To Build A Price-Stable Cryptocurrency, Basis Comes Backed With $133 Million From Top VCs and Shutting Down And Returning The Money- Part 2
The second part of the letter brings more information on tokens. Read on and get the facts right. It is quite informative.
The Continuation From The Earlier Part Of The Letter From Al-Naji
As the letter states the reasons behind Basis being shut down, we take you through the major details of cryptocurrency as recorded by Al-Naji. Here is the remaining part of the letter that helps you to get more insight on the Basis and the current scenario it is facing.
As Al-Naji Further Explains
In response to changes in demand, Basis remains stable by incentivising traders to buy and sell it as the incentives are being set up through regular, on-chain auctions of bond and share tokens serving to adjust Basis supply. They knew they needed to initially play the role of trader themselves that could be capital intensive, as the Basis ecosystem would take some time to develop. After publishing the whitepaper, they raised a $ 133M round of financing allowing them to involve a diverse set of investors who felt could add a lot of value to the project enabling them to build a large stabilisation fund to bootstrap the system thereby assembling an outstanding team set their sights on launching the system.
Having to apply US securities regulation to the system, unfortunately, had a serious negative impact on their ability to launch Basis. Their lawyers came to a consensus that there would be no way to avoid securities status for bond and share tokens, the regulatory guidance started trickling out over time. Bonds and share tokens would, therefore, be subject to transfer restrictions, due to their status as unregistered securities with Intangible Labs responsible for limiting token ownership accredited investors in the US for that first year even after issuance and for thereby performing eligibility checks on the international users.
Requiring a centralised whitelist is the enforcement transfer restrictions meaning their system would not only lose the censorship resistance but also the on-chain auctions having significantly less liquidity.
Adversely affecting the stability of Basis is having fewer participants in the on-chain auctions making Basis intrinsically less attractive to the users. Besides, by imposing transfer restrictions, on bond and share token auctions materially hurts their ability to build the Basis ecosystem.
The Ultimate Failure Of Basis Was Viewed To Be Disastrous
Thereafter transfer restrictions that generally lapse 12 months after security is issued as the auctions of bond and share tokens governed by their monetary policy are set to be continuously issued, transfer restrictions and a centralised whitelist would be required indefinitely.
As considering many alternative paths to launch to try and comply with regulatory constraints they keep the product compelling and competitive as the paths include launching offshore with added utility making bonds and share tokens less financial starting with a centralised stability mechanism. However, they don’t consider any of the paths that are compelling enough for the users or investors consistent enough with the vision to justify moving forward.
Being sad to share the news that they have decided to return capital to their investors, it also means that unfortunately, the Basis project is shutting down.
This isn’t the outcome that any of them wanted as they knew to go into this that they were fundamentally making a binary bet on the favorable regulatory landscape whereas the binary nature of the bet comes to be precise as they included a return of capital clause in the token sale, to begin with even though they hoped they would never have to rely on. Therefore, even if they were disappointed, they couldn’t launch the system they were hoping to build and they were thankful that they can at least do right by the investors given these circumstances.
Consequently, they owe their sincere thanks to everyone who supported them and the project from the extraordinary backers and partners who believed in them to the outstanding team that joined them in their mission allowing changing the world looking forward to trying again.
That Is The End Of The Long Letter From Al-Naji
As Basis closes down there remains little space for speculation on the crypto world that helps investors with safe and secure transactions. It is due to this that the founders of Basis are finding it hard to backtrack from the project even though it was found to be a failure. Here we acknowledge the might of the project. As we sign off now, be assured we will bring you more success stories to the tech-savvy.