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title: 'Transcript of Alumni Case Study: Tokenization & Compliance'

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# Transcript of Alumni Case Study: Tokenization & Compliance
already gone through the process of setting up your businesses uh the token journey all of that I think it would be
really um great if you could share with the class um you know how have each of you navigated that um
you know some of the challenges learnings that came from that um so as I mentioned uh the structure would likely
be to have each of you uh kind of present you know your own um journey and let's say we're gonna give
you about 20 minutes each and then we want to open it up for questions I'm sure that there will be questions that will pop in as you're also uh presenting
but just to give it a little bit of structure and so people know what to um expect from the session and then let's
see also towards the end if there's um any other topics that pop up
does that sound good for you all great so um let's go ahead in
alphabetical order so Alex sensei you've always been the first one pitching and doing everything in the cohort so I'm
sure it feels familiar um if you want to go ahead and just quickly introduce yourself tell us a little bit about alex
and then go ahead and jump in sure um hello everyone my name is
cinderella she i am the ceo and co-founder of alex alex stands for
automated liquidity exchange and before i start introducing you about alex and give you a very brief
description of our journey towards a token launch and token sale i want to
congratulate you to be part of this fantastic um you know accelerator
program also welcome you to the stacks community before alex decided to build on stacks
we have um invested quite a lot which chain we want to be and we realized that
and also throughout the journey we have realized that stack is a very very very
special community you will see that they're not that much you know trash talk priced down from kind of talk
people are here the community is here really everybody has a long-term vision
and is here to stay so i want to welcome you and you know anything we can do to
help you to help you to grow uh please dm me or any of our community leaders on
our discord so alex what it is um why are we here and
what are we building and what is our journey about our token launch and all the challenges that we have been facing
that hope to share with your opinion and joy so that you can avoid uh you know
what could have been avoided um alex is a defense so uh the way we set up this and i'm
saying this to you if you have you know you can always come to dme it's going to save you quite a bit of a legal fee okay
so the way we set up is very very clean and when we present it to a family as
well as our token um uh law firm uh the setup is already so good
that you will save you lots of money so the alley itself is starting from as a
technology company so our company is registered in singapore uh bear in mind
that i am a us person so i'm based in new york so if some of you are u.s person there's some bits and pieces of
footnote that you know happy to discuss with you offline uh my co-founder is
based in hong kong but we have decided to uh register company
in singapore but that's a technology company um but we also
set up in the meantime set up a foundation which is alex lab foundation
and that's a panama entity why do we need a foundation it's a non-profit
foundation because the foundation is the body which governs the default protocol
as well as the allocation of the alex token okay so now coming back and please
interrupt me if you wish what is alex token right so alex token
is a governance token of the protocol it is used for voting for staking and also
to receive a protocol reward it is very necessary for example to participate you
know you know our current ideo or upcoming ideo et cetera et cetera and alex told
me is how our stakers and liquidity providers are incentivized
so before you start all this i would say it's very kind of important to have a
token on risk in your mind i remember my co-founder rachel is fantastic in this she keep on saying we
have to talk we need to have a token armies we need to have a token really is your monetary policy right but please
don't be scared because when we were starting to design our token numbers i remember it was you know iterative
process but there will be fantastic i think um advisors here within this accelerator program which we got really
really really good advice but the best advice i got from our token army's
advisor is that it is a monetary policy but you cannot forecast the future
perfectly so make sure that you are not trying to optimize something that you
know that is not going to be deterministic what it means that always leave a room for you to be able to
improve and iterate so now coming back to alex tokonomics
it is a very typical kind of your mainstream type of different economies because we're on stacks so it's a
deflationary i think most um participants and users
of alex like that part deflationary but we don't have a fixed emission procedure
right as opposed to some of other uh uh tokenomics but because we are a d5
because there's money locked in a smart country we very much emphasize on the
risk management part right what happens if flex one happens you know who is going to make hope et cetera et cetera
so i think that was very well received in terms of uh total economics and i talked about the legal structure so it's
a lab foundation alex that foundation is a is a polynomial based entity and i'm sure for example bbi is fine too british
version error is fine too right so it's a non-profit uh entity governs alex
define and allocation of alex token so the way we started a token sale is a
following we actually did the equity round for the
alex technology company but within the token nominees there's a certain allocation
allocated to this technology company just because the technology company is the one who come up with all the
technology ai uh uh you know technology for the alex protocol to use so that's all well
documenting the tokenomics um now the second thing is about tokens
right so the purpose of alice token again we want to make sure we
we try to decentralize as fast and as wide as we can what it means is that we
don't want to just have a few vcs hold the majority of tokens and i think
you know in this era of of of d5 it is really really important that you want to
have a very strong community backing you which also means you want to put the token
into your community's hand as fast as white as possible so the way we conduct
is a following and this is not a typical script okay so you could vary that uh
you know adopt that according to your knee is that we first need a private round cell the purpose for the private
round cell are twofold one is for uh to um to to have the alex foundation the
protocol strategy to have certain liquidity because basically we are
you know we we are we are defects we need certain liquidities right so the liquidity need to provide it somewhere
