TW is a popular instrument used to grant early stage investors rights in respect of future tokens. TWs are usually used along with equity financing documents such as SAFEs or Series Seed/A rounds, but are rarely issued on their own.
The key term in the attached document is the "Holder's Portion," which is equal to the product of (a) the Holder's Pro Rata Portion, (b) the Equity Token Allocation, and (c) the Total Network Tokens.
For example, let's say that the project plans to issue 2 billion tokens (
Total Network Tokens). An investor holds 5% in the common stock on an as-converted basis (Holder's Pro Rata Portion). The company further decides to allocate 30% of the total supply to shareholders (Equity Token Allocation). In this case, the investor would be entitled to receive 30 million tokens or 1.5% of the total supply.If you have any questions, feel free to reach out to @roman_buzko. Subscribe to @Degoverned to stay up to date with legal and regulatory updates for web3/crypto.
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