CASE STUDY: EXORDIUM SECURITY TOKEN

THE PROBLEM

Exordium, the publisher of massively-multiplayer space strategy game Infinite Fleet (developed by Pixelmatic), is issuing a digital equity token. However, popular token issuance solutions posed several challenges:

• Issuers must implement the transfer restrictions required by security tokens at the smart-contract level, making it very difficult to adapt to fast-moving regulations worldwide.
• Platforms such as Ethereum are showing the strain of adoption, with unreliable transaction times and excessive transaction fees.
• A lack of on-chain privacy leads to investors revealing sensitive information about their financial activities.

THE SOLUTION

Since our platform, STOKR, is a technology and compliance provider, Exordium is working with us. This is to issue a digital equity or security token known as EXO on the Liquid Network, using Blockstream AMP (subject to regulatory approval). The token will provide a profit share to investors from the game’s profits. The EXO token is also compatible to receive an ISIN code. ISIN codes are beneficial for institutional investors to track investment holdings consistently across markets worldwide.

Using Blockstream Green, each investor can register their Managed Asset Account with us or other issuance partners. By registering, an investor is added to a list of approved investors, enabling them to receive and send the EXO token.

Blockstream AMP implements transfer restrictions through a simple multisig authorizer setup, providing Exordium with flexibility to adapt to shifting regulations. Liquid’s cutting-edge privacy technology, Confidential Transactions, secures users’ sensitive financial data. The Liquid Network also currently offers much lower transaction fees than other issuance platforms and supports the Lightning Network for further scale if needed.

BENEFITS

• Transfer restrictions implemented at the protocol level using multisig.
• Adaptable to shifting regulations through Blockstream AMP’s authorizer API.
• Secures the financial privacy of investors.
• Immediate wallet support with Blockstream Green.

HOW IT WORKS

Selecting an Asset Type

Two types of assets can be created in Blockstream AMP: transfer-restricted assets and issuer-tracked assets. Exordium used transfer-restricted assets to ensure that only approved investors could send and receive the EXO token.

Issuing the Asset

Exordium, together with us, will issue the EXO token using Blockstream AMP. The newly-issued EXO token will then be sent to Exordium’s treasury wallet in preparation for distribution to registered investors. Exordium will hold reissuance keys so that they can authorize additional tokens according to their allocations (e.g., future equity sale). The issuance will not be confidential, which means that anyone can verify the total supply at any time.

At issuance, Exordium will choose a ticker, name, icon, and associated domain. Investors can use this data to verify that Exordium genuinely issued the asset they receive.

Configuring the Transfer Rules

Exordium will implement EXO transfer restrictions using Blockstream AMP’s in-built category-based controls. We will then assign each registered investor to a unique category: approved KYC/AML status.

Only investors that satisfy this category can receive or send the EXO token. The multisig authorizer will deny any transactions sent to users that do not satisfy the correct category requirements by refusing to sign the second multisig key.

The authorizer is implemented through Blockstream Green.

Transfer-restricted asset approval process (using categories)

Distributing the Security Token

We will calculate the relevant token amount to be received by each investor that has purchased simple agreements or future tokens (SAFTs), then supply this data to Exordium. Exordium will then distribute the EXO token to the investors from their treasury wallet. A small amount of L-BTC will also be sent to each investor to ensure they can cover Liquid Network transaction fees.

Distributing Profit Shares

On the date and time that the profit shares are due, we will temporarily freeze all EXO transfers using the Blockstream AMP API. We will then use the Blockstream AMP API to get a full ownership report, calculate the required profit share payments, and retrieve a new receive address for each investor.

Exordium will then make the payments to the investors according to this information. After completing the profit share payments outside of Blockstream AMP, Exordium uploads records of the payments to Blockstream AMP via the API, ensuring that all relevant data on investor activity is stored in one central location.

To learn more about Infinite Fleet's STO offered on STOKR, click here.