so we did a private sale but the the purpose of a private sale is not you
know nobody touched that money only foundation has that money okay so it's very very important to make it very very
clean founders don't touch the money et cetera is for the protocol to start
having the liquidity in this defect so we did a private round cell but we didn't uh
obviously many of them are vcs but we made sure that there's a large number of
vc so not each one single vc has let's say more than 20
of that private cell so we try to again also try to progressively decentralize
even among the vcs right so vc money is not dirty money they are your mom and
dad's you know 401k pension fund endowment right so but we try to make
sure there's a large number of vcs that they can participate in this private round so play around is a you know we
had a 2 million paragraph tokens that was completely over subscribed originally we wanted to do only half a
million um so with this money put into the alex lab foundation as his own
initial liquidity provider right so that's number one the second purpose of
this private round is also for press discovery because as i mentioned uh alex
want to be decentralized as fast as we can as wide as we can which means we
want community to have our token so but we need a price discovery right uh the
reason is that we were always wanting to do an ideal idea it's basically like
your ipo in a traditional finance but it occurs in the decentralized exchange
such as alex um so what we did is that we used as babyron as a price discovery uh and bear
in mind that the private round is for investors but has a very long investing schedule so we make sure that the best
in schedule is four years okay and investors did not shy away from if they
believe in your project they would not mind this four-year investing period if
people push back to you there will be visible principle oh four years is so long now the mainstream everybody's at
two-year no if they believe in your project they happily will participate a
four-year investing type of schedule so it's four-year investing so it's not right away liquid so once we have that
price discovery we say to our community which at that point of time is already
close to 17 000 uh people right uh members with
individual wireless i would say is a is more than like 11 000 individual wallet
why do we know that because we run a very very long test net before
so we have all these individual wallets they participate in our test net we say we want them to come to participate on
our idea on our own launch pad so that's again a very special feature of alex is
that we have a launch pad to ideal emerging project the purpose of the idea
of a launch pad is not just to raise funds the race fund is really important but i think the most
important is that to build your community and to make sure that your community can participate uh in your
token launch and number three is also for decentralization so we launched our
own token our own launch pad early this year so we really only are
men and shy of i would say six weeks right so uh the idea was a a
success i think we were 32 times over subscribed but why do we want to do our idea again we
want to be decent should i get all this individual wireless credit and the chance to participate to hold alice
token raise you know a fund but also you know try to build your community right you
want your community to come to be part of you um so that was a alex ido um so um i
would say that at the moment where i do another project a very exciting nft
project called bitcoin monkey and exactly the same recipe is a certain
amount of fun will be will be raised but the most important is for them to reach
decentralization as well as build a very strong community for this particular
project so that's that in terms of how we work
with a future project who would like to come to ideo and alex
in terms of token particularly from the token sale legal compliance point of view is that we work with very good
lawyers which is denton based in singapore um they will help the project
who come to idioms alex also help them on the legal compliance point of view and issue the opinion about token you
know security or not security also we managed to have a group discount of of
um for in in terms of legal fee but i think in particular what's interesting is that
we also managed to negotiate that the project if you are a smaller project the legal fee something can be quite uh
overwhelming that you could also pledge some of your token as part of the legal fee so that's what alex managed to
negotiate with uh with the denton this uh token expert
um so that's pretty much about how alex went about about our token sales
um any question or andrea should i wait for it um later
i think let's let's allow for one or two questions right now and then uh we'll continue with the the rest of
the uh with philip and sungmin and then we'll have questions at the end as well so if anybody has a question for sensei
around alex
this is rob ross from afani what is the biggest challenge you challenge that you encountered during the entire process
that you had um i think that the biggest challenge is
that because we are all startup and thank you for the question rob i think because we are startup right in the very
beginning it was just um you know rage for myself and our cto plus one or two
developers so you need to do everything yourself and we weren't i'm i'm a quant
i study metrics and no idea about legal sometimes you get overwhelmed um
so that's number one but uh i will say that if we try and we
are a defect right diva is a little bit scary right so i would say if you we take the mindset of we want to be as
compliant as we can right and really spend the time to go
through media and greedy with the lawyers and that's kind of no shortcut
for that so if you're a ceo also there's no shortcut for that i learned so much right spend time we are in an era that
the law in each country particularly in the u.s is you know very kind of dynamic in the
sense of changing every now and then um other uh i know uk australia us most
likely have the you know most strict token law in terms of security and not security so i would say spend time be
most compliant as you can then i think that if you have that mindset it's a little bit easier number
two is also we'll come back to the fundraising i think i'm coming next week right andrea i have to talk about fundraising is that i got this really
good advice from patrick right patrice stanley who is i think the mentor of this program he said whatever you think
you need to raise just raise the double because illegal is going to cost you so much right so just fun just for you know
making sure that the token cell is right it's combined it's going to be costly so make sure
when you raise a fund you have some budget set aside for the legal and compliance
thank you thank you for that sente any other question maybe one more question
uh yeah this is uh matt from savita mining um i had a question about the emission schedule so
compared to like other protocols such as architect or even like city coins for example
