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RootProject is cofounded by Dr. Nicholas Adams Judge, a political economist, and Chris Place, a Y Combinator Alum. The nonprofit’s pre-ICO recently passed 203% of its funding goal and is open until July 28th, 2017. The cofounders are taking zero tokens and no compensation beyond a reasonable salary.
Chris’s time at Y Combinator, and my time coding out and sitting on an MVP for three months too long has burnt into us the value of “release early, iterate.” So that’s what we did with our pre-ICO, and it’s been a truly fascinating process, with lots of education for the founders involved.
We’ve learned a lot from our 800+ Slack team, our new hires, and even the brutal-if-broad-brushed skepticism of Reddit. We’ve raised well over 200% of our goal, and our pre-ICO runs until July 28th.
RootProject was born out of a conversation that our whitepaper starts with. But that conversation begot a lot of thinking about how a crypto asset can be used to let nonprofits act with all the market oomph of a for-profit institution while retaining their status. We realized we’d stumbled on a model that, if proven out, could be a very important change in the institutional economics of nonprofits.
This graph was the best communication thing we did in week 1.
SO! Let me try communicating what we’re up to, now that we’ve heard where our description was weak. I got six bullet points for ya where you don’t have to think of cryptocurrencies, three where you do.
Part 1 (Don’t Need to Think About Cryptocurrencies)
- Rootproject is building a nonprofit whose core activity is based on anti-homelessness work programs that were pioneered to some extent in Albuquerque, NM and now have the data to prove that they’ve been very effective.
- We marry it to a crowdfunding platform, so people — or large institutions — can crowdfund projects they think will improve their community or public-accessible space (e.g. a business front that is effectively part of the public space).
- Those donations are mostly tax deductible, a big deal in US tax law ( though donations for business improvements won’t be tax deductible).
- We, not the project initiators, complete the task, giving day labor to vulnerable people, and helping them gain work experience and job skills. Their wages, along with a supervisor’s, are part of the project budget.
- We call this the the “laborless crowdfunding model:” it makes projects more expensive, because of labor bills, but it opens crowdfunding up to projects where project intiators don’t have the time, willingness or capability to do the work themselves.
- In fact, the labor we do is a big POINT of the project. The work people do lifts them out of poverty and exposes them to community programs and caregivers that can help them get back up on their feet.
Part 2: A CryptoCurrency Makes It Really Exciting.
The above is potentailly a model that will save some people enormous, brutal suffering. But it’s hard to scale and not transformative unless you have the resources to scale. A cryptocurrency is absolutely essential to our plans, and it’s where things get real.
We introduce a token, called ROOTS. Investors can buy it, and they expect it to regularly appreciate through three main mechanisms. It is hard capped, so each increase in currency demand or reduction in liquid supply should drive the price up.
You can read more about the theory behind our currency— institution regime here.
- The currency-as-fee model (another model name we made up): Donors donate to a project. Like Kickstarter or other crowdfunding platforms, we take 10% (7%-ish after CC fees). That 7% is used to purchase tokens on the open market, reducing liquid supply. Some of that 7% is used to fund operations — so it has to be sold back on the market — but we operate out of our ICO (or other release funds specified in the whitepaper) for as long as we can, so we retain as much of that fee as possible. This reduces liquid token supply and should lead to currency appreciation.
- Workers get paid a decent wage in their local currency. However, they get 50% on top of that deposited into a medium term pension fund-like entity that holds solely ROOTS for an average of 18 to 48 months. This is part of the crowdfunded budget, and it greatly reduces liquid supply on the market. Workers have to meet certain requirements. Namely, enough days worked, long-term employment achieved, or, if appropriate, substance abuse seminars are attended. Smart contracts help us with the administrative load. Workers have payments disbursed to them in local currency, so they don’t need to know anything about cryptocurrencies.
- Large one-off charity projects with major institutions can be negotiated. RootProject will coordinate the labor in exchange for an extra purchase of ROOTS which are mostly burned, permanently making the rest of the currency more valuable.
So, that’s basically it. Our crowdfunding platform MVP is coming very soon. (Maybe a surprise during the ICO is planned on that one).
Once that’s up, people can contribute in two, different ways: They can donate to a particular project, or they can purchase ROOTS on the open market.
If you help us succeed, we will build out a model where for-profit institutions don’t hold more power than nonprofit institutions.
That is precisely how cryptocurrencies can build a new world.
*Yes, there are some icky elements in mixing capitalism and nonprofits, that’s why Chris and I think it’s important we personally aren’t keeping any tokens — though we do allow employees, over a very long vesting period to keep 10% total, as investors typically demand management — investor interest alignment. This will only occur if it does not interfere with our status as a nonprofit — novel regulatory questions that will drive some of our pre-ICO funds into the pockets of the best tax lawyers in town.
Company name: RootProject
Company site: https://rootproject.co