WIP-004/Introduction of "Token Compensated Seller", and Process

Title : Introduction of “Involved Seller”
Authors /Editors: zeryx, gruad
Squad : Product Bubble
Date Created :Nov 21, 2022

This Proposal will craft a new definition and variable that may be added to Thread Proposals; that alter the behavior in part or all of the operation of the Needle Crowdfunding process.

CONTEXT

Seller
The individual or corporation that currently owns the Property or Asset, who may or may not be involved in Weavr as a member. The Seller may indeed also become the Governor; and if held as a corporation, the Seller Corporation can evolve into a Governor Corporation.

The Seller will receive part or all of the funds raised in the Needle Fundraising process to compensate them for relinquishing custody and ownership of their asset.

Debt Co
This is a simplified description of Weavr Mortgage S.A.; a wholly owned subsidiary of WeavrDAO (12321 DAO LLC) with the primary purpose is to provide lending support to Governors and Governor Corporations.

THxxx
An ERC20 Thread Token on the Arbitrum Network; associated with a particular Thread and underlying Asset.
Each Token has it’s own name; replacing the xxx.

NEW DEFINITIONS

Token Compensated Seller
When a Thread proposal indicates that it has a Token Compensated Seller, this indicates that the Seller is a member of WeavrDAO and is interested in receiving some percentage of the fair market value (needle target) of their asset as Thread Tokens. The exchange rate is a fixed $1: 1THxxx, and cannot be negotiated or altered.

Seller Token Percentage
The Seller Token Percentage* defines the percentage% of the total value of an asset that the Token Compensated Seller* is receiving in Thread Tokens (THxxx); with the remainder being compensated by the Needle Crowdfund as USDC.

Example

A Broker proposes a Thread that contains a Token Compensated Seller, with a Fair Market Value of the asset of $100,000 USD; a operations budget of 10% and has listed the Seller Token Percentage as 40%.
This means that:

  • The total market value of the asset is $100,000 USD.
  • The Cash Asset Value will be $60,000 USD (100%-40%)
  • The funding target will be $70,000
    • $60,000 for 60% of the $100,000 property; and $10,000 for the operations budget.
  • The Seller will receive 40% of the total Thread Tokens; or 40,000 THxxx
  • Token Investors will provide $70,000 and receive 70,000 THxxx

PROCESS

The Seller and Broker come to an agreement in advance of an introduction to Weavr regarding whether the seller is a Token Compensated Seller; or a regular seller receiving only USD.
If the Seller is a Token Compensated Seller; then the Conditional Offer between the Governor Corporation and Seller (if applicable) will be modified to contain a fixed amount of $USD, and a fixed amount of $THxxx (equal to the agreed upon Seller Token Percentage ); with THxxxx being accepted at $1 per token.
The remainder of the Conditional Offer will remain the same, including a condition on financing.

The Broker will then ensure that the Thread Proposal contains Token Compensated Seller in the tags, and in the description body of the Proposal; along with the predefinedSeller Token Percentage defined and described. The Broker would then discount the needle target by the percentage retained by the Seller; as per the example above.

In this circumstance, the initial Governor will be selected as Weavr Mortgage S.A. or Debt Co, which will execute the Needle and receive the USDC raised during the Needle funding process.
After the Funding Process; Debt Co will initialize the Thread and allow for the conversion into Thread Tokens.
Debt Co will immediately make a Token Action proposal.
This proposal will mint an additional supply of THxxx equal to the Seller Token Percentage multiplied by the Total Market Value of the property, and transfer those tokens to the Governor (Debt Co).

If that proposal passes; those tokens are minted and transferred to Debt Co. Debt Co will then finalize the conditional sale, transferring the raised USDC and THxxx tokens to an Escrow Provider. In exchange, the Debt Co’s Mortgage agreement will come into affect providing a security interest and claim on the property in the event of a Default by the Governor Corporation.

If the proposal does not pass; the Governor (Debt Co) will refund all thread participants by making a Dissolution Proposal; offering the amount fundraised to dissolve the thread, and unwind the fundraising process.

If the first Dissolution Proposal does not pass, either to a lack of quorum or poor votes, Debt Co will continue to submit the same proposal until it is accepted.

2 Likes

@gruad1 @omen please take a look, definitely room for improvement. Let me know if any of the term names seem confusing, we should make these as clear as possible.

First off, this proposal looks good and the breakdown is fantastic. I have sort of a general idea of what the operations team will be doing but wanted to know if there is a doc on exactly what the team does and how the 10% will be split?

Not yet! But that’s actually a great idea for another proposal.
We might want to see an example to build out the edge cases and round it out, but currently it’s the responsibility of the Governor.