Decentralised Funding Report

See PDF attached

We were involved in a similar project before which worked very well and we can write out a report to learn from it.

See PDF attached

• Experience with decentralised funding systems
• Been in the Finance space for over a decade
• Degree in Economics

Changes from our Fund 2 submission.

I have reduced the scope of the proposal from a detailed report to a medium-high level report which allows me to reduce the fee charged by 79% in USD terms.

Questions and Answers that were made previously during Fund 2.

Q/A 1

Kris Urbas: How does it help to encourage DEVs and Dapps to be built on the Cardano?

ICO Research Group: Great question!

Personally, I am more interested in making sure we have a good system in place that funds proposals which help ADA increase in value relative to things like USD or BTC. So you could say I am not truly addressing the problem statement that IOHK have created.

However, If I had to answer your question, it would be this -

If we have funds leaking out into weak proposals due to a flawed system design, then how are we going fund quality proposals that truly "encourage DEVs and Dapps to be built on Cardano" in a way that creates value for ADA holders?

Funding proposals means that ADA gets sold off into fiat currencies which increases the sell side pressure on Cardano. When the price goes up (through funding quality proposals), it garners attention similar to the parabolic rise of Bitcoin & Ethereum in 2017 which pulled in all the finance guys like myself into the space to investigate.

Currently, there is little to no incentive to be on ideascale conducting due diligence on every proposal, especially by people with the necessary skills/experience who can do a good job.

Hope that helps answer your question.

Kris Urbas: I understand now, I think this is very important for the ecosystem even if not directly related to the current fund goal, thanks for the explanation!

Q/A 2

shapiro21: What metrics are you going to use to gauge the success or failure of a funding process? Do you have any general metrics in mind?

ICO Research Group: Nice question.

With some proposals, you will be able to track a direct correlation between the price of ADA and the success of a proposal. Think of Uniswap as an example, it encourages people to buy ETH to make transactions so the value of ETH goes up. We can see the amount of ETH uniswap uses, uniswap accounts for 20% of all the Tx fees on Ethereum. If we fund proposals like this you could say the funding process has been successful (assuming the financing cost is significantly lower than the value created for the network).

Some proposals will have more of an indirect effect. For example, the proposal brings more people into the Cardano eco-system to hold ADA in perpetuity because holding ADA provides increasing utility to the holder. It is harder to track directly how these proposals make the value of ADA go up and requires more qualitative judgement.

There are issues with the current funding process and they will become more prominent as the system grows. However, they have been solved before in the prior decentralised funding model, but I can elaborate on that topic further if this proposal gets funded.

Below is an Extract of the PDF proposal so that non-english readers will be able to auto-translate and read the proposal.

Page - 1

Title Page

Decentralised Funding

(An Insider's View)

Page - 2

Contents

Slide # / Slide Content

3. Key Questions

4. Introduction

5. The Proposal

6. Involvement in Project Catalyst

7. More About Us

8. Compensation

9. Results

10. Contact Information

Page - 3

Key Questions

Before we begin, a key question to ask is –

What are the key objectives for Cardano's decentralised fund?

In our view, it is to create value for ADA holders.

The decentralised fund will either be ADA holders' greatest friend or its greatest enemy.

Funding low quality proposals will make the value of ADA go down and funding high value quality proposals will make the value of ADA go up.

Another question to ask is –

Given that Cardano's current success is based on scientific methods and a research first driven approach, does it not make sense to research other decentralised funding systems which have been successful?

Page - 4

Introduction

We started off the crypto journey back in 2017 and was floored by the idea that anyone, anywhere could invest in the best deals possible without any restrictions. This single idea is what made us interested in digging deeper and it brought us to where we are today.

The people who get access to the best investments with the most upside are the Venture Capitalists. They have the incredible upside because they can invest at the earliest stage possible. The public are left with the IPO round which has the least possible upside. Crypto has given smaller investors access to make some remarkable returns if investments are made wisely.

We helped a project during 2018/2019 which involved decentralised investment decision making which worked very well. That involved around 50 participants who were all incentivised to find/research projects so the fund (around 7 figures USD) could buy a stake in the project (e.g. the token or coin). People who had a good reputation (from doing good work) received most of the rewards if the projects selected appreciated in price.

The top rated project was Cardano and the second best rated project was Celsius Network (which is up x68 since the investment) with Bitcoin taking the third spot.

Page - 5

The Proposal

What we will do is translate the key findings from our involvement in the previous decentralised funding project in a way that can help improve the outcome of Cardano's decentralised fund.

We can take all the positive points from that project and if useful incorporate it in to Cardano's decentralised funding system. Also, we can take all the things that did not work so well and avoid repeating the same mistakes. We will have a case study to learn from which is incredibly relevant to what we are building out today with Cardano's decentralised fund.

Completing this proposal would take 1 month which includes –

1. Medium to High level information on the previous decentralised funding project (e.g. how the system worked)
2. Translating findings to help streamline Cardano's decentralised funding system in a way that drives value for ADA holders while removing a lot of the complexities

+ On-going feedback to IOHK and community members to help make Cardano the best it can be.

Page - 6

…

Page - 7

More About Us

• Worked in Investment Finance / Corporate Finance (worked on multi $million deals, generated double digit % returns)
• Been in the Finance space for over a decade and have spent most of this time evaluating different investments whether they are early stage start up projects, private/public equity acquisitions or DLT coins/tokens
• Good network of talent, VCs, private investors and have worked in a range of start ups
• Recently brought in a Full-Stack developer to our team to help us run a Stakepool and build on Cardano
• Direct experience in working on decentralised funding systems
• Degree in Economics
• Operating out of the UK

Page - 8

Compensation

The fee for this proposal will be £4.5k (17.4k ADA(1)).

(This is a significant reduction on fees you would expect from firms like EY & PWC whom I have worked with before in previous companies)

Notes:

1) ADA/GBP conversion rate of 0.25862 on 16th January 2021

Page - 9

Results

You have a low cost proposal that delivers results, and if we get this system right, it would be stronger than even the best venture capitalist teams. This will make ADA one of the most valuable eco-systems on the planet.

A well-built system will encourage participants to become more educated and savvy investors that can build wealth, help ADA appreciate in value and drive economic growth which is dearly needed in today's stagnating economies.

"We will have a billion VCs by 2040. Just like the internet turned everyone into publishers, crypto will turn everyone into investors."(1)

Balaji Srinivasan (GP @ Andreessen Horowitz)

"Sounds really interesting. I think it could be a valuable contribution to translate your experience into a proposal. I think you have a good baseline of impact, feasibility and relevant experience that can make this a highly rated proposal."

Dor Garbash (Project Manager @ IOHK)

Notes:

*1) https://twitter.com/balajis/status/1298490644638228480*

Page - 10

Contact Information

twitter.com/ICOResearchGRP

t.me/icoresearchgroup

icoresearchgroup.com