The crypto market has seen some stupendous results in 2017. Although 2018 isn’t turning out to be the best year for returns, it is still too early. The crypto community has invested a lot of money into new projects and experimentation. Sometimes this results in overheated markets. Other times, it results in great innovations. After all, the most widely used crypto platform today, Ethereum, was itself created out of an ICO with mostly Bitcoin investors putting their money into an unknown idea.
So what does the future hold? While we don’t have a crystal ball to answer that question, we can take a guess. The community likes to invest in early stage projects. That’s why even a project like Tezos got fully funded. However, as the space matures, there will only be so many new foundational projects. After all, you don’t need 20 Ethereum clones to get the job done.
So what should the community do? How can they continue making those early investments into foundational projects? Well, today we’ll discuss a project called Equi that provides one such out for crypto investors and the broader community.
How Equi Helps you Diversify
Equi can help you diversify from crypto into more long-term investments, very similar to venture capital. It is a clever mix of crypto and venture industries. The project uses its native token called the EQUI token, which is used to make investments and also get returns from successful projects.
The process itself looks very much like a venture capital investment. There will be projects listed on the platform, and if you like the opportunity, then you would invest. The one drawback though is that the money isn’t liquid unlike tokens, i.e. you will only get your money back when there is an ‘exit’ event for the company (e.g. it goes IPO or gets bought out). We still don’t know what kinds of projects will get listed though. It may very well be projects with tokens, so you can get more immediate liquidity.
The model allows for investors to get 70% of the profits generated by an exit event. 5% is given to holders of the EQUI token who may not have invested in the platform, and the remaining 25% is taken by the company as fees. Although this seems like a very high fees to charge, these opportunities may not be available elsewhere and may therefore be worth it if the returns are adequate for investors.
The clever thing about the EQUI token is that even if a smaller subset of investors make some really good investments, the whole community will benefit. Why? Because even if you don’t make an investment, you are still eligible to get that 5% return. That’s not too shabby in our view.
The crypto community is already used to investing in very early stage companies. Maybe they can reach beyond tokens and into more traditional venture.
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