FIP-0004 - e-commerce acquisition

Summary:

Seek approval for the acquisition of the codebase for a coupon platform that can be integrated into the Balance ecosystem and open the doors to the global e-commerce markets.

Motivation:

Recent events in crypto have further shown the need for diversification into other markets as relying on a single small segment such as defi poses challenges for revenue generation in bear market conditions. This codebase will give the Balance team a huge advantage in building real world products that can integrate into the ecosystem, generate revenue and onboard users outside of our current reach.

Background:

The coupon industry is very large and continues to grow, year over year. With the events from the last few years relating to the global pandemic and forced lockdowns in many places around the world, online shopping has increased by orders of magnitude. People are also looking for ways to save money when online shopping and coupons deliver these savings easily and safely.

An opportunity was presented to us by a development house who were looking to offload some of their recent products. The e-commerce platform is a fully functioning coupon solution that generates income through affiliate commissions by delivering coupons to end users via a number of methods including a browser extension. This is similar to how the Honey platform currently works or that of the in-built solution from Microsoft in their Edge browser.

Considerations:

With any investment, there are risks involved. One of those risks is not being able to capture enough market share to execute the vision. Another risk faced is the potential response from existing competitors and other defi protocols looking to enter this space.

Our ability to gain widespread adoption such that the revenue earned is sufficient to cover the ongoing operational costs and their initial acquisition price is paramount. Integrating crypto into e-commerce and onboarding users through the extension may be challenging, and marketing will also play a key role to ensure that the value proposition offered is unmatched by anyone. User acquisition and onboarding will be a leading KPI for success.

Proposal:

This proposal is for an outright acquisition of the codebase for a coupon platform that will allow us to pivot into the e-commerce space and will give us an entry into the highly profitable e-commerce market.

The codebase will be transferred to our custody and integrated into our ecosystem, and it will be relaunched under the Balance umbrella as an entirely new product. Note that we would be acquiring the codebase, not a turnkey solution, and full integration would enable use cases for our current products.

This investment will cost $860,000 in stablecoins that we currently have set aside in the treasury.

We believe this to be a fantastic opportunity to create revenue and real-world use cases for the Balance suite of products and it will allow us to reach a huge consumer base.