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Gregory Magarshak edited this page Dec 15, 2023 · 4 revisions

TradedTokenContract

Tokenomics and Legal Overview

Below is a list of all the different smart contracts and how the ecosystem works together, with examples from the Intercoin community. It has analysis of legal regulations in addition to economic incentives and technical guarantees. Don't take our word for it – please consult with your choice of security auditor, tokenomics advisor, and legal advisors, in your own jurisdiction, before releasing your own token. Or get in touch with us, since we help projects, companies and communities build solutions to raise money and generate revenue.

ClaimingToken

Investors and team members receive an investor token (e.g. Intercoin's ITR token, which is sold in an offering like this) and an offering memorandum like that with risk disclosures to investors, and using available exemptions from for securities transactions, such as Reg D (like this, Reg CF for crowdfunding (like this), Reg S for offers and sales to people residing outside the United States. Finally, you can also use exemptions like Rule 144 for affiliates the company who have held the token for at least a year.

Learn much more information in our interview with Sara Hanks:

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Review the regulations of your local jurisdiction (FINMA in Switzerland, for instance) and keep in mind other government agencies such as OFAC and FINCEN, which issue their own guidance when it comes to Convertible Virtual Currencies.

TradedToken

Tokenomics

The TradedToken is not sold by the company, but rather is issued by a smart contract as the market demands it. It supports optional presales, which take place before the UniSwap/PancakeSwap initial liquidity is deposited. The presales can be done using FundContract, to guarantee that all TradedTokens in the presale were sold for a given minimum price distribution, and locked up. In the case of Intercoins, there are no presales, and the company makes no money from selling TradedTokens. The launch is a completely fair launch and decentralized.

When the demand drives the token price some significant % percentage past the all-time high, a window opens up that allows the ClaimManager to allow others to claim the token, by calling wantToClaim and then showing up later to claim() the tokens. For example, when INTER exceeds its all-time-high by 50%, all ITR holders together can line up to waitToClaim(amount) some newly minted INTER, and then come and claim() it a week later. This allows balancing the token between Customers and Traders on the one hand, and Initial Investors on the other hand. For more information, see https://intercoin.org/TradedToken.pdf

TradedToken can restrict the number of holders to those who already have a token balance. Only addresses with Owner or Manager role can send tokens to addresses that have a zero balance, thus creating an effective "whitelist" of wallets that are considered "in the network" or "on the platform". This is also useful for TradedTokens that represent equity securities, which may trigger further requirements if they go beyond 500 holders.

TradedToken is an Ownable contract, and the owner can renounceOwnership after appointing some managers. Managers can do things like transfer() the tokens to new addresses that have a zero balance. They can also addLiquidity(amount) and claim(amount) both of which mint new tokens, and are subject to limits set in the initialization parameters about how much they can drop the token's price. The claim(amount, address) method simply mints more tokens and sends them to an address. The addLiquidity() method mints more tokens, sells them, and adds them to liquidity on the UniSwap/PancakeSwap decentralized exchange, then sends the LP tokens to the zero address, provably locking it.

In order to guarantee to the community that the addresses with Manager role will behave in an orderly way, we have developed smart contracts, to act as managers in place of EOAs:

  • The LiquidityManager allows anyone to call addLiquidity, and then it in turn calls addLiquidity on the TradedToken contract, in its capacity as a Manager, allowing anyone to add more liquidity as it becomes needed by the ecosystem to smooth the price movements.
  • The ClaimingManager allows holders of ClaimingToken to call wantToClaim(amount), and then show up some time later (specified in ClaimManager's initialization parameters, e.g. one week) and call claim(). The amount claimed uses the exchange rate between ClaimingToken and TradedToken set in the initialization parameters, too (e.g. it can start at 1 TradedToken and then steadily grow with time, to give ClaimingToken holders an incentive not to rush to convert it as soon as they can all the time). The amount claim()ed may be significantly less than wantToClaim() because all claimants must share the availableToClaim amount representing the maximum allowed price drop since the last all-time-high.
  • The DistributionManager has an owner address that can call transfer(account, amount) to direct it to send TradedTokens to any address, including those that have a 0 balance, in its capacity as a Manager of TradedToken smart contract. This can be used to on-board customers, or subsidize customers with some initial TradedToken, or just airdrop it. However, in a typical set-up, each DistributionManager instance starts out being donated some ClaimingTokens and must obtain its TradedTokens through ClaimManager just like every other ClaimingToken holder. This is to make sure that there is no additional mechanism to inflate the token supply and even the owner of the DistributionManager cannot simply mint tokens outside of the existing limits that are shared by all ClaimingToken holders.

Legal Analysis

Unlike ClaimingToken, the TradedToken is designed to be a utility token that matches all the criteria laid out in the SEC's No-Action Letter to TurnKey Jet, Inc. and goes beyond them by adding a lot of guarantees for token holders. Let's go through the SEC's criteria first:

  • The company selling the ClaimingToken will not use any funds from TradedToken transactions to develop their Platform, Network, or App, and each of these will be fully developed and operational at the time any TradedTokens are sold. For example, at Intercoin.org we raised money through selling ITR tokens to investors first, and spent many years building out the software and network and app, while none of the money from the INTER tokens goes towards

  • The TradedTokens will be immediately usable for their intended functionality (as utility tokens, as well as for staking in various communities in order to get CommunityCoins to pay for goods and services) at the time they are sold.

  • The deployers of TradedToken smart contract will restrict transfers of TradedTokens to Platform Wallets only, and not to wallets external to the Platform. In the case of INTER tokens, they are intended to be bought by our customers, brought in by our sales funnel, where they describe their community, project and their needs, so we naturally get to "KYC" or "know your customer". The customers can then buy TradedTokens on exchanges, whether decentralized (like PancakeSwap) or centralized (like MexC). The exchanges have addresses that are considered "on the Platform" since they have been vetted. Inside a centralized exchange, traders have a balance, but not a self-hosted wallet.

  • The TradedToken smart contract will make TradedToken available for a fixed amount of 1 BNB per token perpetually, thus to buy 1 billion of TradedToken would require 1 Billion BNB. Each unit of TradedToken would be usable as a coupon of 1 BNB to cover up to 20% of the bill for any Intercoin services, or fully pay for Intercoin's smart contracts.

  • Neither TradedToken nor its deployers would offer to repurchase tokens at any price. However, each INTER token can be redeemed to effectuate up to a 20% discount on any Intercoin services, or pay for the operation of its smart contracts over time. It can also be staked in other communities that choose to work with INTER, in exchange for their own currency. Those communities may choose their own arrangements regarding the exchange rate between INTER and their own CommunityCoin backed by INTER.

  • The TradedToken is always marketed in a manner that emphasizes the functionality of the Token, and not the potential for the increase in the market value of the Token. That's because it's marketed to communities that desire Intercoin's smart contracts, and to the customers desiring goods and services in a growing number of communities that join the INTER platform.

Staking TradedToken

TradedTOken can be staked in communities that may choose to issue their CommunityCoins backed by the stake. For more information, see https://intercoin.org/Tokenomics.pdf

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