Crowdfunding has long been a popular avenue for startups to raise capital for new product launches. However, a significant challenge plagues the industry: nearly 10% of all crowdfunding campaigns ultimately fail to deliver rewards to their financial backers.
Major crowdfunding platforms like Kickstarter, for instance, state that a project creator will still receive pledges even if the funding goal is not met. While "creators are still responsible for completing their project and fulfilling rewards," platforms like Kickstarter refrain from getting involved in disputes, leaving any potential legal actions entirely to the backers.
SeedOn is building a platform that seeks to leverage blockchain technology to solve this and other fundamental issues plaguing traditional crowdfunding platforms. CryptoSlate interviewed Claudiu Minea, SeedOn’s CEO, to explore how blockchain can be used to protect backers while offering project creators a turnkey solution for Web3 fundraising.
CryptoSlate: What is SeedOn, and why does the market need it?
Claudiu Minea: SeedOn is a blockchain-powered solution designed to revolutionize traditional crowdfunding. Our primary goal is to deliver unparalleled traceability and transparency to all stakeholders, giving them complete oversight and control over their investments.
The concept for SeedOn emerged from the need for a decentralized environment where fund transactions and raised capital are both trackable and visible to every participant on the network.
The key feature to highlight is our smart contract-based escrow system, which ensures responsible fund management for every project. The total capital invested is released to the project in stages. Consequently, the project creator only gains access to a limited portion of the funds until specific milestones or objectives of the campaign are fully met. This mechanism ensures that, in the rare event of a fraudulent project, the financial loss is minimized, with only a fraction of the total capital at risk and the remainder returned to the investors.
CryptoSlate: What makes blockchain technology so critical for the future of crowdfunding?
Claudiu Minea: I firmly believe that blockchain technology can fundamentally transform how crowdfunding operates today. By harnessing the core attributes of the blockchain—such as decentralization and immutability—we provide a level of transparency and traceability for all financial transactions that the crowdfunding industry currently lacks.
Through the use of smart contracts, investors can be confident that their funds are used exclusively for their intended purpose. They retain full visibility and control over their capital throughout the entire process.
CryptoSlate: There's always concern with new tokens regarding value retention. How do you plan to address this?
Claudiu Minea: That's a valid concern, as many new crypto projects struggle to maintain value after the initial hype subsides. When designing our token's utility, we were determined to ensure that our native token, SEON, possesses real-world usability.
Every crowdfunding campaign listed on our platform can be backed by investors using either fiat currency or SEON, based on their preference. Importantly, when an investor chooses to back a project with fiat, our platform's internal mechanics will convert the fiat into SEON before processing the investment.
This built-in process will drive consistent liquidity for our token. To further enhance its value, once SeedOn reaches a mature stage, we will implement a buyback-and-burn mechanism to reduce its token supply during periods of high demand.
CryptoSlate: Could SeedOn have been built without blockchain? Is it just a gimmick, or is it central to its success?
Claudiu Minea: There are many ways to achieve similar results in software development. What differs is the long-term impact and the level of effort required to achieve the same goals through centralized methods.
SeedOn could certainly have been developed without blockchain, but then we would be indistinguishable from our competitors.
Using the blockchain's distributed ledger fosters trust among our platform's users, as all transactions are recorded on a decentralized network. Without blockchain, we could have made transactions visible, but it would have been done in a centralized manner, meaning the data could be altered.
CryptoSlate: Many Kickstarter projects over the years have vanished with investors' money without ever delivering. How will you prevent this?
Claudiu Minea: We tackle this problem directly with our smart contract-based escrow system, which enforces milestone-based fund releases. The total capital invested is only liberated to the project in predetermined stages.
Therefore, the project creator only gains access to a limited amount of funding until critical objectives of the campaign are met and verified. This ensures that in the unlikely event of a project failure or fraud, the financial loss is contained to a minimum, with the unspent funds being automatically returned to the investors.
CryptoSlate: What is the best way for a new project to apply and get listed on SeedOn?
Claudiu Minea: On June 1st, we are launching our project application process. Entrepreneurs can visit https://seedon.io and submit their project’s whitepaper. Following the submission, our team will schedule a discovery call to understand their vision for their new venture.
Blockchain technology has been successfully implemented by platforms like PolkaStarter to provide crowdfunding solutions for Web3 projects. Utilizing on-chain instruments to offer funding for digital ventures has a clear value proposition.
However, developing ways for blockchain to interact with the physical world is a crucial step for mass adoption. SeedOn claims to be addressing "some of the most well-known drawbacks in the crowdfunding sector," and it will be fascinating to observe its real-world performance.
One of the main challenges of Web3 solutions like SeedOn is the high level of technical knowledge required to understand the technology. Retail investors without a technical background must still trust the platform without an audit from a recognized body. The need for the Web3 industry to self-regulate through comprehensive code audits is more critical than ever. Nevertheless, by using platforms like SeedOn, investors may be able to rely on the strength of a smart contract escrow system to safeguard their investments.
