Whenever a person wants to launch a project, he/she must deposit a minimum stake that will be refunded if the project founder provides documents that add transparency to the development.
I like the idea of having some form of collateral. There should be consequences for failing to deliver, unlike now. However, as long as the funding is greater than the collateral there is still an incentive to try to scam people. Regardless, it is still a great idea!
Note the part of the milestone-based distribution.
If the person doesn't deliver, he/she won't get funds past the first milestone.
Great point! You'd lose the collateral AND the remainder of the funds would be kicked back to the funders. If you make the collateral larger than the first distribution then it would make 100% scams impossible!
Since the project backers decide on the milestones, they have the power to make the stake equal to the first milestone. :)
this also is a good point, banks have operated this way for a long time. you must prove that the project is on course before the next stage of funding is released. good way to proivde confidence and protection to investors