The ISO (Initial Stakepool Offering) model, or also known as ISPO (Initial Stake Pool Offering), consists of raising funds for projects through a stakepool, where delegators receive part of the rewards, or all, in project tokens instead of ADAs, which are kept by the SPO to finance their venture.
The original idea was presented in April 2021 by the SundaeSwap team, and it has grown in the ecosystem, creating a win / win situation, because the delegators who participate are the first to obtain a share of the tokens of a project in the they create, and the developers get funds necessary for their work.
But this model has trouble evolving, as developers have required a great deal of influence, or marketing capital, to successfully launch an ISO.
In addition, scammers have emerged who impersonate ISO pools, stealing from delegators who will never receive ISO tokens.
The ISO model attracts many delegators, concentrating delegation in those pools, which undermines decentralization.
The first ISO in the cryptocurrency industry was MELD, which has been able to take advantage of the Cardano PoS consensus to attract more than 40,000 delegators and raise more than USD 10 million in rewards for its Lending / Borrowing project, which it is an indicator that shows delegators’ eagerness to be at the forefront of finance and business.
The Stakeboard team believes that if people have access to information, and with ease of use, it will innovate in financing models in the crypto industry, and it will also attract capital for project investment.
You can read the Stakeboard: Social Staking Platform proposal in a previous article.
Therefore, the Stakeboard developers present two components to improve the usefulness of the Stakeboard platform: Stakepad and Stakestarter.
Stakepad will offer an improved version of the ISO model, to benefit smaller SPO projects, and typical ADA holders, who have limited or no access to private sales and the like, democratizing the ecosystem.
Stakestarter will go beyond the ISO model, combining features from popular platforms like Kickstarter and Patreon, and adapting them to work within a PoS funding model. Stakestarter’s objective is to provide an alternative tool to SPOs, when the ISO model is not adequate, while offering delegators investment options.
Stakepad seeks to solve the concentration of delegation caused by the ISO in the stakepools that ask for financing, harming the operators of small stakepools, and also combat scammers who set up ISO pools posing as an original to take funds illegitimately. In the case of the MELD ISO, millions of $ ADA were delegated to fraudulent stakepools.
It also seeks to help small SPOs, as a great deal of influence or marketing capital is required for the success of ISOs.
Each ISO differs in the reward model, and there has been, in general, a lack of transparency. MELD has released its ISO without even releasing details about the rewards.
In response to the problem of delegation concentration, the Minswap development team innovated the model, calling it Fair ISO (FISO). Rather than launch new stakepools for its ISO, Minswap partnered with single pool operators, who were randomly selected from a pool of applicants who met the presented criteria.
The general parameters seemed reasonable to build decentralization, and the final selection of stakepools was algorithmically randomized, being a fair method, giving equal possibilities. This method does not allow the community of delegators to have a voice in the election.
Minswap’s FISO model does not solve the barrier to entry problem for most development teams, because the need for a lot of marketing and a lot of time persists.
In addition, the selection task consumed substantial resources from the Minswap team.
At the moment there does not seem to be an urgent concern to integrate the “Know Your Customer” (KYC) functionality into a FISO protocol, but there is caution about future regulations.
Stakeboard will improve the FISO model with the following actions:
- Stakeboard will use its platform to advertise the FISOs of its associated projects to SPOs and delegators, thus reducing the barrier to entry due to marketing issues. Users will receive notifications about the FISOs operated by theplatform,
- Skateboard will improve and streamline the selection process, with a list of stakepools that meet the criteria for possible ISO stakepools.
- Stakeboard will use Alice Staking Detective (another proposal from the team), a bot to screen applicants for questionable or suspicious actions in the management of their stakepools.
- After the selection process there are two options to make the final selection, either it can be submitted to a community vote (SundaeSwap model) or it can be done using a random selection algorithm (the Minswap model). The team’s proposal is that no less than 2/3 of the final selection is made through algorithmic randomness, and no more than 1/3 of the final selection is made through a community vote, conducted on Stakeboard.
- The winning partners of a project have an incentive to concentrate the delegation. Stakeboard will advise on how to manage delegation distribution so that more small stakepools can participate, maintaining the commitment / delegation ratio.
- Stakeboard will allow associated projects to choose additional parameters. For example, Stakeboard may limit the amount of funds to contribute per registered user on the platform, making it difficult for whales to earn disproportionate rewards.
