Crowdfunding is a popular method for startups to raise funds for new products. However, almost 10% of all crowdfunding projects fail to deliver rewards to their backers.
The most popular crowdfunding platform, Kickstarter, states that a project will still receive pledges even if the goal is not achieved. While “creators will still be liable for completing their project and fulfilling rewards,” Kickstarter will not get involved in disputes leaving any potential litigation up to the backers.
SeedOn is creating a service that attempts to use blockchain technology to solve this and other issues with crowdfunding platforms. CryptoSlate interviewed Claudiu Minea, SeedOn’s CEO, to discover how blockchain can be used to protect backers and offer creators a turnkey solution to crowdfunding.
Akiba: What is SeedOn, and why does the world need it?
Claudiu Minea: SeedOn is a blockchain-based solution whose goal is to revolutionize conventional crowdfunding, aiming to provide traceability and transparency to all stakeholders so that they have complete control of their investments.
SeedOn arose from the idea of having a decentralized environment where investment transactions and raised capital can be traceable and visible to all network users.
The main feature to emphasize is SeedOn’s Smart Contract Escrow model, ensuring a controlled startup’s capital infusion. The total capital invested will be released to the startup in stages. Therefore, the entrepreneur will only have access to a limited amount of cash flow until further objectives or targets of the project have been completed. This ensures that in the unlikely event of a fraudulent project, the loss will be kept to a minimum, losing only a part of the total capital and having the rest returned to the investors.
Akiba: What makes blockchain technology so important for crowdfunding?
Claudiu Minea: I truly believe that blockchain technology can revolutionize the way crowdfunding is done today. By making use of blockchain’s main characteristics, we provide transparency and traceability to all investment transactions, thus introducing something that the crowdfunding industry is missing.
With the use of smart contracts, investors can be sure that their funds will be used for their intended purpose and will have total control of their investment throughout the whole process.
Akiba: There are always worries about new tokens and whether the value will hold. How do you plan to address this?
Claudiu Minea: Indeed, new projects from the crypto space struggle with maintaining value after the period of hype passes. When we talked about our token’s utility, we wanted to make sure that SEON will have real-life usability.
All crowdfunding campaigns that will be listed on our platform will be backed by investors with either fiat money or our native token, SEON, depending on preferences. However, when an investor chooses to back a project with fiat money, behind the scenes in the internal workings of our platform, we will exchange the fiat money for SEON and then proceed with the investment.
Having this in place will facilitate liquidity for our token. To appreciate the value of our token, when SeedOn reaches its maturity, we will have in place a buyback-and-burn mechanism to reduce its supply during conditions of high demand.
Akiba: Could SeedOn be made without blockchain? Is it just a gimmick, or is it essential to its success?
Claudiu Minea: There are many good ways to achieve the same result in software development. What differs is the long-term effects and the effort that has to be made to achieve the same goal through different methods.
SeedOn could have been developed without blockchain for sure, but then we would be no different from our competition.
Using the blockchain’s distributed ledger will promote trust among our platform’s users, as all transactions will be visible in a decentralized environment. Without blockchain, we could have made all transactions visible, but this would have been done in a centralized way, meaning that the present data would have mutable characteristics.
Akiba: Many Kickstarter projects over the years have disappeared with investors’ money and never been delivered. How will you combat this?
Claudiu Minea: We combat this issue by using the Smart Contract Escrow model, ensuring a controlled startup’s capital infusion. The total capital invested will be released to the startup in stages.
Therefore, the entrepreneur will only have access to a limited amount of cash flow until further objectives or targets of the project have been completed. This ensures that in the unlikely event of a fraudulent project, the loss will be kept to a minimum, losing only a part of the total capital and having the rest returned to the investors.
Akiba: What is the best way for a new project to apply and get listed with SeedOn?
Claudiu Minea:Â On the 1st of June, we will start the project registration process, thus entrepreneurs could go to https://seedon.io and submit their startup’s pitch deck. Subsequent to the submission, entrepreneurs will have a discovery call with our team so we can understand what their vision for their soon to be new business is.
Summary of blockchain’s place in crowdfunding
Blockchain has been used successfully by platforms such as PolkaStarter to offer crowdfunding launchpad solutions for web3 projects. Utilizing on-chain instruments to provide funding opportunities for digital projects has a clear correlation.
However, developing ways for blockchain to interact with the physical world is an essential step for massive adoption. SeedOn claims to be addressing “some of the most known drawbacks in the crowdfunding sector,” and it will be interesting to see how well this can work.
One of the significant drawbacks of web3 solutions such as SeedOn is the need for a high level of programming competence to verify the technology. Several projects such as Safemoon and Safu have allegedly withdrawn funds from liquidity pools after claiming this “was not possible.”
Regular investors without a programming background still have to trust the platform without an audit from a recognized body. The need for the web3 industry to self-regulate through well-constructed code audits is higher than ever. However, through the use of platforms such as SeedOn, investors may be able to rely on the strength of smart contract escrow to protect their investment.
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