Preshold

Preshold is a precise-threshold crowdfunding protocol.

A project sets a specific amount and a deadline.

• If sum of pledges is less than the amount, everyone gets refunded completely and project gets zilch.
• If sum of pledges exceeds the amount, everyone gets refunded proportionally, so the project only gets exactly what they asked for.

That’s it. End of text. Enjoy it, go implement it. Rest of this page consists of appendices.

Variants

Optional flexibility variant

Pledgers can opt out of either or both of the refund options, making it more similar to a donation. Ideally the project should not be notified about who is opting out and who isn’t; so it can’t buy those options with exclusive rewards/stretchgoals. The options need to remain on the pledger side. The options are there to make pledging even more appealing, to charity-minded pledgers.

Ongoing or one-shot

This could work for a one-shot deadline or repeated over specific intervals (such as monthly deadlines) to fund work on specific projects. The project is explicitly allowed to (with enough notice, of course) change the desired sum from month to month based on what they think they can get away with. Too high, and they risk ending up with nothing.

Purpose

1. Disincentivizes gaming the system—in traditional crowdfunding, if the pledges are falling short the project can pay itself (using a proxy) the remainder, bringing us back to all the drawbacks of “flexible funding” a.k.a. just normal donation/tipping w/o the pledge threshold that motivated the donation/investment in the first place.

2. In traditional crowdfunding, once something is funded there is no incentive for further people to join in. With Preshold, the more people join, the cheaper it gets for everyone.♥︎

3. Preshold works especially well when you are raising money for one specific cost, such as digital FOSS goods. For example: “We need such and such amount of money for studio time and mastering and mixing. Then everyone can download the songs, CC-BY-SA 4.0 licenced.” Another example is that the writing of a book or recording of a song can be Preshold-funded—and copylefted—but paper books, or records, can additionally be sold (at cost) normally, outside of the campaign itself.

What’s a good threshold?

It’s common to see patron-based projects that are really undershooting their monthly goals.

Maybe they can’t reach enough to put as many people on it full-time as they want.

In those cases, I suggest a lower threshold that can increase or decrease on a month-by-month basis as the project’s ambitions or popularity increase, as long as that’s clearly communicated to the patrons.

If a really popular project wanna shoot for matching Lambos and a luxury lifestyle, they’re gonna have to be clear about that in order to get people to still sign up. Setting a threshold is a kind of game. Too high, and you’ll end up with nothing since patrons are refunded. Too low, and you’ll end up with less than you could’ve asked for.

Be transparent about your projects needs (and frivolous wants).

History

We hashed it out, painfully, a few years ago in a thread on snowdrift.coop. I don’t know if anything ever came of it so I want to present it for a wider audience here.