right where the emission schedule is is a is a is a planned uh set ahead of time uh document you
mentioned explicitly you guys opted for a not uh set in stone emission schedule
and i'm wondering if you could kind of talk more to the trade-offs of that decision you know it seems like it's
maybe you're consciously saying we're going to be a little bit less decentralized or at least appear less
decentralized up front and eventually work towards decentralization that's kind of you know i'd like to hear more
about about your thoughts there sure is an excellent question thank you
um as i said i think because um you know we are in the in this industry
or this sector that is growing so much right who knows
what is our challenge down on the road in five years right nobody know so very
consciously we don't pin down or get our hands really kind of handcuffed say this
is what we are going to do in the next five years and i think the difference also with other protocols such as city point is
the following we are not just one service defect right we really try to build our
whole ecosystem so as you can see i mean you know some community members don't like me
saying that i'm just saying that we are really trying to build up you know better more efficient more decentralized
goldman sachs on stacks for bitcoin but if you think about what is uh what is
goldman sachs what is the whole financial ecosystem right you need market market
is is ideal launch paid market is dex and philippe and also uh
something have that right marquee it mark is about dex is about ideal launch
pad you need to have instruments so philip has usda right
and you and we will have our own fixed income land barrel type of instrument
right but mark is also about leverage right so we really want to build the
whole functionality really like financial services for stacks on stacks
for bitcoin so if you think about that we will have our own ecosystem and we want to use our token for the ecosystem
right so our token number one is really to uh reward our for example stake yield
farmers but for example for bitcoin monkey this kind of ideal partner because they come to ido we need to
provide them alex liquidity we need to help them so let's say if you come to idm alex right it's not just that okay
we say okay people subscribe it's very game if i have a way that you get the lottery ticket right before behind is a
whole mechanism how we design your ideal how we support alex token or rs protocol
support you liquidity so that when the debt is open right your tokens are going
to be very well supported and also allah is going to support your tokens in farm
and stating as well so that's a bitcoin monkey right let's say they have the banana token once banana token is being
traded people start staking it they are going to get not just banana token but they also get alex token as part of the
war so this is what we meant in our tokonami is that you know a big chunk of
our tokens are going to be used to support or hug to help the whole
ecosystem that's why we cannot say every year we're going to admission how much think about you are all in the pipeline
of issuing your token and most of you most likely will be ready in three to six months and believe something
are here to help you to make sure your token are going to be traded very well very well supported but we don't know
next year how many you know new tokens what kind of liquidity are there going to be for for allies to to go there to
support you so we don't want to really again handcuff our hands so it's very different from
cevita mining the city point right the kind of design uh so that's number one
however we do say that the max you know the max the max every year we're going to
admission how much but also we have a deflationary schedule that i think
um i think a total of certain amount that's just a number like 1 billion will be out there to try to be as you
know as strict as possible about the total amount of uh alex token i hope
that answer your question and again because alex is going to have the whole ecosystem around it using alex token to
support them hence we don't want to pin down each year you know how much we're going to admission because maybe the
third year you know the ecosystem is going to be striving so much that we need more admission
yeah i i get the benefit certainly of the flexibility i'm just wondering if there are any it seems like it comes at
the explicit trade-off of less decentralization because you have this one private entity that controls fully
controls the emissions schedule so that was that was kind of that's not true that's not true we are we are having a
doubt right we are the first one who use the executed dao for example within the stats ecosystem so everything even if a
stake in farming is voted you can go to see a smart contract right it has to be
voted by the executed dow so uh what we say in the token army is that six to
eight months after the mainland launch uh before there is a genesis style right we work through this decentralization
complete decentralization but i think within six months we will have a full-fledged doubt yeah so start
centralizing the move to dow is kind of the model that you you picked yeah i would say partial
i would say i would say a progressive decentralizers that's kind of the vocabulary we kind of invented
in the sense that if it's just almost impossible i think philippe has a lot to say on this as well it's almost
impossible to be day zero to be completely decentralized right so you want to work progressively towards that
and i'm sure you are in a discussion with city coin right so there's a rethinking about the tokenomics
if that's a you know the best way to go about it yeah exactly thanks thanks for
your uh insight there great thank you for your question thank you so much sensei um i think
we're gonna go ahead and move on to phillips from arcadico um and then stick
around today if you can for the end there might be some other questions that might pop up if you're available
awesome um honestly i think kente did a great job she said most of the things um
i think already that um i think also want to mention including the setup hours is very similar um so
yeah i i think if i had known all of uh what tiente said um
just now if i'd known all of that back in may that that would have really saved me um
also maybe weeks weeks to months of our time and a lot of uh dollars or euros
but anyway i did prepare a little presentation um just to you know
form my thoughts around this i did you know just a little caveat i did speak to
my partner earlier today and i told her i'm going to have to say something about
the token sale on compliance and she's like you're going to be talking about compliance i'm like yeah so just know
that i might be the worst person ever uh to speak about uh compliance um
whatever that means i'll leave that up too to you guys but um i might not be the best um or most compliant person in
the room here but we had to go through it yeah and so before you jump in do you
