Success tokens, a Series B investment for VCs to invest in DAOs. For @scribeDAO
TL:DR; Success tokens are a means for VCs to receive strong upside exposure to the protocol without receiving tokens at a discount which might disappoint the community
TL:DR; Success tokens are a means for VCs to receive strong upside exposure to the protocol without receiving tokens at a discount which might disappoint the community
1⃣ What the situation?
After a token has launched a VC can't get the token at the pre-sale price anymore, but projects still want access to VC capital and expertise as they can be huge value adds for the projects growth and success
After a token has launched a VC can't get the token at the pre-sale price anymore, but projects still want access to VC capital and expertise as they can be huge value adds for the projects growth and success
2⃣ What's the problem?
Currently the way the above situation is solved for is that the fund will buy "tokens at a discount" which can cause holders to question what value a VC investor will bring, and could turn off the broader project community from the token
Currently the way the above situation is solved for is that the fund will buy "tokens at a discount" which can cause holders to question what value a VC investor will bring, and could turn off the broader project community from the token
3⃣ What's a solution?
A possible solution could be "Success tokens" which
instead of offering a VC a discount offer the VC a call option wrapped into their token purchase
Here the VC buys the token at full price, and the call option is only valuable if the project succeeds
A possible solution could be "Success tokens" which
instead of offering a VC a discount offer the VC a call option wrapped into their token purchase
Here the VC buys the token at full price, and the call option is only valuable if the project succeeds
4⃣ What's an example?
I. Success token = 1 SOL and 1 $10 call option on SOL
II. Sell the token at current SOL price with expiry at X years
III. At expiry you can redeem the token for 1 SOL and the value of the $10 call option (paid in SOL)
I. Success token = 1 SOL and 1 $10 call option on SOL
II. Sell the token at current SOL price with expiry at X years
III. At expiry you can redeem the token for 1 SOL and the value of the $10 call option (paid in SOL)
5⃣ Conclusion
The success token allows VCs to buy it at current price, satiating the community, but also gives them double exposure to upside through the call option
This should better align the incentives of the VC with the community to propagate the success of the token
The success token allows VCs to buy it at current price, satiating the community, but also gives them double exposure to upside through the call option
This should better align the incentives of the VC with the community to propagate the success of the token
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