eGreenbacks Protocol Is Based on Two-Layer Token Model.

SQM Tokens

Each Property in the Platform Will Have Its Own Property-Specific Token

SQM tokens are property-specific tokens, which are created when a new property is tokenized. Each property listed on the Platform has its own SQM_{PID}, where PID stands for a unique property ID. The SQM token was engineered to be legal proof of real estate property ownership and integrate with blockchain property rights registries as soon as the necessary technology and legislation are established.

Each SQM_{PID} simulates and represents the corresponding fractional ownership of the underlying property within the existing legal framework. The number of SQM_{PID} created is equal to the area of the underlying property in square meters. One SQM_{PID} represents an ownership share equal to 1/(the total number of SQM_{PID}).

Each SQM token has its own smart contract, which is designed specifically for the jurisdiction of the property, and its type and purpose.

SQM token smart contract: An SQM token smart contract can include various provisions unique to each property, but there are 4 general functions of SQM tokens:

  • An SQM token smart contract can include various provisions unique to each property, but there are 4 general functions of SQM tokens: it provides the investor with exposure to the underlying property
    income (allows investor to participate in rent income), expenses and price changes
  • An SQM token is an instrument for raising funds by sellers tokenizing their property
  • SQM tokens allow a token holder or joint group of token holders who own 100% of the SQM_{PID} to use the underlying property at their own discretion (for example, live there or work)
  • SQM tokens give voting rights on property-specific decisions through a special mechanism decentralizing property governance

Some SQM tokens have traits of securities, and eGreenbacks will go through all the necessary licensing, registration, or exemption procedures in the corresponding jurisdictions before any such tokens are sold or traded. Cash flows from income-generating properties and proceeds from the sale of property will be distributed through a smart contract as dividends, or through buyback tools to provide additional liquidity to the secondary market.

Other SQM tokens will be pure utility tokens and will require no licensing (for example, timeshare and coworking space access tokens).

Although the SQM token price is backed by the underlying property value, it can still fluctuate, and SQM token trading can be used to make a speculative profit.

SQM tokens can be bought or sold on the eGreenbacks Platform or any other exchange, or in peer to-peer deals. All transaction costs are built into SQM token smart contracts and are paid exclusively with EGB tokens, irrespective of where SQM tokens are traded.

eGreenback Token Is a Means of Payment and a Store of Value within the Platform and the Fuel of the Protocol

The eGreenback token is a pure utility token used for several specific functions within the Platform.

There are 3 major functions of eGreenback tokens:

  • eGreenback token is the fuel of the Protocol and the Platform; all the fees (tokenization, transaction, management, etc.) are paid exclusively with eGreenback tokens
  • eGreenbacks token is a means of payment and a store of value:
    • SQM tokens on the eGreenbacks Platform can be purchased with eGreenbacks tokens
    • eGreenbacks token holders can earn extra income for work done within their roles assigned on the Platform paid with eGreenbacks tokens
  • eGreenbacks tokens give voting rights on decisions through a special mechanism decentralizing Platform governance
  • eGreenbacks token holders can sell their eGreenbacks tokens outside the Platform

As the agreed eGreenbacks token price can fluctuate, we anticipate that eGreenbacks trading can be used to make a speculative profit. We emphasize that eGreenbacks is not responsible for possible losses associated with such an unauthorized speculative use of eGreenbacks tokens. The core functionality of eGreenbacks tokens within the Platform is guaranteed unconditionally at the market price of eGreenbacks tokens.

The eGreenbacks token supply is fixed: no new eGreenbacks tokens will be created after the initial crowd sale.

Tokenization Workflow

Tokenization Workflow Can Be Described in General but the Protocol Is Very Flexible and Will Change in Line with Legal Framework

Any Seller Can Tokenize Property With eGreenbacks: Any real estate seller (individual or institution) can list property on the Platform.

The listing process consists of the following steps:

  • a seller registers with the Platform and passes all KYC, AML and other procedures
  • the seller applies to list the property on the Platform
  • preliminary analysis of the property
  • appraisal
  • expert committee approval
  • due diligence procedures
  • the qualifying property is assigned a unique property ID (PID)

The Protocol Is Developed in 2 Phases:

Phase One: Crowdfunding Business Model Is Used

Investment opportunities are detected through eGreenbacks market research, and we will leverage the experience of our team and advisors. Procedures including analysis, appraisal, expert committee and due diligence are performed to confirm the investment decision.

The first phase is the major source of the Platform’s growth within the existing legal framework. For this phase, a proven crowdfunding business model is used:

  • The seller lists a qualifying property for crowd sale
  • Investors submit firm commitment orders and deposit funds to a special crowd wallet
  • When the funding target is reached, eGreenbacks Group sets up the legal ownership structure, including a Special Purpose Entity (SPE) to tokenize the property
  • A fixed number of SQM_{PID} tokens are issued: one token per square meter of the property
  • The SPE purchases the property and distributes SQM_{PID} tokens among the crowd sale participants
  • The SQM_{PID} tokens are listed on the Platform

eGreenbacks can use its own funds from to co-invest in crowdfunding listings to further align its own interests with the interests of investors.

Phase Two: eGreenbacks Protocol Transformed into Decentralized P2P Tokenized Real Estate Market

The second phase will be launched as soon as the necessary technology and legislation are developed, jurisdiction by jurisdiction. Sellers will be motivated to tokenize their property, even without the intention to sell it immediately, as any fraction of tokenized property can later be sold, inherited, gifted, or otherwise distributed with minimal transaction costs.

Decentralization elements will be tested and added to the Platform on a step-by-step basis. eGreenbacks blockchain development, community growth, and eGreenback token holders’ gradually increasing role in operations and governance are the foundation for the second phase.

eGreenbacks Protocol is Based on Existing Legal Framework and Prepared for The Future

In Phase One, existing real estate crowdfunding and securitization models are intended to be used.

In some jurisdictions, the nominee trust structure is the best available solution. A trust will hold the shares of SPV, which owns the property, for the benefit of SQM token holders. Beneficial rights will be protected by the nominee agreement. In this case, the SQM token itself will represent the proof of being party to such an agreement.

In others, SQM tokens can represent the shares in SPV without any trust structure. This requires the legal possibility to keep shareholders registries and the writing of share transfers on the blockchain. For example, Delaware, which is sometimes called the “incorporation capital” of the USA, made it legal to maintain shareholder lists using blockchain technology.

In Phase Two, SQM tokens are expected to be legal proof of ownership. At this stage no SPE structure will be needed. This can be implemented when blockchain technology will be adopted by the national laws on title registration.

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