mind just uh introducing yourself really quickly i'm sure some people are already familiar with with who you are but sure
yeah yeah so um i'm one of the core contributors of architect architect is a crypto collateralized stablecoin um what
that means is basically lock up collateral in a smart contract so you can borrow stable coins against our
stable coin is called usda so that's our zone that as they say and in french are
you know the the reason we live basically um stable coins and we want to make that
stable on usa widespread um and then just widely adopted among all
all stacks d5 protocols and the whole ecosystem really um
just a quick word on stable coins in general i'm pretty sure in the next few months there will be other stable coins launching are we threatened by that i
don't think so they're mostly going to be centralized stable coins our you know stable coin has a reason that
it is decentralized and the cool thing about ours will be that we can add collateral types of different types of
collateral literally for you to mint or in other words borrow again so today that's stacks sdx and xbtc
uh so rap bitcoin but in the future that might be um something else you know i know some other people are launching a
token here becomes this widely um spread thing in in you know indeed
fire or generally even a banana talk and i'm just saying something you know like the nfc project that kienta just spoke
about um we could adopt it as a collateral type if there's enough liquidity around it if
it's you know sufficiently decentralized and all those things i i think one of the uh earlier things could be city
going something like that but i think the problem with city coins lies and its emission schedule and high staking
rewards are stacking i should say um in that
it becomes less interesting for people to log it up without earning yield around it so that adds this whole layer
of complexity where we we would have to incorporate some yields earning uh like
we do today on on stag's faults but anyway i'm going off on a tangent
here the point is there's tons of collateral types that we can adopt and make it easy for you to mint usda
against and use that in in other protocols that will launch in the future
um so yeah that's that's architecto pretty excited about we've built so far we launched about six months ago uh back
in the end of october and yeah um i'll i'll stop there and
talk a bit about what people are really interested in which is token sales and compliance but like i said i think the
most interesting things have been said already but having said that i think there's several correct ways to do it um
so what i'm gonna say might not be the truth or is not the truth it's just one way how we did it which turns out to be
similar to how uh alex did it you can either issue equity a token or
vote we only did a token by the way so that's how we differ from alex we never issued equity to any of our investors
there's a pure token sale that happened um no one owns any equity in any of the
companies that we well except for us obviously but those companies do not really represent architecture they're
more of a vehicle to get a token launched or something to pay ourselves a salary or things like that but they
don't really have a very specific um you know future use or
or again in um in architecture we we even have plans uh at some point
defense legally obviously again to to shut them down so there's really no entity behind it but that's like the far
future say five years ahead and that's already mentioned it's really hard to see even a year ahead so
who knows but ultimately our goal is not to have like necessarily
legal entity behind if that's possible in any way you know might be just not even daydreaming
anyway this is um so you see nfa a lot right not financial advice it's not legal
advice since i'm not a lawyer so i can't really say what i'm saying is right or wrong but it works for us and
another caveat is you can go very minimal in cost which actually is what we did we did
not work with those blue you know with the most well-known lawyers on earth but
i think the lawyers that we chose were very pragmatic they did their job really well i'm super happy about them but
they're not necessarily the most well-known law firms and i didn't want that either because these people
i know i'm uh this is being regarded so i have to be uh um smart
with my words but those people they they tend to charge a lot so i i was always
like let's be pragmatic i don't want to go all out let's keep the cost down as
as hiente also said um raised a lot more than you think you need because those legal costs can go up
i think um just incorporation all those things it was not that expensive i think we
paid i would have to double check but it was around 30k 30 40k
so not cheap but i think you can also pay 300k so it really depends um
yeah who you engage with then if you do a token sale i think it's just mentioned as well be careful about
u.s versus non-us so i'm a european citizen i'm not in the us i don't have plans to go to the s i don't like the us
per se i don't want to immigrate to the u.s honestly i like for me everyone is the same but
the the laws in the us i i don't necessarily get them and so if you get a us investor especially accredited one
maybe you can try to convince them to invest through a farm vehicle they own farm vehicles gambian bvi as mentioned
british virgin islands cayman islands panama i've heard this shells as well and by the way we are incorporated in
panama um so yeah that's that's what we went for but i think the top three there bvi
gaming and panama are the um the most popular ones um
again do with this you won but after speaking to probably about five lawyers that was
um my conclusion so we did as i said no equity but just a
token sale on a saft which stands for simply agreement for future tokens the reason we did this token sale was mainly
like yente said as well to get long-term supporters on board and primarily to to
take care of some liquidity when launching the platform for our deco governance token which also can be used
um for obviously voting in governance for staking it providing
or might be value accrual in the future i have to be careful with my words again
but uh there are plans to to incorporate some value accrual in in the deco token
most likely from what we call stability fees which is the interest that is paid on your usda borrowings um that go to
the you know to the protocol that might be used potentially in the future to buy and burn
so basically it's very similar to to a stock buyback but where we would
buy back tokens and burn those to alleviate some of the
cell pressure that most of those d5 protocols with high inflation will have
um so we did a soft race what i think you should try to get as well as a legal opinion on your security
status you probably have heard people's talk about how we test often you know or your utility token or your security
um all that nonsense quite frankly but you have to do it so we got a legal opinion
um we they use a lawyer in singapore for that which was great so it's not a legal opinion of the scope of the us um
