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Tokenized Equity — Conceptual Model

Tokenized Equity BizShares represent onchain exposure to ownership interests in real-world businesses. Unlike debt instruments with fixed repayment schedules, equity instruments are performance-linked and long-term in nature.

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1:1 Representation of Offchain Shares via SPV Mechanism

Under the intended model:
  • Each onchain equity token corresponds 1:1 with an offchain equity unit
  • Legal ownership of underlying shares is held through a Special Purpose Vehicle (SPV) or equivalent legal structure
  • Onchain tokens function as a digital representation of beneficial ownership rather than a direct statutory share registry entry
Design in progress.

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Locking of Founder Shares; Offchain Custody

To maintain alignment and prevent adverse selection:
  • Founder and early stakeholder shares may be subject to lock-up provisions
  • Underlying legal shares corresponding to tokenized equity are held by the SPV or an appointed custodian
  • Transfer of onchain tokens may be linked to offchain legal record updates where required
This structure ensures that token supply corresponds to legally recognized ownership positions. Design in progress.

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Dividend Distribution & Governance Considerations

Equity tokens may entitle holders to:
  • Dividend distributions when declared by the business
  • Participation in economic upside through profit sharing or exit events
  • Potential governance rights depending on the share class represented
Dividend flows would follow a similar pattern to debt payouts:
  1. Business declares dividend according to its corporate processes
  2. Distributions are coordinated through the legal vehicle that holds the underlying shares and made available for token-holder distribution according to the instrument terms
Governance rights, voting mechanisms, and shareholder communications are subject to legal alignment between the onchain token representation and the underlying corporate documentation. Design in progress.

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Tokenized Revenue — Conceptual Model

Tokenized Revenue BizShares represent rights to a portion of a business or project’s revenue rather than equity ownership or fixed debt repayment.

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Revenue Share Calculation Options

Possible calculation models include: 1. Gross Revenue Share
  • Investors receive a fixed percentage of total top-line revenue
  • Simpler to audit but less sensitive to cost structure
2. Net Revenue Share
  • Share is calculated after defined operating expenses
  • More aligned with profitability but requires stronger reporting controls
3. Fixed Revenue Share Until Cap
  • Investors receive a percentage of revenue until a predefined return multiple is reached
Suggested Default (for early design):
  • A capped revenue share model tied to gross or adjusted gross revenue for transparency
Example (illustrative):
  • 5% revenue share until 1.5× principal is returned
Design in progress.

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Use Cases

Revenue-based instruments are suitable for:
  • Enterprise infrastructure projects with predictable usage revenue
  • Film and media productions with revenue participation structures
  • Real estate income properties distributing rental income
  • Franchise or licensing models with recurring royalties
These structures align investor returns directly with economic activity.

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Convertible Debt — Introductory Overview

Convertible Debt combines debt-like downside protection with equity-linked upside potential. Core Structure:
  • Begins as a debt instrument with defined yield and maturity
  • Under predefined triggers, converts into equity tokens
Potential Triggers:
  • Future financing round
  • Valuation milestone
  • Maturity date conversion option
Key Parameters:
  • Conversion discount or premium
  • Valuation cap
  • Maximum equity allocation upon conversion
Convertible mechanics require coordination between onchain token logic and offchain legal agreements. Design in progress.

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Indexes — Introductory Overview

Indexes are diversified onchain instruments that bundle exposure across multiple BizShares. Objectives:
  • Reduce single-business risk
  • Provide simplified exposure to sectors or themes
  • Enable passive-style participation
Key Design Components:
  • Weighting methodology (equal weight, revenue-weighted, risk-adjusted)
  • Rebalancing schedule (periodic or rule-based)
  • Dividend/Payout passthrough from underlying BizShares
Index tokens would aggregate cash flows from underlying instruments and redistribute proportionally. Design in progress.

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Market/Exchange Design for Equity & Revenue Tokens

Unlike debt BizShares, equity and revenue tokens may support more flexible market structures. Potential models include: Orderbook-Based Marketplace
  • Peer-to-peer listing and matching
  • Price discovery through bids and asks
Automated Market Maker (AMM)
  • Liquidity pools facilitate continuous trading
  • Algorithmic pricing based on pool balances
Managed Liquidity Model
  • Protocol-curated liquidity with guardrails
  • Hybrid between AMM and controlled swaps
The final market design must balance:
  • Regulatory considerations
  • Liquidity depth
  • Volatility management
  • Investor protection
Design in progress.