MONEY-BACKED SECURITY TOKENS
In an ETO, every token in circulation is money-backed with at least 80% of the Enterprise Token sale price.
Even though the tokens have a speculative value, eventual live security, and utility value, they are backed with nYUSD stable-price token for 15 months.
The purpose of this model is to ensure that a project is able to have a circulating supply held by a dedicated community, while allowing others to claim buybacks (and burns) for Fair and Inclusive s that they do not want to hold.
Four buybacks take place, split across the 6th, 9th, 12th, and 15th month after ETGE (Enterprise Token Generation Event).
The timeline allows ETO participants sufficient time to assess the potential of a project or a business, and whether they want to hold their Enterprise Token or claim a buyback. It simultaneously allows teams ample time to achieve their milestones or deliver a viable development with a good product-market/fit (PMF).
The rationale behind the four buyback rounds is to give holders enough time to assess whether the team has delivered a good product or achieve their milestones, and whether it is reasonable to release funds so that the team can scale their product or expand their operations. Holders are given this opportunity four times, while having the right to claim a partial buyback in each round.
If the team is able to deliver a viable product with good product/market fit or achieve their milestones, holders do not claim a buyback. This unlocks funds, which no longer need to be used for buybacks, and instead enables the growth and scaling phase for the product.
On the other hand, if the team fails to deliver roadmap achievements, holders initiate buybacks. This process is split into four rounds so that teams are given additional opportunities if needed, but delayed performance comes at a cost to the team.
For each buyback round, if the team has not done well, people will claim a partial buyback, reducing the funds the team could have had if the team had performed well. At the same point, the project’s or business’s valuation is reduced because all bought back tokens are burned.
This system also motivates teams to be incredibly transparent with their community to retain their confidence and trust. Acquiring trust may give teams some sway during the buyback period, allowing them to appeal to some long-term holders to forego buybacks.
However, in the end, buybacks are guaranteed and it is up to holders to claim them, and they may claim them regardless of how transparent a team is.
An Enterprise Token Offering has various distinguishing factors from a token sale that offers refunds.
First and foremost, an ETO does not force holders to lock their Enterprise Tokens for any length period. Instead, an ETO allows the sale participants to have the freedom to sell Enterprise Tokens, trade them, or hold them, without tarnishing the buyback status.
Moreover, until the final buyback, circulating Enterprise Tokens are money-backed.
This factor makes Enterprise Tokens issued under an ETO truly money-backed because anyone in the secondary market can participate and benefit from the price floor, which limits the downside while giving full exposure to the upside of a venture.
The most important differentiation of an ETO, though, is that it gives an Enterprise Token a variable supply and valuation.
Understandably, holders are making claims for an Enterprise Token buyback if there is insufficient demand. If a portion of an Enterprise Token’s supply lacks demand, then it is reasonable to burn this excess Enterprise Token supply so that a healthy secondary market can be retained.
This factor also gives holders the opportunity to re-assesses a project’s valuation. Project valuation can be decreased if a project falls off its roadmap and if the team fails to meet its responsibilities to the community.
This valuation reduction, which can be painful for the team, ceases once a team has delivered a product/market fit, and organic demand for Enterprise Tokens is generated.