#Mind dump of the ideas related to this topic
Generally when speaking about funding cryptocurrency or cryptocurrency related projects we speak about pre-sale of tokens, whatever those tokens represent. This is usually referred to as “IPO” in which people can invest in and what gives a project some money to pay for development until there is sustainable business model. Such model is the most logical at first though, and sometimes seems as the only solution.
However when you look at the scene of cryptocurrency and related projects you can see that most IPO’s end up as P’n’D (pump and dump)  and the people who issued the tokens for the IPO never get to the point where they can sustain themselves so they run out of IPO money and project dies. We all know at least one project that ended like this, no need to debate it now.
The trend and logic of doing the IPO is sometimes disrupting the sanity of project design, sometimes people who want to build something force “tokenization” just so they could sell the “premined” tokens to someone and pay the bills with the money the got. Due to this you have several projects who have no need to have any tokens whatsoever but they have included them in design, needlessly complicating the implementation and disrupting the user experience.
A different approach to funding problem seems to be taken by Ethereum foundation, that is having corporate sponsors who see their interest in continual development of the technology. Unfortunately this means lost sovereignty over the blockchain and direction where development is headed. Results of such politics are visible now where Ethereum has forked into two projects who differ in ideology. One side is protecting the big (and dumb) money while other is more about being open and public and keeping the set of rules as they were originally designed.
Something similar is going on with Bitcoin, where you have Blockstream company which is controlling most of development. Blockstream is classic venture capital funded startup. Their agenda is still unclear, but their funding has to come from somewhere and that someone must have his/their agenda.
Peercoin has started as a one man show, that is Sunny King was the only developer and he did not ask for funding, probably as he was one of the first miners anyway. Later when Peercoin grew larger and needed more developers to continue the growth, problem of funding was tackled with Peer4commit - which is essentially a donations platform akin to commercial ones like Flattr. TL;DR it does not work, as people never donate as much it would be necessary to bay the hours of developer. I’ve read some articles about this, and it is claimed that people donate under 10% of what the hours actually cost.
This has to something with human psychology, and even though I can speak about it I wont - at least not in this post. One other reason is that there is very few of those who see Peercoin as something that is more that an speculative “altcoin” on the exchange. There is no sufficient interest to make it better. This is not only about Peercoin, Ethereum and Bitcoin are in the same problem - that is why they have switched to previously mentioned funding models. Donations just don’t work for continual development.
I’ve noticed that NXT is now trying to make a hybrid solution between donation and IPO. Their NXT 2.0 token (called Ardor) will be 50% fork of old chain and 50% of it will be IPO’d to keep up with the development. So they did not take whole of communities bread, just 50%. Quite generous for community which has successfully gotten rich (150M+ market cap at peak) and then went bankrupt (7M market cap at bottom) while not donating to their developers. But that is just humans, who do human stuff. It is normal and expected.
As both of this solutions to funding (IPO and corporate sponsor) are not optimal and third one is just not working, I am trying to find one that we could use to fund development of Peercoin and keep our developers while not giving up on freedom.
To shorten the story I will not explain how I got to the proposed solution but simply explain the rules which served as a background for it.
So the rules are:
- keep the blockchain public and free for all
- try to come up with more ways to utilize the blockchain we got
- avoid changing the way our network works (for the most part)
- allow private projects that use the public blockchain and open underlying technology
It is quite obvious that rules are there to keep the Peercoin as it is (mostly), and keep it open and free (sovereign) but still allow flexibility for the companies.
What is the only model that I could think of is to make Peercoin more interesting to companies and by bringing more utilization bring more value to the chain. Any companies, as long as they don’t require some silly legal frameworks from our side. But in general I can imagine various forms of DAO’s to be 99% of said companies.
We should offer a some sort of framework which would make DAO’s want to become a part of Peercoin ecosystem, and allow Peercoin chain to be utilized in such manner that allows more flexibility about it’s uses. This is indeed what I am designing right now. PeerAssets is the step one.
Such framework should strive to reduce the cost of launching DAO to bare minimum, and keep operational costs as low as possible while providing decentralized alternative to classic Internet toolkits on which people run their businesses on.
As shown in Peerbet  example any kind of service which can turn profit can also generate income for developers, managers and other personnel involved. Also if such a service sees some upcoming technology in the ecosystem as a way to improve it’s service and increase the profits then such service will probably donate/invest some profit to such a project. DAO’s might be even interested in permanently hiring skilled developers, as Nu project has already shown. Nu naturally has/had a deficit of being independent chain and thus it brought no value to Peercoin.
Now DAO’s should step up to provide services and try to generate profit. Those services can be simple in start.
Each transaction over the Peercoin network is paid by the user to the network as a whole, as each tx (monetary or asset transaction) burns some PPC. This incentives all Peercoin holders to support DAO’s by investing in them as DAO’s can work to reduce inflation or even start a deflation process. This is not the end of this cascade or mutual benefits. Users want to invest in DAO’s as they are after dividends, so external capital is drawn in our ecosystem. Developers want to join DAO’s and our ecosystem as there is money to be earned by developing.
Flexibility is the key here, as it will allow great variety of DAOs to operate. Which allows Peercoin supporters to diversify their investment in several sectors, reducing the risk of total loss like what happened with Nu/B&C and allowing continual dividend payout even if some businesses enter recession for some periods of time.
With decent enough liquidity, community members will have resources to invest in upgrading Peercoin website, developing blog and other activities that interest them.
What I lack in general idea is a way to fund the development of such platform. Now, relatively simple parts like PeerAssets can be implemented for “free” so to say but bigger project that would round up the whole are far more complex and will require external help in terms of manpower and monetary resources.
One solution I can think of is to start a DAO which would develop the needed technology and then open it up after a while so community can keep building on the platform. However there is no guarantee that such DAO would open the tech instead of keeping it for itself and profiting of it.
 It is easy for such projects to become pump and dump schemes as big investors hold enough tokens to sway the markets to dance as they play.
 Peerbet project has donated some of it’s profits to PeerKeeper project, and has resulted in some technology which was later merged with Peerbox.