Funding the digital commons

The solution of Circularise and Milvum for the challenge of Odyssey

WINNER: CIRCULARISE & MILVUM

THE CHALLENGE

Tokenizing the Ecosystem

Odyssey’s mission is to enable everyone to build an open digital public infrastructure for society. We believe that proprietary solutions should be built on top of protocols that are part of the digital commons (ownerless and publicly available).

However, to facilitate mass adoption of these commonized protocols, #buidlers need a lot of funding. This is exactly where the problem resides: How do you fund an open source project which has no owner, on top of which everyone can build, and which can be used by everyone without permission. Also, we are all aware of the nightmare ICOs brought: Wall Street on steroids. Odyssey wanted to develop a “Protocol Investment Vehicle”, the answer to the current undesirable situation regarding investing in commonized protocols.

The challenge was to create such an investment vehicle, that would align  investors with #buidlers to drive mass adoption for new, ownerless protocols while mitigating startup failure risk. This would make the digital commons economically viable.

SOLUTION

#odysseyhack

Funding the digital commons

The solution enables not only institutional investors, but also corporates and governments to invest in protocols that are not owned by anyone, but that can be used by everyone.

Circularise and Milvum built a prototype that allows investors to simulate investments in open protocols. These simulations provide insights to the investor about the potential return on investment, and how the investor could help out the protocol with adoption in a truly transparent way. Simulations are based on a projected adoption curve, transaction parameters, protocol rules, and investment details. When the optimal protocol and investment rules are found for a proposed protocol, a smart contract is generated directly from the simulation to fund the builders. This smart contract pays out returns to the investor until his return cap is reached. This diminishes the incentive for the investor to get as much money as possible out of the protocol and rather creates the incentive to increase the adoption rate of the protocol: for the reason that this will guarantee an earlier payout of his investment. The solution uses machine learning on the adoption curves and transaction costs of current and future protocols to make the simulations as realistic as possible.

Together with the licensing structure and the legal arrangements that have been made by the team’s overarching foundation, investments can be made directly with approval of the AFM.

The next milestone is to link the governance contracts directly to the funded protocols, thereby giving fair voting power to all stakeholders involved in the development of the protocol.

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