Proposal for Angelshares Investment in a DAC Trading Platform

[santaclause102]

I followed and invested in Scharmbeck which is now in testing. It provides WDC/Fiat. They raised money by giving out shares in the company.

If AGS fund is used for this initiative, we should get shares in the company.

Which is what we intend to do. 20% of the profits (same as with a new DAC where 20% are given to PTS/AGS owners) will be put in a DAC Development Fund. The fund will be controlled by 1 Invictus member and 1 trusted community member.

I was talking about a more direct stake at the individual level.

If we are doing a fundraiser with several companies (or a few individuals) that is very possible. But how will we accomplish this (without Invictus directly representing AGS investors) when most of the investors of the AGS fund are not clearly identified or willing to be identified? As a stakeholder you are required to sign all the required papers and eventually go to board-meetings/vote in decision.

I much rather prefer the 20% DAC Development Fund and perks (e.g. no trading fees, rewards, contests, bounties) and delegate part of the decision power to the community in a transparent and open way. Else our supposed agility and flexibility will be crippled by unnecessary formality and bureaucracy.

How exactly did Scharmbeck handle the fundraiser? I know that no Kickstarter company has ever handed over shares, instead they focused on compensating investors through gifts or privileges. That is what we want to do as well.

But I am definitely open for ideas and if a few individuals want to invest in this and join the company please approach me.

This is a complicated issue to decide on. My suggestion would be to tell everyone what the explicit (empirically countable) benefits will be and how much that would cost:

For example: Setting up a fiat - PTS exchange: Costs 100.000 USD acquired by the BTC raised through AGS. Benefits: x % of Dividends (see silent partner model below) in the company for AGS holders. The x depends on how much VC Funding is raised compared to the initial investment of I3/AGS.  Additional benefit: Rise in PTS price by an assumed xy.
Goal 2: Costs, benefits....
Goal 3: ...

A general advice is: Develop a core business model: Pain -> Solution + address Scalability + address Costs/Benefits.   
There are a lot of problems you address with your set of solutions. Adding complexity is adding insecurity and makes it harder for people here to decide. It might make sense to separate the goals a bit and say how much money is needed for the first one of which we can be sure that it will be achieved. Explicitly say how much money you want from the community for this and how much money comes from 3rd Party investors and how that will effect the benefits for the community.  This means I think every single one of your goals is legitimate and really worth following. The questions is just whether this is the most cost effective way? Doing nothing about the goals you promoted on the long term would be the worst though.

You could choose a silent partner structure which gives investors a right for dividends but no right to vote (at least that is possible in Germany).
Given the silent partner model. I see a bit of an issue with only giving AGS holders a stake in your company. Because PTS holders paid the price with a 40+% percent price drop by the creation of AGS. Only honoring AGS holders would ignore this and let the price drop further (until the PTS/USD exchange works)!
This means work out everything more explicitly.

Where do the other 80% go (you talked about a 20% fund....)?

This sounds like a lot of critique. But is its not. There will surely be a first PTS/Bitshares (sorry BEXshare would that be right here?) Exchange and we will need it. See it as a refinement of your idea. I like and appreciate the way you approach it!! Thanks for your contribution to the community!

[Markus]

domsch,

can you convince me that this argument is wrong:

"A global direct Fiat-DAC exchange handling all major (more than 3 or 4) fiat currencies is not needed and will not be profitable.
Doing two trades (first your local fiat-BTC exchange, then a global BTC-DAC exchange) is cheaper. Economies of scale for fiat-crypto-exchanges require that there are as few competing exchanges as possible. Trading n fiat currencies directly against m altcoins/DACs requires n•m markets, going through bitcoin requires n+m markets. If 2(n+m)<n•m the narrower spreads of the large exchanges will make trading via the largest crypto-currency (i.e. Bitcoin) cheaper."

