It’s time for a crypto-funding reboot

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It seems like hardly a day goes by without a new decentralized finance project promising to reshape how users think about money and investing. Recently, this trend has become more intense.

In the rapidly evolving world of DeFi, startups are pushing the boundaries of what digital assets can offer. For many, the excitement generated by these projects underscores the potential for a more transparent and accessible financial future.

While DeFi protocols have the potential to disrupt and democratize finance, 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 several key reasons, which mainly stem from the fundamental principles of decentralized business models.

For example, traditional businesses may rely on bank loans or public markets to raise funds; This is a luxury that DeFi projects do not have due to their reliance on decentralized governance and existing in an uncertain regulatory environment. And that’s just the tip of the iceberg.

First, many DeFi projects often lack access to capital pools available to traditional tech startups. While venture capital firms specializing in Web3 and crypto exist, the number of startups exceeds the number of VCs ready to invest, creating a highly competitive funding environment.

Need for alternatives

The rise of entrepreneurship in recent years has increased the demand for alternative financing solutions, resulting in financing avenues such as crypto launchpads gaining popularity. It’s easy to see why; Crypto launchpads provide a different path for projects by leveraging 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 sale models that prioritize short-term financial gain over sustainable community engagement. Token sales can attract speculative investors looking for quick profits rather than those committed to the project’s vision. This approach often leads to unbalanced distribution of funds and little or no involvement of community members, affecting the long-term success of the project.

Projects therefore became frustrated with the fundraising options available to them. They will either have to go the VC route or deal with an overly competitive crypto launch pad market that may not suit their needs.

However, some projects have recognized this oversaturation and taken steps to offer an alternative. For example, Astrovault has developed a new fundraising platform that leverages a decentralized exchange experience. Titled Outbid, the platform is available for integration directly into Cosmos Hub to facilitate new ways for projects to raise funds. Outbid is a decentralized, gamified launchpad designed to create a transparent fundraising pipeline for projects in the vast, loosely integrated Cosmos blockchain ecosystem.

By gamifying the fundraising process through an auction-style microsales mechanism, Astrovault has facilitated a way for communities in Cosmos to become more actively involved in raising money for projects they see potential in. Because all projects are parameterized, Outbid’s platform can help fundraise for any deal or development stage.

The project suggests that the platform will be managed by any DAO selected by Cosmos, which will be responsible for overseeing marketing and business development activities. Additionally, the platform plans to support fundraising efforts by matching donations, allowing early-stage projects to gain visibility and support from the community.

After all, every worthwhile project deserves a safe and transparent place to begin its journey and connect with the people who will help bring its vision to life. By encouraging a community-focused approach to fundraising, projects can build trust, engage early supporters, and lay the groundwork for long-term success.

By focusing on creating more collaborative models for fundraising, founders can feel more empowered to ensure their projects get the support they need from users who truly understand their value.