because they don't well they don't know american law per se but it was in the scope of
singapore law which is anyway useful to have because they analyze your token they check how decentralized is they
from a legal point of view give you a few pointers at why you can improve on token um but i can tell you that there's
a lot of low-hanging fruit efforts that you can make to to make your token more decentralized just from the get-go
an example could be obviously as a team you want to be rewarded
think of a healthy lock-up you are not going to give yourself the majority of the tokens it doesn't really
fly in a decentralized protocol either way but also from a security status things like that are very obvious things
that you have to look out for also you might want to think of some
mining thing you know how how are your tokens coming into life we do that through purely emissions so
they in some sense get minted out of thin air but something like proof of transfer light could be interesting um
because then some work or some capital at risk has to be given you know to create those things there's always
a potential good um you know indicator that there's some work some
decentralized work because all those miners would be decentralized probably if you could also fake decentralization
obviously but so those miners they would be decentralized so think of easy ways
in your tokenomics and your setup both you know operationally as well as in the smart contracts on how you can make
things decentralized that would not harm you um as kiante also said i think
you cannot be completely decentralized from the start it's just not realistic but think of ways that can indicate
decentralization and a path towards it the path is super important that you know how to get there within x amount of
time i think that's the most important thing and people will forgive you for being a bit more centralized
especially in the beginning obviously if you're five or ten years old and you're
yeah decentralized um i was gonna say as then um
yeah that's probably not a good thing either way to think of that raising money from you as a credit
investor see i already said this try raising through a foreign entity so one of our investors are actually convinced
they were in the us and they only had a u.s entity and i said look i'd rather accept your investment rule for an
entity i convinced them they probably were gonna do them anyway i don't wanna you know take the uh praise for that but
they set up a bvi entity and now they're investing in all sorts of web three companies through that foreign entity i
think for tax reasons it's also interesting for american citizens probably to set that up somehow so they
invest through a bvi entity which i think makes sense but
i'm not the investor so but if you raise from uh american investors you have to go through two
things you have to file a form d uh which is some kind of exemption with the sec
and do a state filing for state that you raised in with the amounts um these are details to just get a lawyer uh they'll
they'll figure it out for you it's it's not too expensive for them to file this few thousand dollars and if you raise
say 300k to 500k from one investor then two three thousand dollars it's
well it's not a lot of money essentially versus uh what you raised from that entity so
just get the lawyer to do it so you make sure you're compliant because those us government websites
they you know warp you back into the 80s well 90s let's say when the internet
just literally they're very very poor in ux hard to use they do not even respond
for me often so i was glad our american lawyer did that
i think uh most people um can look into this it's all transparent but just very high level um
our tokenomics investing as quiente said we had some investors come to us and say oh we like to invest we'd love to do
this but we don't want to do four years that was just no look there's enough capital in the market today enough
liquidity that you can push back on investors don't think you need an investor if they are not willing to uh
to add here at least to three to four years fasting all our terms for every investor were the same four years
fasting with a six month cliff except for a ten percent at tge token generation event that was a use for
liquidity so they got 10 percent vested of what they um of the token amounts that they bought
they were not allowed to obviously sell but i can't i can't verify that but at
least in the first three to four months we said please just put it as liquidity don't sell and all of them did that uh
you have to go on their word but if they're honest people they will do it so about ten percent we did in a token
sale um 50 will go to community over the next four years 20 is allocated to the team
and 90 is controlled by the dow which ultimately is also the community every
significant expense uh in deco in changes in in the protocols until they
go through a governance vote we had about 10 governance votes so far so we're fairly active i would say in
governance um every other week or so we have a governance folk could be small things
like uh for instance today or tomorrow we will launch a vote to increase the
loan to value of our collateral types so instead of lower borrowing rates those borrowing
rates get doubled which means your stack stock has become a lot more capital efficient so things like that changes um
they're also used well the decoy token is used to to make those changes
finally i think our setup um as uh as mentioned it's very similar to i think
what the industry standard is at the top you have this what is in belgium called the bv not important just a limited
company and it licenses um software to the foundation so anything that we do
um is in name of this limited liability entity architect bv
and that is also how we employ people ultimately so i get paid through that belgian entity we have some contractors
uh throughout the world that get paid by that entity and if anything you know needs to change
hands that goes through in terms of money right so we oh yeah i forgot to say the staff was all raised
on stables we don't have bank accounts on the foundation or the inc which might be a downside because it's not easy to
get um to get banking approved um but we're in the process of doing that
having said that the obviously the architect bv has a bank account since it's not crypto we literally never
mention crypto to anyone in belgium we just say we are a fintech company um
building fintech software and delivering services around fintech crypto is a very
dirty word in the banking world you don't like it don't mention it if you don't have to you're not lying
you're just talking about fintech which my opinion technically is correct so
i would advise you to do the same and then the foundation has all the usdc that we raised and again if something
you know needs to be transferred it goes from the foundation to the bv and then the bv accepts it um as euros through cpa you
can use like a crack and business account whatever to ship that money um but like i said we're also looking at
