It’s 2025 and you are relaxing on your favorite beach.

You whip out your smartphone and within minutes

you’ve...

...bought shares in an innovative startup halfway across

the world

...traded a fraction of a Picasso painting for a fantastic

pair of collectible sneakers

...invested in the copyright license of your favorite movie

...swapped your gold & platinum holdings for fractional

ownership of a private plane and a cruise liner...

...invested in fractional ownership of an office building in

an upcoming high-rent location...

That’s the power of tokenization, and it starts with this

book.
 Contents

1. Understanding Blockchains.................................09
1.1 Blockchains are Internets of Value............................09
1.2 Types of Blockchains....................................................12
1.3 Atomic Exchange Transactions..................................13
1.4 Smart Contracts............................................................14
1.5 Blockchain Selection Checklist...................................17
1.6 Decentralized Finance (DeFi)......................................21

2. Understanding Blockchain Tokens.......................26

2.1 Types of Blockchain Tokens........................................26
2.2 Blockchain Token Metrics............................................31
2.3 ROHAS Token Valuation Method...............................65

3. Understanding Token Economics.........................67

3.1 Token Ecosystem..........................................................69
3.2 Token Economics Parameters....................................71
3.3 Token Economic Models..............................................77
3.4 Token Distribution Methods........................................82
3.5 What does a Token Economist do?...........................85
3.6 Token Whitepapers.......................................................86
4. Understanding Tokenization................................93
4.1 The Tokenization Equation..........................................93
4.2 Benefits of Tokenization...............................................96
4.3 Interesting Tokenization Projects............................116

5. HYFI Tokenization Checklists.............................120

5.1 Art...................................................................................121
5.2 Carbon Credits.............................................................125
5.3 Copyright Licenses.....................................................129
5.4 Diamonds......................................................................133
5.5 Private Equity...............................................................137
5.6 Rare Collectibles..........................................................142
5.7 Real Estate....................................................................147
5.8 Structured Financial Products..................................151
5.9 Tax Deeds.....................................................................156
5.10 Whisky Casks............................................................161
Asset Tokenization can 10x the Crypto Market!

A Boston Consulting Group (BCG) report predicts

that the total size of illiquid asset tokenization
globally would be $16 trillion by 2030.

Considering that the total market capitalization

of Crypto is currently 1.6 trillion, that's an
amazing 10x opportunity!
About the Author
Rohas Nagpal is the Chief Blockchain Architect of
Hybrid Finance Blockchain (HYFI).

He began his career as a hacker in the early 1990s, In

1999, he co-founded the Asian School of Cyber Laws,
dedicating 16 years to cyber investigation and cyber
law.

His work spanned 18 countries, investigating cyber

crimes & data breaches for hundreds of organizations
across sectors like aerospace, banking, law
enforcement, pharma & shipping.

During this time, he also assisted the Government of

India in framing draft rules under the Information
Technology Act.

6
He also authored the Cyber Crime Investigation
Manual, hailed as a "bible for cybercrime investigators"
by the Times of India.

In 2016, he co-founded BankChain, a community of 37

banks + IBM, Microsoft, and Intel. The core product
was a self-building blockchain ecosystem with a web
app, PWA & Blockchain REST API service.

He has also been a consultant for the Reserve Bank

Innovation Hub for preparing a Whitepaper on
Non-Fungible Tokens (NFT) and Central Bank Digital
Currency (CBDC).

He writes a weekly newsletter for Mint, advise several

Blockchain startups, and has developed the Blockchain
Token Valuator.

He also conducts the free Blockchain Engineering

Program.

You can connect with him on LinkedIn, Instagram,

Twitter, Facebook, and YouTube.

7
(c) 2023-24 Rohas Nagpal. All rights reserved.
Version 2 dated 4 Jan 2024.

The information in this publication is for general

information only and should not be taken as
constituting professional advice from me.

I am not a financial adviser. You should consider

seeking independent legal, financial, taxation, or other
advice to check how the information relates to your
unique circumstances.

I am not liable for any loss caused, whether due to

negligence or otherwise arising from the use of, or
reliance on, the information provided directly or
indirectly.

I link to external resources for your convenience. I am

selective about them but I don’t endorse them.

No investigation has been made of common-law

trademark rights in any word.

During the preparation of this work, I have used

ChatGPT in order to make the information more
engaging and simpler to read. After using this tool /
service, I have reviewed and edited the content as
needed.

8
 1. Understanding Blockchain

1.1 Blockchains are Internets of Value

The conventional internet uses protocols like TCP/IP

and SMTP to move data across the globe in seconds
(email, video pdf, text, messages, etc).

Blockchains enable the movement of value across the

world in seconds.

This value can be cryptocurrencies like Bitcoin and

Monero or tokenized versions of real-world assets like
airplanes, carbon credits, real estate, whisky casks etc.

Tokenization of real-world assets is the most

important Blockchain use case.

Blockchains can minimise fraud and maximise

efficiency, security & transparency in supply chains,
healthcare, global money systems, financial
technologies, democratic elections, auction of public
assets, energy trading, electronic record authentication,
delivery of Government services, IoT and much much
more.

9
Quick facts

1. Blockchain technology was invented by the unknown

inventor of the Bitcoin crypto-currency in 2008. Simply
put, the bitcoin crypto-currency runs on the bitcoin
blockchain — a public blockchain where anyone can
become a miner and details of every single bitcoin
transaction are stored on each node.

2. Blockchain is an innovative mix of decades old, tried

and tested technologies including Public key
cryptography (1970s), Cryptographic hash functions
(1970s) and proof-of-work (1990s).

3. Blockchains are provably immutable and enable the

rapid transfer and exchange of crypto-tokens (which can
represent assets) without the need for separate
clearing, settlement & reconciliation.

4. Blockchains can handle data authentication &

verification very well. This includes immutable storage
(data stored on a blockchain cannot be changed or
deleted), digital signatures and encryption. Data in
almost any format can be stored in the blockchain.

5. Blockchains can create public-private key pairs and

also be used for generating and verifying digital
signatures.

10
6. Blockchains can handle smart asset lifecycle
management very well. This includes issuance,
payment, exchange, escrow, and retirement of smart
assets.

7. Blockchains do not have a single point of control or

a single point of failure.

8. For organizations, blockchain technology can

minimize fraud; accelerate information and money flow;
greatly improve auditability and streamline processes.

9. The original blockchain, which powers the Bitcoin

crypto-currency, used proof of work as a consensus
mechanism.

But today there are multiple distributed ledger systems

that offer a host of consensus mechanisms such as
Proof of stake, Byzantine fault tolerant, Deposit based
consensus, Federated Byzantine Agreement, Proof of
Elapsed Time, Derived PBFT, Redundant Byzantine Fault
Tolerance, Simplified Byzantine Fault Tolerance,
Federated consensus, Round Robin and Delegated
Proof of Stake.

10. Blockchain solutions can be permissioned or

permissionless. Blockchain solutions can also be
private, public or hybrid.

11
1.2 Types of Blockchains

Blockchains can be of various types:

Layer-1 Blockchains: These blockchains validate &

execute transactions without the need for any external
network. Examples: Bitcoin, Ethereum, HYFI Blockchain.

Layer-2 Blockchains: These blockchains are

"sidechains" built on top of Layer-1 blockchains. The
underlying Layer-1 (e.g. Ethereum) provides
decentralization & security, while the Layer-2 (e.g.
Polygon PoS) provides scalability.

Permissionless blockchains: Anyone can participate on

public / permissionless blockchains without restrictions.
Examples: Bitcoin, Litecoin, Ethereum.

Permissioned blockchains: Various controls can be set

in a private / permissioned blockchain.

Example: Hybrid Finance Blockchain (HYFI) where

permissions such as connect, send, receive, issue,
create, mine, activate, and admin can be set.
12
1.3 Atomic Exchange Transactions

Think of a blockchain transaction like a multi-tasker. It

can handle many deals at once, each going to different
blockchain addresses.

For example, it can do two things in one go: send dollars

from person A to B, and at the same time, send Euros
from B to A. This is like a swap, but it's super secure.

The best part? Everything in the transaction happens all

at once or not at all. This makes sure that both sides of
the deal are completed together, which is really
important in finance.

This is called a "delivery-versus-payment" or DvP

transaction.

For a technical deep-dive into how Atomic Exchange

Transactions work, watch this video:
https://www.youtube.com/watch?v=li9guOpF9oI

13
1.4 Smart Contracts

A smart contract is a computer program that

automatically executes the terms of a contract when
certain conditions are met.

These conditions are written into the code of the

contract, and when they are met, the contract executes.

These terms can include anything that two or more

parties would agree to in a traditional contract e.g.
terms of payment, delivery date, quality of a product or
service, etc.

Smart contracts are stored on a blockchain. This

makes them transparent, secure & immutable.

Example: If the terms of the contract state that

payment will be made upon delivery of the product, the
smart contract will automatically transfer the funds to
the seller's account when the delivery is confirmed.

Smart contracts can interact with other systems &

technologies through the use of external data oracles.
They provide smart contracts with access to real-world
information such as prices, weather conditions, etc.
14
Smart contracts v traditional contracts

Smart contracts differ from traditional contracts in 3

ways.

Smart contracts are digital contracts that are

self-executing and operate based on predefined rules
encoded in computer programs.

On the other hand, traditional contracts are written in

natural language and require legal interpretation and
enforcement by a third party.

Smart contracts operate on blockchain technology,

which provides a distributed and decentralized ledger
that is transparent, immutable, and secure.

In contrast, traditional contracts are typically stored in

centralized systems that are susceptible to
manipulation.

Smart contracts are designed to automate processes &

eliminate intermediaries, resulting in faster & more
efficient transactions.

Traditional contracts, on the other hand, often require

manual processing and involve multiple parties, which
can result in delays, errors & disputes.

15
The biggest advantage of Smart Contracts

The biggest advantage of smart contracts is that they

are self-executing, which means that there is no need
for a third party to enforce the terms of the contract.

This makes smart contracts faster, cheaper & more

efficient than traditional contracts.

16
1.5 Blockchain Selection Checklist

A Blockchain is suitable for tokenization use cases if it

satisfies these criteria:

❏ Verified Node Operators from Compliant

Jurisdictions: Nodes must be operated by entities
verified in jurisdictions compliant with the Financial
Action Task Force (FATF).

❏ Robust KYC, AML, and CFT Policies: Node

operators should have strong policies for customer
identification and verification, anti-money laundering
(AML), and countering the financing of terrorism
(CFT).

❏ Regulatory Real-time Monitoring: Availability of

nodes for regulators to monitor activities in
real-time.

❏ Permissioned Addresses Based on KYC Level:

Granting permissions to each blockchain address
according to the level of Know Your Customer (KYC)
compliance.
17
❏ Comprehensive Regulatory Support: Full support
for KYC, AML, CFT, consumer protection,
right-to-be-forgotten regulations, and data privacy.

❏ Asset Freeze and Unfreeze Capabilities: Ability to

freeze and unfreeze assets based on legal orders.

❏ Direct Regulatory Control Over Assets: Allow

regulators to directly freeze and unfreeze assets
using dedicated nodes.

❏ Business, Compliance, and Regulatory Oversight

Support: Adequate features for supporting business
operations while complying with regulatory
frameworks.

❏ Off-Chain Data Purging: Support for the selective

removal of off-chain data to comply with
right-to-be-forgotten regulations.

❏ Secure Peer-to-Peer Connections: Fully encrypted

P2P connections to ensure data privacy.

❏ External Private Key and Multi-Signature Support:

Enabling the use of external private keys and
multi-signatures for enhanced security.

❏ Cold Node Availability: Provision for cold nodes to

keep private keys offline, reducing the risk of
unauthorized access.
18
❏ High Transaction Throughput: Capability to handle
large volumes of transactions efficiently.

❏ Low Block Time for Efficiency: Reduced latency

with low block time to enhance transactional
efficiency.

❏ Integration with External Applications: Ease of

integration with other applications through
standardized interfaces like JSON-RPC API.

❏ Scalability and Future-Proofing: Ability to scale and

adapt to future technological advancements and
regulatory changes.

❏ Energy Efficiency: Consideration of the

blockchain's energy consumption, particularly for
environmentally sustainable operations.

❏ Disaster Recovery and Data Redundancy: Robust

mechanisms for disaster recovery and data
redundancy to prevent data loss.

❏ Customizable Smart Contract Templates:

Availability of customizable templates for smart
contracts to cater to diverse tokenization needs.

❏ Audit Trails and Transparency: Comprehensive

audit trails for transactions to ensure transparency
and ease of auditing.
19
❏ Cross-Border Compliance: Capability to comply
with international regulations and facilitate
cross-border transactions.

❏ Interoperability with Other Blockchains:

Facilitating the seamless transfer of assets across
different blockchain networks.

❏ User Privacy Protection: Mechanisms to protect

user privacy without compromising regulatory
compliance.

20
1.6 Decentralized Finance (DeFi)

Decentralized Finance (DeFi) is an umbrella term for

financial applications powered by blockchain
technology.

Apart from Tokenization of Real World Assets, some of

the important DeFi categories are:

1. Bridges
2. Collateralized Debt Positions
3. Derivatives
4. Decentralized Exchanges
5. Farms
6. Indexes
7. Lending
8. Liquid Staking
9. Options
10. Oracles
11. Payments
12. Prediction Markets
13. Staking
14. Synthetics
15. Yield
16. Yield Aggregators
21
1. Blockchain Bridges

A bridge receives one type of crypto, locks it as a

deposit, and then "mints" an equal amount of another
crypto and releases it on another blockchain.

Examples: Wrapped Bitcoin (WBTC), Multichain, and Just

Cryptos (JST).

2. Collateralized Debt Positions

Collateralized Debt Positions (CDPs) are protocols that

mint their own stablecoins using collateral.

