Every now and then crypto VCs approach the Streamr team and want to buy tokens directly from the project. However, there is no supply for additional fundraising, and neither the company nor individual team members want to sell their tokens. So we have to turn such parties away empty-handed.

However, it could be very beneficial to the project to have such parties onboard, especially if it enables access to long-term funding for the project. One idea here could be to create a supply of tokens earmarked for raising a long-term fund to support growth and success of the project beyond the ICO roadmap, i.e. from ~2023 to infinity!

Currently, the project still has around $10M left from the crowdfunding. As planned, this will be sufficient to reach the last milestone of the whitepaper roadmap. While there’s still plenty of funding left, now is a great time for the token holders to plan for the long-term sustainability of the project and invest in it.

Many projects divert some small share of revenue from their token economics to a long-term maintenance fund. This works, and is possible in the Streamr token economics too. However, for most projects the stream of funding attainable in this way is very small, especially in the beginning when the project is early on its adoption curve.

Imagine instead that the token holders would create a supply to be invested in yield-earning assets. For instance, if $20M is raised and locked as stablecoins into DeFi to earn roughly 10% APY, the project earns a stable $2M in yearly interest. Once the initial roadmap is built, the yield alone can be enough to cover the further development of the project, ad infinitum.

Here are some detailed specs showing what the fundraising could look like:

• Authorise the minting of up to 100M DATA for this purpose (5% of max supply, 10% increase to current supply) over the years 2021-2022
• Spread the fundraising over time (2021-2022)
• Accept reputable crypto VCs and high net-worth individuals. Full KYC/AML for everyone
• Tokens are sold at a maximum discount of -20% from the market price at the time of agreement
• In exchange for the discount, tokens are subject to a 12-24 month lockup
• Only sold tokens get minted; no supply increase unless there are deals
• Mandate Streamr Network AG to negotiate, make the deals, and park the funds into top reputable DeFi platforms
• Use of the funds raised would be subject to Streamr governance
• Spending the generated yields or the capital itself would always need the community's approval.

The case against the proposal

Minting more tokens inflates the token supply, and could reduce the price of the token – unless the purpose of minting is perceived to have a net positive effect on the project.

Investing the funds in DeFi is more risky than keeping them in a bank account. Vulnerabilities in the DeFi platforms used could lead to losing the capital.

The case for the proposal

For most decentralized networks it takes years to grow the adoption and the size of the network, and this is likely to be the case also for the Streamr Network. By raising a long-term fund, the project’s viability would be secured beyond 2023. Moreover, VCs bring great exposure for crypto projects and add a badge of approval to a project’s vision.

In the traditional startup world, it’s commonplace to raise more than one round of capital to make a project’s vision fully come true. Equally, in the crypto space there have been a number of projects that raised funds beyond the initial ICO (e.g. Polkadot has done two rounds of token sales, and Dapper Labs raised traditional VC money besides its Flow ICO).

The key question is this: Is it net positive to inflate the supply by a maximum of 10% to have a chance of funding the project until infinity?