Why are all major commodities traded in USD only?
Why did Cryptsy roll back from having direct markets between all alts to having only BTC-alt-markets.
Why can Mt. Gox charge 5 % fees for cross-(fiat)-currency trades and get away with it?
Why are there so many BTC-altcoin exchanges but so few doing fiat-altcoin directly?

[bitbro]

Domsch, without any proven headway or concrete evidence of this project, we would first be investing in only you.  Can you tell us about yourself

[domsch]

I followed and invested in Scharmbeck which is now in testing. It provides WDC/Fiat. They raised money by giving out shares in the company.

If AGS fund is used for this initiative, we should get shares in the company.

Which is what we intend to do. 20% of the profits (same as with a new DAC where 20% are given to PTS/AGS owners) will be put in a DAC Development Fund. The fund will be controlled by 1 Invictus member and 1 trusted community member.

I was talking about a more direct stake at the individual level.

If we are doing a fundraiser with several companies (or a few individuals) that is very possible. But how will we accomplish this (without Invictus directly representing AGS investors) when most of the investors of the AGS fund are not clearly identified or willing to be identified? As a stakeholder you are required to sign all the required papers and eventually go to board-meetings/vote in decision.

I much rather prefer the 20% DAC Development Fund and perks (e.g. no trading fees, rewards, contests, bounties) and delegate part of the decision power to the community in a transparent and open way. Else our supposed agility and flexibility will be crippled by unnecessary formality and bureaucracy.

How exactly did Scharmbeck handle the fundraiser? I know that no Kickstarter company has ever handed over shares, instead they focused on compensating investors through gifts or privileges. That is what we want to do as well.

But I am definitely open for ideas and if a few individuals want to invest in this and join the company please approach me.

[sumantso]

I followed and invested in Scharmbeck which is now in testing. It provides WDC/Fiat. They raised money by giving out shares in the company.

If AGS fund is used for this initiative, we should get shares in the company.

Which is what we intend to do. 20% of the profits (same as with a new DAC where 20% are given to PTS/AGS owners) will be put in a DAC Development Fund. The fund will be controlled by 1 Invictus member and 1 trusted community member.

I was talking about a more direct stake at the individual level.

[domsch]

I followed and invested in Scharmbeck which is now in testing. It provides WDC/Fiat. They raised money by giving out shares in the company.

If AGS fund is used for this initiative, we should get shares in the company.

Which is what we intend to do. 20% of the profits (same as with a new DAC where 20% are given to PTS/AGS owners) will be put in a DAC Development Fund. The fund will be controlled by 1 Invictus member and 1 trusted community member.

[sumantso]

I followed and invested in Scharmbeck which is now in testing. It provides WDC/Fiat. They raised money by giving out shares in the company.

If AGS fund is used for this initiative, we should get shares in the company.

[domsch]

If your VC can fund $7 million as you say, then there is little need for $100K from the AGS fund. 

AGS is supposed to be used to develop DACs.  You have stated a plan to implement a DAC in 18 months, at that time AGS funding may be appropriate. 

Partnering with existing exchanges would probably be far more profitable for AGS holders and then using $100K to fund the development of integration with Open Transactions based exchange integration may be a more compelling and DECENTRALIZED solution.   Also spending $100K for development of cross-chain trading and options trading / coordination systems that work with the block-chain provided hooks may provide more value. 

I really believe that your initial VC funding should get you to a deployed product and our $100K plus-up should be focused merely on integrating advanced features not available on other exchanges.

You have our moral support, but to qualify for AGS funding I think you need to prove your ability to reach the same threshold of other USD/BTC exchanges.  Once there we can begin working with you to take it one step further and give you a competitive edge over the competition.

Raising $7m in a seed round is (nearly) impossible for any start-up and only a few start-ups I've heard of have raised that much in a seed round. Obviously raising that much in a seed round would mean giving up the majority of the shares which will mean less power inside the company. And we do absolutely not want a VC firm to have the last word in decisions.

