With almost 600 participants, Karma’s campaign had the biggest number of participants on Tokenomica as of right now. As we equally value both groups of our clients: investors and issuers, we have prepared an interview with the founder of Karma — George Goognin who has shared his experience using Tokenomica.
— Hi George, thank you for taking your time to speak with us. Karma is the first company to launch the utility-to-security swap on Tokenomica. Why do you think it is a working model?
— Hi, well, there were several reasons for us to do the swap.
Digital assets' market changed from what it was during our initial offering in 2017: utility tokens don’t provide token holders real rights, while the opportunity to gain swiftly due to the speculation isn’t available anymore. Outside of that, high volatility affects all market participants.
We have managed to build a working business that grew 43% monthly throughout 2019. It seemed fair to provide our investors with an opportunity to finally start profiting from their investment.
We wanted them to become full-fledged beneficiaries of the company. After the swap, they will be able to both profit from their investment and take an active role in our business.
Together with that, we will be able to build a compliant “company-shareholder" relationship model, which will help us raise new capital both from institutional and retail investors if we will need it.
— How important is legal compliance for your company?
— That’s actually is the point where we meet with Tokenomica, building a legal business is highly important to us. Even in 2017, our ICO was structured in a fully compliant manner but the asset in the core still wasn’t a security.
So, with the swap, we have also taken our time to run a campaign in a fully compliant manner.
— Do you think that U2S will be adopted by more companies in the future?
— Not a lot of projects that had an active offering throughout 2016-2018 managed to build a working business, most of them didn’t even survive. Hundreds of projects are zombies now, some just shut down without saying goodbye. I can’t give you the precise calculation on the number of projects that will be able to perform the swap but I think that the overall number will be around 20.
I see enormous potential in tokenized securities or security tokens, as it provides excellent opportunities for all market participants: intermediaries are eliminated, the potential for easier cross-border trading, and of course a massive reduction in costs.
Now, we have gone through the issuance process ourselves and it has proven to be a working solution already. However, I am fully aware that this market is only in the first stages of development and I hope that we will see the rise of the secondary market, which is vital for the massive adoption of tokenized securities.
— What do you think about the issuance process and onboarding on Tokenomica?
— Ok, so there are two answers to this question. I’ve registered as an individual, we have a corporate account as well. But what matters most to me is users that have completed the swap.
So, for the company, the onboarding process is quite clear as you always have your manager available, KYB is totally understandable, and we are used to this level of bureaucracy. The token issuance seemed completely clear as well and it took just a few minutes to issue tokens on the blockchain and just a bit over couple of weeks to complete legal setup prior to the campaign.
But now, I would like to bring some negativity as well. The onboarding process for regular users is overwhelming, complicated. It is really close to traditional financial institutions. I understand that you have to complete these procedures in order to be fully compliant with EU regulations. However, there is no difference here for regular users. They are used to swift KYC procedures: most crypto platforms either have an easy verification or no KYC at all. In time, they might adjust to the new requirements as more platforms will have to comply with strict regulations.
— What do you think about post-campaign features on Tokenomica and which of them do you think will be demanded in the feature?
— For us, the two most important features are dividend payouts and easy voting system. As I know, you guys plan to launch both in the near future. As soon as we conduct the first voting, I will be able to provide feedback on them together with our investors.
And further, we will need to see what the demand will be from our investors. Of course, we would like to take a closer look at both ESOP and Cap Table Management that will be released in the near future but voting and dividends are the most important.
— When are you planning to conduct the first voting on the platform?
— First, we will need to successfully finish legal documentation after the campaign and it will take quite a lot of time. So, right now, we aim to conduct the first voting either in the Q3 or in the Q4 of 2020 but the date will depend on the launch of secondary trading.
— Did the outbreak of COVID-19 affect your business?
— We are still working and there is no struggle for us in remote communication. The only thing that affected us is panic. It’s a part of human nature to panic when something beyond our control is happening. But we’ve handled the situation: we had to conduct in-depth interviews with all of our issuers to explain to investors that issuers are still working.
There are more campaigns that are set to launch on Tokenomica throughout 2020, register now and be the first one to invest in the promising EU businesses.