Thanks, seen, but why is there so much huge gap between the soft cap and the hard cap, the soft cap is $1.5 million while the hard cap is $55 million, it just doesn't make sense to me why the different is so huge
Great question! Here is our answer.
In connection with the fact that all collected funds during the ICO are divided into money funds and part of the funds is sent back to support the liquidity of the token. We made a hard cap to
limit the amount of money collected, which are directed to the development and implementation of the LevelNet project, as well as to protect the interests of investors and maintain the liquidity of the token.
In order to understand the formation of funds, let's look at their purpose. The purpose of the funds:
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Buyback. To increase the interest for the community members, as well as to foster equitable spending on product development, we created a smart contract. This contract, using the funds from the "Buyback Fund," will regularly buy back tokens from the market using the algorithm described below. Buybacks will be carried out on CryptoCurrency exchanges.
The buyback algorithm is built on the Token Offering results, i.e., on the total number of tokens sold. Depending on the "Return Fund," the smart contract algorithm redeems tokens automatically from exchanges on which it trades. Returned tokens are destroyed.
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Money Back Guarantee.In order to increase the investor interest, we created a smart contract that provides an opportunity to receive a reward for participation in the LevelNet project. Depending on the amount of token, the payment is made in the form of money, the smart contract algorithm automatically calculates and sends a one-time payment to the investor from the "Money Back" Guarantee Fund. The tokens in this algorithm remain in existence.
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Development & Implementation Fund.This fund is the development, administration and management of the LevelNet project. A more detailed description of the fund's expenditure can be found here
For example: If the hard cap is collected then the distribution will be as follows:
Those. as you see on the development and implementation of leaving a smaller part of the money, and the rest of the money will be sent back to the market to support liquidity.
Conclusion.Hard Cap is in our case this is the maximum capacity of ICO. The capacity was chosen not accidentally, in order to valuation the project
in a fair way, the method is described on page 23 of white paper. The valuation is based on the volume of
Development & Implementation Fund. And the value of the Hard Cap ICO is made to
set the valuation cap of the LevelNet project.
References:
https://medium.com/@LevelNetwork/how-lvl-tokens-will-maintain-their-liquidity-6f626339186fhttps://medium.com/@LevelNetwork/maintaining-of-liquidity-of-the-lvl-token-issued-by-levelnet-283c8765ed1fhttps://medium.com/@LevelNetwork/exit-strategy-for-lvl-tokens-holders-issued-by-levelnet-2b22ae7946c3https://levelnet.co/files/LevelNet%20White%20Paper.pdf (page 23-Valuation and Valuation Cap)
https://levelnet.co/files/LevelNet%20White%20Paper.pdf (page 18- Buyback and alogoritm)
https://levelnet.co/files/LevelNet%20White%20Paper.pdf (page 19- Money Back Guarantee and alogoritm)
I hope I could explain to you, if you have any questions feel free to ask, we will respond to any