Examples: MakerDAO (MKR), JustStables (USDJ).

3. Derivatives

Derivatives are Smart Contracts that get their value, risk,

and basic structure from an underlying asset.

Examples: Synthetix (SNX), Keep3r Network (KP3R),

dYdX (DYDX).

4. Decentralized Exchanges

Decentralized Exchanges (Dexes) are protocols that

enable users to swap / trade cryptos without the need
for KYC (Know Your Customer) processes.

22
Examples: Uniswap (UNI), Curve (CRV), PancakeSwap
(CAKE).

5. Farms

Farms lock money in exchange for their token.

Examples: TokensFarm, ZoomSwap (ZM), and Goose
Finance (EGG).

6. Indexes

Indexes are protocols that track the performance of a

group of related assets.

Examples: Set Protocol, Index Coop (INDEX), Enzyme

Finance (MLN).

7. Lending

Lending protocols enable users to borrow and lend

cryptos.

Examples: AAVE, JustLend (JST), and Compound

(COMP).

8. Liquid Staking

Liquid staking rewards liquidity for staked assets.

Example: Lido (LDO), Rocket Pool (RPL), and Marinade

Finance (MNDE). 23
9. Options

Options are protocols that give you the right to buy or

sell crypto at a pre-decided price.

Examples: Opyn, Ribbon Finance (RBN), and Friktion.

10. Oracles

Oracles are protocols that bring information from the

outside to the blockchain and vice versa.

Examples: Nest Protocol (NEST), WitSwap (eWIT), and

Umbrella Network (UMB).

11. Payments

Payment protocols enable the payment / sending /

receiving of cryptos.

Examples: Flexa (AMP), Sablier Finance, and Lightning

Network.

12. Prediction Markets

Prediction Markets are protocols that enable

wagering/betting in future events.

Examples: Polymarket, Azuro, and BetHash (HASH).

24
13. Staking

Staking protocols reward users for “holding” their

cryptos.

Examples: MoneyOnChain (MOC), Stafi (FIS), and

ThetaCash (TBILL).

14. Synthetics

Synthetics are protocols that create tokenized

derivatives that mimic the value of other assets.

Examples: Alchemix (ALCX), Injective (INJ), Youves

(YOU).

15. Yield

Yield protocols reward users for staking or providing

liquidity.

Examples: Convex Finance (CVX), Arrakis Finance, and

Alpaca Finance (ALPACA).

16. Yield Aggregators

Yield Aggregators are protocols that aggregate yield

from multiple DeFi protocols. Examples: Yearn Finance
(YFI), Beefy (BIFI), and Badger DAO (BADGER).

25
 2. Understanding Blockchain
Tokens

Blockchain Tokens are digital assets that can be traded

on a blockchain and are often used:
1. to incentivize participation in the network,
2. to represent a claim on underlying assets, or
3. to serve as a medium of exchange.

2.1 Types of Tokens

From Algorithmic Tokens to Virtual Financial Assets,

there are 17 types of Blockchain Tokens.

1. Algorithmic Tokens

Tokens that use an algorithm to vary the supply in order

to stabilize price / volatility e.g. UST (now defunct) a
so-called algorithmic stablecoin of the Terra ecosystem.

Interestingly, Algorithmic Tokens are prohibited by the

Dubai Financial Services Authority (DFSA) - the
independent regulator of financial services conducted in
or from the Dubai International Finance Centre (DIFC).

26
2. Asset-backed Tokens

Tokens that are backed by off-chain assets such as fiat

currency, agricultural commodities, and precious metals
e.g. USD Coin (USDC), and PAX Gold (PAXG).

3. Crypto Currencies

Tokens that can be used to buy and sell products &

services or which can be quickly converted to 'cash' e.g.
Bitcoin (BTC), Litecoin (LTC), Bitcoin Cash (BCH).

4. Crypto-backed Tokens

Tokens backed by on-chain assets such as

cryptocurrencies e.g. Wrapped Bitcoin (WBTC).

5. DeFi Tokens

Tokens that are part of Decentralized Finance (DeFi)

protocols such as Collateralized Debt Positions (CDP).
For more about DeFi, see this post: What is DeFi?

6. DFSA Recognized Crypto Tokens (Dubai)

Tokens recognized by Dubai Financial Services

Authority (DFSA) - the independent regulator of financial
services conducted in or from the Dubai International
Finance Centre (DIFC): Bitcoin (BTC), Litecoin (LTC), and
Ether (ETH).
27
7. Exempt NFTs (India)

Tokens that are exempt from taxation as NFTs in India -

whose transfer results in the enforceable transfer of
ownership of underlying tangible assets.

8. Exempt Virtual Digital Assets (India)

Tokens exempt from taxation as VDAs in India - gift

cards & vouchers, mileage points, reward points, loyalty
cards, and subscriptions to websites, platforms, and
applications.

9. Fractional Licenses of Intellectual Property (FLIPs)

Tokens that represent the whole or part of licenses

relating to copyright, industrial designs, patents, and
trademarks.

10. Governance Tokens

Tokens that give holders a vote in a project’s

development e.g. Uniswap (UNI), Hybrid Finance
Blockchain (HYFI).

11. Non-fungible Tokens (NFTs)

NFTs are unique digital assets representing ownership

or proof of authenticity of one-of-a-kind items.

28
12. Open Blockchain Tokens (Wyoming, US)

Tokens issued under Wyoming, US law HB0070 - Open

blockchain tokens-exemptions e.g. Wrapped Asset
Project (WRAP).

13. Privacy-enhanced Currencies

Tokens that are either private by default or which allow

the activation of privacy functionality e.g. Monero
(XMR).

Interestingly, Privacy-enhanced Currencies are

prohibited by the Dubai Financial Services Authority
(DFSA) - the independent regulator of financial services
conducted in or from the Dubai International Finance
Centre (DIFC).

14. Public Blockchain Natives

Tokens that are used for paying fees for usage of a

public blockchain e.g. Ether (ETH).

15. Security Tokens

Tokens that represent equity or ownership of a

company.

29
16. Utility Tokens

Tokens that are part of a specific use case e.g. Filecoin

(FIL) which is the incentive layer of the IPFS
decentralized storage ecosystem.

17. Virtual Financial Assets (Malta)

Tokens that are recognized under the Virtual Financial

Assets Act of Malta e.g. Chiliz (CHZ).

30
2.2 Blockchain Token Metrics

Blockchain Token Metrics are essential indicators that

help investors & traders understand the performance &
potential of blockchain tokens.

Blockchain Token Metrics are primarily divided into 10

categories:

1. Supply Metrics
2. Capitalization Metrics
3. Volume Metrics
4. Price Metrics
5. Holders' Statistics
6. RoI Metrics
7. DeFi Metrics
8. Consensus Metrics
9. Staking Metrics
10. Mining Metrics
31
 2.2.1 Supply Metrics

Supply Metrics comprise:

1. Circulating Supply
2. Total Supply
3. Maximum Supply
4. Inflation
5. Stock to Flow
6. Vladimir Club Cost

1. Circulating Supply

Circulating supply refers to the number of tokens that

are publicly available and actively circulating in the
market. It represents the portion of the total supply that
investors can buy, sell, or trade.

The circulating supply can change over time due to

various factors such as:
1. mining,
2. staking,
3. burning, or
4. token release schedules.

Circulating supply is a crucial metric because it directly

impacts a token's market capitalization (market cap).

32
Market cap is calculated by multiplying the current
market price of a token by its circulating supply.

Market cap = Current Price x Circulating Supply

This value helps investors compare the relative size &

worth of different tokens, providing insights into their
potential risk & return profiles.

A lower circulating supply may suggest scarcity and

higher demand, possibly leading to a price increase.

Conversely, a higher circulating supply could indicate

that a token is more readily available, potentially making
it less valuable.

2. Total Supply

Total Supply refers to the number of tokens in existence,

including those in circulation and those held in reserve,
locked, or not yet released.

The total supply may change over time as new tokens

are mined or created, or existing tokens are burned or
destroyed.

3. Maximum Supply

Maximum Supply is the predetermined maximum

number of tokens that will ever exist for a project.
33
Once the maximum supply is reached, no new tokens
will be created. This limit is often imposed to maintain
scarcity & value.

Examples:
● Bitcoin: 21 million
● Ether: Unlimited
● HYFI: 1 billion

4. Inflation

Inflation refers to the increase in the supply of a

particular token over time, which can affect its value &
purchasing power.

Unlike traditional currencies managed by central banks,

blockchain tokens often have predetermined issuance
schedules and supply limits coded into their protocols.

Inflation in tokens typically occurs through the process

of mining or staking, where new coins are issued as
rewards to participants who validate transactions and
secure the network.

Inflation = Projected 12-month increase in CS / Current

CS

The rate of inflation varies across different projects,

depending on their issuance model, block rewards, and
supply caps.
34
In proof-of-work (PoW) tokens like Bitcoin, new coins
are created through mining, where miners compete to
solve complex mathematical problems to add new
blocks to the blockchain.

The successful miner receives a block reward in the

form of newly minted coins, contributing to the increase
in circulating supply.

In proof-of-stake (PoS) and delegated proof-of-stake

(DPoS) tokens like Ether, new coins are issued to
validators or delegators who lock up or "stake" their
coins in the network.

The new coins are distributed as rewards for validating

transactions and maintaining network security.

Inflation can have several effects on the value &

dynamics of tokens:

● Dilution of Value: When new coins are issued

through mining or staking, the value of existing
coins may be diluted, potentially impacting
long-term holders.

● Incentive for Network Participants: Inflation can

serve as an incentive for miners, validators, and
stakers to participate in the network, promoting
decentralization and security.

35
● Deflationary Mechanisms: Some tokens, like
Bitcoin, employ deflationary mechanisms such as
halving events, where block rewards are reduced
over time. This approach can counteract inflation,
ensuring scarcity and potentially increasing the
value of the digital asset.

5. Stock to Flow (S2F)

The Stock to Flow model is a widely-used valuation tool

for commodities like gold & silver, and it has been
adapted to analyze cryptocurrencies like Bitcoin.

It is a ratio that compares the existing supply (stock) of

an asset to its annual production rate (flow).

S2F = Stock / Flow

Stock to Flow = Current CS / Projected 12-month

increase in CS

In the context of cryptocurrencies, the stock represents

the circulating supply of coins, while the flow refers to
the rate at which new coins are created (e.g., through
mining).

According to the S2F model, an asset's value is directly

related to its scarcity, with a higher S2F ratio indicating
greater scarcity and potentially higher value.

36
6. Vladimir Club Cost

The Vladimir Club is the cost of owning 1% of 1% of a

crypto's eventual supply.

Example: Bitcoin's maximum supply is 21 million coins.

To be "in the Vladimir Club" for Bitcoin, you would need
21 million x 0.01 x 0.01 i.e. 2100 BTC.

37
 2.2.2 Capitalization Metrics

Capitalization Metrics comprise:

1. Market Capitalization
2. Fully Diluted Market Capitalization

1. Market Capitalization

Market Capitalization is an extensively used metric to

measure the relative size of a token. It is calculated by
multiplying the current market price of a token by the
total number of tokens in circulation.

Market Capitalization = Circulating Supply x Current Price

It's a simple way to gauge the worth of a token, and it

also helps investors make decisions about investing in
one token over another. However, it's important to note
that a high market cap does not necessarily mean a
token is more valuable; it just means it's more widely
held.

Historically, Bitcoin (BTC) has always had the highest

market capitalization and Ethereum the second highest.
If this reverses, it would be called the Flippening.

38
2. Fully Diluted Market Capitalization

Fully Diluted Market Capitalization (FDMC) is a variant of

market cap that takes into account the maximum
possible number of tokens that can exist for a particular
token. This includes tokens that have already been
released or mined, but also tokens that have been
announced but not yet released into circulation.

In simple words, FDMC is the market capitalization if the

maximum supply was in circulation.

FDMC = Price x Max Supply

If the maximum supply is unknown or unlimited, like in

ETH, then:

FDMC = Price x Total Supply

If the maximum supply and total supply are both

unlimited, then we can't calculate the FDMC.

FDMC gives an indication of the potential value of a

token, should all the potential tokens be released.

This is particularly useful for new projects where the

total supply of tokens is not yet in circulation. Investors
can use this as a tool to understand the possible future
value of a token.

39
Comparing Market Cap & FDMC

While both these metrics provide useful insights, they

serve different purposes.

Market cap gives a snapshot of a token's current value

in the market, while FDMC aims to show its potential
value in the future.

A significant gap between the two could indicate a large

number of tokens waiting to be released into the
market. This could lead to a dilution of token value in the
future, and investors must take this into account.

40
 2.2.3 Volume Metrics

Volume Metrics comprise:

1. Trading volume
2. Transaction volume
3. Volume to MarketCap Ratio
4. Velocity

1. Trading volume

Trading volume refers to the total quantity of a specific

token that is traded within a given time frame.

If the trading volume is high, it suggests that the token

is highly liquid and popular among investors.
Conversely, a low trading volume might indicate a less
popular token or potentially low liquidity.

The trading volume provides insight into the market

activity surrounding a blockchain token. It is a critical
gauge of investor sentiment and market confidence.

Example: A sudden spike in trading volume could

suggest a significant market event or news about the
token, such as a new partnership or technological
upgrade.

41
2. Transaction volume

Unlike trading volume, which focuses on

exchange-based trading, transaction volume refers to
the total quantity of tokens transferred on the
blockchain network.

This metric is not limited to trading activities on

exchanges but also includes all token transfers
happening on-chain.

A token with a high transaction volume signifies that it is

widely used in the network for various transactions,
including, but not limited to, smart contract interactions,
payments, or fees.

This could indicate that the token has a high utility

beyond speculative trading, showing its inherent value
within the blockchain ecosystem.

