Crowdfunding in the cryptocurrency space remains a problematic venture. Numerous business models have come and gone with most of them becoming obsolete. The Staked Coin Output – or SCO – method may have some merit to it. It is an alternative to token offerings. More importantly, the funds are not sent directly to a team of developers either. 

Staked Coin Output Explained

The news regarding Staked Coin Output, or SCO, took a lot of people by surprise. It is a new way of crowdfunding explored by a blockchain project. This first project is called “Aleph”, a cross-blockchain layer two network. As part of the SCO model, there is a brand new reward model. Community members stake tokens to receive tokens from other projects.

In this particular case, users need to stake NULS coins. Any project utilizing the SCO model on this chain will be of great interest to stakers. They will receive a number of tokens based on their NULS stake. It is a unique way of dealing with crowdfunding and token distribution. Its chance of success is not guaranteed, however. 

Who is it for?

The audience for Staked Coin Output projects is rather diversified. Projects looking for crowdfunding outside of ICO, IEO, and STO models can reap the benefits of this approach. For investors, this new method offers some big benefits as well. As the investments occur through staked NULS rewards, there is no real ‘loss” if things go awry. That is, assuming the NULS price doesn’t crash during the staking periods. 

Developers will have a lot fewer problems to deal with as well. As there are no direct financial contributions to the team, there is no reason to create a payment gateway either. Less overhead leaves more time to build an ecosystem. Moreover, the SCO model can bring legitimacy to new projects looking to make their mark on the industry as a whole. It is not a replacement for token sales, but rather a stepping stone of sorts. 

Initial Success is Promising

While most cryptocurrency users might not own NULS, the community is passionate. In the first 24 hours, Aleph secured over 2 million staked tokens. A total of four dedicated nodes had to be launched to accommodate the inner workings of Staked Coin Output. All Aleph nodes combined currently hold $1.25m worth of NULS tokens. An impressive figure.

The bigger question is what happens once the hype calms down. A second project exploring the SCO model has made its plans clear. Even so, NULS is a very niche altcoin which is not on most people’s radar. It seems unlikely that many people will invest and stake for these new token offerings. Anything is possible in the cryptocurrency world, though. 

Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency or digital currency.

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