This blog post is a two part series, read the part one here: Trust Through Code: Part 1 - The Rise of Anonymous Innovation

Venture Staking represents a revolutionary approach to project funding that increases longer term demand for newly launched tokens and limits the risk of losing the investment. This mechanism introduces flexibility and accountability for various organizational structures, each with its own unique requirements and challenges.

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What is Venture Staking?

Venture Staking is a new investment form, where liquidity providers stake Ethereum and only the yield is invested into the respective project. Like this you reduce the risk of a total loss of the investment while you increase the demand for the respective token.

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Fair Launch and Venture Staking

Venture Staking works especially well in combination with a Fair Token Launch. In a Fair Launch there are no tokens pre-minted at TGE, all tokens are minted over time to contributors, for soonami including prior investors. This reduces the most often seen behaviour of early investors dumping big amounts of tokens on new investors entering the market. 

In a Fair Launch there is usually a period of linear token minting, which increases the supply of the token over time. This increase over time is facing constant demand from yield invested through staked Ethereum.

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On Average Higher yield

Venture Staking generates higher yield than normal staking, which only generates 3-6% depending on market mechanics. As in a Fair Launch a fixed amount of token is supplied to liquidity providers, the exact yield can not be predetermined. Market will adjust the yield by either

• Increased overall staked ETH: reduces yield (as the same number of tokens are shared between a higher number of liquidity providers)
• Reduced staked ETH: increases yield (as the same number of tokens are shared between a smaller number of stakers)
• Increased token price: increases yield (as the same amount of tokens now pays a higher value)
• Reduced token price: reduces yield (as the same amount of tokens now pays a reduced value)

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For-Profit Token Launches

Market-driven token distribution forms the core of our approach to for-profit ventures. Unlike traditional funding rounds with preset valuations, Venture Staking allows the market to determine yield through dynamic staking mechanisms. This creates additional demand for a token and a more natural and efficient price discovery process while ensuring early supporters have skin in the game.

The value capture mechanisms are designed to align all stakeholders' interests. Token holders who stake their assets receive tangible benefits tied to project success, such as protocol fees, governance rights, or access to premium features. This creates a virtuous cycle where supporting the project's growth directly benefits participants.

Development milestones are tied to token distribution schedules, ensuring consistent progress and accountability. Smart contracts automatically manage token releases based on predefined criteria, removing the need for trust in manual distribution processes.

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Foundations

Sustainable funding for public goods presents unique challenges that Venture Staking is uniquely positioned to address. Foundations work basically by design like a staking model: They need long term yield to fund the foundations purpose. Through carefully designed staking mechanisms, foundations can create renewable funding sources that don't rely on continuous donations or grants.

Community governance plays a central role in foundation-based projects. Token holders who stake their assets gain voting rights proportional to their commitment, allowing them to influence resource allocation and strategic decisions. This creates a democratic approach to public goods funding while maintaining operational efficiency.

Long-term ecosystem development is supported through structured treasury management. Staking rewards can be designed to incentivize sustained participation, ensuring foundations maintain stable resources for ongoing development and maintenance.

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Centralized and Decentralized Projects

Blockchain technology allows for a completely new organisation type: Decentralized projects. These projects only run through code and are governed by the community. The first completely decentralized project is Bitcoin itself

Flexible governance structures allow projects to adapt as they evolve. Venture Staking supports hybrid models where certain functions remain centralized for efficiency while others are progressively decentralized through community participation.

The funding model can scale with project needs, starting with centralized control and transitioning to decentralized governance as the project matures. This allows teams to maintain agility in early stages while building toward community ownership.

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The Power of Observable Metrics

Perhaps most importantly, Venture Staking establishes clear, measurable criteria for project evaluation. Instead of subjective assessments, stakeholders can track specific metrics: development milestones completed, smart contract deployments, protocol usage statistics, and governance participation rates.

These metrics create a new kind of reputation system - one based on observable actions rather than personal history. A team that consistently delivers becomes more trustworthy than one that consistently disappoints, regardless of their organizational structure.

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The Future of Project Funding

As we look ahead, Venture Staking's versatility becomes increasingly apparent. Traditional startups can leverage token-based funding while maintaining familiar corporate structures, benefiting from both regulatory clarity and crypto-native fundraising efficiency.

DAOs find in Venture Staking a natural fit for treasury management, allowing them to create sustainable economic models that align participant incentives with long-term success. The mechanism supports their unique needs for decentralized decision-making while ensuring efficient resource allocation.

Hybrid organizations that balance traditional corporate structures with community ownership can use Venture Staking to manage this transition effectively. The mechanism provides clear frameworks for progressive decentralization, allowing teams to gradually shift control to the community while maintaining operational effectiveness.

Public goods projects, often struggling with sustainable funding models, can use Venture Staking to create long-term support structures. By aligning community incentives with project success, these initiatives can secure the resources they need while maintaining their commitment to public benefit.

The future of crypto innovation needs diverse funding mechanisms that can adapt to different organizational needs. Through Venture Staking, we can create spaces for all types of projects to thrive, judged not by their structure but by the value they create.

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Are we ready to embrace a future where trust comes from code rather than traditional funding models?

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