Undoubtedly, in these last two years we have experienced a real revolution in terms of growth of blockchain projects and how they are financed, boosting the crowfunding concept as never before.
Benefits of blockchain technology as secure, transparency and unalterable access have opened up endless possibilities for entrepreneurs to gain access to global crowdfunding opportunities. The great exponent of these possibilities has been unquestionably the process of initial coin offering (ICO).
As we already know, the initial coin offering, ICO, inherently assumes the purchase of specific tokens that constitute the fundamental part of the economic ecosystems that are translated into digital assets of blockchain products. The expectation that emerges from there is that these tokens are able to generate their own value based on the global economic movements of the offer and demand of cryptocurrencies. Many times this value can result from speculative pressures or in the best of cases, from the actual demand of each cryptocurrency.
However, the economic model of crowfunding that means the ICO is not the only solution we are seeing in these days of the boom of new blockchain projects looking for global financing. Perhaps part of the evolution towards other ways of crowfunding is because of the security and trust gaps that ICOs leave behind, especially since they are not an exception for scam projects. Unfortunately, it is a real risk that, together with the enormous possibility that many of these projects do not have the expected success, make the ICO an object potentially rejected by the regulatory authorities of several countries.
In the idea of protecting both business owners and investors from these potential risks, a new proposal has emerged that comes from the companies Blockhive and Agrello, through its unified project Tokenote. It is a new type of fundraising system, the Initial Loan Procurement (ILP). These companies developed the ILP as an alternative for companies that need financing for their projects.
Let’s see below what the Initial Loan Procurement consists of. Broadly speaking, it is a way to allow investors to earn interest on their contribution, while allowing companies to obtain loans to expand their ecosystem.
Given its base of being mainly a loan, the legality is assured. On the other hand, investors benefit from the direct success of the company.
On the website of the Tokenote project, we are told that the potential of the ILP lies in its flexibility in use, as it is carried out in the form of loans and on a global scale, allowing companies to access the necessary capital to finance projects for the public and private sectors.
This modality in the Tokenote platform works by issuing an access token, which is called Futures Loan Access Token (FLAT), so that the creditors can transfer their loan contracts to third parties. Tokens will be issued to creditors that lend funds to the particular company that requires financing. It is good to point out that when implementing smart contracts, creditors are entitled to receive an interest of 20% of the total annual operating profit of the Blockhive platform, which represents a guaranteed investment free of the speculative fluctuations that the cryptocurrency market usually presents.
On the Tokenote ILP platform, creditors lend in cryptocurrencies and receive FLAT tokens. Creditors must sign a loan agreement before receiving their FLAT tokens. The system uses Agrello smart contracts that can be digitally signed using the Agrello ID. Each contract is registered in the chain of blocks, and it is fulfilled according to its data. It is worth mentioning that this Agrello ID provides an important anti-money laundering solution and KYC -Knowing Your Client – that provides greater robustness to the legality aspects.