Litecoin Foundation founders: we 'don't have a business model,' but Litecoin will survive

In April 2017, the Litecoin Foundation was founded with $0 in the bank. As the price of Litecoin skyrocketed from around $10 to over $200 later that year, the foundation suddenly was sitting on more than $1 million in assets. 

Now, the Litecoin Foundation has a modest $200,000 in total assets, a lean team consisting of one full-time employee and several volunteers, and a struggling business model that its co-founders have promised to fix. However, the message from the foundation seems to be clear: Even if the foundation disappears, Litecoin supporters "will continue to work on Litecoin because we love Litecoin," said Litecoin founder Charlie Lee. 

Flimsy business model 

Recently, Litecoin Foundation co-founder Xinxi Wang said both publicly and to The Block that the organization "didn’t have a sustainable business model."

The Singapore-based nonprofit dedicated to developing and promoting Litecoin is a tight group surrounding Lee. Like other nonprofits, the foundation's major revenue stream is donations, although the major donor is Lee himself. Out of the disclosed $575,000 in donations the foundation received from June 2017 to May 2019, around 80% was from a donation Lee himself contributed in Dec. 2017. 

The foundation’s other fundraising venues, such as online merchandise sales and the annual Litecoin Summit, have also been experiencing some turbulence. In Q2, merchandise sales saw a significant uptick from $217 to $13,400, after the foundation revamped its website for a better shopping experience. However, the summit is projected to lose around $50,000 this year. Meanwhile, Lee said the foundation burns through around $100,000 per year, which means it can last at most two years if it does not generate any additional capital. 

Same name, different fates

The Litecoin Foundation is not the only nonprofit named after the blockchain it supports. Bitcoin Foundation, founded in 2012 to develop and promote Bitcoin, drew its major revenues from membership fees and conferences. However, the organization ran on a deficit since 2013, with both its 2013 and 2014 conferences resulting in net losses. At one point, bitcoin OG Andreas Antonopoulos questioned the opacity of the foundation's finances: 

"You say they are funded. Where are those funds? Who controls those funds? When was the last audited? Are they actually solvent? Or have all of those funds disappeared into a big black hole?"

Bitcoin Foundation’s woes even prompted BitMEX's Research team to conclude that "Bitcoin never needed a Foundation - it is stronger without one, and any all-encompassing Foundation like this was always doomed to fail."

Similarly, the Litecoin Foundation has also been plagued by criticism and suspicion. A year ago, Lee was publicly called out for being "a scammer and a cancer to crypto," following the revelation that he had unloaded all of his LTC holdings. Lee subsequently responded that he did not sell his holdings at its all-time high, saying "it's nobody’s business at what price I sold my LTC at, but I got tired of all the ‘sold at ATH’ hate."

According to Lee, there is a common misconception that the fate of the Litecoin Foundation will be the fate of Litecoin. Similarly, when major events such as price dip happen to Litecoin, some knee-jerk blame the foundation. Due to this misconception, Lee and Wang have even considered renaming the foundation to disassociate it from Litecoin itself. 

"If we named it Crypto Foundation, people probably wouldn’t be FUDing that the foundation running out of money is the death of Litecoin," said Lee. 

As Lee points out, "a decentralized cryptocurrency doesn’t really need a foundation to support it." However, a foundation can still play the organizing role to bring supporters together and maximize their contribution to the blockchain. 

"We do whatever we can with the resources we have to work on development and adoption of Litecoin," said Lee. 

There is still hope 

At the end of the day, the Litecoin Foundation team is determined to hold out as long as it can. 

"We will do more if we have more money and do less with less money," wrote Wang in a tweet. 

The foundation has brought down staff costs as its employees voluntarily cut their salaries, and it's increased spending on marketing. It also revamped its website to bump merchandise sales online. Recently, it launched a crowdfunding program, for which it has raised around 48 LTC, or around $2,600, to build. 

"We didn't have a sustainable business model, now we are talking about that internally every day,” said Wang. 

"Even without that structure, we will still be supporting Litecoin individually," Lee added.