Recently, the amount of funds raised by startups through ICOs remained flat. But the boom isn’t over yet. The underlying technological advantages are just too good.
Fractal co-founder and CEO Julian Leitloff spoke to German online magazine Gruenderszene about the role Fractal is playing in the blockchain scene.
Comment: Julian Leitloff has already founded several companies successfully, among others the e-commerce startup Stilnest. He made it onto the Forbes 30 under 30 in Europe. For quite some time, he’s been around Berlin’s blockchain scene, and now wants to take off with his blockchain vendor Fractal Blockchain.
Chances for success are high, as he’s setting up the token launch for the renowned BigchainDB Project Ocean Protocol. We met Julian to learn more about his work, and his opinions about the Blockchain ecosystem.
Julian, you are co-founder and CEO of Fractal Blockchain. On your website, there’s not a lot of information about you yet. What services do you offer specifically?
We support the token launch. Many projects reinvent the wheel and become experts in global capital market regulation, where instead they should focus a lot more on their community and work on their protocols. A lot can go wrong during a token launch, and you shouldn’t do everything yourself. With Fractal, we cover the process from onboarding to processing of payments.
You are managing the token launch for the Ocean Protocol, a subsidiary of BigchainDB. How does a token launch work, and in what phase are you currently?
It’s a huge project, especially with such a renowned project as Ocean. There are basically four tiers: Everything technical, around the protocol, all legal contracts, the launch software and the community building. And if course, all of this needs to be done in parallel – a huge challenge for the team. We’re finished with the pre-launch, that was extremely successful. From our side, we’ve already covered a lot, we are ready for the launch of the network. For the team, the real job is just starting, which is building the protocol.
What is the biggest challenge during a token launch?
To get all the different disciplines to sit down together. Communication is especially challenging, because everything needs to check out from a technical and legal perspective, while at the same time be exciting to the community. Some teams underestimate how challenging a token launch really is. When we can’t drive that point home, sometimes we chose to not move ahead with a customer, because it’s just not going to work. There needs to be an understanding that you can’t be an expert for everything, and that for exactly the topics where you aren’t, you get external experts involved.
How closely are you working with lawyers to make sure that everything you are programming is done in conformity with the law?
In the US, you call legal texts ‘Legal Code’ and this summarizes our understanding quite well. Law and software need to be created in close coordination to not only write legally impeccable, but also user-friendly software that people want to actually use. If the legal aspects are only considered and then added on top in the last planning phase, the result will look accordingly. We employ full time lawyers and in addition, we have a few external firms that support and audit us.
Up until now, a couple of blockchain start-ups from the EU have moved to Gibraltar, that, until Brexit is finalized, is still part of the EU. Where else do you see potential for launching an ICO inside the EU? Do you see a future for Germany as a place to conduct an ICO from?
It depends on your preference: There’s no perfect place right now. Especially Gibraltar also illustrates that certain risks are always associated with solutions like this. Germany has a good process for utility tokens. I’d personally be excited if projects not only had their offices here, but also conducted their token launches from here.
What needs to change in Germany?
A lot needs to happen where tokens are classified as securities: I don’t even mind that you are required to issue a prospectus, that protects nothing but the income of the lawyers that write them, but especially the requirement to identify people through video. We need smarter regulation, I don’t mean less regulation. Generally, there’s a need for more international collaboration in terms of regulation, otherwise meaningful rules are simply circumvented. And it helps the scene, too, if we can say with confidence that no money with us is being laundered through our projects.
Won’t that cause projects to search for new ways to circumvent regulation?
That will always exist, even though that’s really not advisable. We’ve recently seen a wave of exchanges delisting tokens that did not perform KYC checks on their investors. That hurts of course, because there’s nothing you can do retroactively to fix it. Apart from that, it’s flat-out nonsense to raise this much money and then have the regulators breathing down your neck or be prevented from access to your fund, because no bank dares to touch the money. There are a few people in the scene that are struggling with that, but of course they won’t say so publicly.
There are a few ICO Launchpads around. What makes you different?
Well first of all, the simple fact that we have successfully conducted a token launch. With Ocean, the size was pretty large from the beginning too: 40,000 registrations from 166 countries – that’s quite the load for the infrastructure to endure. And the feedback was universally positive – the community liked it.
But there’s more: We want token launches to be both fun and simple. That includes having API connections to the outsider for example, for excellent customer service, or to support marketing efforts. But the most important aspect is our international approach: token launches are an international phenomenon, and if you only tackle the European market, you leave a lot of potential on the table.
This story first appeared in German at Gruenderszene.de and has been translated to English.