the banking not the license i probably said license but a banking account not a banking license for obvious reasons we
don't want to be a bank but a bank account um and then
yeah hopefully we would get that soon but if not not such a big deal
since all the money would go through the bv anyway there's a foundation and then the inc
i have to be honest that i don't really know why there are two uh but the ink issue is a token and it sits under the
foundation um but again i'm not the best person to speak about compliance we were
advised to do it that way to set up these two companies don't know if it's the best setup
it is what we did and on paper legally this inc is uh issuing
the decode token um honestly i have a philip i have a question for you
and this is super informative and very helpful this is always from plot way by the way so does the ink
hold the underlying technology and the ip behind that or does the
foundation have that well technically that's the beefy because we developed the um
all the software under the bv um and then the foundation pays a
license fee to the bv because everything we develop and we're employed by that bv so literally we we
developed that ip then we license it out by the way all the i i be it's not closed source right it's all open source
but that is all given to the foundation for a license fee well not given the ip
is never transferred right but they have the right to use it and right right right and they're paying you to feed it
to basically leverage it during the duration however long the bv is an ll
equivalent of an llc it's just a limited liability company okay yeah
exactly i think it's like what they probably i'm assuming um had you structured this way
so that way you have like an arm's length from the token issuance which was just
for the ink itself um so the ink is only reliable for the token issuance where you as the bb don't have any liability
with associating or pegging yourself the token and then the foundation is the one kind of like executing all this
that would make a lot of sense yeah i guess we all just become pseudo
lawyers that was all i had to say uh
thank you so much phillip um are there any other questions for phillip i think we have time for one question
before we move on into segments section
nope okay so let's go ahead then um sungmen
thank you phillip uh for sharing your improv that information and your experience as well um and don't worry
they will be getting legal advice as well we're bringing in a couple of uh additional lawyers they had one session
this morning and then they'll be having two sessions tomorrow um so they'll also be able to explain you know this
offshore type of entities and structures in a little bit more detail
so i think then we are ready for sun men
hi everyone um it's around uh 1 45 a.m here so it might be a
little not that functional but i'll try my best so uh well there's a lot of informative
um you know talk from both chanting and flip so there's quite a bit of overlap
for what what was that what i was gonna talk about also probably going to cut it
slightly shorter than uh you know previous talk so among
like so i'm talking about only token rate here and so
i'm trying to give you like as much tip as i could so yeah
before you before you jump into could you uh quickly just introduce yourself and tell us a little bit about stock
swap yeah um hi i'm sung min
co-founder and uh ceo of uh stack swap and
been i i think uh first time i dab into a crypto business was 2017 uh also see
ico craze back then and um yeah but you come to shove all the way here
and we are dex as the name suggests and that's what we focus on
and yeah i i would like to be like a lesser market i think that more of a you know
informative session so if you're interested like what we are then you could ask me later
okay so hopefully oh this will help you raise money quickly a little background what to prepare
before you raise your money through token sale do's and don'ts right real quick
so what you need to know is that i mean everybody knows it already but there is a bit of a regulation disparity all over
the world some countries are more tightly controlled while others are not that
well you know i mean tightly controlled so we got to take advantage of that as much as we can like you know setting up
bvi if you're u.s citizen what not i am i think like more similar to philly
but bit more extreme uh most of my wealth is actually in crypto i'm like
about like my mother is the only person in the family who keeps u.s citizenship still um and i'm able to give up my
other citizenship pretty soon also um and well you gotta understand the market
like the nature of this crypto market i'm sure you guys know it already is quite volatile with respect to fiat i
don't think crypto is as volatile but you know with respect to fiat it's quite volatile
and there are a couple of compliance issue but you know you already know probably from previous
talks so let's move forward well as you see scc also provide like
you know sample of the token sale agreement so you can kind of refer to it and kind of see what are the factors
that you need to put down um but i mean they even have this you know like
token sale uh very good um sample so it's best that you don't mess with any
u.s entities and chinese entities actually um for the for future reference
uh just sharing this photo i mean the screenshot
taking it today earlier but you see bitcoin price has been going from i
don't know six some k to 27k like why was it 60 something k at one point and
why was it like 20 something like and who knows man like i i believe
no explanation makes any sense like only like hard numbers and
probabilities matter so yeah i can't tell like why markets move
where but what we what i do know for sure is that it is going upward up and down you
know quite often so you got to take advantage of the market when you raise
your capital so you get it it has to be the right time and among the compliance issue like you
got to do aml like how i see though or two what degree of ammo can i say you need to do
i suggest you check uh uh financial action task force and office of foreign
asset control uh website at least a little bit and you know just give us some idea of
what you're dealing with if you haven't looked at it already okay so what do you need to prepare
first you need to find a good legal counsel like that you need
because and after that well you got to have saf and you got to prepare your legal memo
of your token saying that it's not a security and don't go with the security model even if
you are planning to use it that way and you need the audit report um at least on the way
so what defines good legal counsel in my opinion has to be somebody who is smart and
flexible and creative like uh you know me being a crypt anarchist i
just don't feel too comfortable with um being too compliant but i must
so we're gonna find the best way to make things work
so you need somebody who's like i don't know man like you gotta be friends with your lawyer so you could talk about
