Raising Capital without Pre-mining

[bytemaster]

We are looking to raise capital and allow members of the community to 'invest' in the development of the BitShares P2P Bank & Exchange (P2P B&E).   We would like this to be a community project and not another Ripple.   We would also like to avoid all pre-mining.

The challenge is creating an investment structure that allows anyone to put in small or large amounts of money and actually see a return greater than simply waiting for someone else to fund it and mining upon release.  Ideally this structure could be set up without requiring any financial instruments like stocks. 

If you are interested in investing in BitShares then please help us come up with a fair, simple, and profitable investment vehicle for everyone.

[empoweoqwj]

Have you got a link to what people would actually be investing in?

[bytemaster]

https://docs.google.com/document/d/1RLcjSXWuU9vBJzzqLEXVACSCdn8zXKTTJRN_LfoCjNY/edit

[lexxus]

I suspect that each and every mechanism that you will propose to attract venture investments will be essentially economically equivalent to pre-mine. Why everyone hates pre-mine? The only reasons are

1. envy to even possible success of early investors
2. terrible PR pre-mine had on pump-and-dump alt coins.

There is nothing wrong with correctly designed pre-mine as a risk premium for yearly adopters and investors. Pre-mine itself is actually a wonderful mechanism if it's used smartly.

[bytemaster]

Yes, but would you believe that a condition of some of our early investors is a promise not to pre-mine?      I fully understand how much economic sense it makes to do pre-mining, but there is another angle to consider.

If the project is open source, then someone could fork the chain immediately with 0 pre-mining and win everyone over.

[lexxus]

Yes, but would you believe that a condition of some of our early investors is a promise not to pre-mine?   

Yes, sure. As I outlined above pre-mine is so much hated in the community that it's a smart move for your early investor to demand absence of pre-mine.

If the project is open source, then someone could fork the chain immediately with 0 pre-mining and win everyone over.

It depends on what is the motivation to switch. For example, if pre-mine doesn't increase initial mining complexity, then there is a little incentive to switch in order to mine more in the beginning. Also will forks develop further? If I know that there are more features, infrastructure and improvements coming on the initial chain, I would think twice before switching to fork.

[worldinacoin]

There is so many of such initiatives, what makes you stand up above the rest?

[bytemaster]

You are correct... but I the point of this thread is to innovate new alternatives to pre-mining which we already know has strengths and weaknesses.

[lexxus]

You are correct... but I the point of this thread is to innovate new alternatives to pre-mining which we already know has strengths and weaknesses.

Yes, I know. Sorry for hijacking your thread. Hope you'll find a good solution.

[bytemaster]

Some ideas that we are considering:

1) We could pre-sell CPU hours on machines that are designed to be the most cost-effective miners and the value to the investor would be not having to manage mining hardware, software, utilities, overheating, etc.   The advantage to the company is that it isn't actually selling BitShares for cash, it is selling CPU time for cash.    Any unsold CPU hours would be used by the company for its own mining.    The profits from selling CPU time could then be rolled into development.

2) We could launch a mining pool in parallel and give investors a cut of the fees from being the first/only/most trusted mining pool.

3) We could waive fees on the mining pool for investors and charge higher fees for non-investors until a competing mining pool could get set up.   The default client would be configured to use our mining pool. 

[lixiaolai]

to raise capital from the public, I think the invictus project needs more work and much more published information.

[bytemaster]

We are in total agreement with regard to Invictus.   This is mostly just exploring ideas.  I was hoping this thread would be of general use for many different projects.