EQWITY ICO Review : EQWITY the Security Token Ecosystem needs more services aggregation
EQWITY at Eqwity are building the easiest way to enter the STO market, thanks to a decentralized one-stop shop using Data Intelligence and A.I. for aggregating, standardizing and digitizing all necessary services for setting-up a Security Token Offering from A to Z. Then, EQWITY also aim to bring back the notion of access to services by introducing the “STO Plus”, a new hybrid model entitling to a compliant security token as well as a utility token for enjoying the services. Finally, the overall ecosystem is shaped to support blockchain companies at each milestone of their life cycle (incubation, compliance, fundraising, listing and trading).
After controversial starts regarding the idea of J.R. Willet in 2012, the first ICOs emerged. Many projects experimented this fundraising mechanism, expecting to finance their work in 2013. Ripple pre-mined 1 billion XRP tokens and sold them to investors in exchange of “paper money” or bitcoins. Then came Ethereum, which gathered more than 18 million dollars in early 2014. At that time, it was the most important ICO ever realized.
However, the ICO became truly popular only a few years later, thanks to a lightning growth within the blockchain industry.
Since its apparition in the blockchain industry, the ICO have faced pretty tough criticisms regarding the abuses and risks of its model. Despite this, the ICOs offered to startups an excellent bias to persuade investors to funds their project. In the USA, the Securities Exchange Commission (SEC) recognized this fact. However, it recently has been cracking down on fraudulent and non-compliant ICOs to set and enforce a better standard in the industry. In view of the legal uncertainty surrounding the ICO future, Security Token Offerings (STOs) are arising as the new method of crowdfunding and could be the next big thing to spur growth in the industry. The STO would offer to investors securities and voting rights in the funded company.
- Scam Risks: Too many scams recorded in the market since ICOs boom. According to Bloomberg and SATIS Group, 78% of ICOs can be classified as scams . 10
- No Rights: Investors are helping founders to launch their projects by investing on them without getting any voting right, shares and dividends in the company.
- Unverified Founders: There is a real lack of verifiable information about founders. Today, it’s easy for scammers to plagiarized documents in addition to having fake team listings or creating fake LinkedIn profiles (which seems to be a trustable source of information within the market).
- High Rate of Fails: hundreds of these projects are now dead because they were not listed in any exchange or the product hasn’t materialized. Moreover, according to News Bitcoin survey , the total 11 funds raised for the failed ICOs were more than $100 million.
- Hacking Proliferation: According to Ernst & Young, more than 10 percent of $3.7 billion raised in ICOs in 2017 has been stolen . 12
- Inexperienced & Unskilled Team: The challenges faced by more recent ICOs in reaching their targets are partly attributable to the lower quality of projects,lack of entrepreneurship experience, absence of skills and no financial sustainability vision.
Once this is achieved,each part will be randomly sent to a decentralized network of auditors organized in block fields (financial auditors, marketing auditors, blockchain auditors, legal auditors…). For joining the network each new auditor will need to be verified first (identity verification, background checking, skills test, project audit simulation). Several auditors in each block field will compete to be one of the first five to define the project as viable or non-viable in their field. Once this is reached, the audit session is stopped. But, not every auditor gets a reward only the five winners from each block field. For participating, each voluntary auditor will need to deposit first on the platform the amount in EQY tokens he would desire to earn for his audit service (a max value will be defined by the platform for avoiding abuses and ensuring selffinancing).
• Company Incorporation (optional) For raising funds through a STO or STO Plus, the project team will need to firstly incorporate a company for being able to issue security tokens. Thanks to a large network of partners located in the best places for launching a security token offering, Eqwity will provide a fast company incorporation service.
• Security Token Issuance STO+ Issuance is an easy-to-use app enabling every issuer to create a very sophisticated security token within few minutes! Thanks to a smart forms system based on a guided questions-answers process, issuers will be able to create specific ERC-1400 Security Tokens without coding a line.
• Compliance Process STO+ Compliance is an integrated smart platform aiming to aggregate all necessary service providers for performing a compliance process anywhere in the world, to standardize and digitize all procedures for each targeted country and area, and to bridge with a maximum of financial regulators for drastically reducing procedures duration.
The project audit phase will be based on “Proof of Viability (PoV)” model. As previously detailed, it will prevent non-viable or destined to fail projects for being able to raise funds from the community. The audit session will be performed within a decentralized network of auditors organized in block fields. For ensuring a high-level of impartiality, the selected auditors will get only relevant information regarding their field for evaluating the project viability.
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