A smart contract is a transaction protocol designed to automatically execute and manage legally relevant events and actions according to the terms of a contract or an agreement. Our smart contracts are written using Solidity, an object-oriented programming language for interacting with the Ethereum blockchain network. Once a smart contract’s parameters are defined by our clients, it is compiled and deployed to the Ethereum blockchain until its maturity. The user interfaces for both funds and investors interact directly with the contracts using web3 technology, a highly reliable tool used to provide secure access to decentralized applications and blockchains.
TransferNext utilizes smart contracts for two purposes. Firstly, smart contracts allow asset management clients to define the specific terms for fundraising, such as the lockup period for investments or dividends. These terms will be baked into every transaction, and any transfer of funds will execute automatically without need for intervention. Secondly, smart contracts allow clients to create tokens representing a share of one or more of their funds via a security token offering (STO). After fundraising is complete, investors are given access to a separate contract that will allow them to seamlessly transfer any tokens to other investors who meet certain criteria.
Our users fall under two categories: our asset management clients and their investors. There are key differences between how these two types of users interact with our platform, and as such, they are presented with distinct interfaces. Fund managers use our platform to raise capital through STOs, and investors use it to purchase tokens from the fund managers, track their value, and transfer them to other accredited investors. All transactions on our platform are currently purchased with Ether, the cryptocurrency associated with Ethereum. A constantly updating exchange-rate API is used to convert the Ether value into our clients’ currency of choice. In the near future we seek to move away from Ether as an intermediary currency to allow investors to purchase tokens from fund managers directly with standard, government-issued currencies.
TransferNext offers asset managers the ability to raise capital via security token offerings (STOs). STOs facilitate the conversion of value of an asset (or fund in this case) into an investable asset that lives on a blockchain network. Asset managers define the terms of their STOs, including the fundraising window, the total amount of capital to be raised, and the value each of their tokens represent in one or more of their funds. Our team builds the terms of the STO into a smart contract that is then compiled and deployed to the blockchain, allowing investors to purchase tokens representing shares in a fund. Once the STO is complete, a new smart contract is activated to govern the terms of the tokens themselves. Due to the illiquid nature of the funds of our target client base, tokens will generally not be redeemable until after a date specified by the client. Fund managers can allow investors the right to sell their tokens privately to other accredited investors to liquidate their position, allowing investors a unique form of liquidity that competing firms may not have.
The tokens generated by our STO contracts are ERC-20 compliant, meaning that they must adhere to specific standards related to the sale and exchange of such tokens. ERC-20 is the most commonly used standard for tokens on the Ethereum blockchain, and its purpose is to maximize token security and validity. If an investor purchases a token, it will be made available for withdrawal from the STO contract (where it is essentially kept in escrow) after the STO is complete. Upon withdrawal, the token is deposited directly into a crypto wallet service of their choosing, or they may transfer it to another investor. Upon termination of the lockup period, any investor holding a token will receive an automatic disbursement of their funds, plus or minus returns and losses, per the terms of the token.
New York, New York
transfernext.contact@gmail.com