3. Volume to MarketCap Ratio

The Volume to MarketCap Ratio is a significant

parameter that provides an additional layer of market
sentiment analysis.

Volume to MarketCap Ratio (VMR) is calculated by

dividing the 24-hour volume by the Market
Capitalization. This is also called Volume Turnover
(24H).
42
VMR = 24-hour volume / Market Capitalization

By comparing the trading volume of a token to its

market capitalization (the total market value of a token's
circulating supply), we can get a sense of the token's
liquidity and activity level relative to its size.

A high ratio suggests a high level of trading activity,

potentially indicating investor excitement or panic,
depending on the market context.

Conversely, a low ratio could mean the token is in a

period of relative stability, with fewer transactions
happening compared to its overall market size.

4. Velocity

Velocity is a measure of how quickly tokens are moving

between wallets in the network. It's calculated by
dividing the on-chain transaction volume by the average
network value (a rough estimate of the blockchain's
market cap).

A higher velocity might indicate that the token is

commonly used for transactions and has a high utility in
its network. However, high velocity could also suggest
that users are not holding onto the token, possibly due
to low speculative or inherent value.

43
Meanwhile, a lower velocity suggests that token holders
might be treating the token more as a store of value or a
speculative asset, rather than using it for transactions.

44
 2.2.4 Price Metrics

Price Metrics comprise:

1. Price USD
2. Price BTC
3. Open-High-Low-Close prices
4. All-time-high (ATH)
5. All-time-low (ATL)
6. Time from ATH
7. Percentage down from ATH
8. Breakeven Multiple
9. Cycle Low
10. Time Since Low
11. Percentage Up Since Low

1. Price USD
Price USD is the crypto's most recent trading price in US
Dollars. Ideally, this should be averaged across multiple
credible exchanges. Similarly, there can be Price INR,
Price EUR, Price SGD, etc.

2. Price BTC

Price BTC is the current price of a particular

cryptocurrency expressed in Bitcoin. Since Bitcoin is the
leading cryptocurrency in terms of market cap, other
cryptocurrencies are often compared against it to
evaluate their value.

45
This metric allows investors to understand how the
specific cryptocurrency is performing in comparison to
Bitcoin.

Cryptos can also be quoted in sats / satoshis which is

0.00000001 BTC.

3. Open-High-Low-Close (OHLC) Prices

OHLC is a technique used in charting to represent the

opening, closing, highest, and lowest prices of a
cryptocurrency during a particular time period, such as
an hour, a day, or a month.

Here is what each component means:

Open: The price at which the cryptocurrency began the

period.

High: The highest price reached during the period.

Low: The lowest price reached during the period.

Close: The price at which the cryptocurrency ended the

period.

These metrics give traders a concise view of the price

fluctuations within the chosen period.

46
4. All-Time-High (ATH)

This metric represents the highest price point that a

particular cryptocurrency has achieved in its entire
trading history.

This is often used to compare the current price with the

peak performance of the asset. It can give a perspective
on how far the asset's price has corrected from its
previous peak.

You should also check out the high prices over the last
24 hours, 7 days, 30 days, 90 days, and 52 weeks.

5. All-Time-Low (ATL)

The all-time low (ATL) is the lowest price point that a

cryptocurrency has reached since it started trading.

Just like the ATH, it gives an idea of the extreme lows

that the asset has seen and how much it has recovered
since then. You should also check out the low prices
over the last 24 hours, 7 days, 30 days, 90 days, and 52
weeks.

6. Time from ATH

This metric measures the time that has elapsed since

the cryptocurrency last hit its all-time high.

47
This can provide insight into the length and severity of
bear markets and the potential timing for a recovery to
new highs.

7. Percentage Down from ATH

This metric is a measure of how far the current price is

from its ATH in percentage terms. It can help gauge the
severity of a price correction or crash.

Example: Bitcoin's ATH was $69,045 and it's currently

trading at $26,278, it is roughly 62% down from its ATH.

8. Breakeven Multiple

The breakeven multiple shows how much the price

needs to multiply from its current level to reach its ATH
again.

Example: A coin's ATH was $10 and it is currently at $2,

the breakeven multiple is 5, meaning the price would
need to increase 5 times to reach the ATH.

9. Cycle Low

The cycle low refers to the lowest point that a

cryptocurrency reaches in its market cycle. Market
cycles are characterized by periods of highs (peaks) and
lows (troughs).

48
Identifying the cycle low can provide potential entry
points for long-term investment.

10. Time Since Low

Time Since Low is the measure of the time that has

passed since the cryptocurrency last reached its cycle
low.

It provides an idea of the length of the ongoing bull

market and might hint at the expected time left for
growth before the next bear market starts.

11. Percentage Up Since Low

This metric shows how much the price has increased

from its cycle low in percentage terms. For instance, if a
crypto's cycle low was $30,000 and it's currently trading
at $60,000, it's 100% up from its low.

This metric can provide insights into the current stage

of the market cycle and the gains that have been
achieved from the last bottom.

49
 2.2.5 Holders' Statistics

Holders' Statistics comprise:

1. Active Addresses
2. Whales

1. Active Addresses

Active Addresses is the number of unique addresses

that participated in a transaction anytime during the
past 24 hours.

2. Whales

Whales are addresses that own more than 1% of the

circulating supply of a crypto asset. Whale transfers
from cold wallets to exchanges and vice versa are very
important to track.

50
 2.2.6 ROI Metrics

Return on Investment (ROI) measures the amount of

return on a crypto investment, relative to its cost.

ROI = Profit / Cost

ROI (Return on Investment) Metrics comprise:

1. Short-Term ROI
2. ROI by Year

1. Short-Term ROI

A crypto's ROI is the percentage return over a specific

period - 7 days, 30 days, 90 days, 1-year period, etc.

2. ROI by Year

ROIs by Year is the percentage return of a crypto asset

from the beginning to the end of a specific year.

51
 2.2.7 DeFi Metrics

DeFi Metrics comprise:

1. Total Value Locked
2. Borrowing volume
3. Capital deployed
4. Protocol revenue
5. Annualized protocol revenue
6. Annualized total revenue
7. Supply-side revenue
8. Token incentives
9. Total revenue
10. Price-to-Earnings (P/E) ratio
11. Price-to-Sales (P/S) ratio

1. Total Value Locked

Total Value Locked (TVL) represents the total value of

assets (usually in cryptocurrency) locked within a DeFi
protocol or platform.

It is an important metric as it indicates the level of

adoption and usage of the protocol. TVL demonstrates
the trust and confidence users have in a particular
protocol.

52
For example, if MakerDAO (MKR) has a TVL of $6.29
billion, it means that users have collectively locked
$6.29 billion worth of assets within that protocol.

2. Borrowing volume

Borrowing Volume measures the total amount of funds

borrowed from a DeFi protocol.

It reflects the demand for borrowing services within the

ecosystem and can indicate the activity level and
growth of the protocol.

This usually applies to these categories:

1. Lending Protocols that enable users to borrow and

lend assets.

2. Leveraged Farming Protocols that enable users to

leverage yield farms with borrowed money.

3. Uncollateralized Lending Protocols that enable

users to lend against known parties that can borrow
without collateral.

3. Capital deployed

Capital Deployed refers to the amount of funds invested

or utilized within a specific DeFi protocol or project.

53
It includes funds used for lending, liquidity provision, or
other activities within the protocol.

For example, if investors have deployed $10 million in a

decentralized exchange to provide liquidity for trading
pairs, that $10 million represents the capital deployed
within that exchange.

4. Protocol revenue

Protocol Revenue measures the income generated by a

DeFi protocol. It typically includes fees earned from
lending, borrowing, trading, or other services offered by
the protocol.

For instance, if a decentralized lending platform charges

a 1% fee on each loan, and the platform has facilitated
$1 billion in loans, the protocol revenue would amount
to $10 million (1% of $1 billion).

5. Annualized protocol revenue

Annualized Protocol Revenue represents the projected

or estimated revenue of a DeFi protocol over a one-year
period.

It provides a normalized view of revenue and helps

compare protocols on an annual basis.

54
To calculate this metric, the protocol revenue generated
within a specific period is multiplied by the number of
periods in a year.

For example, if a DeFi protocol generates $1 million in

protocol revenue in a month, the annualized protocol
revenue would be $12 million ($1 million * 12 months).

6. Annualized total revenue

Similar to annualized protocol revenue, Annualized Total

Revenue represents the projected or estimated total
revenue of a DeFi protocol, including all revenue sources
such as fees, token incentives, or other income streams.

It takes into account all sources of income generated by

the protocol within a specific period and extrapolates it
to estimate the total revenue over a year.

7. Supply-side revenue

Supply-Side Revenue refers to the revenue generated

from providing liquidity or assets to a DeFi protocol,
such as earning interest or fees as a liquidity provider in
a decentralized exchange.

For example, in a lending protocol, liquidity providers

earn interest on their supplied assets, and that interest
serves as supply-side revenue.

55
8. Token incentives

Token Incentives are rewards provided to users who

participate in a DeFi protocol, often in the form of the
protocol's native tokens. These incentives can include
token distributions, staking rewards, or other
mechanisms to encourage participation & engagement.

For instance, a DeFi protocol might distribute tokens as

rewards to users who provide liquidity or stake their
tokens within the protocol.

9. Total revenue

Total Revenue encompasses all sources of income

generated by a DeFi protocol, including protocol
revenue, supply-side revenue, token incentives, and
other revenue streams.

It provides a holistic view of the overall revenue

generated by the protocol. Calculating the total revenue
involves summing up all the different revenue streams
of the protocol.

10. Price-to-Earnings (P/E) ratio

This is the fully diluted market cap (FDMC) divided by

annualized protocol revenue (APR).

P/E = FDMC / APR

56
11. Price-to-Sales (P/S) ratio

Price-to-Sales (P/S) ratio is the fully diluted market cap

(FDMC) divided by annualized total revenue (ATR).

P/E = FDMC / ATR

Notes about P/E and P/S ratios:

Some protocols have only supply-side revenue and

hence their P/E ratio cannot be calculated.

Example: In Uniswap (UNI), all the trading fees go to the

liquidity providers (supply-side).

Some protocols have only protocol revenue and hence

their P/S and P/E ratios are the same.

Example: In MakerDAO (MKR), all interest payments go

to the protocol and are distributed to MKR holders
through buybacks.

Some protocols have both supply-side & protocol

revenue and hence their P/S & P/E ratio are both
available.

Example: In Compound (COMP), interest payments are

divided between lenders (supply-side) & the protocol's
treasury which is managed by token holders.

57
 2.2.8 Consensus Metrics

Consensus Metrics comprise:

1. Targeted Block Time
2. Block Reward

1. Targeted Block Time

Targeted Block Time is the targeted time interval

between two blocks. This is usually measured in
seconds and is defined by the blockchain's
specifications. The actual block time usually differs
from this.

2. Block Reward

The block reward is the newly minted coins that are

awarded to the miner / validator / creator of a new
block. This does not include the transaction fees that
are awarded by the blockchain.

58
 2.2.9 Staking Metrics

Staking Metrics comprise:

1. Annualized Staking Yield
2. Real Annualized Staking Yield
3. Tokens Staking
4. Percentage Network Staking
5. Staking Minimum

1. Annualized Staking Yield

Annualized Staking Yield represents the projected or

estimated yield earned by staking tokens over a
one-year period.

It is a measure of the return on investment (ROI) for

staking activities. Staking involves locking or holding
tokens in a blockchain network to support its operations
and secure the network.

Staking rewards can be in the form of additional tokens

or a percentage of transaction fees. Annualized Staking
Yield helps investors and users assess the potential
earnings they can expect from staking their tokens over
a longer timeframe.

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2. Real Annualized Staking Yield

Real Annualized Staking Yield refers to the actual or

realized yield earned by staking tokens over a one-year
period.

It is the yield that has been earned and received by

stakers during the specified timeframe.

Real Annualized Staking Yield takes into account any

fluctuations or changes in staking rewards and provides
a more accurate reflection of the actual returns from
staking activities.

3. Tokens Staking

Tokens Staking represents the number of tokens that

are currently being staked within a blockchain network
or staking platform.

Staked tokens are typically locked for a certain period

and cannot be freely traded or transferred during the
staking period.

The number of tokens staked provides insight into the

level of participation and engagement of token holders
in the staking process.

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4. Percentage Network Staking

Percentage Network Staking represents the proportion

of total tokens in circulation that are currently being
staked within a blockchain network.

It is calculated by dividing the total number of tokens

staked by the total supply of tokens.

This metric helps gauge the level of network security

and decentralization, as higher levels of staked tokens
indicate a stronger network with a larger portion of
tokens being actively used for securing the network.

5. Staking Minimum

Staking Minimum refers to the minimum number of

tokens required to participate in the staking process.

Some blockchain networks or staking platforms set a

minimum threshold that users must meet to be eligible
for staking rewards.

The staking minimum ensures that participants meet

certain criteria and have a sufficient stake in the network
to contribute effectively.

61
 2.2.10 Mining Metrics

Mining Metrics comprise:

1. Hash Rate
2. Percentage on Nicehash
3. Attack Cost (1H)
4. Attack Cost (24H)
5. Next Halving Date

1. Hash Rate

Hash Rate refers to the computational power or

processing speed of a blockchain network or
cryptocurrency mining operation.

It measures the number of hashes (calculations) a

network can perform per second.

A higher hash rate indicates a more secure and robust

network, as it requires more computational power to
successfully mine new blocks or perform cryptographic
operations.

The hash rate is often measured in hashes per second

(H/s), kilohashes per second (KH/s), megahashes per
second (MH/s), or even terahashes per second (TH/s)
for more powerful networks.

62
2. Percentage on NiceHash

Nicehash is a popular marketplace that connects sellers

(miners) of hashing power with buyers who need it for
various purposes.

