You've heard of ICO (Initial Coin Offering), but IVO should be a brand new term. It stands for Initial Vote Offering and it's a funding mechanism that only exists on the Steem blockchain. The idea is fairly simple. For those looking to raise money (steem); particularly for those looking to elevate capabilities on a project, you can sell votes in advance. Essentially in exchange for money now one can trade tokens that you can use to vote posts now or later, which are already backed by the steem you collected in the IVO.
You can use the votes right away to get an immediate small return on your investment or you can wait. Thus the risk is highly mitigated. Through waiting you'll experience the benefit of project work on the account power so that when you spend the vote you'll get the benefit of the reward after the people that raised the money have done a lot of work. Essentially the project will organically grow the account through posting and curation, and as an investor you'll see a handsome return on your investment by the time you're finally ready to use or sell the vote.
The bottom line is this. Do you think that you can make more money holding your steem and steem power and posting with it, or do you think the team of people working on the project will earn faster than you as an individual. Especially if you're not that active, don't like to post, or can't imagine putting in the time it takes to build a monster account here then this can be a way for you to invest.
This is a massive financial opportunity for the platform
With SMTs and communities coming there are a lot of ways to buy equity into a system or simply form a group and become whales. In a lot of those cases you have a substantial risk around the SMT and if it will be successful. You may end up buying into tokens that don't ever gain traction (they may sky rocket too, but the risk is you lose your investment). So, this is a different way to attract cash. It has the benefit of far less risk because it's backed by Steem. An IVO is immediately backed by an account with Steem Power and the ability to return your capital as soon as it's powered up.
Why is this good for the platform? Here is a way to pool capital, which will attract capital. Business minded folk can be on the platform drop an IVO and have an account with more Steem they can use to upvote their own posts, and after the votes have been redeemed the account is free to use the steem power. This should attract investors to the platform, which can raise the price, which in turn will help all of the active posters on the platform with higher post rewards!
An example: mspwaves
The Minnow Support Project has a streaming internet broadcast station called mspwaves. A handful of people have delegated to it and brought the account to a 10kSP account. Over time we're going to be looking to increase the capabilities of this station to provide additional media types to the platform. In order to do that we may want to raise funds. So, let's look at an example of mspwaves doing an IVO.
For starters the price listed below is set such that if you vote today you'll get your money back or close to it. So, we've done our best to reduce risk for you. It's possible that the price of SBD or steem drops, but it's the same risk whether you hold it in your account or move it to an IVO.
Secondly, this would be a good example of a project to support. It's a fully functional internet streaming station with 20 DJs, backed by the minnowsupport project, and the leadership of that is comprised of multiple top 20 and backup witnesses. There's an actual project, team, and community around it. As you saw it was able to host some of the biggest names on the platform during the Steem Panel Discussion.
This is a good project for the Steem blockchain to have it's own station, and it's a good business opportunity because with so many talented people working on it it's bound to grow. We're still wrapping our heads around if we'd actually do this just yet, but in theory this is a great way to raise funds today, that we can then use to help grow the project.
How does it work? Think of Whaleshares!
Thanks to the folks from Whaleshares and the BTS community we already have a pathway that's established and working for months to make this work. In this example we can list a new token on BTS called mspwaves. We could sell them in tranches of 10k steem. The first tokens are cheapest because the account is smallest at that time. Later tokens are more expensive because the account will have a larger and larger SP count on it and will be able to create higher rewards on posts.
Until 50% of the tokens have been redeemed or 3 months have passed the issuer won't use the account to upvote anything other than it's own posts. After that projects have a few options. You'll have to see how the experiment is running, but you could start upvoting project team members, paying them in upvote tokens, and/or distribute to users you're trying to attract (for mspwaves we could give them to audience participants).
Why not wait until SMTs
This is a model with all the functional parts now.
This is a model that can inform new ways to use SMTs.
SMTs are complicated and doing something like this now could help us all understand how to have a successful launch.
This is good for the platform to get investors.
This builds ties with the BTS community.
We need to promote how Steem can be used today to make it as successful as possible.
I think ultimately my favorite reason to start today is after I participated in the Storm token sale. That thing took a month to get through. On day one SMTs are released they are released, but you're probably not ready. You still need to get a website out, form a team, figure out the ratio, and have a giant plan in place. That takes months of prep to do well to have a really successful raise. So, if you want to be ready for SMTs on day 1 the best thing to do is fiddle with an example using BTS and see where that baby goes.
Why wait until SMTs
This keeps all the proceeds on the current platform.
This keeps all the buying pressure on Steem.
Knowing exactly how SMTs take shape will give the closest approximation to what they become.
Better relations with Steemcentric whales.
What could these cost?
Here's a sample I worked up. Mspwaves has 10kSP on it currently so that's where the starting value comes from. Each round would add another 10kSP to the bot, so the vote value goes up, so the price goes up. It doesn't currently include some of the tokens sticking with the founders, but that might be an option too. It's just an example. It's yet to be seen if we actualy try this with mspwaves.
How are they purchased?
Go to bitshares.org. Create an account. Use blocktrades to move currency to bitshares. Use bitshares to purchase mspwaves tokens.
How could they used?
Send 100 new tokens to @whaleshares within BTS. Include in the memo "U steemit-URL." It'll vote on the post with 100% (you can send fewer for less than a full vote). You can check out http://whaleshares.net/ for more details.
Eventually we'll need a Steem SMT whaleshares clone
But that baby doesn't exist yet. So, if you're looking for experience now in preparation for the launch of SMTs then I suggest this as a good trial experience.
Other logistics
Not everyone is a BTS investor. So, it's likely you'd need tutorials and also a Discord group to show people how to do it and talk about it. You probably need some live meetings during the sale to talk through how it would work. If you end up trying something like this then be sure to come on the Minnow Mayor Town Hall to talk about your plans! It's Sunday nights from 8-11pm est (0100-0400 UTC).
This idea is brought to you by the high price of SBDs
This really only works because the price of SBDs are high (and I think going to rise). Since the vote values are shooting sky high you can actually raise money with this. So, kudos to high SBDs and thanks to Korean pumpers looking to maximize their value of SBD.
If you do an IVO please reference this in your first post about it.