I have stated several reasons why this project can not be run as a DAC initially, it will be difficult for us to operate legally and obtain everything that is required, such as licenses and partnerships. After we have built the initial structure that operates legally and smoothy, we can work on building a DAC exchange on top of this. It is already hard to get banking as a crypto-startup, so if we want the project to focuse on our ideals, anonymity and decentralization, finding a bank and a company willing to partner for the licenses will be a lot more difficult.

We not only want to be a trading platform but we will also support DAC's and help them with promotion and with our own DAC Fund (which can be compared to AGS). So the AGS invested in this project are not only there for a legit trading platform to be established, but to also generate another partner for DAC's and enhance development.

The reason why we will do a better job at this than other exchanges opening Fiat<->DAC is because we solely focus on this operation from the beginning on and do not do any other trading except from Fiat<->DAC. All our resources are focused on one exchange and we will do our best to fix where other exchanges are falling behind (customer support, delays, slow trading process etc.). This allows us to create specific features that improve trading and create a more effective and painless trading process. Most have the bigger exchanges are currently hands-full with managing their Bitcoin exchange and have not started adopting altcoins as of now. So it would take significantly longer for them to work with DAC's and implementing them to their system. And obviously none of them directly support the development of DAC's by providing financial and intellectual help.
Additionally, we will play a major role in the educational mission and help users understand the concepts of DAC's and convince them to participate. With this project I can work on some of the marketing plans mentioned here https://bitsharestalk.org/index.php?topic=1578.0 and we will work alongside with Invictus to make it all happen.

As a note, it would be fantastic if there will be other trading platforms that focus on decreasing the entry barrier for the masses to join. It is not our intention to gain an absolute market share in the trading space. Our goal is it to lower the entry barrier and embrace the masses to participate and to invest.


I wanted to raise the seed round through AGS; use that money to build the first PTS<->Fiat exchange and then work on the more sophisticated trading platform while also beginning the educational mission (together with Invictus eventually). After we have gained enough traction and have done a significant amount of trading I can try and raise a higher Series A round in order to finance the licenses and an international expansion.
The reason why I want AGS for our seed round is because it allows us to stay within the community and do things that would not be possible if an outside investor joined. The community will play an active role in the development process, they can participate and influence their ideas/changes to the project at any time. And the DAC Development Fund that we create will outgrow the current AGS fund and most importantly, our fund will be continuous and it will increase on a monthly basis (20% of the profits made through trading fees). That's why I think that this project will be a great addition to further help the community to grow and to develop more awesome projects.

[bytemaster]

If your VC can fund $7 million as you say, then there is little need for $100K from the AGS fund. 

AGS is supposed to be used to develop DACs.  You have stated a plan to implement a DAC in 18 months, at that time AGS funding may be appropriate. 

Partnering with existing exchanges would probably be far more profitable for AGS holders and then using $100K to fund the development of integration with Open Transactions based exchange integration may be a more compelling and DECENTRALIZED solution.   Also spending $100K for development of cross-chain trading and options trading / coordination systems that work with the block-chain provided hooks may provide more value. 

I really believe that your initial VC funding should get you to a deployed product and our $100K plus-up should be focused merely on integrating advanced features not available on other exchanges.

You have our moral support, but to qualify for AGS funding I think you need to prove your ability to reach the same threshold of other USD/BTC exchanges.  Once there we can begin working with you to take it one step further and give you a competitive edge over the competition.

[AdamBLevine]

For what you're trying to do interfacing with US dollars, you will want to deal with ripple.  That's the one thing they're really really good at, if you connect with me on Skype I'll invite you to the Ripple federation chat where you can learn more about accessing ripples liquidity flows.

[mf-tzo]

I like the whole platform DAC-Fiat idea. I am in favor of such a project and in favor if such a project was to take place to fund part of it with Angel Shares and if the project completes initial founders to get benefits (as with Kehottee for example). That is the idea I believe in supporting the community's projects. I liked the nice surprise with Angel shares for Kehottee Founders but If such benefits are known in advance, even better. Budgets and estimations and some numbers would be nice...For example estmated total project cost, estimated funds needed, estimated benefits (shares from the platforms profits for example would be nice) for those who contribute if the project succeeds etc..

