I'm kind of confused as to the whole "buyback" model that's going on. Is it basically BitSapphire delegates that will need to get hired by the blockchain in order to pay back moonstone donations? What if BitSapphire can't get enough delegates elected? What are the reasonable odds of losing money in the whole deal as opposed to receiving a 15% ROI? Is there a risk of losing all investment if things don't work out as planned?
Basically, how much riskier is it to buy and hold moonstone IOUs as opposed to just hodling BTS?
Good question. The crowdfunder is similar to a kickstarter where we wnat to release a public good (The whole wallet code under the open source MIT license). However, normally kickstarter-style donation drives mean that a minority of passionate people pay for the public. This means that there is an incentive for the public to free-ride.
With BitShares it is for the first time possible to build a public good and get payed by the public for doing so (i.e. the delegate pay system). The problem we see currently is that the public is essentially taking on the risk of hiring a delegate without him/her producing anything of significance yet. We are very much against the public paying for risk taking, that should be left to individual donors/investors. By combining a market for projects and their public return via the delegate system, and the delegate pay itself, it becomes possible to de-risk the public completely!
This means that the donors can get payed by the public via the delegate system for choosing the right projects, while the public never takes "the wrong bet".
The secondary effect of this system is that the kickcstarter model still works, but as a donor you reduce your overall risk exposure as you can make potentially a return.
Considering that the project is close to completion (we're currently working on the market interface which will be presented soon, and a custom blockchain deserializer) the risk should be considerably lower than lets say a traditional kickcstarter model where projects ask for money to start working on it. We've already done the heavy lifting!