Explaining Token Rights

Token Economic Rights

Rights related to receiving income, profits, or redemptions.

Conversion to Equity. Convertible into equity shares under specific conditions (e.g., milestone, maturity).
Dividends. Share of the issuer’s net profits, distributed periodically.
Fixed Income Payments. Recurring, fixed-rate interest-like payments.
Profit Sharing. Share of net profits, often tied to audited financial results.
Redemption at Face Value. Right to redeem the token at a fixed nominal value at maturity.
Redemption at NAV. Redeem based on the token’s underlying net asset value.
Revenue Sharing. Share of gross revenue, typically before costs.
Interest Payments. Periodic returns are paid to token holders based on a fixed or variable rate, typically linked to the amount they invested or lent.
Token Buyback Rights. The issuer's promise or option to repurchase tokens from holders at a set price or under certain conditions.
Staking/Yield Generation. Earnings are provided to token holders for locking or staking their tokens, often as a reward for supporting network operations or liquidity.
Capital Appreciation Entitlement. The holder’s right to benefit from an increase in the token’s value over time, reflecting the growth of the underlying asset or project.

Rights related to exit events and asset protection.

Exit Participation. Entitles token holders to receive a share of proceeds if the issuing company is sold, merged, or undergoes a liquidation event.
Liquidation Preference. Priority claim over other equity holders during a liquidation event.
Liquidation Proceeds. Right to receive a portion of the company or SPV assets upon liquidation.
Pari Passu Treatment. Ensures all token holders of the same class are treated equally in terms of rights and payments.
Senior Debt Priority. Gives token holders priority over others in repayment in the event of issuer default or liquidation.
Subordinated Debt Position. Places token holders lower in the repayment hierarchy, meaning they are paid after senior debts are settled.

Blockchain-native or regulatory support features.

Claim to Underlying Asset. Enforces rights to physical or real-world assets (e.g., gold, real estate).
Delegated Voting. Ability to assign voting rights to a third-party proxy.
Lock-Up Period. Time period during which tokens cannot be transferred.
Transferability. Can the token be freely transferred or traded?

The ability to influence key decisions of a project or company, such as voting on proposals, changes to protocols, or strategic actions.

Proposal Submission Rights. Grant holders the ability to formally submit proposals or initiatives for consideration by the issuing entity.
Information Access Rights. Entitles token holders to receive key financial or operational updates about the project or issuer.

Note: Skip this question if you do not grant voting rights to your investors.

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