Add Value to VITA tokens by Burning Shares

DAO-Wide General Discussion
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Summary

Allow the public to invest in Molecule and VitaDAO. Return value to VITA token holders by using the revenue generated from IP and data assets to burn tokens (a crypto-native form of share buy backs).

Molecule recently raised a $12.7 million seed fundraising round (tweet). I’m a big fan of the work that Molecule and VitaDAO are doing in the decentralized science, so I’m excited to see more funding coming into this space. However, as an existing VITA token holder, I think that the existing VITA token holders should have gotten some financial upside from this deal.

I strongly believe that it’s in Molecule’s best interest to create a business plan that allows the general public to invest in Molecule and a tokenomics model that gives VITA token holders meaningful financial upside.

I propose the following

  • Allow the public to invest in future Molecule and VitaDAO fundraising rounds
  • Return value to VITA token holders by using the revenue generated from IP and data asset to burn tokens (a crypto-native form of share buy backs)

Current VITA Token Has No Financial Upside

My biggest concerns with the fundraising announcement is that it seems to indicate that only accredited investors can invest in Molecule. This means that even if the general public believe in VitaDAO, and wants to invest in the mission, there is no way for us to currently do so. he general public is able to buy VITA tokens, but the VITA token has no meaningful financial upside. It doesn’t grant us holders any IP ownership rights. It’s mostly just a governance token.

In my opinion, this is a huge missed opportunity because that means that the demand for VITA tokens is limited to people buying it for altruistic reasons.

Raise More Money

By allowing the general public to invest in VitaDAO, you will also raise more money because you are raising from a larger investment pool. In Balaji Srinivan’s* Thoughts on Tokens essay, he shows how raising money via an Initial Coin Offering can cause an increase of 60-75X the possible buyer pool as opposed to traditional funding rounds. It also allows a faster time to liquidity of about 1000x.

*Balaji is also an investor in Molecule.

In Paul Kohlhas’ interview with Zima Red, he talks about how the early days of biohacking was possible because people were able to biohack by ordering from from wholesalers in Korea and China. The decenralized spirit should be kept alive by allowing people from all over the world to invest in Molecule.

VitaDAO has one of the most impressive DAO members I’ve ever seen. A lot of people that follow and contribute Molecule and VitaDAO are well educated, well connected and relatively afflfuent. For example, I’m guessing VitaDAO probably has one of the highest PhDs per capita relative to any other DAO. I strongly believe that if the general public was able to invest in the world’s first decnetralized VC biotech fund, the demand for this token would be very strong.

Incentivize more Community Participation

The quality of proposals and comments on the VitaDAO proposals page, reaffirms my stance that VitaDAO has some of the most brilliant DAO members I’ve ever seen. Many of these high quality contributions and insights are coming from people working on this in their free time or part-time between work and school. If this is what people are doing for free or part-time, imagine how much higher the quality would skyrocket if there was also a financial upside for suggesting a drug that had valuable IP.

This would also incentivize every member to go from a silent participant to an active evangelist.

Solution: Use Revenes from IP NFT to Burn Tokens

For a company like Molecule, the best way to return value to VITA shareholders is to burn VITA tokens using the revenues generated from the IP, IP-NFTs and data assets that Molecule and the DAO owns. Burning shares is like share buybacks or distributing dividends but for crypto. This keeps incentives aligned because this ensures that the only way to get shareholder value is by owning valuable IP and the best way to own valuable IP is by developing useful drugs.

Bonus: To prevent the incentive to patent troll and patent squat our IP-NFTs we could use Harberger Tax NFTs.

I realy love the work that Molecule is doing and I’m a strong believer that if you want things to grow, you need to incentivize people to grow it. Let’s incentivize people to grow Molecoule and share the wealth with our community.

Further Reading

Sample of proposals related to the business and IP structure

Sample of proposals related to analytzing various biotech and research projects

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This is a good idea, but the main counterargument is the Howey test and the US Securities and Exchance Commission’s determination to protect you from any chance at a 100x. With the Terra, Celsius, 3AC and other blow-ups, SEC and other US federal regulation are going to be involved in this space.

If the team does anything to drive value to the token, that token will likely be classified as a security. If the team gives any expectation of future profits, that token will likely be classified as a security. Burning tokens in other protocols was expressly considered something that drives value to tokens.

The biggest thing helping the team so far is that $Vita is not structured like a security (and $VITA holders are stakeholders, not shareholders), so it should fail the Howey test. Being a social good, HQ outside of the US, etc will also help, but if US token holders are impacted, SEC could still try to go after them (and/or US based team members). Since there are legal entities, this is easier than trying to track down a bunch of cartoons.

If $VITA ends up following an airline rewards points program, or stadium seating type set-up, it might avoid being classed as a security. But right now, the lack of regulatory clarity means it’s safest to avoid doing something like this. FWIW, $VITA has held value better than most of DeFi in this bera market. Likely because it’s NOT a store of value, and the market is NOT treating it as such.

Also don’t take it personally if the team doesn’t say much. That’s just to make sure they don’t say anything that could be misinterpreted by regulatory agencies.

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Thanks a ton for writing this answer out @bowtiedshrike , 100% agree

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