Crowdfunding using 2-of-3 multisig, DCA, Joinmarket and Blockonomics

What?

An idea I want to suggest based on my research about ICO, IEO, DAICO/PIPs and Growdrop about solving issues related to crowdfunding using Bitcoin.

Why?

1. Most of the ICOs are scams and has poor risk/reward for any investor right now.
2. IEOs are money making schemes of Exchanges and few projects.
3. I liked the experiment with regards to DAICO and Growdrop however it has its own risks involved and use of Ethereum. You can read more about it here: https://ethresear.ch/t/growdrop-expanding-financial-inclusion-with-defi/6245

How?

I will explain the working with the help of an example:

• Blockonomics create a multisig escrow contract with 1 key owned by investor, other 2 by blockonomics and project founder
• Open source algorithm gets triggered once BTC is sent by investor, opens a long position (1x leverage on Delta) with 1/52th amount of half BTC sent by investor. Other half is used for market making on Joinmarket for coinjoin. At any point if the position is at 5% loss, algorithm stops adding to it every week until break even. This is just an example: Delta can be replaced by other derivatives exchanges by user, algorithm can be different, etc.
• I don’t want to use buzzwords like AI, Blockchain etc. but the algorithm can be coded in such a way that it manages the BTC with minimum risk and always updates the information with values requested by investor or blockonomics or project founder at any point.
• The profits generated by algorithm in one year or more time based on lock time of contract can be used later to release some amount for investor and his invested money, small fees for blockonomics and rest profits for project founder to use in his project. The project founder may promise some added benefits like native token for his project, discounts, etc. which should not be mixed with this model to keep it simple and secure.

Risks/Limits involved

1. Long position opened at 1x leverage might go underwater for a long time and this model only works in terms of profits/loss calculated in BTC and not in USD. However you can make a better algo for such type of dollar cost averaging and see some backtest results here: dcabtc.com
2. Less income from Joinmarket but again allocation of funds for market making on Joinmarket depends on algo.
3. Less amount in funding will generate less profits hence less funding and wont be a win-win situation for everyone involved.
4. Risk of blockonomics or someone else using such open source model to create a platform for investors and project founders looking for funding can be involved in partiality in case of dispute. This can be solved to some extent by involving more parties in this model and not use 2of3 multisig but 3of5 etc. Please note that blockonomics will not hold the funds but hold 1 key.

This is not end of the research related to this idea and I will think about more things, try to create a demo code, do some experiments on testnet etc. in next few months.

Feel free to add more to it or suggest some changes.