- Stakeboard will be able to respond dynamically to FISO conditions, and optimize the results of the partners’ projects. For example, Stakeboard could suggest to the partner, remove the limit that the project imposed on the number of delegations, and in cases of modifications, Stakeboard will send email notifications notifying each delegate.
- All FISO stakepools accessible through the Stakeboard FISO delegation panel will be legitimate, and delegators who open a Stakeboard account will be notified when they become aware of a fraudulent stakepool for the ISO.
- Eventually, Stakeboard will develop an optional “Know Your Customer” (KYC) functionality for project partners affected by regulations, according to legal jurisdiction.
The team plans to provide Cardano SPOs with tools to advance their own entrepreneurial endeavors, as well as partner with entrepreneurs to bring fresh business plans and funding proposals to the Cardano delegators community.
The Stakestarter design is in the early stages, and will have the following characteristics:
- Projects may include proposals, both for seed funding and ongoing.
- Ongoing funding will come in the form of block rewards earned through delegators who have reviewed the project funding proposal and accepted the offer.
- Project proposals will be required to contain “subscription deadlines”. And if delegators do not promise a specified minimum number of delegations and / or an initial minimum amount of funds (i.e. locked in an escrow account) before this subscription deadline, the funds on deposit will be returned from the escrow account to delegators.
- Projects will be required to provide proof of progress periodically to delegators.
- Projects will be able to KYC through Stakestarter.
- Proposals must detail all the rewards or benefits that will be awarded to delegators for delegating in the project, as well as how and when they will be awarded.
- Potential extenuating circumstances (for example, failure to meet a specific minimum price for the ADA) and contingency plans (such as temporary project postponement and delay of delegator rewards) should be detailed in all project proposals so that delegators understand, to the extent possible, any potential risks involved in delegating to a project.
Stakestarter poses considerable design challenges, but the team promises to create a prudent format that attempts to mitigate counterparty risks for both delegators and SPOs.
- Reward dashboard for delegators for a selected ISO
- ISO project creation
- ISO SPO signup system
- ISO pool selection system
- ISO Project dashboard
- Design UI
- ISO Communication Center
- Refine UI UX
- MVP launch
Key performance indicators:
- Provide dashboards for at least one live or historical FISO
- Increase by 10% Stakeboard base account creation (ie 550)
- Increase by 10% verified SPOs on Stakeboard (ie 165)
- 10 ISO delegations executed through Stakepad
- Provide dashboards for all live ISOs (if available)
- Increase by 15% Stakeboard base account creation (ie 1725)
- Increase by 15% verified SPOs on Stakeboard (ie 230)
- Launch an ISO on Stakepad
- 20 ISO delegations executed through Stakepad
The team has been working hard on Stakeboard since August and Despite having had to fund the development of the project so far from the team’s savings and on a voluntary basis, they have made great progress.
The design of the platform has been completed and several basic functions have been created. Since the end of November, SPOs have been able to verify ownership of their stakepools and create Stakeboard profiles. The integration of the Nami wallet has been completed and direct delegation from Stakeboard has been enabled. And recently they have launched the landing page of the project.
In order to continue development, they present this proposal to the community, detailing the costs that must be financed:
- UX / UI $ 4,300
- Project Management and Marketing USD 2,900
- Front End USD 8,500 (170 hours at 50% of developers’ accustomed wages)
- Backend USD 15,500 (310 hours at 50% of developers’ accustomed wages)
- Cloud USD 600
- DevOps USD 3,500
Total funds requested: USD 35,300
The co-founders are Giovanni Gargiulo and Sebastiaan M.
Giovanni – Co-founder. Senior Software Engineer. 16 years Development Experience – DevOps Advocate – Plutus Pioneer and Stake Pool Operator [EASY1].
Sebastiaan – Co-founder. 16 years Development Experience. Entrepreneur and government contractor for software integrations and solutions – Plutus Pioneer.
I can see the rest of the members here.
You can read the proposal published in Ideascale here.
The team has also presented 2 more proposals, which complement this one:
Stakeboard is a Social Staking platform that will connect Pool Operators (SPO) and delegators in a simple way, to generate knowledge in the ecosystem of delegation, Cardano’s PoS, contributing to a more diverse, inclusive and balanced network of stakepools, since the community will know the work of SPOs that today have no visibility.
Alice, the Staking Detective: an alert bot about changes in the data and configurations of the stakepools.