Fluid equity

Individual contributions to ventures within the open value network (OVN) are transferred into fluid equity using a benefit redistribution algorithm.

Fluid equity is a continuously computed record of contribution-based participation in an open organization, not a passive investment contract in which capital is entrusted to an issuer in expectation of profit generated by that issuer's managerial efforts.

Contributions are NOT considered as "investment", since the contributor is part of the open venture, with access to governance also provided as a benefit to contributors. Contributions can be of different types: time, financial, material (equipment, tools, consumables, space), social capital, etc.. Therefore, fluid equity is not to be considered a security, in the traditional legal sense.

The fluid equity distribution for a particular venture is presented as a piechart. We call this form of equity "fluid" because within the context of one venture everyone's equity is continuously diluted as other affiliates contribute to the venture.

Moreover, an OVN is totally transparent and open (or permissionless). There is no secrecy and there is no walled activity that a contributor doesn't have access to. Even if an agent only contributes financially to a venture, since there is no hierarchy between different types of contributions, this agent is considered a contributor, therefore an insider, like any other contributor, with the ability to influence the course of the venture.

Legal issues

Crowdfunding for equity

In some countries today, crowdfunding for equity is still illegal. Some people have raised the concern that ventures of an OVN may not be able to get micro-contributions in cash from people, because that would be considered crowdfunding for equity. But the law applies to companies that are closed organizations, which don't give access to internal processes to investors, but only some limited access to information. The OVN is an open organization, meaning that it provides free access to innovation and production processes, as well as to governance. The individual who contributes cash for a venture becomes an affiliate, or a member of a non-registered association if you will, has access to all the processes that make up the venture, and can influence all these processes.

Secondary markets

Some individuals have proposed to make OVN fluid equity transferable. In other words, to allow individuals to sell their accumulated fluid equity in ventures even before the venture generates revenue. This subject has been discussed at length within the Sensorica community.

Reasons in favor of it:

• Individuals can get some currency for their past efforts, offloading some risk and use it for their immediate needs.

Reasons against it:

• Creating a secondary market for OVN fluid equity might drive those who are close to ventures to inflate the potential of the venture, according to some exit strategy that they might have. Since OVN ventures are open, it would be much more difficult in the OVN context to inflate ventures than in the current economic context and markets.