 incentive to prevent this because they don’t grow based on the number of quality projects, but the amount of listing fee received: which is 5% of the total money raised by the successful project (the more listings they sign, the more money they get).
- Crowdfunding is one of the riskiest investments without the protection of the SEC or the return of a VC.
Solution - Crowdfunding 2.0
- Using the unique nature of the smart contract (principle of decentralized trust), the platform creates something called backer insurance where the significant chunk of the funds are locked and released in tranches only when the team reaches the promised milestones. If not it’s returned to the investors.
- The platform itself benefits not from the listing fees but rather from quality projects successfully delivering and growing the ecosystem.
- Projects that don't provide backer insurance paying higher fees (there is a 5% listing fee for a project with zero backer insurance and 0% listing fees for teams that decides to lock up the 50% of their tokens).
- Honest creators offer video evidence of their activities leading to progress; backers vote for releasing another amount of funds for each roadmap milestone reached.
- An approach like this gives the power back to the backers.
- Pledgecamp creates a "community of moderators model" in which the moderators are staked and get rewarded for being in that state.
- Pledgecamp coin is the medium that allows you to be locked up in stake when the price of the coin is bound with the overall success of the platform (the minimum amount of tokens for getting a moderator status is 10 million Pledgecamp coins).
Features of Pledgecamp ecosystem
Pledgecamp Crowdfunding 2.0 is assembled from three parts: Crowdfunding, Knowledgebase and Market Network which will be helping with project scalability.
Crowdfunding
Backer Insurance - Smart contracts empower backers to enforce escrow of their funds. A Pledgecamp exclusive.
Campaign Deposit - Creators must place security deposits to curb abuse. Refunded upon KYC and transparent disclosures.
User Moderation - Users who stake tokens are empowered to moderate the ecosystem and earn revenue in return.
Global Inclusion - Millions are excluded from crowdfunding today. Pledgecamp opens the model to the world by allowing the US, China Hongkong people to participate.
Smart Crowd - Token incentives (bounties) harness the limitless power of the crowd. Help creators, earn income.
Knowledge Center
Empower Innovators - A decentralized knowledge center provides entrepreneurs the insights they need to succeed.
Ask Questions - Project creators can get timely answers to specific business problems by offering rewards.
Earn Rewards - Users can monetize their expertise and help projects succeed. Speak up, get paid.
Market Network
Guarantee Payment - Smart contracts give vendors the peace of mind that young startups will pay as promised.
Track Funds - Smart contracts with vendors allow backers to verify that funds are used as promised.
Trusted Vendors - Creators can vet and find key partners with histories and reputations on the blockchain.
Campaign Deposit - Creators must place security deposits to curb abuse. Refunded upon KYC and transparent disclosures.
Creators can use tokens to pay for specialized answers, hire the crowd to perform bounties, etc.
A drawback to the solution Pledgecamp is providing could be the high fluctuation of the cryptocurrency token. That's why they invented the reserve system which guarantees a fiat prize equivalent for the amount of Pledge coin locked up, but even this is not a 100% guaranteed protection from high price fluctuation. I asked this question to the Pladgecamp CTO, Sam Pullman, and here you can read his response:
“Creators and investors are protected from variation by our reserve, which adjusts the PLG quantity of the escrow wallet automatically to preserve the original, let's say USD, value. In effect it's a stable coin we can trust; even if one is an option in the future, it reduces business risk in the case we dedicate to an external coin that has issues. Look at Dai for example. More importantly, this coin is specialized in its second function, which is to stake it and acquire Camp Share (similar to the steem/steem power two token economies). Keep in mind we expect campaigns to accept a mix of crypto and fiat, as we intend to accept credit card to be a mainstream application. If the backer insurance level in a campaign is set at 20%, that is the amount that must remain in PLG over time in the escrow wallet, so funds will convert as necessary into or out of PLG.”
Also, the amount of 10 million tokens seems to be a little bit high for those who want to participate as moderators, but you can think about it as an about the “inner PoS”.
So we have here a decent project, using the blockchain as a trustless holder of funds, which wants to step up the game on the level of the startups and wants to be a worldwide spread alternative to Kickstarter which represents a more US-based and oriented platform. With global coverage like this thanks to the element of cryptocurrency, you will be able to support the entrepreneurs from all over the world, and at the same time, you will have an assurance that project you decided to help will be motivated to deliver on their goals since there will be a party of moderators which can decide to freeze their funds if the roadmap goals weren't met. You, as a part of the ecosystem, have a right to flag fraud campaigns and to curate them through the Pledgecamp Moderator system. You are also part of the system that rewards Camp Shareholders with actual proceeds from campaigns, in the form of listing fees paid by entrepreneurs.
This project has a lot of great ideas, a good team of advisors and the power to change the current face of startup models. Just don't forget that like any good project, even Pledgecamp has its competitors who can simply adapt to the tempo of this new player and get the status back.
All in all, it definitely deserves some of your attention to make sure to join their telegram and ask as many questions as you please, before you consider investing in.
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Do stay tuned
With respect, Mickey