Whitepaper: If a campaign is canceled, all raised funds, since they are stored in a smart contract controlled by the KICKICO platform, are returned to the backers in their entirety.
That's effectively the same as with Kickstarter, creditcards are only charged after conclusion of the campaign.
However, the real trouble begins after the campaign has finished successfully! What if the creator fails to deliver the product and rewards? By that time the creator has likely already converted the pledged ETH to fiat.
With KICKICO a part of that risk is alleviated by KickCoins:
By making a pledge, a backer receives this award (either at the end of the campaign or, after the project is implemented), as well as the equivalent amount of KickCoins at the current exchange rate. Thus, the backer does not just give away their money, but exchanges it for the reward plus the KickCoins provided by KICKICO.
So if the creators do not deliver, KICKICO claims the backers haven't lost anything because they still have the KickCoins worth the same value.
But this system doesn't seem to add up. ETH goes into the system through backer pledges. The same amount of ETH leaves the system through the campaign creators, minus the 4% KICKICO fee. Then where does the value of the KickCoins, equivalent to the amount of ETH pledged, come from?
That's a really interesting question, I tilted on it while reading the whitepaper.
I think they are talking about be the reward system in crowdfunding, like you give 500$ to a project and you can can have a CD and a reduction once the product is done ... And they would give the equivalent of the reward in KickCoins.
But it's true that I don't really understand how it can work, because above in the whitepaper they say :
"For ICO campaigns, the platform fee will be 4% of collected ETH, and 4% of the campaign's tokens. In return, we provide from 4 to 8% of the KickCoins (in effect, selling our KickCoins to the campaign creator in exchange for the fee). Those KickCoins will be given to backers, together with the campaign tokens.
For crowdfunding campaigns, we give backers from 4% to 20% of the value of their investment as KickCoins, depending on their reputation on the site (Karma scores). This rate is being taken from exchanges, but will never be less than 0.0005 ETH per KickCoin.
This system ensures that in both ICOs and crowdfunding campaigns, the backer gets cryptocurrency for their contribution. We have two requirements for creators of crowdfunding campaigns that want us to provide KickCoins to their campaigns:"
We could really use a concrete example. Let's say this one is on KICKICO:
https://www.kickstarter.com/projects/ramybadie/unstable-unicornsthe creator indicates what the backer will receive for pledging a certain amount of ETH. By making a pledge, a backer receives this award, as well as the equivalent amount of KickCoinsI pledge $20. Creator indicates I get the Black Box Edition. The campaign is successful, I receive the Black Box Edition (cost to backer $15 maybe?) and the equivalent amount of KickCoins ($15).
Which is very different from: I pledge $20, the platform gets 4% of $20 and 4% Unstable Unicorns tokens. And I receive 4-8% of $20 worth of KickCoins and 96% of $20 worth of Unstable Unicorns tokens. Which by the way also doesn't add up. Where does that other 0-4% worth of KickCoins come from? That's funded by the growth of other campaign tokens?
. 4% fee is very cheap comparing to kickstarter of indiegogo.
.