A SAFT is classified as a guarantee, because until the tokens are created and released, investors put their money into a business based on the hope that these tokens will be sold at a higher price once the project is more developed. This meets the most basic definition of a security: to invest in a company while waiting for future profits. The SAFT follows a protocol that many financial companies follow. This is the Y Combinator Simple Agreement for Future Equity, which involves an agreement between investors and a company that allows rights to future equity. SAFT is short for the Simple Agreement for Future Tokens. This term refers to an investment (security) contract created by blockchain developers for authorized investors. However, the chips, which will eventually be transferred to investors, are entirely purpose-bound and are therefore not securities under U.S. law. Founders and developers use this model to raise funds for the creation or development of the system or its technology. Investors will then receive this utility je-token in the hope that there will be a commercial application case in which they will now be able to sell the tokens. Developers of a decentralized token-based system each create a recipient contract (SAFT) with their authorized investors. The certificate includes the agreement that the investor now financially supports the project and receives tokens at a reduced rate at a later date.
The company that develops the token network registers with the SEC, but does not currently issue tokens. Then, the founders and their team use the financial resources acquired to develop the network. At first, investors do not receive tokens. SAFT has been placed as a solution to a new problem. It should create a way not yet (ready) to sell utility tokens. A JUICE will initiate a procedure to help the publishers of a utility token finance their project without violating the rules in force, including securities laws. However, usage cancellations are not considered titles. To simplify, STOs tokens are usually investor-linked for a certain percentage of the company. It`s a bit like stock. The tokens, which come from STOs, provide irregular returns, a stake in the company, participation rate and interest rates. In addition, the description of STOs involves the use of an intelligent contract defining the exact structure of the token.
It is in the same vein as an ICO. How SAFT works is the developer of a decentralized system that uses tokens, creating a SAFT with their genuine investors. This juice is also called a “contract addressed.” The certificate is accompanied by the agreement that the investor will financially support the project. In addition, they will receive chips at a later date at a discounted price. The company that develops the token network registers with the SEC (Securities and Exchange Commission). However, they do not spend chips at this point.