Kickflow
With an exploding DeFi ecosystem on Tezos and numerous new projects, funding rounds are happening quite regularly.
There are a few crowdfunding/ ICO platforms that have launched on Tezos to provide decentralized funding rounds for new projects that are looking for funding to be able to develop their projects. But in a fast growing market, there’s room for more.
Kickflow is a new crowdfunding platform that is about to launch on Tezos. Kickflow is not an ICO/ IDO platform where you will receive tokens of the funded project in return for a contribution.
Crowdfunding would be purely on a patronage basis. Kickflow combines crowdfunding with a multiplier funding pool (explained below). Kickflow is decentralized and is managed by a DAO.
“Kickflow can conduct completely on-chain funding rounds managed by a DAO. All executive decisions are made using a token voting mechanism.”
Kickflow also allows contributions with other Tezos based tokens besides XTZ.
With Kickflow, it will be possible to increase the amount of funds that is collected through the crowdfunding round, by a method that’s called match-funding.
Several projects can participate in a match-funding round. With a healthy filled sponsor pool, funding that is collected through the crowdfunding, will be matched with funds from the sponsor pool.
This means that for every dollar that’s collected, the sponsor pool will multiply that by a certain factor. That factor can be 1:1 or lower, depending on the amount of funds that is available in the sponsor pool.
For example: If a project A receives $100 from Bob during the crowdfunding round, then it also receives an additional $100 from the sponsor pool. Project B receiving $50 from Alice would also receive $50 from the sponsor pool.
It is likely that the sponsor pool can not match the value of the total collected funds because there are not enough funds available in the sponsor pool. A 1:1 factor to multiply matching in funds is not possible in that case. In that case the funding from the sponsor pool will be divided by ratio.
Factoring in community reach
The ideal crowdfunding platform offers people an opportunity to contribute to projects with potential. One indicator of potential is community reach.
The more people show interest, the more reach it will have on social media and the more potential users there will be for the project. So if a lot of people are contributing during the crowdfunding phase, it is considered to have a large community reach.
Kickflow uses a mathematical formula to factor this into the distribution of the sponsor pool funds. This formula influences the ratio that is used to multiply contributions with the funds from the sponsor pool.
The core idea is inspired by the concept of Quadratic Funding and The Capital-constrained Liberal Radical (CLR) mechanism introduced by Vitalik Buterin, Zoë Hitzig & E. Glen. Weyl.
The idea is that if two projects participate in a crowdfunding round, and project A receives a total of $1,200 from 2 contributors, and project B receives $1,200 from a total of 10 contributors who have all contributed lower amounts per contribution, that project B has larger community reach.
Factoring in this data by use of CLR, would result in the fact that project A would receive 15% and project B 85% of the 1:1 ratio. (Or lower ratio if the sponsor pool is insufficiently filled.)
You can find the math and more info here.
Manipulation
Match Funding in general can be manipulated though. If you want to start a project and are looking for funding, you could simply supply contributions yourself, which would be doubled by the matching pool. Basically free money.
The community reach factor could be manipulated too, by using several addresses to add your total contribution. This is an issue that is approached in several ways by Kickflow.
A cooldown period is introduced of 7 days. In that period, the contributions can be analyzed.
“Entries can be flagged and disputes can be raised in the DAO.”
If funds that are contributed by several addresses, but originate from a single address, manipulation is suspected. This process will be finetuned over time.
You can read a discussion on this topic on Agora here.
Full workflow of a Kickflow crowdfunding round
– Sponsors fund a sponsor pool using a stablecoin. [10 days]
– Projects could join the rounds by making a returnable security deposit and start accepting community contributions, in tez & FA1.2 compliant tokens. [30 days]
– The system enters a cooldown period and contributions are no longer included in the CLR match. During the cooldown, round entries can be flagged and disputes can be raised in the DAO if a collusion pattern is detected in the contributions. Thereafter, the disputed project can be voted against and disqualified from the round. [7 days]
– The payout period begins, during which entries can retrieve their CLR match payout from the sponsor pool. [30 days]
DAO
The decentralized governance system for changes in the Kickflow protocol works by voting. Users that own the Kickflow Governance Token (KFL) can vote and their vote counts by ratio of the amount of tokens they hold. A proposal can be made on which holders can vote. Some examples of proposals include:
– Proposal to change DAO parameters like — voting period, quorum votes, proposal threshold, etc.
– Proposal to mount a funding round contract. Each round is handled by a different contract, which must be approved by the DAO before it can allow entries.
– Proposal to set the CLR match ratios of the entries in a funding round.
– Proposal to disqualify a round entry that has violated the rules of the ecosystem.
Upgradability is one of the most important aspects of Kickflow. For this reason, every aspect of Kickflow can be upgraded and adjusted. Every round is handled by a fresh contract that must be approved. This allows for feature addition and changes in the funding round logic.
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