Communal Equity: a New Model for Crypto Startup Financing

  1. Issuance and distribution of tokens are almost free. This opens the door to new compensation models that are more equitable to contributors and limit concentrations of power and money.
  2. In theory, all information about a protocol is disclosed on the blockchain. Hence, there is no need for centralized enforcement of disclosures (i.e., the S-1 registration).

Zero Economies of Scale

Stock sales prior to 1933 were not that different than they are today: the founders formed a company, developed a track record generating revenue, and finally hired a dealer to list and distribute their stock.

Hyper-Disclosure

The securities regulations assume that people who sell equity are oftentimes crooks who deliberately hide information to make money.

Suggestions for Future Development

  1. Crypto projects should gain the moral high ground by using the communal equity model to highlight that blockchain technology demands an entirely new regulatory framework for securities offerings.
  2. The SEC should consider exempting token sales from registration if they meet certain well-defined disclosure criteria.

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Creative Director at PandiFi

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