Capital Raise & Supply Increase for Marketing, CEX Listing, Liquidity & Product Expansion.

 

Summary

This proposal has been raised in order to allow Angel and VC money to be attracted to the project and buy in at a realistic price point, yet 5x above the current market price.

Note: The StackOS community can also take part via their Node NFTs.  

The main goals of this capital raise can be summarised as:

• Provide significant funding for marketing across multiple channels and into both the Web 2 and Web 3 space

• Via marketing, aggressively position the product as an enabler for the developer and content creator economies (via application NFT functionality)

• Increase liquidity depth and provide sufficient liquidity in order to list on the largest exchanges

• Provide additional funding to allow the core team to scale as/when adoption ramps up in order to support that adoption by various parties

In order to do this, however, an increase in maximum supply is being proposed.  

The headline figures are:

• A change in Max supply from 1 billion to 3.5 billion

• 2.5 billion tokens are minted

  • 2 billion tokens are sold to Angels, VCs, and StackOS community for Marketing and Adoption (see primary goal)

  • 0.5 billion tokens are used for liquidity (see secondary goal)

    • 166,666,667 tokens will be sold to VCs and kept in USD for liquidity

    • 333,333,333 tokens are kept in tokens for liquidity

• A total of 2,166,666,667 tokens (62% of the total supply is reserved for OTC trades/ VCs)

• Note: that liquidity absorbed due to the Poly Network hack will also be added, a small amount, but nonetheless. The hacker's wallet will be excluded  

The rest of this proposal will set this out in more detail and the thinking behind it.

The Primary goal of this raise is to supply sufficient funding for the marketing budget so as to position StackOS as a leading technology platform that has the capability to add any digital asset to an NFT.

StackOS is the only project in the world to have this capability and this differentiator provides a competitive advantage over any other centralized cloud providers or even decentralized cloud providers. 

This strategy moves StackOS from being a developer economy to a content creator's economy. User-generated content is a highly rewarding sector and marketing has a huge influence on the perception of the brand.

With the advent of AI and Machine Learning products in the last 6 months, StackOS V2 is also building capabilities to deploy GPU instances and StackAI services. This investment will also go a long way to position StackOS as a one-stop shop for building, launching, and distributing AI-based products.

In order to build product awareness, adoption, and revenue; a significant marketing push is needed beyond the largely organic approach taken to date.  

This marketing push will include the following activities:

• Marketing campaign focused on Web 2 companies and their adoption of StackOS and/or agree strategic partnerships that would see these organizations build additional feature sets to aid in bridging Web2 and Web3

• Marketing campaign focused on Web 3 project adoption and integration with StackOS

• Engagement of experienced marketing companies to drive campaigns and uplift the core team's current capability gap in this area

• Funding to cover marketing companies' professional services costs

• Influencer campaign funding (crypto and also content creator influencers)

• Additionally - give the operations and engineering teams the ability to flex resources to support new growth, onboarding, and integration  

The Secondary goal of this raise is to:

• Provide significant additional liquidity which will enable listings via the teams Market Makers with the largest crypto exchanges as well as the ability to maintain that exchange presence during low liquidity market events:

• 333,333,333 $STACK

• 2 million raised in USD  

Increase of Maximum token supply

This will undoubtedly be the sticking point for passing the proposal but the team commits to the usage of funds raised to further marketing efforts, exchange listings, and seek DAO governance on any significant changes in project direction or tokenomics.    

Please consider both the pros and cons carefully.