Percentage on Nicehash represents the portion of the

overall hash rate of a particular cryptocurrency network
that is being rented or contributed through the Nicehash
platform.

The percentage on Nicehash provides insight into the

extent to which miners are utilizing the Nicehash
platform to monetize their hashing power.

3. Attack Cost (1H)

Attack Cost (1H) refers to the estimated cost required to

perform a 51% attack on a blockchain network for a
duration of one hour.

A 51% attack refers to a scenario where a malicious

entity or group gains control over the majority (51% or
more) of the network's total hash rate.

This control allows the attacker to potentially

manipulate transactions, double-spend coins, or disrupt
the network's operations.

63
Attack Cost (1H) helps assess the security and
resilience of a blockchain network, as a higher cost
makes it more expensive and difficult to carry out such
an attack.

4. Attack Cost (24H)

Attack Cost (24H): Attack Cost (24H) represents the

estimated cost required to perform a 51% attack on a
blockchain network for a duration of 24 hours.

Similar to Attack Cost (1H), this metric helps gauge the

security and resilience of a network by considering the
cost of sustaining a majority control over the network's
hash rate for a longer period.

5. Next Halving Date

The Next Halving Date is the anticipated date when the

block reward for miners is reduced by half in a
blockchain that undergoes periodic halving events.

Halving events are programmed into certain

cryptocurrencies, such as Bitcoin, to control the
issuance rate and create scarcity over time.

The Next Halving Date is significant for miners and

investors as it can impact the mining economics and
potentially affect the supply and demand dynamics of
the cryptocurrency.
64
2.3 ROHAS Token Valuation Method

ROHAS is an acronym for:

Revenue model
Organization
History
Algorithm
Social engagement

R = Revenue model

How does the project generate revenue for the

ecosystem? Or what is the economic impact of the
project?

You can get this information from the official website of

the project, and the Whitepaper & other strategic
documents.

O = Organization

Ideally, the organization / team (founders, dev, business)

must be highly-skilled and respected with strong prior
experience, strong credibility, and positive social media
status.

You can get this information from the official website of

the project, and the LinkedIn profiles of the team
members.
65
 H = History

Carefully analyze the trade pairs, listing on multiple

credible exchanges, and relevant metrics:
1. Supply Metrics
2. Capitalization Metrics
3. Volume Metrics
4. Price Metrics
5. Holders' Statistics
6. ROI Metrics
7. DeFi Metrics
8. Consensus Metrics
9. Staking Metrics
10. Mining Metrics

A = Algorithm

The technology platform, consensus mechanism, and

other tech issues are critical. Is the project developing a
new blockchain? Is it using a tried and tested one? Is it a
hard fork? How scalable is the platform?

S = Social

Ideally, the project must have a large, vibrant, active,

engaged, positive community with a fair share of
fanatics.

66
3. Token Economics

Token economics (tokenomics) studies the design and

implementation of blockchain-based tokens.

Understanding token economics is crucial for anyone

considering investing in or using a particular token.

Token economics involves analyzing:

1. the various factors that influence the supply,

demand, and value of a token, and

2. the role that the token plays within the overall

ecosystem.

Token economics is an important aspect of any

blockchain-based project, as it can have a significant
impact on the success and sustainability of the project.
67
Token economics plays a crucial role in the design and
operation of blockchain-based systems, as it
determines how value is generated, distributed, and
maintained within the network.

Key factors that can influence token economics include:

1. Token issuance

Token issuance covers the total supply of tokens and

the rate at which new tokens are issued. This heavily
impacts the value and demand for a token.

2. Token distribution

Token distribution covers the way in which tokens are

distributed e.g. mining, token sale, premine, etc. It
heavily impacts the value and demand for a token.

3. Token utility

Token utility covers the usefulness and utility of a token.

It heavily impacts the value and demand of a token.

4. Token demand

A token’s demand can be influenced by many factors,

including the perceived value of the token, the perceived
value of the project or platform it is associated with, and
the overall level of adoption of the project.
68
3.1 Token Ecosystem

The Token Ecosystem is the network of participants,

stakeholders, and processes involved in creating,
distributing, and using tokens within a blockchain-based
system. Its key components are:

1. Token issuers

These are the entities that create and issue tokens,

typically through an initial coin offering (ICO) or other
mechanisms.

2. Token holders

These are the individuals or organizations that own and

hold tokens e.g. Decentralized Autonomous
Organizations (DAO).

3. Token exchanges

These are the platforms that allow users to buy and sell
tokens. These can be centralized or decentralized.

4. Token wallets

These are digital wallet services that enable users to

store and manage their tokens. These can be custodial
or non-custodial.
69
5. Token smart contracts

These are the self-executing contracts that are encoded

on the blockchain and enable the automation of certain
processes within the token ecosystem.

6. Token standards

These are the technical specifications and protocols

that define the characteristics and behavior of tokens
within the ecosystem e.g. ERC-20, HYFI-TKN

7. Token regulators

These are the governmental or non-governmental

organizations that oversee and regulate the use of
tokens within the ecosystem.

70
3.2 Token Economics Parameters

Token Economics is not a one-time activity for a

Blockchain project. It’s a constant process.

Here are the 40 parameters in Token Economics.

1. Token allocation: How tokens are divided among

different stakeholders, like founders, investors, users,
and ecosystem development.

2. Distribution mechanisms: Methods used to

distribute tokens, such as Airdrops, ICO, Reverse ICO,
IEO, IDO, DAICO, ETO, STO, SAFT, etc.

3. Incentive structures: Rewards for users and

stakeholders to promote specific behaviors, like network
security, user engagement, or liquidity provision.

4. Token supply: Total number of tokens that exist or

will exist, including fixed or variable supply models.

5. Token type: Classifying tokens based on their use

cases.

6. Token utility: Functions and benefits provided by the

token, like access to services, voting rights, or
discounts.

71
7. Token price: The initial or ongoing value of the token,
determined by factors like demand, supply, utility, and
market conditions.

8. Token vesting: A process where tokens are released

over time to stakeholders, encouraging long-term
commitment and reducing the risk of token dumps.

9. Burn mechanisms: Reducing token supply by

permanently removing tokens from circulation, often to
maintain scarcity or stabilize price.

10. Token buybacks: Purchasing tokens from the open

market and sometimes burning them, to create demand
and support token value.

11. Staking rewards: Earning tokens as a reward for

staking, or locking up tokens, to support network
security or governance.

12. Governance rights: The ability of token holders to

participate in decision-making processes for a project or
protocol.

13. Inflation rate: The rate at which new tokens are

created and added to the total supply, impacting token
value and distribution.

72
14. Deflationary mechanisms: Strategies to reduce
token supply over time, creating scarcity and potentially
increasing token value.

15. Network fees: Costs associated with using a

blockchain network, such as transaction or smart
contract execution fees, paid in the native token.

16. Liquidity provisions: Ensuring tokens can be easily

bought or sold by incentivizing users to provide liquidity
to decentralized exchanges or other trading platforms.

17. Token sale structure: The format of the initial token

sale, such as public sale, private sale, or auctions, with
varying levels of access and pricing.

18. Use of proceeds: How funds raised from token

sales are allocated, such as development, marketing, or
partnerships.

19. Lock-up periods: Timeframes during which certain

tokens cannot be sold or transferred, ensuring long-term
commitment from stakeholders.

20. Revenue sharing: Distributing a portion of a

project's revenue to token holders, often as an incentive
for participation or investment.

21. Dividend distribution: Sharing profits with token

holders, similar to traditional stock dividends.
73
22. Token migration: The process of transitioning from
one token standard or blockchain platform to another,
often to improve functionality or scalability.

23. Token upgradeability: Allowing for improvements or

modifications to a token's features or functionality over
time.

24. Collateral requirements: Amount of tokens or other

assets needed to be locked up as collateral for certain
activities, like lending, borrowing, or creating synthetic
assets.

25. Cross-chain interoperability: Enabling tokens to be

used across multiple blockchain platforms, improving
liquidity and flexibility.

26. Oracle integration: Connecting tokens and smart

contracts with external data sources, enabling
real-world information to influence on-chain processes.

27. Privacy features: Implementing mechanisms to

protect user privacy while using tokens, such as
zero-knowledge proofs or confidential transactions.

28. Regulatory compliance: Ensuring that tokens and

their distribution follow applicable laws and regulations
to minimize legal risks.

74
29. KYC/AML requirements: Implementing Know Your
Customer (KYC) and Anti-Money Laundering (AML)
procedures to verify user identities and prevent illicit
activities.

30. Ecosystem funding: Allocating a portion of tokens

or resources to support the development of projects
and initiatives within the ecosystem, fostering growth
and innovation.

31. Tokenomics modeling: Creating mathematical

models to simulate and analyze the behavior of token
economies under various conditions, informing design
decisions and optimizing token utility.

32. Community involvement: Encouraging token

holders and users to participate actively in the project's
development and growth, fostering a strong and
engaged community.

33. Token redemption: Allowing users to redeem

tokens for goods, services, or other benefits within the
ecosystem, driving demand and utility.

34. Incentivized participation: Offering rewards or

other benefits to users who contribute to the project or
ecosystem, such as bug bounties, content creation, or
user referrals.

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35. Stability mechanisms: Implementing strategies to
maintain token value stability, such as algorithmic
stablecoins, collateralized stablecoins, or seigniorage
shares.

36. Risk management: Identifying, assessing, and

mitigating potential risks associated with token design,
distribution, and usage to ensure long-term project
sustainability.

37. Scalability considerations: Ensuring the token and

its underlying platform can handle growing transaction
volumes and user demand without compromising
performance or security.

38. Sustainability initiatives: Incorporating

environmentally friendly practices or technologies, such
as energy-efficient consensus mechanisms or carbon
offset initiatives, to reduce the environmental impact of
token usage and blockchain networks.

39. Token distribution events: Organizing events like

token airdrops, bounty programs, or staking rewards to
distribute tokens to a wider audience and drive user
adoption.

40. Token holder rights: Defining and protecting the

rights of token holders, such as voting, revenue sharing,
or redemption rights, to create a fair and transparent
ecosystem.
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3.3 Token Economic Models

The primary economic models are:

1. Deflationary Model where there is a hard cap on the

number of tokens e.g. Bitcoin (BTC).

2. Inflationary Model where there is no hard cap on

the number of tokens e.g. Ether (ETH).

3. Multi-Token Model where two or more tokens are

used on a single chain e.g. Theta Network (THETA)
and Theta Fuel (TFUEL).

4. Asset-backed Model where the token is backed by

an asset like fiat currency e.g. Tether (USDT).

1. Deflationary Tokens

A deflationary token has one or both of these

characteristics:

1. There is a hard cap on the number of tokens e.g.

Bitcoin which has a maximum supply of 21 million.

2. The market supply reduces with time e.g. BNB

started out with 200 million tokens and where
tokens are burned each quarter till they reduce to
100 million.
77
The market supply is usually reduced in 2 ways:

1. Buyback & Burn - the project buys tokens and

"burns" them by sending them to an address that
has no known private key.

2. Transaction Burning - a smart contract

automatically burns a portion of the transaction
fees. The more transactions, the more the burns.

Since the supply of a deflationary token remains the

same or decreases over time, its price is expected to
increase if the demand remains constant.

2. Inflationary Tokens

An Inflationary Token is one that has no hard cap on the

number of tokens e.g. Ether (ETH).

New tokens can be introduced primarily through mining

and staking. As the supply increases, the value could
drop.

Dogecoin (DOGE) started off as a deflationary token

with a maximum supply of 100 billion DOGE. But this
was removed in 2014 and DOGE became inflationary.

The fiat currencies of the world (USD, INR, etc.) are also
inflationary as there is no limit on the amount that can
be created.
78
3. Multi-Token Model

In Multi-Token models, two or more distinct tokens are

issued. This could be done to avoid legal compliance
problems or to offer better incentives, features, and
functionalities.

Some examples of Multi-Token models are:

1. Axie Infinity (SLP, AXS & Axies)
2. Theta Network (THETA & TFUEL)
3. VeChainThor (VET & VTHO)

4. Asset-backed Tokens

Asset-backed tokens are backed by real-world assets

like Art, Copyright Licenses, Fiat Currencies, Private
Equity, Real Estate, Whisky Casks, etc.

These tokens are also referred to as stablecoins,

tokenized assets, or wrapped assets. The underlying
assets are maintained either by the token issuer or
legally recognized custodians.

Issues that impact Token Economic Models

1. Mining
Mining is the process of using specialized hardware to
solve complex mathematical problems in order to
validate blockchain transactions and earn rewards e.g.
Bitcoin.
79
2. Staking

Staking is the process of holding a certain amount of a

Blockchain Token in a wallet and using it to help secure
and validate transactions on a blockchain.

Stakers earn rewards in the form of additional tokens.

3. Yields

Yields are the rewards or returns that users earn by

participating in certain blockchain-based activities e.g.
staking on a Proof-of-stake blockchain or lending tokens
on a decentralized finance (DeFi) platform.

4. Pre-mining

Pre-mining is the generating and accumulating of

tokens before a blockchain-based project is publicly
launched.

Pre-mining is done in the development phase of a

project to fund the development and marketing of the
project. Pre-mining is a great way to fund a project and
incentivize early adopters.

5. Token burns

Token burns involve the permanent destruction or

removal of tokens from circulation.
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The top reasons for burning tokens are:

1. Reducing the overall supply to increase the value of

the remaining tokens.

2. Signaling governance approval for proposals.

6. Token allocations

Token allocations involve the distribution of tokens to

the founders, investors, and other supporters of a
blockchain-based project. They are done through ICOs,
airdrops, private sales, etc.

7. Vesting periods

The vesting period is the time period before which token

holders are not entitled to access and use their tokens.

This is to incentivize long-term participation in a

Blockchain project. In cliff vesting, token holders must
wait a certain amount of time before they are entitled to
any tokens.

