Crowdfunding & Pre-orders

Trustless Work Use Case: Crowdfunding

Overview: Crowdfunding platforms help innovators and creators raise funds directly from supporters. However, managing funds securely, transparently, and efficiently can be challenging, particularly with trust and accountability between backers and creators. Trustless Work simplifies this by providing an escrow infrastructure that guarantees transparency, safety, and efficient fund management.

How It Works:

1. Initiation:

   • The crowdfunding platform sets up a new campaign with clearly defined milestones (e.g., prototype completion, product launch).

   • Each milestone has associated funds allocated through Trustless Work’s escrow contract.

2. Funding:

   • Supporters deposit funds directly into the smart escrow contract. Funds are held securely on the blockchain, visible to everyone involved.

3. Milestone Status Updates:

   • The project creator updates the status of each milestone upon completion. These updates are transparent and verifiable by supporters and platform administrators.

4. Approval and Release:

   • Supporters or the designated approver review milestone completions.

   • Funds are released to the creator upon successful verification and approval of milestones.

5. Dispute Resolution:

   • If disputes arise regarding milestone completion, a predefined dispute resolution mechanism activates, providing fair and transparent decision-making.

Benefits:

• Trust and Transparency: Backers can confidently support projects knowing their funds are safe and released only upon verified completion.

• Reduced Fraud: Eliminates the risk of misappropriation, as creators only receive funds upon meeting agreed milestones.

• Efficiency and Automation: Streamlines fund management, reducing administrative overhead and costs.

Example Scenario: A startup raising funds to develop a new smart gadget sets up three milestones: design completion, prototype demonstration, and final product launch. Supporters contribute to an escrow contract. As each milestone is achieved and verified, Trustless Work automatically releases funds to the startup, providing transparency and assurance to all stakeholders involved.