I would suggest to follow the model of Bitstamp or BTC-E and pursue licenses from cryptocurrency friendly countries rather than in the US. Slovenia, Bulgaria are friendly but risky. UK, Germany I think might be good options since are friendly as well and less risky. I would also suggest Cyprus. The Bitcoin was known to the masses after Cyprus banks deposits were confiscated. The University accepts Bitcoins as payment now, they are a taxheaven country so you may find very good support over there for obtaining licenses and operate.

I agree a lot with Bitcoinfan. Let Bitcoin give the fights obtaining regulation from the US and the rest of the world. Once this is achieved everything will be easier for the other cryptocurrencies as well. Ofcourse beeing proactive is always good! I also liked the idea of a partnership with Ripple. I don't like how it operates, it is quite complicated for a user like me but I don't see any harm in such a partneship. In the end of the day the user will have the option to exchange PTS-BTC-Fiat and PTS-XRP-Fiat. Although I think there is already a PTS gateaway within Ripple. Again I am not very familiar with Ripple. I just like the idea of partnerhips.

What about Cryptsy? They have announced on their site for quite some time that soon USD market will be available. How will they do that? They are in they US, they are FINCEN registered. If they do it I3 should be able to create a DAC-fiat platforma well. Maybe I am mistaken but I don't think Chryptsy is a very big company with many funds...

[domsch]

What are your thoughts on having this Platform interface as a gateway with Ripple?

It is not our intention to use Ripple. But we can maybe work on implementing it as an additional source of funding.

Ripple as of now is still difficult to use and they have their own problem of educating/adopting, therefor it is smarter to use something that everyone has (Fiat) and give them the chance to invest. Using Ripple would require us to first convince them of the functionality/usage of Ripple and then further explain DAC's. Instead, if we focus our resources on just one concept we will achieve a greater and faster output.

[Bitcoinfan]

Compliance is still not defined by all state money transmitter laws and the companies know they have to be regulated and they go to every full measure they can to make sure they are safe and compliant.  Coinbase started with an AML policy and careful compliance to Fincen/MSB they did not start out allowing wire transfers without any details and blatant money laundering. I don't know how you got this idea that these companies just started out with these completely idealistic ideals that they were above all regulation, they instead got every compliance they were advised to and have kept away from ones that aren't "legally required" yet. The businesses are regulated and they are compliant with current laws. Thank you for your argument.

Any smart company or individual would act to avert legal harm and would not claim to be above a law. You are correct in that you do not know my familiarity with these companies. There was delight in the furthering of technologies that are beyond regulation. That is not to say that the companies ever acted to willfully violate any law. The draw to decentralized autonomous corporations is that they are decentralized autonomous corporations that can avoid oppressive regulations as necessary. I3 began with some lofty ideals too.

I3 is a company that is creating both technologies and companies. Traditional companies (like I3 itself) are easily forced to comply. The technologies can be forced to comply to the extent that they are managed by an entity that can be controlled. I3 sold an ideal that is disruptive to the notion of how companies may be formed and regulated, but is implementing what is practical within the rules it must comply with. Rules get modified as necessary to change what disruption to established interests is practical. I3 is not beyond the law but can act where laws do not yet restrict.

Everyone would agree that it is beneficial to have businesses that can act in compliance with laws. The question here is if the creator of the technology should be the one financing compliance for users of the technology. I doubt it is possible to spend enough to accomplish that without also sacrificing ideals.

We are not sacrificing the ideals of Privacy and Decentralization of the entire ecosystem, for the advantages of being compliant to the law and legally operating.

Think of us like this: We are currently building an entry to a cave. Our entry is easily accessible, visible and can be used by everyone. If our entry collapses and the passage is completely blocked the cave will still be accessible through other smaller but harder to access entries.
If this project will be shut down by the government, for whatever reason, the DAC's and the ideology behind them will still live on. If Coinbase is shut down, Bitcoin will move on.