In graded vesting, token holders are entitled to a certain

percentage of their tokens at regular intervals over time.

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3.4 Token Distribution Methods

The 9 primary token distribution methods are:

1. Airdrops

An airdrop is a marketing activity by a new crypto

project. A small amount of crypto is sent out for "free" to
increase awareness.

It's not entirely "free" as you may need to do some

promotional work like retweeting a post, sharing a link
with your network, etc. If you want to bypass this work,
you can signup for automated services.

2. Initial Coin Offering (ICO)

In an ICO, investors fund a blockchain project in return

for tokens which are expected to increase in value over
time.

The funding is based primarily on information provided

by the project’s whitepaper, website, and social media
accounts.

3. Reverse ICO

In a reverse ICO, an existing, established real-world

business issues a token to decentralize its ecosystem,
and raise funds.
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4. Initial Exchange Offering (IEO)

An IEO is very similar to an ICO. The only difference is

that the funding is based on a crypto exchange.

5. Initial DEX Offering (IDO)

In an IDO, the tokens are launched through a

decentralized exchange (DEX)

6. DAICO

A DAICO combines the characteristics of a

Decentralized Autonomous Organization (DAO) with that
of an Initial Coin Offering (ICO).

A DAICO can make an ICO more secure by involving

investors in the initial project development process. It
enables token holders to vote for the refund of the
contributed funds if they are not happy with the
progress being made by developers.

7. Equity Token Offerings (ETOs)

In an ETO, the investors get pro-rata ownership in the

company and dividend and voting rights.

8. Security Token Offerings (STOs)

An STO is a fundraising model in which the tokens being
sold are classified as securities.
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This means that the tokens are subject to securities
laws and regulations, and must be registered with the
appropriate regulatory authorities.

STOs are often used to raise funds for projects that are
backed by real-world assets and the tokens represent
ownership or investment interest in the underlying
assets.

STOs are becoming increasingly popular as a way for

companies to raise capital in a compliant and
transparent manner, and are seen as a potential
alternative to traditional forms of securities issuance,
such as initial public offerings (IPOs).

9. Simple Agreement for Future Tokens (SAFT)

SAFT is a legal framework used in ICOs to ensure

compliance with securities laws. A SAFT is a contract
between a company and an investor, in which the
investor agrees to purchase tokens at a future date,
once the tokens have been fully developed and are
ready to be distributed.

The investor is typically required to pay a certain

amount of money upfront, in exchange for the right to
receive the tokens at a later date. The SAFT framework
is designed to provide a clear and straightforward way
for companies to raise funds through ICOs while
complying with securities laws.
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3.5 What does a Token Economist do?

Here's what a Token Economist does:

1. Designs Whitepapers.

2. Values Tokens using subjective, mathematical, and

hybrid models.

3. Develops and implements economic models &

frameworks.

4. Conducts research on token-based systems and the

broader cryptocurrency market.

5. Collaborates with cross-functional teams to design

and launch new tokens and blockchain-based
projects.

6. Advises on the economic implications of different

design choices and technical decisions.

7. Supervises legal & regulatory compliance.

8. Monitors and analyzes market trends and

dynamics, and provides recommendations on how
to optimize the performance and sustainability of
token-based systems.
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3.6 Token Whitepapers

A Blockchain Whitepaper describes the features and

specifications of a blockchain-based project, including:

1. the problem that the project aims to solve,

2. the solution that the project proposes, and

3. the details of the project's token sale and

governance model.

Whitepapers are designed by Token Economists and are

aimed at potential investors and users.

A Lightpaper is a simplified & shorter version of the

Whitepaper. A Yellowpaper contains technical details
and is aimed at developers, startups & technologists. A
Beigepaper is a simplified & shorter version of the
Yellowpaper.

Inspired by the Virtual Financial Assets Act of Malta,

here is a list of 45+ things that a Blockchain Token
Whitepaper should have.

1. Summary of the Whitepaper

2. A statement from the relevant persons explaining any

assumptions made in the whitepaper.
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3. Date of issue of the whitepaper.

4. Names, functions, and declarations by the persons

responsible for the whitepaper that to the best of their
knowledge the information contained in the whitepaper
is in accordance with the facts and that the whitepaper
makes no omissions likely to affect its import.

5. Description of the reason behind the Blockchain

Token Offering.

6. Detailed technical description of the protocol,

platform and / or application, as the case may be, and
the associated benefits.

7. Detailed description of the sustainability and

scalability of the proposed project.

8. Associated challenges and risks as well as mitigating

measures thereof.

9. Detailed description of the characteristics and

functionality of the Blockchain Tokens being offered.

10. Detailed description of the issuer, agents,

development team, advisors, and any other service
providers that may be deployed for the realization of the
project.

11. Detailed description of the issuer's wallet(s) used.

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12. Description of the security safeguards against cyber
threats to the underlying protocol, to any off-chain
activities, and to any wallets used by the issuer.

13. Detailed description of the life cycle of the Initial

Blockchain Token Offering and the proposed project.

14. Detailed description of the past and future

milestones and project financing.

15. Detailed description of the targeted investor base.

16. Exchange rate of the Blockchain Tokens.

17. Description of the underlying protocol's

interoperability with other protocols.

18. Description of the manner in which the funds raised

through the Initial Blockchain Token Offering will be
allocated.

19. The amount and purpose of the issue.

20. The total number of Blockchain Tokens to be issued

and their features.

21. The distribution of Blockchain Tokens.

22. The consensus algorithm, where applicable.

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23. Incentive mechanism to secure any transactions,
and/or any other applicable fees.

24. In the case of a new protocol, the estimated speed

of transactions.

25. Any applicable taxes.

26. Any set soft cap and hard cap for the Initial
Blockchain Token Offering.

27. The period during which the Initial Blockchain Token

Offer is open.

28. Any person underwriting or guaranteeing the Initial

Blockchain Token Offering.

29. Any restrictions on the free transferability of the

Blockchain Tokens being offered and the exchange(s)
on which they may be traded, to the extent known by the
issuer.

30. Methods of payment.

31. Specific notice that investors participating in the

Initial Blockchain Token Offering will be able to get their
contribution back if the soft cap is not reached at the
end of the offering and a detailed description of the
refund mechanism, including the expected timeline of
when such refund will be completed.
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32. Detailed description of the risks associated with the
Blockchain Tokens and the investment therein.

33. The procedure for the exercise of any right of

pre-emption.

34. Detailed description of the smart contract(s), if any,

deployed including inter alia the adopted standards, its /
their underlying protocol(s), functionality(ies), and
associated operational costs.

35. If any smart contract/s is / are deployed by the

issuer, details of the auditor who performed an audit on
it / them.

36. Description of any restrictions embedded in the

smart contract(s) deployed, if any, including inter alia
any investment and / or geographical restrictions.

37. The oracles used to obtain data and verify

occurrences from smart contracts used and detailed
descriptions of their characteristics and functionality
thereof.

38. Bonuses applicable to early investors including inter

alia discounted purchase price for the Blockchain
Tokens.

39. The period during which voluntary withdrawals are

permitted by the smart contract, if any.
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40. Description of the issuer's adopted white-listing,
anti-money laundering, and countering the financing of
terrorism procedures.

41. Intellectual property rights associated with the Initial

Blockchain Token Offering and protection thereof.

42. The methods of and time-limits for delivery of the

Blockchain Tokens.

43. Details of the issuer:

(1) Name
(2) Registered address and registration number \(3)
Date of registration
(4) The issuer’s object(s)
(5) Where applicable, the group of undertakings to
which the issuer belongs
(6) Indication of the members who directly or indirectly
exercise or could exercise a determining role in the
issuer’s administration
(7) The issuer’s principal activities.

44. Description of the issuer's principal activities

including the disclosure of any legal proceedings having
an important effect on the issuer’s financial position.

45. Names, addresses, and functions of administrators.

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46. The amount or estimated amount of preliminary
expenses and the persons by whom any of those
expenses have been paid or are payable, and the
amount or estimated amount of the expenses of the
issue and the persons by whom any of those expenses
have been paid or are payable, in whatever form.

47. Where the issuer has been established for a period

exceeding three years, details of its financial track
record.

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 4. Understanding Tokenization

4.1 The Tokenization Equation

Tokenization is the process of converting the economic

rights of an asset into digital tokens on a blockchain.
These digital tokens represent a share or fraction of the
underlying asset.

Here's the Tokenization Equation:

Tokenization of Asset on the Blockchain

= Authentication
+ Provenance
+ Fractionalization
+ Trading

Each token represents a fraction of ownership in the

underlying asset, enabling investors to buy, sell, or trade
these tokens on digital asset marketplaces.

Tokenization bridges the gap between traditional

finance and the digital world, leveraging the benefits of
blockchain technology.

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Effectively, Tokenization brings the asset to the Crypto
world where it can be fractionalized and traded 24x7 by
a global audience.

The biggest advantages of Tokenization are:

1. Democratization of investments by lowering entry

barriers.

2. Enabling small & individual investors to participate

in markets that were previously accessible only to
wealthy individuals or institutional investors.

3. Increased Liquidity and Market Efficiency.

4. Bringing liquidity to markets that are traditionally

illiquid.

5. Bringing greater market efficiency and price

discovery.

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95
4.2 Benefits of Tokenization

4.2.1 Art

Art is a US$ 580 Billion sector and comprises Paintings,

Sculptures, and Folk & Tribal Art.

Benefits of Tokenizing Art on the Blockchain are:

1. Ownership Made Easy: Blockchain lets you split art

into digital shares, so buying and owning art becomes
simpler and more accessible.

2. Proof of Authenticity: Say goodbye to fakes! The

blockchain keeps a permanent record, proving the art's
real deal.

3. Global Market Access: Artists and buyers from all

over can connect, making the art world truly global.

4. Fast and Secure Transactions: Buying and selling art

happens in a snap, and it's super secure, thanks to
blockchain tech.

5. Lower Costs, More Profit: With fewer middlemen,

artists earn more, and buyers pay less. It's a win-win!
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6. Transparency in Art History: Every time the art
changes hands, it's recorded. So, its history is
transparent.

7. Easy to Transfer Ownership: Transferring ownership

of art just takes a few clicks.

8. Democratizing Art Investment: Even if you're not a

millionaire, you can own a piece of fancy art. It's all
about buying fractions now.

9. Liquidity Boost: Selling art fractions is often easier

and quicker than selling the whole piece.

10. Royalties for Artists: Artists can get a cut every

time their art is resold.

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4.2.2 Carbon Credits

Carbon Credits are a US$ 25 Billion opportunity and the

benefits of tokenizing them on the Blockchain are:

1. Transparent Tracking: Blockchain ensures every

carbon credit's history is clear and tamper-proof.

2. Global Access: Anyone around the world can buy or

sell carbon credits easily, opening up a worldwide
market.

3. Quick and Secure Trades: Blockchain technology

makes buying and selling carbon credits fast and super
secure.

4. Reduced Costs: Cutting out middlemen means lower

fees, making carbon trading more cost-effective for
everyone.

5. Real-Time Auditing: Every transaction is recorded

instantly and immutably, allowing for ongoing and
accurate auditing.

6. Fractional Ownership: Blockchain lets you split

carbon credits into smaller parts. Now, even small
players can participate in the carbon market.

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7. Increased Liquidity: Tokenizing carbon credits
makes them easier to trade, boosting market liquidity.

8. Encourages Eco-Responsibility: Easier access to the

carbon market can motivate more companies and
individuals to offset their carbon footprint.

9. Direct Transactions: Direct peer-to-peer trading

eliminates the need for intermediaries, streamlining the
process.

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4.2.3 Copyright Licenses

Copyright Licenses are a US$ 173 Billion opportunity

and the benefits of tokenizing them on the Blockchain
are:

1. Wider Market Access: Artists and creators can reach

a global audience, breaking geographical barriers.

2. Efficient Royalty Distribution: Automated and

transparent royalty payments through smart contracts,
ensuring creators get paid fairly and timely.

3. Fractional Ownership: Allows multiple investors to

own shares of a single copyright, making it accessible
to a broader range of investors.

4. Increased Liquidity: Tokenization can make buying

and selling copyright licenses quicker and easier,
boosting market liquidity.

5. Enhanced Security: Blockchain's secure nature

reduces the risk of fraud and unauthorized copying.

6. Transparent History Tracking: Every transaction and

transfer is recorded, creating a clear history of
ownership and usage.

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7. Direct Creator-Investor Connection: Removes
intermediaries, allowing creators to directly engage with
their audience and investors.

8. Flexible Investment Options: Investors can diversify

their portfolio with different types of creative works.

9. Real-time Revenue Tracking: Enables creators and

investors to monitor earnings in real-time.

10. Legal Efficiency: Smart contracts can enforce the

terms of copyright agreements, reducing legal disputes.

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4.2.4 Diamonds

The benefits of Tokenizing Diamonds on the Blockchain

are:

1. Democratized Investment: Opens up diamond

investment to more people by allowing fractional
ownership of high-value diamonds.

2. Increased Liquidity: Tokenization can make trading

diamonds faster and more fluid compared to traditional
methods.

3. Enhanced Transparency: Every step from mining to

market is recorded, ensuring the authenticity and ethical
sourcing of diamonds.

4. Secure Transactions: The secure nature of

blockchain technology reduces the risk of fraud and
theft in diamond transactions.

5. Global Access: People from all over the world can

invest in and trade diamonds, expanding the market
reach.

6. Efficient Tracking: Easily track the history and value

appreciation of individual diamonds over time.
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7. Reduced Transaction Costs: Cutting out
intermediaries lowers the costs associated with buying
and selling diamonds.

8. Automated Compliance: Smart contracts can ensure

compliance with international regulations and standards
for diamond trade.

9. Customizable Investment Sizes: Investors can buy

tokens representing a portion of a diamond's value,
fitting their budget and investment strategy.

