Crowdfunding platform WeMakeIt wants to use blockchain technology in the course of digitizing its company shares. Although the Swiss SME's plans have been realizable since February 2021 due to the new DLT legal framework, the platform has met with harsh criticism from its user base.
Since this week, WeMakeIt offers their shares online as part of the project "Crowd Takeover". After completion of the campaign at the beginning of July, participants will be entered into the digital share register of Wemakeit AG. From August 2022, it should then be possible to effectively digitize the shares so that they can be transferred from person to person without an intermediary or bureaucracy, according to the project description. But a significant portion of their target audience seemed less pleased, primarily chalking up the energy consumption of the Ethereum blockchain.
Digital shares in Switzerland
Nowadays, a company no longer needs to go public in order to sell company shares. Switzerland has already been developing a regulatory framework for distributed ledger technology (DLTs) since 2014, following the principle of "technology neutrality". Consequently, Switzerland has pragmatically adapted existing principles-based laws to technological innovation in order to maintain system stability. According to resident regulators, consumer protection should thus be ensured and sustainable investments in the DLT sector promoted. For example, it has been possible to offer digital blockchain shares to the general public in Switzerland since February 2021.
The Ethereum-based smart contract of the crowdfunding platform not only allows a permission list of certain addresses that are allowed to trade the tokenized stock at all. Through a dashboard, administrators have the ability to review and approve applications. Verifying whether a certain person is accepted as a shareholder will be done outside the chain as part of the shareholder registration process, which should be easier and less expensive for both the company and investors.
The project encounters headwinds
The company's digital shares are issued and traded as tokens on the Ethereum platform. In the ongoing fundraiser, the company is enticing people with limited NFTs of the event, which caught the attention of the net political community. Participatory crowdfunding projects are in many cases socially oriented and dedicated to environmental protection with some intersection.
Die @wemakeit Aktien sollen bald auf dieser Blockchain gehandelt werden und mit hohen Transaktionskosten diesen Ausstoss mitfinanzieren #impact https://t.co/sl5vPhl8VJ
— Thomas Preusse (@tpreusse) May 28, 2022
First and foremost, critics pointed to the high energy consumption of proof-of-work (PoW) based blockchain systems. While the participatory co-determination may still appeal, the decentralized implementation is also ineffective for various reasons, they said. The trust relationship is unshakable, according to commentators on social media, and entries in a blockchain could be written more effectively by a designated server. Despite harsh criticism, almost 4,000 people decided to subscribe to more than half of the company's shares within 24 hours.
