Read the first issue of The Otonomist for 2021 here, now on Substack!
Last week, Otomomos filed its Form D so we can use the SEC accredited investor safe harbor to offer our security token to pre-existing contacts. In what follows, we share our experience, which we found a bit annoying but not in the least intimidating.
As practitioners keep reminding us, there are two broad types of digital assets: Unregulated crypto, and securities.
One of our advisors, Andy Singleton, puts it thus:
To qualify as unregulated crypto, you will need a token that is created and earned by a community, and not by an issuer. True open source community crypto is a small and fascinating use case. Bitcoin is the perfect case. It was never sold by an issuer. Every bitcoin was earned through mining.
For almost anything else, you will need securities. [W]hen those issuers ask for investments, they are creating securities.
Many of our…
Lots of clients automatically think offshore when looking to operate in freedom and optimize for tax. However, the UK, Canada and US all have entities that are cheap to form, easy to run and have no tax on foreign income. We took a closer look.
Offshore stigma
Operating from offshore is in many ways stigmatized, not only in the popular press but also by many service providers who will deplatform your business if it is not set up in one of the main, often English-speaking countries.
This ranges from crypto exchanges to payment providers to banks.
For digital businesses, these service providers are a lifeline but most, including crypto facilitators such as Wyre and crypto-friendly banks such as Mercury, limit their services to entities based in the UK, Canada and the US.
Legit Hack
Luckily there’s a legit hack which will let your digital business process payments tax free…
VANCOUVER, 16 September 2020 — In this first of two posts, we share why we believe the next decades will bring an unprecedented wave of entrepreneurialism. In a second part to follow in our October issue, we discuss the urgency for a new organizational form and the importance of governance.
The prevailing paradigm
American physicist, historian and philosopher of science Thomas Kuhn introduced a helpful analysis of “paradigms” as competing — and often irreconcilable — accounts of reality in his influential 1962 work The Structure of Scientific Revolutions.
According to Kuhn, a paradigm is an account of reality that goes beyond scientific truth. Rather, it is defined by the consensus of a community. As a result, competing paradigms clash until a consensus shifts and a new paradigm replaces the old.
The prevalent paradigm of capitalism has its roots in what is commonly referred to as the First Industrial Revolution: a power law phase…
By Brenden C. Maher
LEXINGTON, MASSACHUSETTS, August 12, 2020 — Revolutions are always silent. Revolutions sneak up on you — like all exponential technologies they are at first imperceptible.
I know — I’ve been a part of several of them.
Technology’s butterfly effect
My name is Brenden Maher and I am a MIT Media Lab alumnus ’98. I am here to tell you about “The Revolution”.
In ’93, I was one of the first ~150 people in the world developing virtual reality with the “original” Boston Virtual Reality Group {BCS_VRG}.
Oops, wrong Revolution.
In 1997, I was a grad student at The MIT…
In this second post on OtoCo, following our previous article on its launch features and roadmap, we share how we plan to eat our own cake on governance and put the project in the hands of all stakeholders.
Our “DAO or Die” post in the June issue of The Otonomist caused many to reach out to us to discuss how their project could be further DAOfied.
It also lead to some introspection how to make sure we live by our own gospel, which believes that by giving stakeholders a guaranteed voice, we will win their loyalty, leading to a far greater mobilization of talent, which in turn will help defy and defeat centralized players.
Governance Design
With this in mind, we started an internal discussion on how to design our governance such that anybody who walks with us on the…
After setting up hundreds of legal entities for our clients by paper filing, we thought there had to be a better, cheaper and faster way to get incorporated. OtoCo is the result and our first product, a Delaware LLC, is now live on the Ethereum main net.
A Real-World Use Case for Ethereum
Many in the crypto community see getting to mainstream adoption as the real challenge for any blockchain project.
What’s still missing is an easier way to securely pull up private keys. And as a community we can do better on UX/UI, despite recent progress.
But we also need products that are useful for mainstream users.
Over the last couple of years, Otonomos has been helping many in the community set up their legal entities around the world.
We felt your pain! So our new product, OtoCo, wants to be your aspirin.
With OtoCo, the process of spinning up a new…
In this post, we look at historic precedents for sovereign communities without physical territory, and how the future could have multiple overlapping and competing onchain and offchain jurisdictions.
Many things we accept as norm may prove the exception against the larger narrative of history.
Pax Americana may turn out a brief period of relative stability and open seas before internecine conflicts and piracy resume; The Chinese Communist Party an authoritarian aberration against a secular movement towards a democratic Middle Kingdom; Central Bank fiat money a deviation from centuries of privately-issued coins.
So it may be with sovereignty, which we have come to accept emanates from the Nation State even though this understanding only dates back to the early 18th Century.
The international law definition
There is broad consensus in international law that…
Revenue-based financing (RBF) has been around and lets businesses raise capital from investors who receive a percentage of the ongoing gross revenues. Smart contracts bring this to a new level by continuously issuing tokens linked to revenue. We did some preliminary research.
How RBF Works
RBF is a way for revenue-generating business to raise capital without issuing debt or diluting equity.
With RBF, a portion of revenues will be paid to investors at a pre-established percentage until a certain multiple of the original investment has been repaid.
Here are some of the termsheets of established RBF providers we analyzed:
- Bigfoot Capital: https://docs.google.com/document/d/12CgdA4pX8Ex_jzqvsPV2LTvj4PHe2ULjyQE7RpVAitU/edit
- Founder First Capital Partners: https://drive.google.com/file/d/1Dw2XMSkbGudb8bqfZJwI9COr71qhTYKh/view
- Earnest Capital: https://earnestcapital.com/shared-earnings-agreement/ and https://docs.google.com/document/d/10KNj6HJpfF9EjssJzRaGIw2LBxEdawjWbtfLZCGLFl8/edit
The above termsheets show a high degree of communality:
- Periodic payments continue until a return cap for money invested is reached (usually 1.2x - 2.5x, sometimes 5x!);
- The reserve pool can fixed (e.g…
In what follows, we will briefly examine the merits of decentralization. We then make the assertion that most community-lead projects have not consistently decentralized their governance, and will spend the remainder of this post on an out-of-the-box legal setup towards full DAOfication.
Web2 Ate Its Own Children
First, the philosophical question: do we need decentralization?
In an early 2018 piece on Why Decentralization Matters, Andreessen Horowitz’ Chris Dixon makes the case that the centralized platforms of the second era of the internet, from the mid-2000s to the present, will ultimately eat their own children: users feel cheated, and “complements” (entrepreneurs, developers, and investors) become wary…
OTONOMOS.COM
Otonomos helps doers and investors in the crypto and blockchain community around the world form, fund and govern their legal entities, both offchain and onchain