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4.2.5 Private Equity

Private Equity is a US$ 11.7 Trillion opportunity and the

benefits of tokenizing it on the Blockchain are:

1. Broader Investor Access: Tokenization opens up

private equity investments to a wider range of investors,
not just the traditionally wealthy.

2. Improved Liquidity: Trading tokens can be faster and

easier than traditional private equity shares, enhancing
market liquidity.

3. Transparency in Transactions: Blockchain provides a

clear record of transactions, increasing transparency
and trust.

4. Reduced Minimum Investment: Fractional ownership

allows for lower minimum investments, making it more
accessible.

5. Automated Compliance: Smart contracts can

streamline regulatory compliance, reducing
administrative burdens.

6. Efficient Capital Raising: Easier and potentially faster

to raise capital by reaching a global pool of investors.

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7. Reduced Costs: Cutting out intermediaries reduces
transaction fees and management costs.

8. Real-Time Asset Valuation: The ability to track

private equity performance and valuation in real-time.

9. Enhanced Security: Blockchain's secure nature

minimizes the risks of fraud and unauthorized
transactions.

10. Global Trading Opportunities: Investors from

around the world can participate, diversifying the
investor base.

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4.2.6 Rare Collectibles

Rare Collectibles are a US$ 370 Billion opportunity and

the benefits of tokenizing them on the Blockchain are:

1. Wider Accessibility: Tokenization allows more

people to own a piece of rare collectibles, democratizing
access to what was once a niche market.

2. Increased Liquidity: Tokens can be bought and sold

more easily than physical collectibles, making the
market more fluid.

3. Enhanced Transparency: Blockchain technology

provides a clear history of ownership and authenticity,
crucial for collectibles.

4. Fractional Ownership: Investors can buy shares in

high-value collectibles, making it financially accessible.

5. Global Reach: Collectors and investors from all over

the world can participate, expanding the market.

6. Secure Transactions: The inherent security of

blockchain reduces the risks of fraud and counterfeit.

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7. Streamlined Transfer of Ownership: Transferring
ownership of tokens is quicker and simpler compared to
physical items.

8. Reduced Transaction Costs: Eliminating

intermediaries cuts down on fees associated with
buying and selling collectibles.

9. Portfolio Diversification: Offers a unique asset class

for investors looking to diversify their portfolios.

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4.2.7 Real Estate

Real Estate is a US$ 326 Trillion opportunity and the

benefits of tokenizing it on the Blockchain are:

1. Fractional Ownership Made Easy: Split big property

investments into smaller, affordable shares. This
democratizes real estate investing.

2. Global Investors: Anyone around the world can invest

in properties, making the market truly international.

3. Quick Transactions, Less Hassle: Buying and selling

property shares is fast and smooth, without the usual
paperwork nightmare.

4. Cut Down on Middlemen: Fewer intermediaries mean

lower costs and more profit for both buyers and sellers.

5. Clear Property History: Blockchain keeps an

unchangeable record of each property's history, making
it transparent and trustworthy.

6. Easy Transfer of Ownership: Changing property

ownership is just a few clicks away, bypassing
traditional, time-consuming processes.

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7. Increased Liquidity in Real Estate: Selling shares in a
property can be quicker than selling the whole property,
giving a liquidity boost.

8. Automatic Rent Distribution: Smart contracts can

automatically split and send rental income to
shareholders.

9. Secure and Transparent Deals: With blockchain, real

estate transactions are more secure and transparent,
reducing the risk of fraud.

10. Access to Premium Properties: Tokenization opens

the door to high-end properties that were once out of
reach for most investors.

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4.2.8 Structured Financial Products

Structured Financial Products are a US$ 7 Trillion

opportunity and the benefits of tokenizing them on the
Blockchain are:

1. Enhanced Liquidity: Tokenization can make these

complex financial products more liquid and easier to
trade.

2. Broader Investor Access: Lower entry barriers allow

a wider range of investors to participate in structured
product markets.

3. Increased Transparency: Blockchain's transparent

ledger provides clear tracking of product structures and
transactions.

4. Automated Compliance: Smart contracts enable

automatic adherence to regulatory requirements,
reducing the risk of non-compliance.

5. Improved Efficiency: Reduces the need for

intermediaries, streamlining the transaction process and
lowering costs.

6. Customization and Flexibility: Offers the potential for

more customized product structures to meet diverse
investor needs.
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7. Real-Time Valuation: Investors can access
up-to-date valuations of their investments, enhancing
decision-making.

8. Global Participation: Breaks down geographical

barriers, allowing global trading and investment in
structured products.

9. Risk Management: Facilitates better risk distribution

among a larger pool of investors.

10. Innovation in Financial Products: Encourages the

development of new and innovative financial products
through blockchain technology.

111
4.2.9 Tax Deeds

The benefits of Tokenizing Tax Deeds on the Blockchain

are:

1. Expanded Investor Access: Tokenization allows a

broader range of investors to participate in the tax deed
market, traditionally limited to specialized investors.

2. Increased Liquidity: Tokens representing tax deed

investments can be traded more easily than traditional
tax deed transactions, enhancing liquidity in the market.

3. Enhanced Transparency: Blockchain provides a clear,

immutable record of tax deed transactions, ensuring
accuracy and trust in ownership records.

4. Reduced Entry Barrier: Fractional ownership through

tokenization lowers the financial threshold for
investment, making it more accessible.

5. Faster Transactions: The use of blockchain

technology can streamline the process, reducing the
time and complexity involved in buying and selling tax
deeds.

6. Global Investment Opportunities: Investors from

around the world can participate, diversifying the
investor base and potentially stabilizing the market.
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7. Automated Compliance and Reporting: Smart
contracts can help in automating regulatory compliance
and reporting requirements, reducing administrative
burdens.

8. Lower Transaction Costs: By reducing the need for

intermediaries, blockchain can lower the costs
associated with tax deed transactions.

9. Real-Time Asset Management: Enables more

efficient monitoring and management of investments in
tax deeds.

10. Secure Investment Platform: Blockchain's secure

nature minimizes risks of fraud and unauthorized
alterations in the investment process.

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4.2.10 Whisky Casks

Whisky Casks are a US$ 300 Billion opportunity and the

benefits of tokenizing them on the Blockchain are:

1. Democratized Ownership: Allows a broader range of

investors to own a share in high-value whisky casks,
which were traditionally accessible only to the affluent.

2. Increased Liquidity: Tokens representing whisky

cask ownership can be more readily traded than the
casks themselves, offering greater market liquidity.

3. Enhanced Transparency: Blockchain provides a clear,

tamper-proof record of the whisky cask’s history, from
distillation to maturation.

4. Fractional Investment: Investors can buy a fraction

of a cask, making it financially accessible and
diversifying investment options.

5. Global Market Access: Breaks down geographical

barriers, enabling whisky enthusiasts and investors
worldwide to participate.

6. Secure Transactions: The secure nature of

blockchain technology reduces the risk of fraud in the
buying and selling process.

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7. Automated Processes: Smart contracts can
streamline processes such as profit-sharing from cask
sales or bottling.

8. Reduced Transaction Costs: By minimizing

intermediary involvement, blockchain can lower costs
associated with the transaction.

9. Real-time Valuation Tracking: Offers the ability to

monitor the value of whisky casks as they age and
potentially increase in value.

10. Asset-Backed Investment: Each token is backed by

a tangible, physical asset, adding a layer of security to
the investment.

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4.3 Interesting Tokenization Projects

1. Maple Finance

Maple enables experts to handle quick-paced loan

operations, channeling funds to companies for
expansion and daily tasks.

Maple matches both big institutions and qualified

individual investors with lending options that align with
their needs for liquidity, risk, and profit.

Maple Finance leverages Ethereum.

2. Matrixdock

Matrixdock’s primary product is STBT, a tokenized

version of short-term US Treasury securities with
6-month maturities and reverse repurchase
agreements.

STBT is an ERC-1400 token for institutional and

accredited investors. STBT rebases interest every
business day.

Matrixdock leverages Ethereum.

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3. Meld

Meld Tokens are redeemable for gold, silver, platinum or

palladium.

Each Meld Token is backed by 1 gram of gold, silver,

platinum, or palladium. The precious metals are stored
in secure vaults.

Meld leverages Algorand.

4. Ondo Finance

Ondo Finance operates USDY, a tokenized note secured

by short-term US Treasuries and bank demand deposits.

It currently operates 4 funds:

1. US Money Market Fund
2. Short-Term US Government Bond Fund
3. Short-Term Investment Grade Bond Fund
4. High Yield Corporate Bond Fund

Ondo Finance leverages Ethereum and Polygon.

5. RealToken

RealToken enables ownership of US real estate

properties through digital tokens on Ethereum and
Gnosis Chain.

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For each real-estate offering, RealToken creates a
Delaware Series LLC or Inc. which owns a single asset
(a property) with its own token and unique address. This
ensures that the properties are legally independent and
are not cross-collateralized.

RealToken leverages the Gnosis Chain.

6. Tangible

Tangible operates RealUSD, which is backed by

tokenized real estate.

The rent collected from the rental properties is

distributed daily as a native rebase. The yield increases
with the value of real estate held.

Real USD is pegged to the US dollar and 50% of the

backing is held in DAI.

If the collateralization ratio drops beneath 100%, then

50% of the rental yield is automatically redirected to the
treasury. This recollateralizes the asset and ensures that
Real USD is fully backed.

Tangible leverages Polygon, Ethereum, and Optimism.

7. Toucan Protocol
Toucan Protocol enables the tokenization of Carbon
Credits.
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Carbon Bridges enable the tokenization of carbon
credits held in carbon registries. These credits are
locked so that they cannot be double-counted.

Carbon Pools add liquidity by holding tokenized carbon

credits with similar attributes. The pools create tradable
reference tokens.

Toucan enables quick & transparent retirement of

carbon credits.

Toucan Protocol leverages Polygon, and Celo.

8. Whisky Fractions Marketplace

Whisky Fractions is a digital marketplace for buying &

selling fractions of Whisky in Casks.

Whisky, unlike wine, matures exclusively in a cask. Cask

refers to all types of oak vessels that are used in the
storage and maturation of whisky.

Whisky in Casks is called "liquid gold" because of its

economic potential, and its tangible, appreciating
nature.

Whisky Fractions leverages the Hybrid Finance

Blockchain (HYFI).

119
5. HYFI Tokenization Checklists

The information provided in these checklists is for

general informational purposes only.

It is not intended as legal, financial, or investment advice

and should not be considered as such.

The specifics of each asset class and tokenization

project may vary, and the checklists are not exhaustive.

Users of these checklists should conduct their own due

diligence and consult with professional advisors in the
legal, financial, and investment fields before making any
decisions.

The author of the checklists assumes no responsibility

for any errors or omissions, or for any actions taken
based on the information contained herein.
120
5.1 Art

HYFI Checklist for Tokenization of Art on the Blockchain.

1. Preliminary Actions

❏ A. Selection of Art Piece: Choose an art piece

suitable for tokenization.

❏ B. Art Appraisal: Obtain a professional valuation to

establish its market value.

❏ C. Legal Compliance: Ensure adherence to laws

related to art ownership, transfer, and copyright.

❏ D. Securities Law Adherence: Understand and

comply with securities laws for token issuance.

Responsibility: Art Owner

2. Creation of Tokenization Whitepaper

Develop a comprehensive whitepaper detailing the

project, including art details, token structure, rights of
token holders, risks, and legal aspects.

Responsibility: Team HYFI

121
3. Establishment of Legal Structure

❏ A. Legal Entity Formation: Set up a special purpose

vehicle or similar entity to hold the art asset.

❏ B. Token Holder Relationship: Define the legal

relationship between this entity and token holders.

Responsibility: Art Owner

4. AMA (Ask Me Anything) Session with Core Team

Conduct an interactive session for potential investors to

inquire about the project.

Responsibility: Team HYFI and Art Owner

5. Tokenization Process

❏ A. Token Development: Create tokens representing

shares in the art piece on HYFI and another
blockchain (e.g., Ethereum, Binance, or Polygon).

❏ B. Token Quantity and Value: Decide the total

number of tokens and their individual value.

❏ C. Smart Contract Creation: Automate ownership,

transfer, and revenue sharing terms.

122
❏ D. Token Distribution Plan: Outline private and public
sales and investor allocations.

❏ E. Token Availability: List tokens on HYFI Asset

Marketplace and digital asset exchanges.

Responsibility: Team HYFI (Costs covered by Art Owner)

6. Marketing and Promotion

Develop and implement a marketing strategy across

various platforms.

Responsibility: Team HYFI (Costs covered by Art Owner)

7. Token Sale Launch

Execute the token sale according to the distribution

strategy.

Responsibility: Team HYFI

8. Post-Sale Management and Reporting

Handle post-sale token management and provide

regular updates to investors.

Responsibility: Team HYFI (Training provided to Art

Owner’s team)

123
9. Secondary Market Facilitation

Provide guidance for trading tokens on secondary

markets.

Responsibility: Team HYFI (Training provided to Art

Owner’s team)

10. Ongoing Compliance and Management

A. Legal and Regulatory Compliance: Continuously

ensure compliance with relevant laws.

B. Art Management: Manage the art piece and distribute

earnings to token holders (if applicable).

Responsibility: Art Owner

124
5.2 Carbon Credits

1. Preliminary Actions

❏ A. Selection of Carbon Credit Projects: Identify

eligible carbon reduction projects for tokenization.

❏ B. Verification and Validation: Ensure the carbon

credits are verified and validated by recognized
environmental standards.

❏ C. Compliance with Environmental Laws: Adhere to

international and local environmental laws and
regulations.

❏ D. Understanding Carbon Markets: Familiarize with

the regulatory framework of carbon markets and
emissions trading schemes.

