Hey, thanks for replying. I will try to address each of your questions in order as they appear in your response.
-
I agree about the importance of governance with companies and this model would still work in that regard, since the amount of LIT tokens would also correspond to the amount of control one would have in terms of voting. This would only work if setup as a DAO for example with Paideia.
-
Yes, I realize the sentence is confusing. I should not have said “Once the company raises money” but once the company starts making money from customers. As you mentioned, a challenge is determining what counts as profit and deciding what percentage of the profits should be distributed. This would probably require some sort of threshold as well. Perhaps a better term would be excess cash, or whatever amount above what is necessary for the business to survive. This is the part of the idea that is somewhat similar to a dividend. These values could be something that is part of the project tokenomics.
-
What I meant by the “musical chairs” is that the current stock market works by people buying a share in a company and hoping that overtime the value of the share will increase. But the value only increases if more people buy shares. So only the people who sell their stocks make a profit while those still holding on to them at the end do not. And because they did not sell, their stocks are worth a lower amount. The analogy being that stocks are like the chairs and people selling at the right time is when the music stops and people try to get a seat. The people still holding on to their stocks are the ones remaining standing. So people are really only making money by taking from someone else who bought the shares after they did. This is dumb. I tried to inject some humour with this idea by calling it LIT, which you can find the definition here: Urban Dictionary: lit
-
I agree about the benefits of regulation, that’s why I put this point in the advantage and disadvantage section, since it would actually provide clarity but might not make some crypto people happy.
-
Like I mentioned at the beginning, there is nothing super novel about this idea other than the fact that it is a means of investing in a company whose monetary benefit comes not from profiting off of other people who simply bought shares after you did. It would not be as “lucrative” because due to profit sharing, the “gains” only come from the money the company actually makes, which, to me anyway, intrinsically seems more fair/logical. In some sense, this is a way of implementing on the blockchain private shares in a company without public markets, so not really that novel
Since the tokens are locked in a contract, they cannot be sold directly, they must follow the rules of the contract - the tokens can only exist in a box with the specific LIT contract and not someone’s PK address.
Again, thanks for reading the original post and providing your feedback. I hope this answers your questions.