[g_simonsson]

What's wrong with raising money? Is it more ethical to build systems while living of one's savings?

One of the reasons why there's is a lot of Ethereum-based projects currently raising a lot of money is because token-based systems avoid relying on the traditional financial system for payments and value transfers. If your app is using traditional payments it can be shut down by your payment provider.

Blockchain-based tokens allow users to be in control of their own funds and not have their payments tracked or tied to their identity. I'd say that's a pretty big win.

Moreover ERC20-based tokens allows for engineering of incentives in a way that is far more efficient than company shares. It can accelerate network effects in a way that was simply not possible before blockchain technology.

[fauigerzigerk]

Raising money to fund work is not the issue in my view. But raising money from venture capital firms has implications that I find hard to reconcile with the stated goals of this particular project.

Venture capital funds many projects in the hope that a tiny share of them will pay for all the others and a profit on top of it. So for this project to meet the expectations of its owners it would have to be extremely lucrative way beyond funding the work put into it.

Is that really the right structure to fund a foundational protocol with non-commercial goals that are potentially in conflict with very powerful interests?

[TeMPOraL]

Even worse: VC still expect even the "failed" projects to maximize their return. They don't fund things pro bono, and they will force every project to make decisions that put investor returns before sanity and basic human decency.

[fauigerzigerk]

Yes. But I think what we don't know is what the agreements really look like in this case. I don't know what a SAFT (Simple Agreement for Future Tokens) is. So maybe this investment is structured differently than regular venture capital deals.

[g_simonsson]

That's fair, and as this is one of the first SAFTs (link below) sold to SV VCs, there's quite a bit of new ground in the thinking and incentives.

Basically, the deal is that our investors bought the right to future Orchid Tokens, which is a new token used for payments within the Orchid Network. Since it's a utility token it's value should be driven by the utility of the network - the size, health and of course user count of the network.

Since there is a huge market for VPNs which overlaps with the utility of Orchid in terms of enabling access where there is censorship, if Orchid can grab a small part of this market then the utility of the network would drive the price of the token.

Whether this is the right model remains to be seen, and like any project there could be a conflict of interest if investors push for features that are not aligned with the project vision.

The difference is that, unlike traditional startups that are in control of their IP and the deployment of their software, once the Orchid Network is deployed, no one controls it but the users who run nodes. They choose what software to run for their source, relay and exit nodes, and no one can force them to upgrade to some new version. This is similar to other decentralized networks such as Bitcoin and Ethereum.

In practice the developers and teams behind decentralized networks do hold some power of software upgrades from their reputation and control of github repos, etc. But if push comes to show and for example we try to add payment fees or adds or other types of monetization, then users are very likely to simply reject such upgrades or even outright fork client software (thus effectively forking the network once such clients are deployed).

It is my hope that this is a structure that allows for both raising money from VCs and still end up with a truly decentralized network. We'd love to get feedback on this and understand what we can do to ensure that the network remains controlled by it's users and not (too much) influenced by any specific group.

https://www.coindesk.com/saft-arrives-simple-investor-agreem...

[CryptoPunk]

There's nothing wrong with raising money. One reason open source projects without large corporate sponsors haven't succeeded in attaining mass consumer adoption is that they haven't had effective compensation and incentivization mechanisms. With cryptocurrency/ERC20-based-tokens, now they do.