In order to raise additional capital from both Companies in the Web 2 space and from VCs in the Web 3 space, the team proposes the following:

1. Increase of Maximum supply from 1 billion to 3.5 billion in order to create additional supply to be bought OTC by Angels, VCs, and existing Web 2 companies

2. Additional tokens created to be bought OTC at a price point of 0.012 (approx 5x current Market price at the time of this proposal and in line with the original 'private sale' price at TGE in April 2021)

3. Allowance for OTC sales to be conducted in a 'rolling' fashion - where the buy price will remain a minimum of 10% above the current market price or be subject to extended vesting periods

4. No vesting period for VCs - there will be an attempt to add in vesting but this is dependent on negotiations with VCs

5. No additional tokens for team members - existing allocations from original tokenomics to remain in place

6. All of the increase in supply will be used only to raise additional capital (via OTC)

7. In the event that the full raise is not achieved in the short/medium term, point 3 will still apply  

Additional outcomes/expected behavior for existing token holders

If this proposal passes, the initial floor will be the same as the current market price ($0.0025 currently). However, as the VC money comes in, it will initially be used to increase the market liquidity significantly at their entry price of $0.012.  It is anticipated the market price will then drift toward $0.012 or above, creating a new price floor.

This would equate to an FDV market cap of $42m. (currently $2.5m)  One thing to note is that raised capital when used appropriately, can lead to much higher valuation in a shorter time frame.

As the available liquidity rises from the initial raise round, additional exchange listings will follow.

The team has already received solid interest from a few Web 2 companies and a number of VCs in the Web 3 space.  This does not at this time equate to the entire quantity of the raise being sought, but assuming the proposal is passed, this campaign will start in earnest.  This is why the 'rolling' raise of funds is being allowed whilst the increase of maximum supply will be a one-time change to StackOS tokenomics as a result of this proposal being passed.  

Node NFT Optional Participation

Node NFTs will continue to have utility within StackOS as they are a requirement for launching new clusters as the protocol gains usage/adoption.

As part of the proposed capital raise though, any Node NFT holders can choose to participate in the raise at the same price point as the VCs entering that round.  In this way, the team hopes to offer some additional utility and opportunity to long-term supporters of StackOS.

It is also possible during the campaign to raise capital, that there will be some demand for the Node NFTs themselves which may trigger trading activity for those wishing to 'exit' from some of their Node NFTs.  

Participation is optional and will work thus:

1. For each Node NFT in a wallet, up to $2000 of stablecoins can be committed to the capital raise, with a minimum of $500

2. In the initial raise round, the price per token will be $0.012

3. Should the market price clear this level during the rolling raise, the OTC price per token may increase over time

4. All people participating via their Node NFT will be required to KYC (this may limit participation from certain regions)

5. All transactions will be OTC  

Drawbacks of not voting in favor of this proposal

• Listings on larger exchanges will be constrained until such time as the Project significantly increases its Market Cap and available liquidity.  This could happen organically ahead of the next bull market but there are no guarantees

• The ability to market and expand product awareness as well as accelerate adoption/usage will be constrained to existing organic methods due to a lack of significant budgets for marketing

• Influencer campaigns will not be funded from the existing marketing budget so the ability to run such campaigns will be constrained until the market cap grows significantly organically. Understand that the marketing costs also increase as the market cycle improves

• Any investors of 'size' which includes VCs, will be deterred from opening a position with StackOS due to the current limited liquidity and how much they would move the price

• Liquidity depth will be limited, exchanges like Binance need a million dollars in single-sided liquidity alone. Which will keep the high-value investors away, since it's a chicken-and-egg problem    

DAO Voting Mechanisms

Voting rights and principles:

• DAO voting will be 'Token weighted' where voting power is proportionate to the number of tokens held in the wallet vs. the current circulating supply at the time of the vote

• Each node NFT held will grant the voting wallet additional voting power as if the NFT represented 1,400 $STACK tokens

• Each Gen 0 node NFT will grant the voting wallet additional voting power as if the NFT represented 70000 $STACK tokens (1400 x 50)

• The results will be transparent and the team will manage the compilation of final figures across all chains/participants

• In order for the proposal to be passed, it must receive greater than 50.1% of votes cast in favor of it

• A minimum of 5% of circulating tokens is set as the minimum participation level in order to make this a valid DAO vote.  Turnout for the first DAO vote in the middle of a bear market is hard to judge

• Stack project wallets will not participate in the DAO vote to ensure the vote reflects the will of the holders/community rather than the project

Note: The above principles/mechanics will generally be consistent going forward for future votes.