things that maybe you're not supposed to so they can come up with a better solution that suits your business um i
don't know however way you want it it's really important so please do so if you haven't done it
already and things to put down and seth besides what you see in the sec page um
you have to clearly state that whatever entity company foundation
yourself whatever will have some kind of a limited liability against the price fluctuation
right you're going to say that and make sure to state that oh this person you know i hereby confirm that i'm not a
us or chinese citizen or entity or whatever you know it has to be there
and you know how we test and all that make sure they'll avoid being a security there's specific languages that you need
to avoid which you can't get this even by talking to council
and memos kind of look like this you gotta get it from multiple countries uh you know i'm getting from one from
singapore or korea and getting from europe and us you need all of them so
it's money it feels like money wasted but you really need it in the long run and audit report you definitely need
them uh one of the things i would like to tell you about um guys who are doing auditing
is not that familiar with your code anyway so make sure you're deaf toxin
because you know like when you code man like you know what you feel a bit sketchy
about or maybe you should have done more automated tests but like but you know these are the parts that
you gotta make sure to emphasize to that they do their job correctly
otherwise uh you know you can't just trust these auditing firms although they're reputed there are plenty of
cases where reputed auditing firms uh have done some audits and some happens
like there are so many cases so uh yes please uh
talk to them like actively now dudes what do you need to do you got to know your vcs
know yourself and know your market you know are the wars as you know if you know yourself and know your enemy you
always going to win right another stuff that you might need
perhaps is to get like actual advisors are not like the guys you put up their face and you know
don't really talk but actual advisors that could help your weak point
you know the things you don't do well for us like marketing and growth and
compliance issue i don't know none of that and a bunch of people in our team too so
we're trying to get help from you know advisors on that sector that actually did help over time
and about to be more help now what do i mean by know your vc
if you talk to somebody i mean i'm sure a lot of you guys know it better than me but just i'm just you know sharing in
case you forgot all this stuff so
they all care about product and team in the market but i mean it's impossible to have a person to have
like equal care for all three factors right so there's always gonna be like
one that's more important to them um or him or her
so what i usually do is when i schedule a call i you know check their social media or
website whatever writing they could youtube whatever and try to figure out or or their cork
or their superior somebody started to figure out where they fit in are they
more like a pr is this person more of a product guy or more of a team guy or a market guy
as for product and team it'll be easier for you to raise money if you're building on stacks as for market uh you
need to spin more like a bitcoin narrative but which is
a lot more challenging than you know like people building us swan or ethereum because just just the fact like the hard
fact that stacks do not have as big as ecosystem as others as of now i'm sure
it will change very soon uh and so like you have difficult time
so bear that in mind if you were to talk to vcs who are more like a market based
ones uh but those who like this kind of market but they already
invested in stacks of course like the best choice you could you know talk to them easily let me just show you a few examples uh
you just gotta emphasize your strengths to kind of like suit their taste as much as you can
so there's one vc already invested in snacks so like you know majority of talk
we emphasize uh oh we got grant from stax foundation to you know just i mean i try to issue a
damn coin in the in the blockchain it takes like three hours uh and transition doesn't go through sometimes and it's a
lot of hassle so okay so we try to make this quick and easy automatic token generation plus
listing all at once so we want to create the real permissionless exchange
uh and all that you know to to just help the ecosystem grow
and do like it and you know invest it right away like in two days
and next uh this guy has been around for some time and
witnessed a lot of accidents happening in d5 so he was like and he just got burned uh
i'm investing in some other stuff so i specifically asked him because it's a big farm to bring in a security ex like
expert from in-house uh so like so we know we i could talk to somebody who knows
what's up so uh you know like i just happen to so i try to
like emphasize our strong suit um when i talk to them because you know just
uh so like oh yeah i've audited compound on behalf of x and x exchange uh you
know you can confirm with this look look at my screenshot like there's an email thread um and
yeah you know like oh and there were a couple of hacks that happened like like while we were talking that the news
popped up like oh yeah let's let's look through it like see what happens i'm sure i could look at it like five minutes
and well it went well and did you know invested a couple of days
now uh another vc very very big portfolio like thousands of companies um
and he was like looking for some something new like you know some some new
that he hasn't seen before it's like dude we could do actual market forecasts like we have all this back data and
we're publishing online and you know like you know like a bunch of folks like our
phd thesis are about it and we actually have it that's miles beyond state of art you can check right now
so you know we got it some other guy he was just like
more philosophical and smaller firm though but really into deep tech like deep tech and
i think dude already like i think um yeah he has phd ai and something um or
math or something like that so i had to appeal to that side of him like look i'm you know i'm a tech guy so
and oh this is actually from our white paper excerpt and actually one of the main reasons
that we moved over from ai to blockchain was to see if we could actually automate
um governance um where i mean blockchain already automated trust so could you
automate governance to a certain degree and see what happens so yeah like share vision and
invest it actually like within a few hours so like the
you have to know what your strength is and just focus on that don't try to like i
mean you could take different different approach but like what i did was not to
try to tell them like oh we have this weak side but we're taught improving like no like rather this is what we do
freaking well and what we're missing help us
like dude i don't i don't know how to do this well but help us i mean recommend somebody and help us hire