Responsibility: Carbon Credit Owner

2. Creation of Tokenization Whitepaper

Develop a detailed whitepaper outlining the carbon

credit tokenization project, including project details,
token structure, rights of token holders, environmental
impact, and legal considerations.

Responsibility: Team HYFI

125
3. Establishment of Legal Structure

❏ A. Legal Entity Setup: Form a legal entity to hold the

carbon credit assets.

❏ B. Legal Relationship Definition: Clearly define the

relationship between the entity and the token
holders.

Responsibility: Carbon Credit Owner

4. AMA (Ask Me Anything) Session with Core Team

Host a session for potential investors to engage with

the project team and ask questions.

Responsibility: Team HYFI and Carbon Credit Owner

5. Tokenization Process

❏ A. Token Development: Create tokens representing

shares in the carbon credit project on suitable
blockchains like HYFI, Ethereum, Binance, or
Polygon.

❏ B. Token Quantity and Valuation: Decide on the total

number of tokens and their individual value.

126
❏ C. Smart Contract Creation: Implement smart
contracts for ownership, transfer, and revenue
distribution.

❏ D. Token Distribution Strategy: Plan for private sales,

public offerings, and investor categories.

❏ E. Listing on Marketplaces: Make tokens available

on the HYFI Asset Marketplace and digital asset
exchanges.

Responsibility: Team HYFI (Costs covered by Carbon

Credit Owner)

6. Marketing and Promotion

Develop and execute a marketing strategy to attract

investors through various channels.

Responsibility: Team HYFI (Costs covered by Carbon

Credit Owner)

7. Token Sale Launch

Conduct the token sale, ensuring a transparent and

compliant process.

Responsibility: Team HYFI

127
8. Post-Sale Management and Reporting

Manage the tokens post-sale and provide regular

reports to token holders on the project’s environmental
impact and other updates.

Responsibility: Team HYFI (Training for Carbon Credit

Owner’s team)

9. Secondary Market Facilitation

Assist in trading tokens on secondary markets to

enhance liquidity.

Responsibility: Team HYFI (Training for Carbon Credit

Owner’s team)

10. Ongoing Compliance and Management

❏ A. Continuous Legal and Regulatory Compliance:

Ensure adherence to evolving environmental laws
and carbon market regulations.

❏ B. Project Management: Oversee the carbon credit

project and distribute returns to token holders, if
applicable.

Responsibility: Carbon Credit Owner

128
5.3 Copyright Licenses

1. Preliminary Actions

❏ A. Selection of Copyright Material: Identify and

select the copyright material eligible for tokenization
(e.g., art, book, music, movies, software, etc).

❏ B. Legal Due Diligence: Ensure all copyrights are

legally owned or licensed and free of disputes.

❏ C. Compliance with Copyright Laws: Adhere to

international and local copyright laws and
regulations.

❏ D. Understanding Copyright Markets: Familiarize

with market dynamics for the specific type of
copyright material.

Responsibility: Copyright Owner

2. Creation of Tokenization Whitepaper

Develop a comprehensive whitepaper detailing the

tokenization project, including details about the
copyrighted material, token structure, rights and
obligations of token holders, risk factors, and legal
considerations.

129
Responsibility: Team HYFI

3. Establishment of Legal Structure

❏ A. Legal Entity Formation: Set up a legal entity (like a

trust or company) to manage the copyright assets.

❏ B. Legal Relationship with Token Holders: Define the

relationship between this entity and the token
holders, including rights to royalties and usage.

Responsibility: Copyright Owner

4. AMA (Ask Me Anything) Session with Core Team

Conduct an interactive session for potential investors to

inquire about the project.

Responsibility: Team HYFI and Copyright Owner

5. Tokenization Process

❏ A. Token Development: Create tokens representing

fractional ownership or rights in the copyright
material on suitable blockchains like HYFI,
Ethereum, Binance, or Polygon.

❏ B. Token Quantity and Valuation: Determine the total

number of tokens and their individual value.

130
❏ C. Smart Contract Implementation: Deploy smart
contracts to manage ownership, royalty distribution,
and usage rights.

❏ D. Distribution Strategy: Plan the distribution of

tokens, including private sales, public offerings, and
allocations for different investor categories.

❏ E. Listing on Marketplaces: List tokens on the HYFI

Asset Marketplace and digital asset exchanges.

Responsibility: Team HYFI (Costs covered by Copyright

Owner)

6. Marketing and Promotion

Develop and implement a marketing strategy using

various channels to attract investors.

Responsibility: Team HYFI (Costs covered by Copyright

Owner)

7. Token Sale Launch

Facilitate the token sale, adhering to the planned

distribution strategy.

Responsibility: Team HYFI

131
8. Post-Sale Management and Reporting

Handle post-sale token management and provide

regular updates to token holders regarding earnings and
copyright status.

Responsibility: Team HYFI (Training provided to

Copyright Owner’s team)

9. Secondary Market Facilitation

Assist in trading tokens on secondary markets to

enhance liquidity.

Responsibility: Team HYFI (Training provided to

Copyright Owner’s team)

10. Ongoing Compliance and Management

❏ A. Continued Legal and Regulatory Compliance:

Ensure ongoing adherence to copyright and
intellectual property laws.

❏ B. Management of Copyright Assets: Oversee the

management and enforcement of copyright rights,
and distribute royalties or earnings to token holders.

Responsibility: Copyright Owner

132
5.4 Diamonds

1. Preliminary Actions

❏ A. Selection of Diamonds: Identify and choose

diamonds suitable for tokenization, considering
quality, rarity, and market value.

❏ B. Certification and Appraisal: Ensure each diamond

is certified by a reputable gemological institute and
appraised for its market value.

❏ C. Legal Compliance: Adhere to international and

local laws regarding the trading and ownership of
diamonds, including conflict diamond regulations.

❏ D. Market Analysis: Understand the current market

dynamics and potential investor interest in diamond
tokenization.

Responsibility: Diamond Owner

2. Creation of Tokenization Whitepaper

Develop a whitepaper outlining the project, including

specifics of the diamonds, token structure, rights of
token holders, risk factors, and legal considerations.

Responsibility: Team HYFI

133
3. Establishment of Legal Structure

❏ A. Legal Entity Formation: Create a legal entity to

hold and manage the diamond assets.

❏ B. Relationship with Token Holders: Clearly define

the legal relationship between this entity and token
holders, including rights to returns from sales or
rentals.

Responsibility: Diamond Owner

4. AMA (Ask Me Anything) Session with Core Team

Host an interactive session for potential investors to

engage with the project team.

Responsibility: Team HYFI and Diamond Owner

5. Tokenization Process

❏ A. Token Creation: Develop tokens representing

shares in the diamond assets on appropriate
blockchains like HYFI, Ethereum, Binance, or
Polygon.

❏ B. Token Valuation: Decide on the total number of

tokens and their individual value based on the
diamonds’ appraisal.

134
❏ C. Smart Contract Implementation: Implement
smart contracts for ownership transfer, and
possibly for sharing returns from sales or rentals.

❏ D. Distribution Plan: Strategize the distribution of

tokens, including private sales, public offerings, and
allocations for different investor categories.

❏ E. Marketplace Listing: List tokens on the HYFI

Asset Marketplace and digital asset exchanges.

Responsibility: Team HYFI (Costs covered by Diamond

Owner)

6. Marketing and Promotion

Develop and execute a marketing strategy to attract

investors, utilizing various channels.

Responsibility: Team HYFI (Costs covered by Diamond

Owner)

7. Token Sale Launch

Execute the token sale according to the distribution

strategy, ensuring a transparent and compliant sales
process.

Responsibility: Team HYFI

135
8. Post-Sale Management and Reporting

Manage the tokens post-sale and provide regular

reports to token holders on the status of the diamond
assets and any returns.

Responsibility: Team HYFI (Training provided to Diamond

Owner’s team)

9. Secondary Market Facilitation

Assist in facilitating the trading of tokens on secondary

markets to enhance liquidity.

Responsibility: Team HYFI (Training provided to Diamond

Owner’s team)

10. Ongoing Compliance and Management

❏ A. Legal and Regulatory Compliance: Ensure

continuous compliance with diamond trading laws
and international regulations.

❏ B. Asset Management: Oversee the diamond assets

and distribute any returns to token holders, if
applicable.

Responsibility: Diamond Owner

136
5.5 Private Equity

1. Preliminary Actions

❏ A. Selection of Private Equity Assets: Identify and

choose private equity assets, such as stakes in
private companies, suitable for tokenization.

❏ B. Valuation and Due Diligence: Perform a thorough

valuation of these assets and conduct due diligence
to assess potential risks and returns.

❏ C. Legal and Regulatory Compliance: Ensure

adherence to securities laws and regulations
relevant to private equity and tokenization.

❏ D. Market and Investor Analysis: Analyze investor

appetite and market dynamics for tokenized private
equity offerings.

Responsibility: Private Equity Owner or Fund Manager

2. Creation of Tokenization Whitepaper

Develop a whitepaper detailing the project, covering the

assets, token structure, rights and obligations of token
holders, risk factors, and legal considerations.

Responsibility: Team HYFI

137
3. Establishment of Legal Structure

❏ A. Special Purpose Vehicle (SPV) Formation: Set up

an SPV or equivalent legal entity to hold the private
equity assets.

❏ B. Legal Terms for Token Holders: Define the

relationship between the SPV and token holders,
detailing their equity rights, profit-sharing, and
voting powers.

Responsibility: Private Equity Owner or Fund Manager

4. AMA (Ask Me Anything) Session with Core Team

Organize an interactive session for potential investors to

engage with the project team and ask detailed
questions about the private equity assets.

Responsibility: Team HYFI and Private Equity

Owner/Fund Manager

5. Tokenization Process

❏ A. Token Development: Create tokens representing

fractional ownership in the private equity assets on
suitable blockchains like HYFI, Ethereum, Binance,
or Polygon.

138
❏ B. Token Valuation: Determine the total number of
tokens and their individual value based on the
private equity valuation.

❏ C. Smart Contract Setup: Implement smart

contracts to manage equity rights, distributions, and
token transfers.

❏ D. Distribution Strategy: Plan the token distribution,

including private sales, public offerings, and
allocations to various investor categories.

❏ E. Listing on Exchanges: List the tokens on the HYFI

Asset Marketplace and relevant digital asset
exchanges.

Responsibility: Team HYFI (Costs covered by Private

Equity Owner/Fund Manager)

6. Marketing and Promotion

Develop and execute a marketing strategy to attract

investors, utilizing various channels suitable for
reaching private equity investors.

Responsibility: Team HYFI (Costs covered by Private

Equity Owner/Fund Manager)

139
7. Token Sale Launch

Facilitate the token sale, ensuring a transparent and

compliant process, with clear communication about the
nature of the private equity investment.

Responsibility: Team HYFI

8. Post-Sale Management and Reporting

Manage the tokens post-sale and provide regular

financial reports and updates to token holders on the
performance of the private equity assets.

Responsibility: Team HYFI (Training provided to Private

Equity Owner/Fund Manager’s team)

9. Secondary Market Facilitation

Assist in facilitating the trading of tokens on secondary

markets, crucial for providing liquidity in private equity
investments.

Responsibility: Team HYFI (Training provided to Private

Equity Owner/Fund Manager’s team)

140
10. Ongoing Compliance and Asset Management

❏ A. Continuous Legal and Regulatory Compliance:

Ensure ongoing adherence to securities and
financial regulations.

❏ B. Management of Equity Assets: Oversee the

management of the private equity assets and
distribute returns to token holders as per agreed
terms.

Responsibility: Private Equity Owner or Fund Manager

141
5.6 Rare Collectibles

1. Preliminary Actions

❏ A. Selection of Collectibles: Identify and choose rare

collectibles that are suitable for tokenization,
considering their rarity, market value, and appeal.

❏ B. Authentication and Valuation: Ensure each

collectible is authenticated by experts and
appraised for its current market value.

❏ C. Legal Compliance: Adhere to laws and

regulations pertaining to the ownership, transfer,
and trading of collectibles.

❏ D. Collector Market Analysis: Understand the

collector market, including demand, investment
trends, and potential investor interest.

Responsibility: Collectible Owner or Curator

2. Creation of Tokenization Whitepaper

Develop a detailed whitepaper outlining the tokenization

project, including specifics of the collectibles, token
structure, rights of token holders, risk factors.

Responsibility: Team HYFI

142
3. Establishment of Legal Structure

❏ A. Legal Entity Formation: Set up a legal entity, such

as a trust or company, to hold and manage the
collectible assets.

❏ B. Token Holder Relationship: Define the legal

relationship between this entity and the token
holders, including rights to returns from sales or
exhibitions.

Responsibility: Collectible Owner or Curator

4. AMA (Ask Me Anything) Session with Core Team

Host an interactive session for potential investors to

engage with the project team and inquire about the
tokenized collectibles.

Responsibility: Team HYFI and Collectible Owner/Curator

5. Tokenization Process

❏ A. Token Development: Create tokens representing

fractional ownership or investment in the
collectibles on blockchains like HYFI, Ethereum,
Binance, or Polygon.

143
❏ B. Token Valuation: Decide on the total number of
tokens and their individual value based on the
collectibles’ appraisal.

❏ C. Smart Contract Setup: Implement smart

contracts to manage ownership, transfer, and
profit-sharing from sales or exhibitions.

❏ D. Distribution Strategy: Plan for the distribution of

tokens, including private sales, public offerings, and
allocations for different investor categories.

❏ E. Marketplace Listing: List the tokens on the HYFI

Asset Marketplace and relevant digital asset
exchanges.

Responsibility: Team HYFI (Costs covered by Collectible

Owner/Curator)

6. Marketing and Promotion

Develop and execute a marketing strategy tailored to

attract collectors and investors, utilizing appropriate
channels.

