I am seeing the light of the value of governance when the world of trustless crypto coin meets the funding of trusted assets. The article below seeks to explain my point of view and my rapidly developing recognition of the value ofSteem governance and they ideas of the Aragon project.
In the non- crypto world there are many .Business forms. One very common one is called limited partnership, where a General Partner operates a business and has a few or many limited partners who provide investment capital in return for a ongoing share of the profits of the business. Limited partners remain limited as long as they have no direct control of the operations of the business. This status gives them certain protections in the event of problems with the General Partner.
Like all things in the non-crypto world, this is a trusted relationship.
I’m calling for most of us to resist the temptation to join trusted crypto assets, until they have reached a level of protection to be trust less.
This is a time to be protecting and growing the number of coins you hold. The risk is only multiplied when your coins are invested in a trusted crypto asset.
Just to be sure I’m making my point clear, it is the block chain and the mechanisms of a governance model that provides surety of which provides:
- protection of invested capital,
- R release of that capital to the operator of the crypto asset,
- protective actions in the event of crypto asset failure
3.Protects against change in direction by the crypto asset General Partner.
For the first time, It could be possible to engineer simple yet trustless Limited partnershipOpportunities for very tiny businesses to get access to the capital they need, while protecting the investors from misappropriation of the investment.
This will not assure the success of the business, but it will help the General Partner to better focus on building a successful business for all concerned. The limited partners can then be assured That the governance model protects their investment and the automation of payment disbursements gives incentive to the General Partner to meet milestones and promised goals.
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The importance of this opportunity cannot be overstated. There are millions, perhaps hundreds of millions of craftspeople who could start their own companies, better their family's situations, and control their own destinies. Crypto Asset gives us the opportunity to supply funding in a way that will do more for poverty and all the billions of dollars thrown away by our governments.
HimWe have fed many people through that effort, but this Crypto Asset class has the best opportunity to truly offer opportunity to blue-collar and other business operators everywhere.
You may wonder what led me to begin considering these things. It is my recent foray into trusted crypto assets, and the pitfalls that caught it up.
Without getting too specific, I saw an opportunity through a smaller crypto coin to invest in a asset, listed on that coins asset exchange.
I'm not complaining about the probable failure of this investment, partially because I made the decision to join it, and I've made money anyway. Though not a lot.
I seem to be able to make money but not a lot, so my advice is don't listen to my advice. But I have learned a few things from this these may be valuable to you.
This crypto coin universe talks a lot about trusted and trustless systems. Abstractly, I recognized the difference but investing in this asset brought home the fallacy of using a trustless media such as a crypto coin to invest in something that requires trust in the operator of the asset. I will add that I do not really feel that this person is let me down.
Before investing in this asset I read the small amount of information that was available, I relied on the history of this asset operator, and the coin was very cheap at the time I invested. Why not?
Not sure of the best terms so I'll call this asset a trusted asset, as compared to a trustless asset.
As a trusted asset, the asset is operated as a loosely formed partnership with one General Partner/ Manager, and limited partners who invested coin and return for an asset managed and controlled by the General Partner/manager. It was clearly stated that this was an asset under construction, with some assets operational and more to come.
I believe that the asset had 1 million shares, with 250,000 of those sold to the limited partners.
As a trusted asset, here are some basic facts:
A. Limited, but some knowledge of the history of the operator.
B. No vesting schedule for the General Partner/ Managers access to his shares.
C. No milestones for completion of the work.
D. Distributions had no mechanism to hold from the operator in the event of nonperformance.
E. Operator seems to have not recognized the cost to buy the coin to pay distributions when the coin value increased.
F. Operator sophistication limited with poor advisors.
This may not sound good, but this kind of partnership is routine across the world. All of the limitations of this agreement insofar as investor protection is concerned is the same risk that exists in any similar partnership.
So, I will restate that the General Partner/ Manager of this partnership, this crypto asset had the same right to succeed or fail as any other. This asset is still operational, so I hope he's down but not out.
There was, and perhaps still is real value in this form of business.
Now, imagine that there was a form of business that would allow little guys to come together and form these kinds of partnerships, but in a trustless way.
First let me explain my idea of trustless. A trustless partnership, or if you prefer to call it a trustless crypto asset is one that assures that everyone's interests are protected. All will rise are all will fall but there are beaned no unfair advantage.
This particular crypto coin has a quite nice asset exchange tool. But it is a tool with no governance model whatsoever. As recently as a few weeks before this asset found itself struggling, the marketing forces for the coin and this operator, a significant force in this coins ecosystem, both verbalize the desire to only allow trusted operators to add assets. They believe themselves to be trusted operators. They probably are trusted. In hindsight, it appears that things can happen beyond any planning weather due to exterior forces or poor decision-making that can take what was a trusted relationship and turn it into one of doubt. This is a shame for everyone concerned. And costly for a few.
If this asset exchange had a wrapper around it that guaranteed that a crypto asset created their had a good governance model, most of the problems this crypto asset has seen may have been avoided.
With this governance wrapper, and operator and their investors could have a choice. Have a traditional General Partner limited partner relationship where the General Partner does his best. Or the operator chooses to offer the crypto asset through the governance wrapper. This wrapper would then of provided much support in at least these areas:
A. A detailed history of the operator and his associates involved in the crypto asset.
B. Crypto assets would be locked in a smart contract to assure operations proceeds are distributed according to an investment plan. This plan would include a vesting schedule, a milestone schedule, and would withhold payouts to the General Partner until the promises are fulfilled. This could be a partial payout withholding or complete.C. instead of a promise of five years or so of payouts, a wind down plan could be included to assure that termination of the partnership was based on business need with adequate notification.
An interesting part of setting up a trustless crypto asset will be how prior work, and existing physical assets are brought into the agreement. I don't see a problem with bringing in these types of assets, and if the crypto asset is an expansion of an existing operation, the issues of how the General Partner recoups that prior investment has to be considered. As I say, I'd think this is neither good nor bad just an issue to clarify. The particular crypto asset I will invested in had a very large substantial holdback for the General Partner of three force of the available crypto assets. He did, however, have a large investment in mining equipment already out of pocket. I overlooked this imbalance because it seemed fair. Later as I consider this, I realized that the operator could exert too much influence on the price of the asset. I do not know whether or not that was exerted but the possibility was a real risk for the investors.
One thing that this crypto asset provided, and it seemed attractive at the time was that it was listed on an asset exchange to make it easy to move in and out of the asset. I’ve come to learn that the developers of Steem/steemit Learned the importance of limiting The investor’s ability to rapidly withdraw. Using the idea of Steem powerSTEEM, power can only be withdrawn over 13 equal weekly payments called powerdown. Because the trusted crypto asset I invested in did not have such provisions the other investors rapidly bailed out at the first sign of the coin going up in value.
This Conundrum between easy liquidity of an asset exchange versus stable investment in the asset are something I will consider in the future p article. Suggestions are welcome. Please comment below.
At the moment my thoughts are that some combination of the governance model of –, Steem,, and Aragon could provide the best framework for trustless limited partnerships.
I am interested in joining with anyone who wants to work on this from a Philosophic, project initialization, developmental, or generally interested please contact me below. Please retwee, Or r’s teem this article if you
Sites:
Steemit: http://steemit.com
Aragon: http://aragon.one