Ink Finance’s motto is, “Finance is built on credit, and credit is competence.”
In other words, an organization that wants funding needs to demonstrate its creditworthiness by showing it can manage its own financial affairs in a transparent way. By that same logic, decentralized finance (DeFi) investors need to do their due diligence to make sure any organization they invest in demonstrates strong financial and operational health. In traditional finance, it is precisely the inability to access such information that makes financing small-to-mid sized enterprises extremely difficult. Ink Finance is set to use the full power of blockchain to change this.
A key hurdle to that process has been establishing creditworthiness and trust. Existing decentralized autonomous organization (DAO) governance structures are vulnerable to Sybil attacks, in which a large number of fake accounts gain a controlling influence over the organization; and whale attacks, in which a single member with a large enough stake can disrupt the organization’s mission.
Attacks like these have led to millions in stolen funds that DAO members and investors can’t recover. The DAO, for example, a large investor-directed venture capital firm, launched in 2016 and was promptly hacked three months later. The hack resulted in $60 million worth of stolen ether (ETH).
The all-in-one DAO toolset that Ink Finance is developing is meant to overcome those hurdles with integrity and balance of power, and create a simplified, efficient mechanism that fosters secure, accountable, and transparent fiscal control, thereby empowering DAOs to establish creditworthiness, so that they can use suitable financial products for both raising funds and managing investments. Here’s how the INK web app is solving financial governance issues for DAOs.
Identity Verification And Operational Transparency
To address vulnerabilities and create DAOs with secure ecosystems and manager accountability, Ink Finance’s comprehensive DAO toolkit includes a set of alternatives of identity verification. It includes INK’s self-developed social media verification, Humanode’s biometric verification, and Astra’s legal verification. All of these mechanisms create a way to confirm a member’s identity without revealing sensitive personal data, and any combination of these methods can be chosen by the DAO and applied to different roles in its ecosystem.
Meanwhile, all operations within the DAO are fully transparent and intra-protocol rules are enforced by encoded procedures carried by smart contracts, creating a comprehensive, secure on-chain operational structure that records an organization’s financial health and risk-control mechanisms. For DAOs looking to raise funding away from its own home blockchain, Ink Finance makes it possible for the DAO to build the structure once and replicate it on other networks, enabling it to fundraise from different sources while keeping it consolidated in one capital book. The protocol’s Multichain module extends a DAO’s immutable reputation record across multiple blockchains. For investors, this rich set of behavioral data gives them the critical information needed in making thoroughly vetted investment decisions.
Bespoke Financial Products
InkEnvelope is Ink Finance’s innovative technical construct that allows DAOs to easily “adopt” and wrap assets of very different origins and forms into a fungible token for easy access. This construct can also be used to create unique financial products for fundraising. This tool explicitly attaches any non-fungible critical information — such as governance procedures or risk triggers — to a fungible token that can be handled by mainstream wallets and DeFi facilities. For example, an investment DAO could construct a managed fund for acquiring real-world arts, in which complete & complex fund management details, such as the appraisers, escrow lawyers, gallaries, auction houses, insurance, liquidation rules, etc., — are all wrapped in an InkEnvelope backed fungible token that’s easier to issue, trade and clear.
Rich Asset Management Toolset For Investment DAOs
The “pluggable” Investment Management component allows organizers to build investment DAOs with rigorously and transparently managed processes. Many of the aforementioned building blocks such as identity verification (applicable to different roles), or the InkEnvelope wrapped assets, are utilized in this toolset to make on-chain asset management flexible, comprehensive, and most importantly, easily adaptable to a rapidly evolving regulatory landscape in the DeFi space.
With these features and functions, Ink Finance is hoping to unlock the potential of DAO-to-DAO finance, in a new era of DeFi. Cash rich investment DAOs will meet asset rich Metaverse or Gamefi DAOs through transparent and secure governance structures on both ends, thereby establishing and continuously enhancing their respective competence, making both better equipped to drive their growth.
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