📈Continuous Organization (cOrg)

TL;DR: Continuous Organizations(cOrg) Case Study

What are Continuous Organizations (cOrgs)? A Continuous Organization refers to any organization that set up a Continuous Securities Offering (CSO) to give to every stakeholder the ability to invest in the organization at any single time.

Core features include:

• Decentralized Autonomous Trust (DAT)

  • Purpose: Regulates buy/sell prices and distributes dividends to align long-term stakeholder interests and discourage speculation.

  • Functionality: Implements bonding curves to incentivize behaviors beneficial to the organization's long-term success.

• Continuous Securities Offering (CSO):

  • Concept: Uses realized revenues as collateral for digital securities or continuos tokens (COT's) that can be bought/sold to speculate on future revenues.

  • Implementation: A percentage of revenues is funneled into a DAT, which issues and buys back using a bonding curve.

    • Examples

      • DXdao

      • MetaCartel

Challenges of cOrgs:

• Regulatory Uncertainty: Legal landscape is still evolving, creating uncertainties in token issuance and governance.

• Community Dependence: Success heavily relies on a strong, engaged community, requiring ongoing effort to build and maintain.

Revenue-Based Bonding Curves (RBBC):

• Design: Uses separate minting and burning curves to align token price with organizational revenue.

Buy and Sell Dynamics:

• Buying COTs: Increases token supply and reserve, affecting price based on buy slope.

• Selling COTs: Reduces token supply and buyback reserve, impacting price based on sell slope.

• Revenue Integration: Direct reception of payments increases reserve value and potentially issues new COTs to the organization or designated recipients.

What are Continuous Organizations?

Continuous organizations are a new type of organization that leverage blockchain technology to create a more fluid, transparent, and community-driven structure. Here are some key characteristics:

• Decentralized Autonomous Trust (DAT): A core feature is the use of a DAT, which acts as a self-executing smart contract managing the organization's treasury funds according to pre-defined rules.

• Continuous Fundraising: cOrgs often operate in a state of "continuous fundraising." They use bonding curves, where the price of their token increases as more tokens are purchased. This allows for ongoing capital acquisition from the community.

• Community Alignment: A core goal is to align the interests of token holders, founders, and employees with the long-term success of the organization. This can be achieved through mechanisms like revenue-based token valuation or goal-based distribution of funds from the DAT.

Benefits of Continuous Organizations

Continuous Organizations present very beneficial properties for all stakeholders:

• Founders get a simple and efficient mechanism to receive financing while strongly aligning their community with the financial success of their project, enhancing the organization's capacity to create strong network effects without affecting the organization's governance.

• Employees advantageously trade alienable illiquid stock options for inalienable liquid FAIR Securities (which can vest as well), truly aligning their interests with those of the organization.

• Early investors receive their fair share of the upside in the case whereby the organization is successful, without having to fear disproportionate dilution in later, bigger rounds.

• The community of users, customers, suppliers and partners of the organization get the ability to invest in the organization in a friction-less and permission-less manner, thus aligning their interests with those of the organization.

• Regulators can better protect citizens from risky ICOs due to the 'security' nature of FAIR Securities while also having the ability to tax revenues generated by Continuous Organizations.

• The environment benefits from the decoupling of governance and financial interests proposed by the Continuous Organization model, allowing founders and their organizations to be more focused on the long term.

Challenges of Continuous Organizations:

• Regulatory Uncertainty: The legal and regulatory landscape surrounding cOrgs is still evolving. There might be uncertainties regarding token issuance and governance structures.

• Community Dependence: The success of a cOrg heavily relies on a strong and engaged community. Building and maintaining this community requires ongoing effort.

Examples of Continuous Organizations:

While cOrgs are a relatively new concept, some projects are exploring this model. Some examples include:

• DXdao: A decentralized governance organization focused on building infrastructure for the Web3 space.

• MetaCartel: A decentralized venture capital fund that invests in early-stage blockchain projects.

Assessing Risks in ICO Investments

Investing in ICOs poses significant challenges for both unsophisticated and so-called "sophisticated" investors due to the difficulty in assessing token value. Many retail investors have been lured by the promise of exceptional returns, only to suffer significant losses. Here are the main risks associated with ICO investments:

• Team Incentives: Founders often receive a large number of tokens with little or no vesting period, potentially diminishing their motivation to deliver on the product.

• Product Creation: ICO projects are typically in early stages with no tangible product, relying solely on intentions outlined in documents.

• Timely Delivery: Many projects underestimate the technical challenges of blockchain integration, leading to delays in product development.

• User Experience: Projects often overlook the complexity of integrating tokens into their systems, resulting in subpar user experiences.

• Market Fit: Uncertainty exists regarding whether the product will resonate with users and achieve market fit.

• Token Value: Despite project success, tokens may hold little to no value, especially if they do not represent a security.

• Investment Viability: ICOs may sell tokens at inflated valuations, raising concerns about the investment's potential return.

Investing in ICOs outside reputable platforms carried significant risks, with many ICOs turning out to be scams. Legal uncertainties surrounding ICOs had led promising projects to seek private funding, using ICOs primarily for community-building purposes. Unfortunately, the ICO market was plagued by scams, ranging from well-intentioned but misguided projects to outright fraudulent schemes. The emergence of Initial Exchange Offerings (IEOs) conducted directly by crypto exchanges did not mitigate these risks, yielding similar outcomes. Consequently, the utility token ICO market appeared to be on a decline.