No Equity, Just Coins and Code

The DeSo Blockchain was bootstrapped and self-funded by Nader Al-Naji. In 2019, Nader recognized that special-purpose blockchains could vastly out-perform existing approaches on storage-heavy applications like social use-cases and advanced trading applications. And so he set about building DeSo to address what he felt were the largest opportunities in crypto.

Nader and his team, which we often refer to as the DeSo Core Team, worked on developing the blockchain from 2019 until late 2020 when they officially launched the network, and third-party nodes started running. In addition to developing the DeSo Blockchain, the team also developed the first application, called BitClout, which went viral and pioneered a concept now known as "Social Tokens." In early 2021, the DeSo Blockchain code was made 100% open-source, solidifying DeSo as a truly decentralized layer-1 platform.

When they launched the network, the Core Team embedded a bonding curve mechanic that would mint DESO for Bitcoin in a fully-decentralized way. The idea was that users could sacrifice Bitcoin to get DESO in much the same way early Bitcoin users sacrificed CPU power to get Bitcoin. Thus the distribution mechanic could distribute DESO tokens in a fully-decentralized way to anyone, without geographic restrictions (much like Bitcoin mining). The details on the economics of this distribution are described in the Initial Distribution section.

Importantly, although DESO could be purchased through this bonding curve mechanism, no equity has ever been issued or sold to finance the DeSo Blockchain's development. There is no "shareholder class" to create a conflict of interest with the token, DeSo is truly just "coins and code." It was Nader's explicit intent to avoid creating a conflict of interest between equity and tokens, as he saw the negative effects it could have, and this is why he self-funded its development for nearly two years and only issued tokens through a decentralized mechanism that was fully open to the public. This means in practice that, if you own DESO, then you own the exact same asset that everyone else owns, from top-tier VCs to ordinary people.

This lies in stark contrast with other major blockchains, such as Solana, which have a for-profit VC-controlled entity behind them that is wholly separate from the token. We've seen with projects like Uniswap and Brave how this can lead to conflicts of interest, where value accrues to equity-holders who are owed a "fiduciary duty," rather than to token-holders, who don't have the same rights. Indeed, any token backed by a for-profit company like Uniswap or Solana could even be sued by equity-holders for distributing too much value to token-holders, rather than maximally milking the network value for equity-holders. These issues tend to be less important in the early days, but play a key role as networks mature and become structurally important. There does not exist, nor will there ever exist, such a problem with DESO.