Token DPA is a debt security instrument created by blockchain firms for use in the token pre-sales. The term DPA stands for the Debt Payable by Assets. This tool was developed by Republic Crypto and is specifically targeted to the international investors who are not accredited. The product is a follow up from the Crowd Safe, another open-sourced token instrument also aimed at making it easier for all investors to get into the blockchain ecosystem. Both tools help unaccredited investors earn the benefits just like the accredited investors.
How Token DPA Compares With SAFTE And SAFT
Most of the blockchain companies make use of SAFT (Simple Agreement for Future Tokens) in their token pre-sell activities. However, the tool is generally used as a pre-sale agreement with investors who are accredited. Unfortunately, retail investors who are not very refined in the market do not get much value from the tool. This is because it does not provide for a claim on the company assets should the project beforehand fail. It also has no maturity date.
On the other hand, SAFTE (Simple Agreement for Future Tokens and Equity) gives a prospect of getting some equity in the future, it is derived from SAFT. However, it still does not guarantee the investors that they will get their money as debt holders get the first priority in case of a liquidation.
Republic Crypto Debt Payable By Assets Conclusion
The Token DPA primarily check on two fundamental problems with SAFT. First, the investors' token distribution rights expire without a chance of becoming debtors and cannot request cash if the project for which they invested fails or falls behind schedule. It offers terms which are in line with the interests of the investors. Each Token DPA is unique to the project at hand but follows the same framework. Investors should go through and understand the terms of each agreement before putting their resources on the project.
Another benefit is that investors do not have to wait for the issuing company to hold a public token sale or a distribution for them to receive the tokens. They can get back all their principal or just a part of it or get the number of tokens they need when certain pre-determined sales occur at the issuing company.
The Token DPA provides the framework to make this possible. Here is an example, if the issuing company uses up all capital before the investors get a right to get a return on investment, the investors have the power to force the company to insolvency when they make the request. This is in contrast with SAFT where investors right of getting a return on their invested amounts depends on the time when the issuing company holds a public token sale.
Token DPA is ideal for companies at any stage of growth – whether starting out or seeking funding for growth. It enables them to sell securities to anyone even the unaccredited investors. In a normal setup, the law bars public selling of tokens to unaccredited investors without applying for an exemption when making the registration.