It’s time for a crypto-funding reboot

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

In the rapidly evolving DeFi world, new initiatives push the boundaries of what digital assets can offer. For many, the excitement surrounding these projects highlights 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 stay consistent with their roadmaps. We can chalk this up to a few key reasons that mainly stem from the core tenets of decentralized business models.

For instance, traditional businesses can rely on bank loans or public markets to raise funds, a luxury that DeFi projects don’t have due to their reliance on decentralized governance and existing in an unclear regulatory environment. And this is just the tip of the iceberg.

For one, many DeFi projects cannot access capital pools typically 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.

The need for alternatives 

In recent years, the rise of entrepreneurship has heightened the demand for alternative funding solutions, which has caused funding avenues like crypto launchpads to gain popularity. It’s easy to see why—crypto launchpads provide a different route for projects by tapping into 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, which prioritize short-term financial gain over sustained 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 an imbalanced distribution of funds, with little to no involvement from community members, affecting a project’s long-term success. 

So, projects have become disillusioned with the fundraising options available to them. They face either having to go down the VC route or deal with a hyper-competitive crypto launchpad marketplace that may not align with their needs.

However, some projects have taken notice of this oversaturation and taken steps to provide an alternative. Astrovault, for example, has developed a new fundraising platform that draws from its experience as a decentralized exchange. The platform, titled Outbid, has been presented for integration directly into the 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 micro-sale mechanism, Astrovault has facilitated a way to get communities on Cosmos more actively involved in raising money for projects they see potential in. And since all projects are parameterized, Outbid’s platform can help fundraise for any type of deal or stage of development.

The project suggests that the platform would be governed by any DAO selected by Cosmos, who would 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 exposure and backing from the community. 

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

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