somebody something so yeah that's that's how i kind of approach them
um and besides like some technical background that we have we actually then half of the team is joined from big
exchanges in korea so they are you know they they know the crypto game it's been around for some
time so uh and like known in the community so korean
you know crypto scene is pretty small so like everybody know each other like oh i use there like oh yeah
i know uh and we have done some d5 projects before
which is kind of like some are anonymous but like it's easy to check i mean you see the
my like github like like history you show them that you know
then easy to like confirm them so like i've done it before uh you know
and now we try to do it on sex let's see what happens and kind of worked out
and things we don't do well or we just like like i just said like i just i asked him to help us
and now this picture again you see
around october last year until like end like early this year like market went up like crazy
right and that was the time that i did raise over three million dollars because like
we waited way to wait because um all the indicator was saying it's
gonna crash soon um from my i don't know why i do like i
don't know economics that well but all the numbers are saying that you know won't last like a couple of months so
i was like okay this is the time we gotta hit hard like now mike is good so you gotta wait for the
right moment when it's hot just like hit hard and fast like
um don't give them time like you know just have a short list 10 people 20
people you talk to them like you know make sure you're in the good time make sure they're not too tired when you when you
approach them you know like preferably like not too late at night or
or not too early in the morning like decent time not right before lunch too because they
want to go eat so uh yeah i try to schedule it after lunch i mean
when they feel more relaxed and you know satisfied easier to talk to and don't give them time like
tell them like you don't need to give us the amount but like you know give us the answer within today
or tomorrow or you know we got to move on this is the kind of tip that i picked up
from sex accelerator actually from trevor and it worked out really well you got to play the funnel game to get
things over with it's really important um yeah and then getting help from the
device i just wanted to point out like among many very healthy their other guys were more helpful actually but i just want to point out two guys
um because you know one dude was from federal reserve of new york and i
actually love picking his brain every time i talk to him they have totally different background right it's like it's been in the fed for such long times
like yeah this is how the regulations are going and you'll probably see this happening within like x amount a year
because because of this and this reasons like oh i kind of get it so
you know talking to these advisors that like do not share like similar background actually probably like
give me a lot of insight uh so and in terms of growth and everything matching um
uh other v speaker vcs um other deals has been helping us a lot
too so you know and don't i didn't mention it but just to repeat
it uh recap do not get investment from chinese or usmtd you will have a lot of headache
like philip said get it through bvi entity um whatever and do it and talk to the investors
unprepared like don't talk to a lot of them like you'll be just drained and
if you're talking to them unprepared or if you're unsure that you know you guys are really good fit
just i'd rather skip it because you know they all talk to each other right but you don't want them to like
give you a bad rep to other vc right so rather avoid talk if you're unsure of
this match and do not give them too much time like just you know tell them to make decisions
like now within two days or like if they give oh yeah what's the check size oh it's in between 100k to up to 2 million
look man like just give me a number is it like 115k or what is it that you're
considering if you work to invest right now just just push for it and
i you know you talk to them a lot of times the deal doesn't go through don't sweat you know don't don't let it
get to your emotions just it just wasn't meant to be and just got to move forward with your
product and you get it next chance and yeah these are some of the
backgrounds that i fish him in so just sharing with you all right thank you
thank you so much i think that was very helpful as well as enlightening
and just to to your point about know your vcs so as you guys
basically you know fundraising is going to be a big part of your journey and one of the biggest things that we saw um you
know taking place in in cohort one actually was a lot of requests for certain vcs but not really knowing why
so to that point you know making sure that you understand why you want a connection or why you want an
introduction uh to that particular uh investor what is going to be your your
forte or your strengths that you're going to be able to pitch to them um that's going to make a huge difference in the quality of both the connection
and then the chances of you actually being able to um you know get something out of out of those um
those potential connections or intros so um thanks so much for that sungmin um
great so i wanna open it up just really quick if anybody has any specific questions for sungmin um right now um i
know it's super late for you some men so would love to to get you off as soon
as possible so you can get some rest no problem no problem
or questions from for any of the other speakers for tente or for all of them
i have a quick question okay this is ollie hey some man thanks for the presentation um really good advice
on building the fomo and um using the asset to get them to commit uh
i saw that you had william bow being listed did you have him in before you were approaching the rest of the vcs or
was he of collateral afterwards oh i was in i was a part of a china
accelerator batch 19. so and william invested in the company before that okay he was the one chose to invest in on our
vehicle in korea so um yeah okay yeah it's like solid signal and like
accreditation in space so that probably definitely helped when you're going out and talking to
whatever investors good guy all right
right and yes uh to ali's point um these advisors that you do bring in um they
are you know they do help in terms of being able to open doors if it's them directly or just you know provide some
um background and kind of additional credibility to whatever it is that you're building and proposing
any other questions comments
nope okay
so i want to thank phillip sensei sungmen i don't know if you have any questions for the team
otherwise i think we could close it out good luck everybody bye
okay well thank you so much thanks everyone for coming today um and yeah you can
see or connect with uh with our three speakers in the discord or let us know if you want any particular intro
all right thank you everyone thanks everyone thanks andrea
tomorrow thanks andrea