Dividends and revenue imply centralization and trust


#1

Hi @thibauld,

One of my main concerns with this type of fundraising schemes in which tokens are not a pure utility, but start behaving as a security, is that they tend to require a level of centralization. For example,

  • in order to charge 1 USD to open an account in Peepith, you must set an entry toll. Who controls it?.
  • in order to have revenue and redistribute dividends, the organization needs to “be honest” about the revenue it generates, but no one will assure the token holders that the organization won’t hold parallel account systems to hide part of the revenue.

You mention this issues in part in the Regulation section of your post, but I believe it’s not just a matter of regulation as a bureaucratic problem, but a real problem of how to handle trust and accountability in decentralized projects.

My best bet for this is Aragon (or any other), virtual jurisdiction. By the way.

Ciao!
Pepo


#2

Hi @pepo,

I agree that if the organization is not a “pure continuous organization” (i.e. uses the DAT to receives 100% of its payment in ETH or DAI), then an organization is needed to serve as a fiat->crypto bridge.

I also agree also on the honesty required by the organization, especially if the organization does not collect its payments during at the DAT level but “voluntarily” distribute dividends to the DAT. The best protection against an organization “cheating” imho is:

  1. Money. Strongly align the organization with its DAT by, for example, having the organization invest a significant amount in the DAT so that it truly benefits if the DAT thrives and gets hurt if the DAT collapses.
  2. Reputation. Cheating would break the trust forever and would result in the collapse of the DAT so there is a high reputational cost to pay here. It is true though that scammers might not care about this cost.
  3. Regulation. To be explored but a way to prevent this would be to have some sort of regulation that would mean that the organization could be liable if does not respect its commitments (?). This latest solution is not very “decentralized” in spirit though :slight_smile:

#3

I agree, thanks for your insights about Money and Reputation being the key aspects.

I would argue that, even if it is a pure continuous organization, the fact that it needs to capture revenue is already a sort of “centralization”. Either because the founders keep some sort of control on the revenue toll system (can increase the price, or update the receiving addresses), or because of the bare existence of the toll system.

Once you have a toll system, the incentive to hack the code and deploy a new set of smart contracts that bypass the tolls while keeping the same data and functionalities should by hi. How will the original developers prevent this? Licensing the source code could be one way, but this would rely on a centralized control of the IP.

BTW I dont pretend to be finger pointing here when talking about centralization/decentralization. The important thing is that a working model is found. Independely of how much blasphemies agains the concept of decentralization are made in the process :slight_smile: .

My perspective is to allow for this centralization at the beginning but design a gradual process in which the original creators gradually loose control of the network they built until it becomes a public one.


#4

@pepo - it is actually possible to dispense dividends in a trustless manner. The P3C ecosystem has an ad service, where you can advertise to members of the CO via a smart contract. When you buy the ad, the money gets delivered to a dividend smart contract that gives out divs to all users in a trustless manner. It does this by buying and selling P3C repeatedly in a loop until all of the divs are distributed.

If you’re curious about what this dividend contract looks like - check it out here. The code is entirely open source and can work for any CO that follows a P3C-like architecture.

You can also call it yourself, by hitting the “Distribute Global Dividends” button on this page - Note, you need ETC and Saturn wallet to pay the gas costs.


#5

Thanks for sharing, sounds weird to me to be honest. What is the product? Is it calling dividends the 10% taken from new investors? Why is it different from a standard pyramid scheme?


#6

Key: 10% tax is distributed when P3C is bought AND when P3C is sold.

The product is still being developed, and we don’t want to necessarily reveal it in this post because we consider the business model (which is designed to leverage the continuous organization, to be proprietary as of now)

What we will say, however, is that we do not intend most users to buy P3C directly, although our contract does allow it. We intend for P3C to be distributed via airdrops in exchange for work. So you as a user, after doing a job, now hold P3C as partial payment. You can choose to liquidate it immediately, and receive 90% of it’s nominal value, with 10% distributed proportionally to all other holders or you can choose to hold onto it and have equity in all future jobs done in the future using our products that connect to P3C.

If our product is successful, we see P3C as blurring the lines between customer, investor, and worker which is something only possible with a Continuous Organization.


#7

Nice. If there is a product, then it makes much more sense. I like how it sounds. Looking forward to hear more about it! Good luck with the development.