Beyond just profits, investment is primarily a subject of market confidence and relative certainty about the future of any given project. With the current outlook of the cryptocurrency ecosystem and the high level of volatility associated with it, most traditional investors are low in confidence towards putting their money into the market.
A lopsided market
The current design of the ICO industry is popular for its flexibility and abundant promise of exposure and infinite possibilities. However, the associated risks of this system leaves most mainstream investors and venture capitalists largely uncomfortable as they feel unprotected assuming a token fails to perform as expected. This opinion goes beyond just assumption as there have been numerous cases of tokens that eventually lose value, or fail to appreciate long after their ICOs. Apart from those with projects that are still active, others remain as identities of projects that eventually become abandoned.
Most investors frown at the current system because they feel that the sign only encourages most token issuers to become irresponsible especially when they encounter any form of challenge. This is so because once an ICO is concluded, the tokens issued actually become independent entities whose value is determined strictly by the extent of demand, while the entire company equity remains with the original owners. Therefore, once an ICO ends, the investor remains totally at the mercy of the token market, and to some extent the commitment of the token issuer who incidentally is not obliged to the investor any longer.
Checking corruption in the ICO market
It is this situation that is assumed by many to have given room for the insincere and dishonest acts flooding the ICO market, where fraudsters issue worthless tokens, collect investors monies and disappear, leaving them to the consequences of fate.
In other to check this growing discrepancy, encourage industry responsibility and promote market confidence, the concept of tokenized equity that is initiated by Stamp’s Platform makes it possible for purchased tokens to retain tangible equity values of any given project. In order words, investors who participate in an ICO will no more be issued independent tokens; rather their purchased tokens will represent part ownership of the specific project.
Tokenized equity
The Stamps platform will facilitate the issuance of tokenized equity and assist organizations with growth and compliance-related tasks. The platform is built on the Soferox dual chain infrastructure and Stamps will streamline the process of issuing equity ownership. Unlike traditional funding methods, when a business issues equity tokens on the Stamps platform, they will instantly have a large following of backers who own a share of their company and avoid possession of legally-classified security classification at the same time.
However, organizations retain a percentage of the equity tokens gifted and may divest themselves of this equity token under terms established during the stamp release, and of those programmatically enforced by the network. This allows organizations to profit from their contribution of value to the community, and avoid the regulatory pitfalls associated with traditional stock and coin offerings.
By adopting a system of tokenized equity, automatically the existing industry doubts and uncertainties will be largely reduced. Token issuing organizations will also assume a more responsible approach, knowing that the overall value of their companies are tied to the performance of their tokens in the open market. Apparently, when overall risk is the business of everyone, responsibility and commitment is inevitable.