The ETO’s confirmed refunds will be very effective at delivering a secure environment for primary market buyers. However, the secondary market is important too, especially as the project moves toward growth.
The secondary market needs to be confident in the legitimacy of a token’s price. Viable price discovery can take time, as primary buyers’ release schedules dilute supply slowly.
Primary buyers’ supply is reduced over time to align a growing circulating supply with product growth and roadmap deliveries.
The ETO, in its first state, will be able to build confidence for primary buyers. The Passerel will be designed to build trust in both the primary and secondary market.
All the positives of an ETO will be part of Passerel. nYUSD-backed utility tokens, burning of refunded tokens, mirror flips — all the good stuff remains.


The Passerel is “flexible,” at the advantage of the secondary market. The participants of an ETO are committed to a token release schedule which involves some release at TGE, and then smaller releases over the course of many months.
In a Passerel, the deployer contract that distributes tokens to buyers acts as a gateway. ETO participants can claim their entire purchased allocation on day 1, day 100, or any other day of their choice. Essentially, they can remain committed to a long-term token release or they can cut things short, but at a toll.
The Passerel requires primary buyers who want an instant release to burn a portion of their allocation. This burn reduces each day, and it becomes 0% once the final token distribution is complete. The advantage of this system is that primary buyers who are only interested in a flip and those who have a lower average exit price can pay the burn and exit their positions early.
This reduces extreme price volatility as surges in secondary market demand are fulfilled with primary buyers who want to capitalize on their purchase as fast as possible. Meanwhile, the holders can remain committed to the long-term release schedule.
The advantage of this is that any market price can never be extremely distorted from the target exit price of primary buyers. Typically, if the price exceeds the target price of flippers or those who have a low exit value, they have to wait for future distributions. This limits a token’s secondary market’s action to also wait out future releases, reducing secondary market confidence.
With a Passerel, there’s strong certainty that any market price is not going to be too distorted from future releases as primary buyers don’t need to wait for a release to sell; they can sell at will if the price is already attractive for their individualized goals.

An Additional Benefit

The refund system of an ETO is rigid, and that is good. Teams are not allowed to move refund dates around.
This also means that teams are bound to a timeline for accessing more capital for growth. The path of a startup can be unpredictable. There can be unprecedented growth at a timeline shorter than expected.
Early growth cannot have a maintained acceleration if a considerable portion of funds is locked. The ETO, in its original format, does not account for this. It frontloads the greater portion of growth.
The Passerel does account for this.
If there is considerable early growth, there are more holders tempted to exit early, at the expense of burning their tokens at the Passerel. As tokens have been burned, fewer tokens need to remain nYUSD-backed, thereby unlocking more resources for the startup to maintain its acceleration.
Summing up, the Passerel is a win-win-win-win scenario. Those who want to exit early can do so; secondary market has confidence in price discovery; long-term holders benefit from the burns of the flips; the project can access some early funding if people want a quick exit because early growth is more than expected.
A Visual Example
In the table above:
• The y-axis is the amount of tokens received, in percent
• The x-axis is the numbers of days since TGE
• The blue line shows the natural distribution of tokens, for a project with an unlock schedule of 20% at TGE and 16% per quarter
• The yellow line shows the amount of tokens received if a token buyer wants to exit ahead of schedule; if a person claims early, the yellow line shows the maximum amount of tokens he/she can ever have
• The red line shows the fee paid for the early exit
The yellow and red lines are in synchrony. Those who want to exit early pay a fee. The yellow line shows the maximum number of tokens they receive, and the red line shows the amount of tokens they burn for their early exit.
The key difference between the blue line and yellow lines is that the blue line does not show final token amounts. The blue line shows the natural distribution so it just shows how many tokens a person has already received and how many are locked and will be received later.
The yellow line shows the final maximum amount a person receives. Once a person claims early, that is their final received number of tokens, as the rest of their locked tokens are burned.
There is no enforcement on early exits. These are voluntary decisions of token buyers who are comfortable enough with a token’s market price, that they are happy to exit early at the cost of burning future token distributions.
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An Additional Benefit