A burst of evolutionary growth and diversification is taking place in blockchain-based cryptocurrencies and systems architectural frameworks as pioneering developers build upon, modify and refine successive variations of Bitcoin’s pioneering distributed virtual currency network transaction system. In the midst of a fundamental market and industry transformation, a small but growing subset of developers have zoomed in on the power and energy sector, launching blockchain-based and related peer-to-peer (P2P) digital tokens and distributed trading, transaction and ledger systems.
Solar DAO kicked off an initial coin offering (ICO) of its SDAO digital token cryptocurrency on July 27. The world’s first wholly digital, autonomous closed-end utility-scale solar project investment fund, Solar DAO aims to sell as many as 80 million SDAO tokens at a pre-set price of USD1.00 each in two stages: a preliminary ICO launched July 27 and slated to run until August 31, and a second, primary ICO planned for around the end of October. Solar DAO is offering discounts for investors who get their bids in early, from a 100% bonus for those who bid on the first day of the pre-ICO. Bonuses scale down from there, to 50% for those who bid successfully during week five of the pre-ICO.
If successful, Solar DAO could throw open the gates for cryptocurrency, solar energy enthusiasts and individuals the world over to invest and share equally in profits earned by building, operating and maintaining utility-scale solar energy projects. Solar Magazine got in touch with Dmitriy Solodukha, one of Solar DAO’s founders, to gain some insight as to how and why Solar DAO was created, the ICO process and what Solar DAO’s launch may portend for solar energy investment and growth.
An Ethereum-Based Utility-Scale Solar Initial Coin Offering
Solar DAO has been built using the Ethereum blockchain systems development framework and platform, which has quickly grown to become the platform of choice for new cryptocurrency developers that have gone on to raise capital via initial coin offerings, or ICOs.
“Ethereum is a different blockchain from Bitcoin and was created with the intention to allow self-executing smart contracts to be coded directly into it, permitting trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism,” Investopedia explains.
Essentially, the ICO process culminates in the sale of a virtual currency or digital tokens conferring rights of ownership, such as SDAOs, via a subscription-based, online public offering. That capital can be used in any number of ways, but by and large, Ethereum-based cryptocurrency developers are exchanging much, if not all, of the capital raised in pre-ICO phases for other more liquid cryptocurrencies, such as Bitcoin, or national, fiat currencies – dollars, euros, yen or renminbi.
They are then reinvesting pre-ICO capital in ventures aimed at developing digital ecosystems of products and services that make use of their cryptocurrencies, TechCrunch’s Jason Rowley explains in a recent article.
Opening the Gates to Utility-Scale Solar Investing
Solar DAO intends to use proceeds from the ICO to invest in utility-scale solar energy projects worldwide for maximum return on investment. Made up of industry veterans with long, well-established track records of doing so successfully, the focus will be on investing in projects in Israel, Portugal, Kazakhstan and Ukraine.
Employing Ethereum profit-sharing contracts, the Solar DAO digital closed-end solar investment fund is designed to liquidate and distribute all holdings to SDAO holders of record at the conclusion of a four-year term.
Solar DAO’s founders outline and provide key documents regarding the Ethereum digital autonomous organization (DAO), its two-phase ICO and the closed-end fund’s investment strategy in a press release, a white paper and a presentation accessible via the Solar DAO website.
Aiming to learn more, Solar Magazine got in touch with Solar DAO founder Dmitriy Solodukha. Following is a transcript (edited for clarity and brevity) of the interview.
Solar Magazine (SM): What one or few characteristics or attributes distinguishes Solar DAO, or makes it particularly new and significant with regard to:
- Ethereum and blockchain platforms?
- The ability for the everyday investor to participate in and benefit financially from utility-scale solar project development?
- Adding momentum to the growing wave of solar power/energy generation capacity worldwide?
Solodukha: We use the Ethereum blockchain and its functionality: smart contracts, ERC20 compatible tokens, etc., so, generally speaking, we are creating a new way (a new financial tool) for anyone who cares to invest to easily own, trade and receive dividends generated from PV solar plants. More particularly, it’s very helpful for people who do not have $1 million dollars or more to invest in the solar energy field.
SM: What online platform/exchange will be used to carry out the ICO?
Solodukha: We are already agreed with Orderbook to list and trade our tokens on their platform after the ICO. We are also going to collaborate with other cryptocurrency exchanges, but for that we first have to complete the ICO. We expect to have the whole thing solved the month following the ICO.
SM: Will SDAO's be exchangeable with Ether and/or other digital or fiat currencies?
Solodukha: Yes, Solar DAO tokens will be easily traded on crypto-exchanges and could be bought or sold with BTC (Bitcoin), ETH (Ether), etc.
SM: Why is Solar DAO focusing on Israel, Portugal, Kazakhstan and Ukraine?
Solodukha: We are focusing on selected markets because:
a) They are very profitable nowadays;
b) We studied them a lot and have experience working in them;
c) We have partners and local workers in these countries.
SM: Will capital be invested in utility solar or other scales of solar projects in other countries at some point? How will investment decisions be made?
Solodukha: We are going to invest in utility scale projects to achieve maximum ROI. Exactly where or when will be decided by voting by SDAO owners.
This is very new technology. We need to create an interface where we can get opinions on investor community questions, and we expect to have several variants of this running.
SM: Realistically, how broad a base of investors do you think the ICO will attract, i.e. solar energy industry professionals and enthusiasts, their counterparts in the cryptocurrency community, venture captial investors, etc.
Solodukha: We have already attracted business and project partners who work with us on PV projects across the globe. We are also going to attract more of our partners and other investors. The cryptocurrency community likes our project very much. We have gotten a lot of reviews and received high marks.
SM: Please briefly elaborate on what you mean when you say existing solar project assets will be refinanced to raise Solar DAO's asset and capital base?
Solodukha: When you construct a typical “greenfield” solar power plant it costs you about $600 per kW (kilowatt). Once it has been built, its value is way more, about $2400 per kW. In addition, you can sell the project or go to a bank and refinance it.
So, you pledge the asset to the bank and receive financing at about $2000 per kW, and you can still earn profits from the plant. Using this money you can construct new and more powerful plants.
SM: What can you say to assure prospective SDAO buyers that Solar DAO and SDAOs are legit and completely trustworthy? Secure from email, DDOS attacks, malware incursions and such?
Solodukha: You can check our contract, which we just published, and you can follow us to see all updates, achievements and so on.
Furthermore, we do our best to keep funds safe. We are going to conduct an ICO audit and a smart contract audit with OpenZeppelin. Just the other day, we changed passwords on hosting, emails and so on.
SM: Thanks Dmitriy for your time. Best of luck with the ICO.
Solodukha: Your welcome. My pleasure.
Stay tuned. All goes well, Solar Magazine will be able to check back with Solodukha and Solar DAO as its groundbreaking ICO progresses and its closed-end utility solar fund moves forward towards making its inaugural investment. comment↓
* Cover credit: flickr @Global Panorama