How to run a zirconia plant using cryptographic tokens

The popularity of the collective investment attraction instrument by issuing and selling its own cryptographic tokens on the open market - ICO (Initial Coin Offering) is growing every month.

Recent examples include the blockchain project ChronoBank, which introduced the concept of national working time tokens tied to average wages in the EU, the UK, the USA and Australia. Following a two-month ICO campaign, ChronoBank attracted investments totaling $ 5.4 million.

However, until now the overwhelming majority of cases of attracting financing according to the ICO model were exclusively online projects. In the list of the largest crowdfunding campaigns, all projects related to the category of “Blockchain”, work online.
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In continuation of the series of articles on ICO, we are publishing a material to the Waves platform team in which ZrCoin , a project from the real sector, which plans to attract funding in the amount of at least $ 3.5 million due to the release and sale of cryptographic tokens, is analyzed in detail.

What is the essence of the project

ICO project ZrCoin starts May 11. During the monthly campaign, blockchain tokens that are not tied to the monetization of online business will be offered to the market, but supported by a tangible asset - synthetic concentrate of zirconium dioxide (ZrO2).

This material is used in the manufacture of refractories and is a colorless crystals. ZrO2 is used in the metallurgical, glass, ceramic and even nuclear industries. For example, because of its refractory properties, zirconia concentrate is used in the construction of nuclear reactors. The material is characterized by high plasticity, resistance to extremely high temperatures and pressure, strength and stability. The melting point of a synthetic concentrate of zirconium dioxide is 2.715 ° C.

The basis of ZrCoin is the technology of extraction of synthetic zirconium dioxide in the processing of industrial waste, for example, refractory scrap. The purity of the material in the extraction with the use of this technology ranges from 66% to 75%. Thus, the project team will not need to develop a new or existing raw material field, which means that much less resources will be spent in the process of organizing production without damaging the environment.

A widely used method for the production of zirconium dioxide involves the extraction of sand from the bowels of the earth, which contains alkaline-earth
metals. Then, the obtained raw material is subjected to expensive multi-stage processing, in order to obtain a synthetic concentrate of zirconium dioxide used in the manufacture of refractories.

Unlike the traditional approach, ZrCoin offers the technology of industrial waste processing, which allows synthesizing zirconium dioxide concentrate, in which the zircon and baddeliteite minerals are fully stabilized and not subject to phase transitions. This approach increases the chemical resistance of products from ZrO2 2.5-3 times. The material obtained during processing contains corundum Al2O3, which improves the stability of the material.

The amount of $ 3.5 million, which the founders of the ZrCoin project are planning to collect on the basis of ICO, will go to build a plant in the Chelyabinsk region, as well as to purchase equipment: mechanical for crushing industrial waste and chemical to produce synthetic ZrO2 concentrate. Construction of the plant is planned in the industrial zone, which has the necessary communications for the organization of such production.

After the processing plant begins to function, its main products will be zirconium concentrate in the form of a powder with a content of synthetic ZrO2 of at least 66%, as well as a synthetic slag-forming mixture.

The production will use dry methods of enrichment and separation of materials, methods of selective grinding, methods
dry magnetic and gravity separation.

Chemists, technologists, materials scientists, managers, economists with experience in the industry and financial industry take part in the ZrCoin project. The purpose of the plant’s products is the production of refractories in metallurgy, as well as in the foundry and chemical industries, including:

• Production of bakorovy products of the BK-37 and BK-41 brands;
• Obtaining zirconium-containing kaolin fiber;
• Use as a non-stick coating in the foundry;
• Making enamels and glazes for metals and ceramics.

What does the ICO model look like

Realizing that the probability of obtaining a bank loan under such a project is low, and also abandoning the risk of losing the lion’s share of business and controlling the enterprise when attracting investments, the founders of ZrCoin decided to follow the ICO path.

ZrCoin tokens will be released on the Waves blockchain platform and will begin to trade on cryptocurrency exchanges 2 weeks after the completion of the ICO campaign on June 9, 2017. Buy digital assets of the project will be able to any user who has access to the Internet and the ability to replenish the account using your personal account Waves.

Tokens will be an analogue of cryptographic derivative financial instruments (derivatives) tied to the underlying asset - zirconium dioxide concentrate. These cryptographic derivatives will be sold using an option model that gives their customers the right, but not the obligation, to sell a certain amount of ZrCoin at a fixed price at a fixed time in the future.

Each token is tied to the underlying asset - 1 kg of synthetic concentrate of zirconium dioxide. After the 18-month period, the founders plan to buy out all ZrCoin tokens at a price of $ 2.80 per 1 token, based on the estimated market value - $ 2,800 per 1 ton of material. If some token holders do not sell their options within the prescribed period, their cryptographic assets will automatically be tied to the new ZrCoin project and will no longer be related to the original ICO.

ZrCoin will be available for BTC, ETH, ETC, LTC, WAVES and USD.

Each ZrCoin token can be either tried to sell during stock speculation, or wait for the project to be redeemed. Following the results of ICO, ZrCoin plans to raise at least $ 3.5 million. The maximum amount of funds claimed is $ 7 million.

According to the plan of the founders of the project, the plant will be built 6 months, within another 2 months it is planned to launch the production process. Real incomes of production, according to the plan of the founders, will amount to 70 million rubles per month. From the 8th month, the founders will begin buying out ZrCoin tokens in the amount of more than $ 400,000 per month.

Collecting amounts in excess of $ 3.5 million will increase the capacity of the enterprise or speed up the process of buying tokens back. The total offer of ZrCoin tokens will depend on the total amount of investment collected. For example, having collected $ 4 million in ICO, the project will release 2.86 million tokens.

After the completion of ICO, the price of tokens to be purchased by the founders of ZrCoin will grow by 5.5% every month. Thus, ZrCoin tokens will reach a value of $ 2.80 after 18 months. A year later, the project organizers plan to conduct an audit and provide investors with the opportunity to purchase a stake in a manufacturing company.

Investor money collected as a result of ICO will be protected by escrow technology - multi-signatures, due to which funds can be withdrawn from the campaign account only if this step is approved by the majority of the total participants who have access to a cryptocurrency account.

What it takes to take care of a project that is planning to raise funds in the framework of the ICO

In the final part of the material we recall key features that must be taken into account by the founders of the project, who decided to attract funding through the ICO.

1. Follow ICO cases, in particular, ZrCoin ICO campaign, which is scheduled to start on May 11;
2. Determine the platform on which the release of blockchain tokens will be performed, for example, Waves or Ethereum.
3. Decide what proportion of the total amount of tokens issued the project founders will keep.
4. Prepare for feedback and answers to questions from members of the cryptocurrency community from around the world: from social networks and from the Bitcointalk forum at the preparatory stage, in the ICO process and after the campaign ends.
5. Set the campaign duration and the amount of discounts on the purchase of tokens during the entire ICO period.
6. Blockchain tokens should be integrated into the functionality of the project and tied to its monetization.
7. A project that issued tokens does not have the right to guarantee dividends on them. Otherwise, tokens are equated to shares and fall under the legislative regulation of the securities market.

ZrCoin's experience can create an ICO precedent for real-world projects around the world that have a token binding to tangible assets. ZrCoin ICO campaign starts on May 11, 2017 and will run until June 9, 2017, inclusive.