— Republic (@joinrepublic) July 16, 2020
As a company that has incubated a number of token-based raises like Dapper Labs and Props Project, the Republic Note is one of the first tokens to offer direct profit-sharing to tokenholders.
As illustrated in the sale campaign:
“Republic Note is a new kind of asset that shares profits when startups and private equities that raise with Republic later sell or go public.”
Looking deeper into the project, it’s clear that Republic has been seeding this initiative for quite a long time, with the presale dating back as far as 2018. Now, under a Reg D 506(c) offering, US accredited investors have the ability to participate at their convenience. While Republic plans to try and extend the offer to a Reg A+ for non-accredited investments, retail investors are currently only able to “reserve” an allocation if/when that day comes.
Notes are being issued on the Algorand blockchain, using a TEAL token standard which “borrows heavily from ERC20 with ERC1404 security enhancements”. Transfers of Notes will be restricted to whitelisted actors with ambitions to create a token wrapper that can be traded on… “Binance Chain and the Binance DEX”
Why Should I Care?
In a world in which DeFi tokens are constantly walking a fine line between being security or not, it’s refreshing to see Republic taking such an open stance on legal compliance while incorporating the best aspects tokens have to offer.
The Republic Note carries two forms of profit, which appear to be different relative to your accreditation status. The first – 25% of Republic’s 1-16% carried interest – is allocated to accredited investors who purchase more than $25k of Notes. The second – 100% of Republic’s 2% securities commissions – is allocated to public tokenholders who invest $20 or more in the public offering.
What’s interesting about this model is that all revenue is passed through to Republic Core – the team behind the Republic Note – and then issued to tokenholders each time $2M in cumulative profit has been reached. These allocations are meant to make Note a basket of Republic offerings, essentially giving investors kickbacks when one of them successfully exits. Here’s a diagram depicting this a little more clearly.
As for the distribution itself, 40% of Notes are being offered to investors, with the majority being retained by a variety of Reserves intended to spur ecosystem growth. Here’s a look at how the 800,000,000 At its current offering price of $0.12/token, Notes currently has a fully diluted valuation of $96M.
While there’s still a lot of centralized overhead in the flow of Notes, the fact that a token is openly able to distribute profits to holders is one which the crypto industry has long hoped for. Moving forward, it will be interesting to see if Notes ever make their way onto to DEXs like Uniswap or if they’ll be siphoned off to Ethereum killers with the hope of having this be their cornerstone token offering.
Underpinning the investments are a suite of “earn” campaigns, drawing from DeFi’s newly popularized liquidity mining schema by allocating rewards to users for learning about different projects are performing value-added actions to the platform.
If one thing is for sure, DeFi premises are slowly starting to make their way to the mainstream, and the presentation of Republic Notes is one many other token teams should take note of.
Cooper is the Editor of DeFi Rate and a contributor to leading DeFi outlets like the Defiant and Bankless. He is active in the DAO ecosystem through projects like MetaCartel and Raid Guild where he seeks to incubate governance models and grassroots community development. He is an ambassador of Set Protocol and the Director of Fitzner Blockchain Consulting where he authors a weekly publication called Token Tuesdays. To stay up with Cooper, follow him on Twitter.