Defining Tokenization Amounts & Fundraising Structure

Defining the tokenization structure, fundraising amount, and investor parameters is a crucial step that determines the total supply of tokens, price per token, and capital to be raised. This step ensures clarity in financial modeling, investor expectations, and regulatory compliance.

Depending on the tokenization model selected in Defining the Tokenization Model, the issuer must define:

1. Total number of tokens issued

2. Price per token

3. Total fundraising target

4. Investor eligibility & exemption framework

5. Lock-up periods and secondary market strategies

Proper structuring enables easy calculations, transparent investor communication, and seamless execution of token issuance and distribution.

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Defining the Number of Tokens Issued

The number of tokens issued must align with the tokenization model and financial strategy of the issuer. Key factors include:

• The total value of the underlying asset or project.

• The percentage of ownership or debt being tokenized.

• Whether tokens are pre-minted or issued gradually upon investment.

Best Practices for Token Amount Calculation

To simplify calculations for issuers and investors, token price should be set at an intuitive value, such as $0.10 or $1 per token. This makes it easy to determine valuation, investor contributions, and expected returns.

Common Token Supply Calculation Approaches

Token Pricing Model	Token Price	Example Calculation
Standardized Low-Value Model	$0.10 per token	$10 million fundraising → 100 million tokens issued
1-to-1 Dollar Model	$1 per token	$10 million fundraising → 10 million tokens issued
Asset-Backed Model	1 token = 1 unit of an asset (e.g., 1 sqft, 1 gram of gold)	A real estate asset of 50,000 sqft → 50,000 tokens issued

The selected pricing model should align with the investment strategy and secondary market expectations.

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Determining Fundraising Targets

The fundraising goal depends on:

• The total cost of the asset acquisition or development.

• The business funding needs (if applicable).

• The desired ownership retention by the issuer.

Tokenization Models & Fundraising Considerations

Tokenization Model	Fundraising Amount Based On	Issuance Strategy
Asset Sale Model	Fractional ownership of an existing asset	Token supply = Percentage of asset sold
Business Equity Sale Model	Company valuation and stake being tokenized	Tokens issued = Equity portion sold
Asset Enhancement & Yield Model	Required capital for upgrades and operations	Funding structured in phases
Distressed Asset Reconstruction Model	Capital needed for acquisition and restoration	Tokenized debt/equity hybrid
Asset Acquisition Model	Purchase price of the asset	Fully backed by asset purchase
Structured Debt Issuance	Bond value and interest structure	Fixed debt issuance with repayment terms
Decentralized Debt Financing Model	Liquidity needs for borrowing	Over-collateralization considerations
Commodity & Resource Tokenization Model	Market value of commodity reserves	Tokens linked to asset-backed units

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Pricing Strategy & Investor Contribution

Best Practices for Pricing Per Token

To facilitate investment accessibility and liquidity, token price should be structured in a way that:

• Ensures easy calculations for investors (e.g., $1 per token for simple valuation).

• Encourages fractional participation for smaller investors (e.g., $0.10 per token for micro-investments).

• Aligns with asset valuation methodology (e.g., 1 token = 1 unit of asset).

Investor Contribution Calculation Example

For a $10 million real estate tokenization project with a $1 per token price, investors contribute as follows:

Investor Type	Investment Amount	Tokens Received
Institutional Investor	$500,000	500,000 tokens
Accredited Investor	$100,000	100,000 tokens
Retail Investor	$10,000	10,000 tokens

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Investor Eligibility & Exemption Considerations

The type of investors targeted will determine:

• Regulatory exemptions applicable to the offering.

• Minimum and maximum investment limits.

• Liquidity and secondary market restrictions.

Investor Classification

Investor Type	Typical Minimum Investment	Applicable Exemptions	Example Regulations
Institutional Investors	$1,000,000+	Full compliance required	MiFID II, SEC Reg A+
Accredited Investors	$50,000 – $500,000	Private placement exemption	SEC Reg D (506c), EU Qualified Investor Exemption
Retail Investors	$100 – $50,000	Limited exemptions	SEC Reg A, EU Small Offers Exemption

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Lock-Up Periods & Secondary Market Strategy

• Registered Offerings → No resale restrictions (but require full regulatory compliance).

• Exempt Offerings → May have lock-up periods (e.g., 12 months under Reg D).

• DeFi-based models → Immediate secondary market liquidity is possible but may have liquidity provider limitations.

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Key Action Items for the Issuer

📌 Define Total Token Supply – Based on asset value, investor participation, and tokenization model.

📌 Set an Investor-Friendly Token Price – Use $1 or $0.10 per token for simplified calculations.

📌 Choose the Fundraising Target – Ensure sufficient capital while maintaining reasonable investor share.

📌 Determine Investor Eligibility – Align with regulatory frameworks and investor classifications.

📌 Plan Secondary Market & Liquidity – Consider lock-up periods and market demand post-token sale.

Once tokenization amounts and funding strategy are finalized, the next step is preparing legal agreements, investor disclosures, and regulatory filings.

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This structured approach ensures clarity, compliance, and effective execution for tokenized security offerings.