Fair Funding in Crypto

How to build in a bear market without selling your soul.

Building in a bear market is tough.

As a founder of a new project it’s especially tough. The members of the team you built put their trust in you and your vision. They gave up their previous jobs to be a part of this. They could instead go to one of the $500M VC funded “Eth-Killer” L1s (who’d have thought that’s still a thing in 2022?) and get a 6-figure salary. But they chose to be here. Now it’s up to you to deliver.

The only question is how.

Building a good product and not just some heartless-ponzi-vaporware or unauthorized copy&paste fork unfortunately does take a bit of time.

Engagement is low. Crypto Twitter is but a shadow of its bull market activity. The hardcore degens are certainly still there and while they’re still looking for new projects and investment opportunities it’s hard to even get the word out that your project exists and is still building. Everybody and their mother is calling for the end of crypto, markets and the world.

So what are your options right now?

• Make up some “utility” for your token and go for the tokensale anyway in the hopes of raising at least a little bit of money to get you over the next few months. You know it won’t give you the runway needed to develop the project properly. You know you won’t be able to pay your team fairly. But hey, at least it’s better than selling out to the VCs, right? RIGHT?
• Or maybe selling to the VC sharks circling the muddy waters of the bear market isn’t that bad. You just drop some of your principles and your community-first ethos and sign up for that big pay check. Now you’ll have enough money to build and to pay your team a decent salary. And all just for 20–50% of the tokens and a vesting schedule that will allow them to dump on your community as soon as there is some traction. That’s not that bad, right?

RIGHT?

There has to be a better way!

What if there was a better way though? A way that would slowly provide you with the funds needed to build out your vision without selling your soul? A way where the people funding you will not just get some benefits of supporting you early, but also be guaranteed to get their money back?

Whenever I come across an “unsolvable problem” or a situation where you can seemingly only chose between “bad and worse”, I look for outside inspiration. Isn’t there an interesting idea, solution, concept somewhere in a different field that could be applied or combined creatively to solve the problem or give an actual “good” option as an alternative?

I’ve always had huge respect for Alchemix. The idea of non-liquidatable, self-repaying loans blew my mind the first time I heard about it and showed me the potential of DeFi when creative problem solving and out of the box thinking was applied. You can never lose your funds and the only debt you take on is time debt. Yet you instantly unlock potential capital to put to work.

And recently I learned about NounsDAO and their daily auctions to fund a treasury. Nouns is an “attempt to bootstrap identity, community, governance and a treasury” and judging by the ~30.000 ETH they have in their treasury, the experiment is going fairly well.

So what if there was a way to get continued funding for your project, where the people funding you don’t just get tangible benefits in the project but there’s also an added twist reducing their risk?

Introducing Fair Funding

The Fair Funding concept we came up with and that we will start soon for Unstoppable looks like this:

• There is a daily auction for a “Fair Funding Spot”
• Whoever wins the auction gets a benefit in the project such as a discount or bonus in the future tokensale
• All funds paid by the auction winner DO NOT go directly towards the project, but are put into an Alchemix vault. A non-liquidatable loan is then taken out which will be the actual funding going to the project. The funder retains complete ownership of funds he paid to win the auction and will get back 100% over time!

Let’s look at a concrete example and how this will look like for the Unstoppable Fair Funding:

• Every day there will be a Fair Funding Spot up for auction.
• The spot includes a significant bonus for the future tokensale.
• There is a minimum bid of 1 ETH.
• Let’s say Alice bids 2 ETH, but Bob ends up winning the auction for day 1 (100% bonus for example) with a bid of 10 ETH.
• Bob now has the right to get a 100% bonus in the future tokensale up to a total of 10 ETH bonus.
• The 10 ETH Bob paid go directly into the Yearn yvWETH vault at Alchemix.
• We take out a 5 alETH loan against Bobs 10 ETH and use it to fund the development of the project.
• If all goes well and the project is a success we pay Bob back the 10 ETH from the projects revenue early.
• But even in a worst case scenario where the project doesn’t succeed, Bob doesn’t lose any of his money! He keeps the claim on the 10 ETH in the Alchemix vault and will be able to withdraw it over time.

So anybody funding us will receive a steep discount in the future tokensale in exchange for this early support. He will also be guaranteed to get all the money he puts into supporting us back! The only unknown is about when exactly the initial money will be paid back, so in a worst case scenario, you will be forced to hodl that ETH for a bit.

A project being sustainably funded, with substantial benefits for the early supporters and no risk of them losing their money — that’s what we call Fair Funding.

We will not just run our own Fair Funding campaign through this, but we’ll actually set it up as the Unstoppable:Funding platform where other projects can start their own Fair Funding campaigns as well.

Come join us at our discord to be one of the first to be notified when the Unstoppable:Funding goes live and see what else we’re up to!