How Does a SAFT (Simple Agreement for Future Tokens) Differ from a SAFE (Simple Agreement for Future Equity)?
A SAFE is an agreement used in traditional startup funding, granting the investor the right to future equity in the company, typically at a discount. A SAFT is an agreement granting the investor the right to future utility tokens once the network is functional.
The key difference is the deliverable: equity for a SAFE, and utility tokens for a SAFT. The SAFT is structured to delay the sale of the utility token until it is functional, aiming to avoid immediate security classification.
Glossar
Saft Conversion
Mechanism ⎊ Saft Conversion refers to the contractual process where a Simple Agreement for Future Tokens (SAFT) transforms into the actual underlying digital asset upon the launch of the decentralized network.
Agreement
Context ⎊ Agreement, within cryptocurrency, options trading, and financial derivatives, signifies a legally binding or consensually established understanding defining obligations, rights, and responsibilities between parties involved in a transaction or contract.
SAFT
Contract ⎊ A binding agreement, common in early-stage crypto fundraising, that grants an investor the right to receive a specified amount of a digital token upon a future qualifying event, such as a token generation event or priced financing round.
Future
Contract ⎊ A future is a standardized financial derivative contract obligating parties to buy or sell an asset at a predetermined price on a specific date in the future.
Equity
Account Value ⎊ In the context of derivatives trading, equity represents the net value of a trader's account, calculated as the total value of assets minus total liabilities.
Future Utility Tokens
Valuation ⎊ Future Utility Tokens represent a novel class of digital assets predicated on deferred access to a product or service within a specific blockchain ecosystem, differing from purely speculative tokens through inherent, though time-delayed, economic function.