Responsibility: Team HYFI (Costs covered by Collectible

Owner/Curator)

144
7. Token Sale Launch

Conduct the token sale, ensuring a transparent and

compliant sales process.

Responsibility: Team HYFI

8. Post-Sale Management and Reporting

Manage the tokens post-sale and provide regular

updates to token holders on the status of the
collectibles and any returns from sales or exhibitions.

Responsibility: Team HYFI (Training provided to

Collectible Owner/Curator’s team)

9. Secondary Market Facilitation

Assist in trading tokens on secondary markets to

enhance liquidity and offer exit options for investors.

Responsibility: Team HYFI (Training provided to

Collectible Owner/Curator’s team)

10. Ongoing Compliance and Management

❏ A. Continuous Legal and Regulatory Compliance:

Ensure ongoing adherence to laws and regulations
relevant to collectibles.

145
❏ B. Asset Management: Oversee the care,
preservation, and potential exhibition of the
collectible items, distributing any returns to token
holders.

Responsibility: Collectible Owner or Curator

146
5.7 Real Estate

1. Preliminary action

❏ A. Select a suitable real estate asset for

tokenization.

❏ B. Conduct a professional valuation to determine its

market value.

❏ C. Ensure compliance with local real estate laws

and regulations for ownership and transfer.

❏ D. Understand and adhere to securities laws

relevant to the issuance of tokens.

Responsibility: Real Estate Owner

2. Creation of Tokenization Whitepaper

Develop a detailed whitepaper outlining the tokenization

project, including property details, token structure, rights
of token holders, risk factors, and legal considerations.

Responsibility: Team HYFI

147
3. Establishment of Legal Structure

❏ A. Set up a legal entity (e.g., a special purpose

vehicle) to hold the real estate asset.

❏ B. Define the relationship between this entity and

the token holders.

Responsibility: Asset Owner

4. AMA (Ask Me Anything) Session with Core Team

HYFI will host an interactive session where potential

investors and stakeholders can learn about the project
and ask questions directly to the core team of the Asset
Owner. This will be broadcast live on the relevant social
media channels of HYFI and the Asset Owner.

Responsibility: Team HYFI and Asset Owner

5. Tokenization Process

❏ A. Token Development: Create tokens representing

fractional ownership or rights in the copyright
material on suitable blockchains like HYFI,
Ethereum, Binance, or Polygon.

❏ B. Decide on the total number of tokens and the

value each token represents.

148
❏ C. Create smart contracts to automate the
tokenization process, including terms of ownership,
transfer, and possibly revenue distribution.

❏ D. Plan the distribution of tokens, including private

sales, public offerings, and allocations for different
investor categories.

❏ E. Listing on Marketplaces: List tokens on the HYFI

Asset Marketplace and digital asset exchanges.

Responsibility: Team HYFI (Costs covered by Asset

Owner)

6. Marketing and Promotion

❏ A. Develop and execute a marketing strategy to

attract investors.

❏ B. Use various channels like social media, real

estate forums, and traditional media.

Responsibility: Team HYFI (Costs covered by Asset

Owner)

7. Token Sale Launch

❏ A. Launch the token sale, adhering to the planned

distribution strategy.

❏ B. Ensure a smooth, transparent,

149 and compliant
sales process.
Responsibility: Team HYFI

8. Post-Sale Management and Reporting

❏ A. Manage the tokens post-sale, including transfer,

trading, and buyback if applicable.

❏ B. Provide regular reports to token holders on

property management, earnings, and other relevant
updates.

Responsibility: Team HYFI (Training provided to Asset

Owner’s team)

9. Secondary Market Facilitation

Facilitate or provide guidance for trading tokens on

secondary markets, enhancing liquidity.

Responsibility: Team HYFI (Training provided to Asset

Owner’s team)

10 Ongoing Compliance and Management

❏ A. Ensure ongoing legal and regulatory compliance.

❏ B. Manage the property and distribute returns (if

applicable) to token holders.

Responsibility: Asset Owner

150
5.8 Structured Financial Products

1. Preliminary Actions

❏ A. Identification of Structured Products: Select

structured financial products suitable for
tokenization, considering their complexity,
underlying assets, and risk-return profile.

❏ B. Risk and Reward Analysis: Perform a detailed

analysis of the risks and potential rewards
associated with the structured products.

❏ C. Legal and Regulatory Compliance: Ensure

compliance with financial regulations and securities
laws related to structured products and
tokenization.

❏ D. Market Feasibility Study: Conduct a market study

to understand investor appetite and the viability of
tokenizing such products.

Responsibility: Structured Product Manager or Issuer

151
2. Creation of Tokenization Whitepaper

Develop a comprehensive whitepaper detailing the

tokenization project, including specifics of the
structured products, token structure, investor rights, risk
factors, and legal considerations.

Responsibility: Team HYFI

3. Establishment of Legal Structure

❏ A. Special Purpose Vehicle (SPV) Formation: Set up

an SPV or similar legal entity to hold and manage
the structured products.

❏ B. Legal Terms for Token Holders: Clearly define the

relationship between the SPV and token holders,
including their rights to returns and obligations.

Responsibility: Structured Product Manager or Issuer

4. AMA (Ask Me Anything) Session with Core Team

Organize an interactive session for potential investors to

learn about the structured products and ask questions.

Responsibility: Team HYFI and Structured Product

Manager/Issuer

152
5. Tokenization Process

❏ A. Token Creation: Develop tokens representing

ownership or investment in the structured products
on blockchains like HYFI, Ethereum, Binance, or
Polygon.

❏ B. Token Valuation: Determine the value of each

token based on the underlying assets and
structured product valuation.

❏ C. Smart Contract Implementation: Set up smart

contracts to manage investment terms,
distributions, and token transfers.

❏ D. Distribution Strategy: Plan the distribution of

tokens, including private sales, public offerings, and
categorization of investors.

❏ E. Exchange Listing: List the tokens on the HYFI

Asset Marketplace and digital asset exchanges.

Responsibility: Team HYFI (Costs covered by Structured

Product Manager/Issuer)

6. Marketing and Promotion

Develop and execute a marketing strategy to attract

suitable investors, using channels that target the
financial investment community.
153
Responsibility: Team HYFI (Costs covered by Structured
Product Manager/Issuer)

7. Token Sale Launch

Facilitate the token sale, ensuring transparency and

compliance with financial regulations.

Responsibility: Team HYFI

8. Post-Sale Management and Reporting

Manage the tokens post-sale and provide regular

updates and reports to token holders about the
performance of the structured products.

Responsibility: Team HYFI (Training provided to

Structured Product Manager/Issuer’s team)

9. Secondary Market Facilitation

Assist in facilitating trading of tokens on secondary

markets, crucial for liquidity in structured product
investments.

Responsibility: Team HYFI (Training provided to

Structured Product Manager/Issuer’s team)

154
10. Ongoing Compliance and Asset Management

❏ A. Continuous Regulatory Compliance: Ensure

ongoing adherence to financial and securities
regulations.

❏ B. Management of Structured Products: Oversee the

performance and management of the structured
products and distribute returns to token holders.

Responsibility: Structured Product Manager or Issuer

155
5.9 Tax Deeds

1. Preliminary Actions

❏ A. Identification of Tax Deed Properties: Select

properties with tax deeds that are suitable for
tokenization, considering their location, value, and
legal status.

❏ B. Legal Due Diligence: Ensure the tax deeds are

legally sound and the ownership transfer process
complies with local and state laws.

❏ C. Property Valuation: Conduct a thorough appraisal

of the property's market value.

❏ D. Risk Assessment: Evaluate risks related to

property condition, market fluctuations, and legal
challenges.

Responsibility: Tax Deed Holder or Managing Entity

2. Creation of Tokenization Whitepaper

Develop a detailed whitepaper outlining the tokenization

project, including specifics of the tax deed properties,
token structure, rights of token holders, risk factors, and
legal considerations.

Responsibility: Team HYFI

156
3. Establishment of Legal Structure

❏ A. Legal Entity Setup: Form a legal entity, such as a

trust or special purpose vehicle (SPV), to hold and
manage the tax deed properties.

❏ B. Token Holder Relationship: Define the legal terms

between this entity and token holders, particularly
regarding property rights and profit distribution.

Responsibility: Tax Deed Holder or Managing Entity

4. AMA (Ask Me Anything) Session with Core Team

Host an interactive session for potential investors to

engage with the project team and ask detailed
questions about the tax deed properties.

Responsibility: Team HYFI and Tax Deed

Holder/Managing Entity

5. Tokenization Process

❏ A. Token Development: Create tokens representing

fractional ownership or investment in the tax deed
properties on suitable blockchains like HYFI,
Ethereum, Binance, or Polygon.

157
❏ B. Token Valuation: Decide on the total number of
tokens and their individual value based on the
property valuation.

❏ C. Smart Contract Implementation: Set up smart

contracts to manage ownership, transfers, and
profit distribution.

❏ D. Distribution Strategy: Plan for the distribution of

tokens, including private sales, public offerings, and
investor categories.

❏ E. Listing on Marketplaces: Make the tokens

available on the HYFI Asset Marketplace and digital
asset exchanges.

Responsibility: Team HYFI (Costs covered by Tax Deed

Holder/Managing Entity)

6. Marketing and Promotion

Develop and implement a marketing strategy to attract

investors, using appropriate channels to reach a
targeted audience.

Responsibility: Team HYFI (Costs covered by Tax Deed

Holder/Managing Entity)

158
7. Token Sale Launch

Conduct the token sale, ensuring a transparent and

compliant process.

Responsibility: Team HYFI

8. Post-Sale Management and Reporting

Manage the tokens post-sale and provide regular

updates to token holders on property status,
management, and any revenue generated.

Responsibility: Team HYFI (Training provided to Tax Deed

Holder/Managing Entity’s team)

9. Secondary Market Facilitation

Assist in facilitating the trading of tokens on secondary

markets for liquidity and investor flexibility.

Responsibility: Team HYFI (Training provided to Tax Deed

Holder/Managing Entity’s team)

10. Ongoing Compliance and Property Management

❏ A. Legal and Regulatory Compliance: Ensure

ongoing adherence to property and tax laws.

159
❏ B. Property Management and Distribution: Oversee
the management of the properties and distribute
any profits or returns to token holders.

Responsibility: Tax Deed Holder or Managing Entity

160
5.10 Whisky Casks

1. Preliminary Actions

❏ A. Selection of Whisky Casks: Identify and choose

whisky casks that are suitable for tokenization,
considering their age, distillery pedigree, rarity, and
potential for appreciation.

❏ B. Authentication and Valuation: Ensure each cask

is authenticated by whisky experts and appraised
for its current and potential future value.

❏ C. Regulatory Compliance: Ensure adherence to

laws and regulations regarding the ownership,
storage, and trading of whisky casks.

❏ D. Market Analysis: Conduct an analysis of the

whisky market, investor interest, and potential
appreciation of the casks.

Responsibility: Whisky Cask Owner or Custodian

2. Creation of Tokenization Whitepaper

Develop a comprehensive whitepaper detailing the

tokenization project, including specifics of the whisky
casks, token structure, rights of token holders, risk
factors, and legal considerations.
161
Responsibility: Team HYFI

3. Establishment of Legal Structure

❏ A. Legal Entity Formation: Create a legal entity, such

as a trust or company, to hold and manage the
whisky casks.

❏ B. Relationship with Token Holders: Define the legal

relationship between this entity and token holders,
including rights to potential profits from cask sales
or bottling.

Responsibility: Whisky Cask Owner or Custodian

4. AMA (Ask Me Anything) Session with Core Team

Host an interactive session for potential investors to

learn about the project and ask questions about the
whisky casks.

Responsibility: Team HYFI and Whisky Cask

Owner/Custodian

5. Tokenization Process

❏ A. Token Development: Create tokens representing

fractional ownership or investment in the whisky
casks on suitable blockchains like HYFI, Ethereum,
Binance, or Polygon.
162
❏ B. Token Valuation: Decide on the total number of
tokens and their individual value based on the
whisky casks’ appraisal.

❏ C. Smart Contract Implementation: Set up smart

contracts to manage ownership, transfer, and profit
distribution from potential sales or bottling.

❏ D. Distribution Strategy: Plan the distribution of

tokens, including private sales, public offerings, and
allocations for different investor categories.

❏ E. Marketplace Listing: List the tokens on the HYFI

Asset Marketplace and digital asset exchanges.

Responsibility: Team HYFI (Costs covered by Whisky

Cask Owner/Custodian)

6. Marketing and Promotion

Develop and execute a marketing strategy to attract

investors, using channels suitable for reaching whisky
enthusiasts and investors.

Responsibility: Team HYFI (Costs covered by Whisky

Cask Owner/Custodian)

163
7. Token Sale Launch

Facilitate the token sale, ensuring a transparent and

compliant process.

Responsibility: Team HYFI

8. Post-Sale Management and Reporting

Manage the tokens post-sale and provide regular

updates to token holders on the status of the whisky
casks and any potential returns.

Responsibility: Team HYFI (Training provided to Whisky

Cask Owner/Custodian’s team)

9. Secondary Market Facilitation

Assist in facilitating the trading of tokens on secondary

markets to enhance liquidity.

Responsibility: Team HYFI (Training provided to Whisky

Cask Owner/Custodian’s team)

10. Ongoing Compliance and Cask Management

❏ A. Legal and Regulatory Compliance: Ensure

ongoing adherence to regulations related to whisky
storage, aging, and sales.

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❏ B. Cask Management and Profit Distribution:
Oversee the care and potential sale of the whisky
casks, distributing any profits to token holders.

Responsibility: Whisky Cask Owner or Custodian

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Hybrid Finance Blockchain
(HYFI)
HYFI is a Legally-compliant
Permissioned Layer-1 Blockchain
for Tokenization of Assets.

www.hyfiblockchain.com
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