What is the Simple Agreement For Future Tokens (SAFT)?

Introduction

With over 6,000 projects and counting, it’s safe to say the blockchain ecosystem is booming. However, blockchain is not just about building a product, the market has matured and investors backing a project play an important role in the success of the startup.

What is a SAFT Agreement?

The SAFT agreement is a contract between authorized investors and a cryptocurrency project. The document states that the investors will finance a project in exchange for discounted crypto tokens at a specific date.

Simple Agreement for Future Tokens (SAFT) vs. Initial Coin Offerings (ICO)

SAFT’s are often confused with Initial Coin Offerings (ICOs). ICOs involve a project selling their tokens to regular, shortlisted users on a launchpad. Whereas, SAFTs only deal with accredited investors. According to coinspeaker, “an accredited investor is an individual who has legal permission to deal in securities. They also meet certain requirements pertaining to income, net worth, professional experience, etc.”

Limitations of the SAFT Agreement

The SAFT framework ensures regulatory compliance for projects throughout the world but comes with a few limitations:

  1. Focused on the U.S. Federal Laws: As you’ve noticed, the SAFT framework is built to satisfy criteria under the U.S. federal laws and regulations. This limits the SAFT to U.S. markets only and can be deemed illegal or invalid in different jurisdictions and countries.
  2. Only accessible to accredited investors: Blockchain’s ethos is community. And the SAFT framework restricts retail investors from investing and getting behind a blockchain project in its early days.

Why A SAFT Agreement on the Blockchain?

A blockchain-based SAFT agreement offers the following advantages:

  1. Secure: The SAFT agreement is a sensitive and confidential document. By embedding it to the blockchain, you ensure that the agreement can never get lost or corrupted.
  2. Immutable: Once an agreement is signed it is set in stone and becomes unalterable. No more fighting lengthy dispute resolution processes.

PAID DApp and the SAFT Agreement

The SAFT agreement helps new entrepreneurs and freelancers protect themselves and navigate a highly globalized economy. It is going to be one of the many contract templates that PAID Network will be offering as part of the release of PAID DApp. These on-chain solutions will ensure our community is protected, allowing you to safely choose from a variety of templates to secure your business interests and #GETPAID.

About PAID

PAID Network seeks to redefine the current business contract, litigation, and settlement processes by providing a simple, attorney-free, and cost-friendly DApp for users and businesses to ensure they #GetPAID wherever they are in the world.