It is all about trust. When we stopped bartering goods and start paying with gold and silver coinswhatever our usage of the technique deems necessary. It is really great.
And so we thought of a way to fund our projects in a new way. Instead of spending enormous amounts of money on performing an IPO (Initial Public Offering) and making our company public, we use blockchain to crowdfund our companies, projects, and objects. Great! New territory. Away from time and money consuming corporate finance institutions, regulators and regulations.
With this new funding method came the scams. Of course. We will be very naïve to think that a new way to ‘easy’ money won’t attract frauds. Does that make the discoveries we made less valuable? I think not. I think it is very important that as a community, we work out ground rules and regulations. I believe we can. If we want to.
At Walnut, we looked into basic usage of issuing tokens. I wrote already about financing houses, about a fund. That is because we really believe in this way of financing and the opportunities blockchain technology is offering.
We also thought about trust and guarentees for investors. We came up with the idea of a foundation. A foundation that manages pledged assets. We are working on our first house financing ITO and have the foundation in place. The foundation will become legal owner of the house that is bought for our customer, until the investors are repayed in full. Then legal ownership shifts to the owner.
It made us think: If we construct this structure for ourselves, why not use the foundation to manages pledged assets for other asset backed tokens issuers? We can. The foundation can. We do need to add a supervisory board but that is doable.
Using the foundation, a token issuer can close a contract with the foundation to manages the assets. The token issuer pays a fee for this management. The assets (property, shares, other assets) are pledged by a deed to the foundation. In this deed the notary decribes what is pledged and under what conditions, the pledge ends. The issuer can publish the deed in his/her whitepaper, as an extra security measurement to give comfort to their investors. Since the foundation is independant from the issuer, and is controlled by an independent board, it really offers a securisation for the token buyer.