Legal services are definitely not essential for this newly created space - but they are crucial add-ons to the crypto world that allow for a much faster adoption rate. They speed-up the process and give non-techies the chance to join a new and revolutionary project without the necessary requirements. Basically, they allow for ideas to spread and adopted at a much faster pace and they do a fair amount of educating of the userbase.


The ideal solution would obviously be an anonymous, decentralized trading platform that gives everyone the chance to invest in new DAC's. We are not quite there yet and we need to work on a centralized solution that will help us accomplish that goal in the future. A decentralized and anonymous trading platform can and will be built on top of the proposed trading platform and we will definitely work on that.

What are your thoughts on having this Platform interface as a gateway with Ripple? 

[domsch]

Can you show us an initial budget for the angel shares funding?


Sent from my iPhone using Tapatalk

The exact costs depend on a lot of factors such as the involvement of the community, exact incorporation costs, fees etc. But I had proposed a figure of roughly 80 - 120 BTC to Dan. This would allow us to set-up the trading platform for PTS, the online wallet, get the legality sorted (through partnerships), bounties and work on the future trading platform for DAC's (which requires a more sophisticated approach)

[domsch]

Compliance is still not defined by all state money transmitter laws and the companies know they have to be regulated and they go to every full measure they can to make sure they are safe and compliant.  Coinbase started with an AML policy and careful compliance to Fincen/MSB they did not start out allowing wire transfers without any details and blatant money laundering. I don't know how you got this idea that these companies just started out with these completely idealistic ideals that they were above all regulation, they instead got every compliance they were advised to and have kept away from ones that aren't "legally required" yet. The businesses are regulated and they are compliant with current laws. Thank you for your argument.

Any smart company or individual would act to avert legal harm and would not claim to be above a law. You are correct in that you do not know my familiarity with these companies. There was delight in the furthering of technologies that are beyond regulation. That is not to say that the companies ever acted to willfully violate any law. The draw to decentralized autonomous corporations is that they are decentralized autonomous corporations that can avoid oppressive regulations as necessary. I3 began with some lofty ideals too.

I3 is a company that is creating both technologies and companies. Traditional companies (like I3 itself) are easily forced to comply. The technologies can be forced to comply to the extent that they are managed by an entity that can be controlled. I3 sold an ideal that is disruptive to the notion of how companies may be formed and regulated, but is implementing what is practical within the rules it must comply with. Rules get modified as necessary to change what disruption to established interests is practical. I3 is not beyond the law but can act where laws do not yet restrict.

Everyone would agree that it is beneficial to have businesses that can act in compliance with laws. The question here is if the creator of the technology should be the one financing compliance for users of the technology. I doubt it is possible to spend enough to accomplish that without also sacrificing ideals.

We are not sacrificing the ideals of Privacy and Decentralization of the entire ecosystem, for the advantages of being compliant to the law and legally operating.

Think of us like this: We are currently building an entry to a cave. Our entry is easily accessible, visible and can be used by everyone. If our entry collapses and the passage is completely blocked the cave will still be accessible through other smaller but harder to access entries.
If this project will be shut down by the government, for whatever reason, the DAC's and the ideology behind them will still live on. If Coinbase is shut down, Bitcoin will move on.

Legal services are definitely not essential for this newly created space - but they are crucial add-ons to the crypto world that allow for a much faster adoption rate. They speed-up the process and give non-techies the chance to join a new and revolutionary project without the necessary requirements. Basically, they allow for ideas to spread and adopted at a much faster pace and they do a fair amount of educating of the userbase.


The ideal solution would obviously be an anonymous, decentralized trading platform that gives everyone the chance to invest in new DAC's. We are not quite there yet and we need to work on a centralized solution that will help us accomplish that goal in the future. A decentralized and anonymous trading platform can and will be built on top of the proposed trading platform and we will definitely work on that.