This article is from CoinDesk, the author of the article: Leigh Cuen & Wolfie Zhao.
Odaily planet daily translator Moni
The block chain project Polkadot may not be able to achieve the expected value of 1 billion 200 million dollars.
Since January of this year, Web3 Foundation, a Swiss nonprofit organization behind the Polkdot project, has been trying to raise funds through private placement sales. According to people familiar with the matter, the project wants to raise $60 million, and three Chinese funds have agreed to invest $15 million in their DOT tokens.
However, according to sources, the three Chinese funds agreed to invest under the condition of lowering the valuation of the project to below US $1 billion, which is in conflict with Polkadot’s expectations because the latter has been seeking the threshold of “unicorn”. (agreed prices may be determined by investors).
Although it is not clear how many tokens purchased from three domestic funds, it is not known how many other investors are involved besides them, but there is news that Polkadot can only sell 70% of 500000 DOT tokens. According to sources, Polkadot will continue to sell the remaining tokens to authenticated investors or distribute them to community contributors free of charge, rather than close the private placement now.
Assuming that other investors want to buy the DOT token just like the valuation given by the three funds, the remaining 30% tokens will not be able to meet the original financing target set by Polkadot even if they sell them all. In other words, if Polkadot wants to raise $60 million in capital, they may need to increase the number of tokens sold.
According to a statement issued by Web3 Foundation, the foundation said it would not comment on any private placement at present, but they look forward to making it public as soon as possible. According to sources, Polkadot has three main purposes to raise funds through token sales.
1, test Polkadot main network;
2, encourage developers;
3, funding for research and operation of Web3 Foundation.
Chain of block chains
In fact, Polkadot is one of the most anticipated block chain projects at present, though they have not yet been officially launched.
Polkadot was created by the co-founder of the Ethernet workshop and also Gavin Technologies, founder of Parity Technologies. He hopes to build a block chain network that enables other block chains to work together. Polkadot’s biggest competitor is the Cosmos launched in March. Their goal is to achieve cross chain interoperability.
In another statement, Parity CEO Jutta Steiner said the company was excited about the new possibilities of Polkadot for the block chain industry, he added.
“Scalable and controllable protocols provide real interoperability, and it is possible to promote the dream of opening the Internet. In the past year, we have been working hard to build customized block chain platform Substrate, Polkadot has also made good progress.
However, the statement of Jutta Steiner did not solve the problem of Polkadot token sales.
In recent months, with the revival of the price of encrypted money, market demand for such sales is increasing. For example, Blockstack plans to raise $50 million through its regulated token product, while other small encryption start-ups are raising money (though not large enough).
In October 2017, Web3 Foundation raised $145 million by half of the total public sale of 10 million DOT, when the price of each token was about 30 dollars. These tokens are currently running on the Ethernet workshop. Once the Polkadot project is formally launched, it will switch to the new block chain. In addition, Web3 Foundation has recruited about 37 employees to support the development of lucrative cross link technology.
Web3 Foundation said they also plan to re distribute the tokens publicly when the Polkadot block chain is released (or near this time), with the aim of ensuring that DOT token can be held by those who are actively involved in helping build Polkadot networks.
According to the white paper disclosed by Polkadot, the supply of the 30% DOT tokens mentioned above is reserved for Web3 Foundation, and another 20% tokens will be distributed before the main network is released, but the time remains to be determined. According to sources familiar with the situation, Web3 Foundation has already spent half of its funds, accounting for 15% of the total supply of DOT tokens.
In the latest financing transactions, Polkadot will allocate 5% of the total supply of DOT tokens. They hope to set the price of each token between us $100-120, so that we can raise about $60 million. The problem is that these tokens will not be on any of the encrypted currency exchanges, because Polkadot does not encourage them to trade.
However, according to a staff leaving Web3 Foundation, the OTC platform is trading DOT tokens at the price of $75-120 per token. The employee said that contributors of Polkadot projects usually sign and participate in governance after the token is issued, and are obligated to hold a token for at least one year, but investors can immediately sell the token to the clearing fund.
For the OTC problem in the market, Ryan Zurrer, head of Web3 Foundation, said:
“We have not authorized them to do so, so the risk of OTC DOT tokens is great.”
In fact, some members of the Ethernet community are critical of Polkadot because they believe that the project is quite similar to the credit block chain, because when the project is released, it is finally decided by the parliament to decide the network governance. It is not clear who will join the “rotating seat” Parliament.
The former Web3 Foundation employees expressed their concerns, they said:
“Polkadot is basically a credit authorization block chain operated by Gavin, Ryan and their friends.”