【GigaStar】 Issuance of ST for revenue distribution rights of creator's YouTube channel / Approved by SEC / Sold to 12,000 investors in the past 2 years / Total funds raised exceed $7.8 million
"GigaStar" is a platform that issues and sells security tokens with revenue distribution rights for creators' YouTube channels. It conducts the issuance of Security Tokens (ST) through a mechanism cal
Good morning.
I am Mitsui, a web3 researcher.
Today, I conducted research on "GigaStar".
Table of Contents
1. Overview | What is GigaStar?
-Features
-Utilized Blockchain
2. Transition and Outlook | Challenges in revenue distribution in the $250 billion creator economy with a total fund raised of over $7.8 million, and considerations for creators
Overview | What is GigaStar?
"GigaStar" is a platform that issues and sells security tokens with revenue distribution rights for creators' YouTube channels. They issue ST (Security Tokens) through a mechanism called regulated crowdfunding, which is approved by the SEC.
◼️ Features
In simple terms, it is a marketplace where you can select your favorite YouTuber, review the conditions, and purchase tokens. You can choose your favorite creator from the following page.
When you select a channel page, project details are displayed, similar to crowdfunding. You can see the number of tokens issued, the amount of revenue distribution, the fundraising goal, and the current amount.
This user issues three types of tokens, each with a different distribution rate of revenue. Additionally, token holders have access to special experiences such as participating in Discord, in addition to revenue distribution.
Finally, we have the projected earnings and channel information. This individual assumes a current subscriber count of 26,000 and an annual return of 11.4%.
In addition, investors check the pages of these interesting creators (YouTubers) and purchase tokens. These tokens are called Channel Revenue Tokens (CRT), and they allow investors to receive a portion of the channel's revenue.
The distribution logic involves a contract between the channel management company and the platform management company, where YouTube's revenue is transferred to a third-party payment provider. The revenue corresponding to the amount of CRT tokens held by investors is then automatically transferred through a smart contract. The remaining funds are transferred to the channel management company.
◼️ Utilized Blockchain
The tokens are issued on Polygon, and it seems that token purchases are settled with a credit card or USDC.
Transition and Outlook | Surpassing $7.8 Million in Cumulative Funding, Aiming to Distribute Revenue in the $250 Billion Creator Economy Market
"GigaStar" is a startup founded in Chicago, USA in May 2022, and it has conducted two funding rounds. It raised $4.8 million in seed funding in March 2023 and $3 million in February 2024.
During this time, "GigaStar" sold revenue distribution tokens for seven YouTube channels on its platform, raising $1,189,362 for creators, with 12,053 investor accounts and $77,636 in revenue distribution.
With the recent funding, GigaStar Market aims to accelerate its expansion, obtain broker-dealer registration, and develop a distribution market set to launch by the end of 2024.
Furthermore, GigaStar CEO Hazem Dawani commented on the funding as follows:
"Just like traditional entrepreneurs, YouTube creators also have the right to access funding and strategic investors. GigaStar Market is the only investment platform focused on providing access to the $250 billion creator economy, where accredited and non-accredited investors can participate through unique revenue-sharing securities.
Being able to raise funds at a higher valuation than the previous round in this environment is another testament to the legitimacy of our business model and the potential of the market."
GigaStar also announced the appointment of Victor Glava, a former serial entrepreneur from Robinhood, as Chief Technology Officer in January 2024. Victor Glava previously served as the co-founder and CTO of Cove Markets, a provider of cryptocurrency futures trading software, which was later acquired by Robinhood. He continued to lead technology in a division at Robinhood.
Glava will lead GigaStar's engineering team to execute the company's technical vision and strategy, and strengthen efforts to expand the GigaStar Market platform, including the development of the distribution market scheduled to launch in mid-2024.
Analysis | Potential and Concerns as Creators
Finally, let's discuss some analysis.
The concept of platforms like "GigaStar" has been talked about since the emergence of NFTs, but there are still not many platforms that have successfully implemented it under regulations. From what I can see, it seems that "GigaStar" has yet to establish a secondary market (unconfirmed), and they have mentioned starting that in 2024.
Once the secondary market is established, the value of revenue-sharing tokens (ST) could become interesting. Well-known revenue-sharing STs will be traded at high prices, allowing for potential capital gains, and some creators might even be able to sustain themselves solely on the revenue sharing.
At a glance, this concept is groundbreaking. Not only YouTubers, but also newsletter operators like myself could successfully raise funds and gain supporters by issuing tokens representing 20% of revenue distribution rights.
However, in reality, this is a very challenging and potentially problematic area. Setting aside legal considerations, the biggest problem is the lack of assurance that creators will continue their activities after issuing tokens.
In the case of a corporation, whether or not the entrepreneur continues to work hard is voluntary, but establishing a corporation comes with a certain level of risk and cost, which raises the entry barrier. Venture capitalists come into the picture, investing in trustworthy individuals. Subsequent funding rounds can be judged based on results, but particularly the first investment is somewhat of a gamble.
Furthermore, issuing STs for creators has an even lower entry barrier, and popularity and revenue are also unpredictable, which could lead to fluctuations. Most importantly, it is difficult to determine the boundary between someone who is desperately working hard and fails, and someone who raised funds from the beginning but lags behind. To put it bluntly, it is closer to the difficulty of prosecuting investment fraud. Since investment is a personal responsibility, it is impossible for third parties to judge whether someone "had the intention but failed".
Therefore, it is likely that certain conditions will be set, such as only allowing YouTubers with a certain number of subscribers to issue tokens, in order to manage risks effectively.
The expansion of the creator economy is tremendous, and the revenue sharing platform also holds great potential. However, it is necessary to manage risks through the system and for the market to gain understanding (investors becoming aware of risks) for widespread adoption to take place.
I look forward to seeing the increase of security token platforms in Japan, which will be enjoyable. So, I will patiently wait!
That concludes my research on "GigaStar"!
Disclaimer：I carefully examine and write the information that I research, but since it is personally operated and there are many parts with English sources, there may be some paraphrasing or incorrect information. Please understand. Also, there may be introductions of Dapps, NFTs, and tokens in the articles, but there is absolutely no solicitation purpose. Please purchase and use them at your own risk.
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Author
mitsui
A web3 researcher. Operating the newsletter "web3 Research" delivered in five languages around the world.
Contact
The author is a web3 researcher based in Japan. If you have a project that is interested in expanding to Japan, please contact the following:
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*Please note that this newsletter translates articles that are originally in Japanese. There may be translation mistakes such as mistranslations or paraphrasing, so please understand in advance.