Benefits of Use
The Benefits of
Why take the risk on a new model?
Adopting a new technology, service or model requires investments in time, re-education and associated costs of adaptation. To be successful, an innovation must offer enough advantages over the status quo that it becomes worthwhile for stakeholders to make those investments.
Here are some of the benefits that we think makes our technology worthwhile:
Cut back office and operational costs… significantly
Digitalization enables automation. Investment instruments created on our platform can contain executable instructions for closing / settling an issuance, clearing secondary trades, generating reporting, making cash distributions to investors and other conventionally high-overhead activities. Liberate resources from the mechanical work of making sure an instrument runs correctly.
Reduce compliance risk
Compliance infractions can have serious repercussions and maintaining constant vigilance is difficult to scale – a growing portfolio requires increasing resources. Smart contract enabled compliance disrupts that trend – making sure that all participants are appropriately accredited, trading restrictions are consistently applied and regulatory reporting is automatically generated.
Organize and manage investments better
Managing paper-based, private-market investments is often an exercise in Excel. Digitalization adds organization and eases the operational resources needed to track and manage investments. For fund managers offering private market investments, the trend is an increasing demand for separately managed account (or private account) services – digitalization of the underlying investments eases personalized client services and the creation of meta-products consisting of cohorts of individual investments.
Add new possibilities
Digitalization supports the addition of new investment features that are challenging or impossible in a paper-based environment. Add the possibility of liquidity via a global, decentralized market. Build governance systems directly into the instrument itself. Strengthen commitments through the use of peer-to-peer management of legal rights (using our Sentinel System™).
Remain compatible with the conventional market
The market won’t engage if it has to learn computer code. To make them broadly compatible, our smart contracts look and feel a lot like conventional ones. We’ve made our smart contracts so that they can be read by both humans and computers. Certain sections may contain ‘smart’ instructions to execute but others will simply describe the terms being agreed. Smart sections are based on natural language descriptions of actions that have equivalent meaning at the code level – helping non-specialists to review and understand smart contract terms.
Improve the management of legal rights
The Sentinel System™ allows issuers to offer digitalized instruments with the best systemic protections of any major asset class. By autonomously managing binding commitments to investors and remedying events of non-compliance, this approach reduces or eliminates the need for conventional adjudication (courts or arbitration) – allowing the issuer to create compelling, innovative instruments that nonetheless guarantee unparalleled levels of investor protection.
Our Sentinel System™ and smart contract automation decreases the challenges of managing structured investment instruments. With these efficiencies enabled, a single investment instrument can include:
- Debt features: Link specific assets to an investment program
- Royalty based financing features: Periodic payments to investors based on specified revenues streams
- Equity features: Upside participation if a company is sold or optional dividend payments based on the company’s or project’s bottom-line
- Project finance features: Fixed coupons or lease-type arrangements to invest in cash-generating depreciating assets
- Loyalty features: Preferential status or discounts – tie customers to an investment program by giving them a reason to invest
- Onboard governance: When governance is built-in and easy, are there new models of consensus governance that makes sense for a particular instrument?