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Hardly a day seems to go by without there being a new decentralized finance project that promises to reshape the way users think about money and investing. Recently, this trend has only become stronger.
In the rapidly evolving DeFi world, new initiatives are pushing the boundaries of what digital assets can offer. For many, the excitement around these projects highlights the potential for a more transparent and accessible financial future.
While DeFi protocols have the potential to disrupt and democratize the financial world, many of these projects face significant challenges in securing capital to develop innovative products and remain consistent with their roadmaps. We can attribute this to a few key reasons that mainly stem from the core principles of decentralized business models.
For example, traditional companies can rely on bank loans or public markets to raise funds, a luxury that DeFi projects do not have due to their reliance on decentralized governance and their existence in an unclear regulatory environment. And this is just the tip of the iceberg.
First, many DeFi projects do not have access to capital pools typically available to traditional tech startups. Although venture capital firms exist that specialize in web3 and crypto, the number of startups exceeds the number of venture capital firms willing to invest, creating a highly competitive financing environment.
The need for alternatives
In recent years, the rise of entrepreneurship has increased the demand for alternative financing solutions, causing financing options such as crypto launch pads to gain popularity. It’s easy to see why: crypto launch pads offer a different route for projects by tapping into a global pool of investors and fostering a more inclusive network of contributors.
However, the launchpad ecosystem has deteriorated as platforms rely heavily on token sales models, which prioritize short-term financial gain over sustainable community engagement. Token sales may attract speculative investors looking for quick profits rather than investors committed to the project’s vision. This approach often leads to an uneven distribution of resources, with little to no involvement from community members, which affects the long-term success of a project.
So projects have become disillusioned with the fundraising options available. They are faced with either having to go the VC route or face a hyper-competitive crypto launchpad marketplace that may not suit their needs.
However, some projects have taken note of this oversaturation and taken steps to provide an alternative. Astro vaultfor example, has developed a new fundraising platform that builds on its experience as a decentralized exchange. The platform, titled Outbid, has been presented for direct integration into the Cosmos Hub to enable new ways for projects to raise money. Outbid is a decentralized, gamified launch pad designed to create a transparent fundraising pipeline for projects in the massive, loosely integrated Cosmos blockchain ecosystem.
By gaming the fundraising process through an auction-style micro-selling mechanism, Astrovault has facilitated a way to more actively engage communities on Cosmos in raising money for projects where they see potential. And since all projects are parameterized, Outbid’s platform can help raise funds. for every type of deal or development phase.
The project suggests that the platform would be governed by a DAO selected by Cosmos, who would be responsible for overseeing marketing and business development activities. In addition, the platform plans to support fundraising efforts by matching donations, allowing projects to gain early-stage exposure and community support.
Ultimately, every worthwhile project deserves a safe and transparent place to begin its journey and connect with people who will help bring its vision to life. By fostering a community-driven approach to fundraising, projects can build trust, connect with early supporters, and lay the foundation needed for long-term success.
By focusing on creating more collaborative fundraising models, founders can feel empowered while ensuring their projects get the support they need from users who truly understand their value.
