Developing a crypto crowdfunding platform

Crowdfunding platforms help entrepreneurs raise funds to develop their ideas without the need for banks, venture capital funds, or exchanges. On these platforms, anyone can contribute to a business idea they like in exchange for certain benefits that they will receive once the project is developed. These benefits can include dividends, a stake in the company, discounts, and more.

As a result, everyone benefits. The entrepreneur brings their idea to life, investors receive the expected profit, and the crowdfunding platform itself charges a fixed commission for intermediary services, which averages between 5-9% across the market. Considering that the investment volumes often amount to hundreds of thousands of dollars, developing your own crowdfunding platform seems like an interesting business idea.

Why should a crowdfunding platform use cryptocurrency?

Crowdfunding based on cryptocurrency investments is gaining popularity not only in the US and China, but also in the CIS countries. Digital currencies allow users to invest in projects worldwide, while entrepreneurs, in turn, gain a higher probability of raising their pledged amount. Consequently, the platform's effectiveness is increasing, as is interest from its target audience.

Advantages of cryptocurrency:

• Security. Information about all transactions is stored on the blockchain network. This means no information can be forged or altered.
• Minimal fees. Cryptocurrency payments are processed with minimal or no fees.
• No borders. With cryptocurrency, you can make payments from anywhere.
• Transaction speed. Coins are credited to your account in minutes, regardless of the country from which the payment was sent or the time of day.
• Refund guarantees. All processes in the cryptocurrency crowdfunding platform are controlled by smart contracts. They are incorruptible and immutable. They can be used to guarantee the return of funds to investors, whether certain conditions are met or not met. For example, in cases where a startup fails to raise sufficient investment within the stated timeframe.

How to Create Your Own Crypto Crowdfunding Platform

First, you need to define your niche—what specific projects can be hosted and seek investment on your platform. For example, the fundraising goal could be charity, IT or video game development, film production, etc.

The niche defines the target audience, design, and technology stack that will be used in the development process.

The next step is to choose the optimal business model. That is, how investors will invest in projects that interest them. There are four main options in crowdfunding:

• Donations. In this model, people make voluntary contributions to projects they are interested in, without any return.
• Rewards. A model in which investors are rewarded for their investment in the form of a service or access to a product. Additional incentives are often provided for larger investments.
• Share sale. A model in which an entrepreneur sells a stake in a startup to attract investment for its development. Shares can be digital, in the form of tokens.
• ICO (Initial Coin Offering). A method of raising investment where a startup creates its own cryptocurrency and exchanges it for donations, which investors can make using more popular digital currencies such as BTC, ETH, and so on. These tokens act as digital shares of the project, its internal currency, or a tokenized asset.

You also need to determine the financing terms. For example, the popular platform Kickstarter doesn't fund any project unless it has raised enough investment. However, not all are so critical. Some platforms operate on a partial funding model, where the startup receives the entire amount raised by investors.

Monetization options

The crowdfunding platform offers several monetization formats. Let's look at the most popular ones:

• Fixed fee. The platform charges a fixed percentage for the intermediary's services. This is typically 5% of the total amount if the fundraising goal is met and 9% if the fundraising fails.
• Listing fee. Some platforms charge a one-time listing fee. This most often applies to projects that sell a portion of their shares to investors.
• Advertising fees. Platforms may charge fees for additional services, such as displaying a project at the top of a listing, etc.
• Subscription fees. Fundraising initiators pay for project placement. For example, a package of 5 placements per month costs $50.

To achieve its own financial goals, the platform can use several types of monetization at once.

Functionality and technical development

For a platform to attract the attention of investors and startups, it must be user-friendly and functional. Let's look at the basic set of tools it should include.

Quick registration

Users shouldn't spend more than 2-3 minutes getting started with the platform. Therefore, the registration form should be as simple and intuitive as possible. It's also important to remember that cryptocurrency users prefer to remain anonymous. Therefore, logging in via social media or email is not the best option.

Personal account

Both parties must clearly understand how the crowdfunding campaign is progressing, how much money has been raised, when investments were made, how much time remains until the project closes, etc. Therefore, the account must be equipped with all the necessary statistics and tools for tracking them.

Listing of projects

Initiatives should be categorized and filtered for easy listing. Investors should be able to review all project information and contact its creator.

Development of a crypto crowdfunding platform at CryptonisLabs

A cryptocurrency crowdfunding platform's operations are directly related to financial transactions. Therefore, when creating one, special attention is paid to ensuring system security. CryptonisLabs has practical experience implementing such projects and will help you build a reliable digital business.