WeOwn's utility token update – April 2020
As our business finance offering expands, we’re getting queries from the WeOwn community about the impact on our utility token, and how it will be used to support peer-to-peer lending activities. To answer some of the most frequently asked questions, we’ve put together a CHX update:
What is CHX?
CHX is the utility token that powers WeOwn’s technology environment and the blockchain we’ve built to underpin it. If we were a vehicle, CHX would be our fuel.
It’s incredibly useful to us, as CHX serves a number of purposes. It incentivises network validators to participate in transaction processing, ensuring the decentralised character of our public blockchain environment and the integrity of each transaction. It can also be used as payment for transaction fees, to ensure the integrity and safety of our network, and as a reward medium for incentive schemes across our entire service offering.
As CHX is a utility token, it’s important to note that holders do not have any equity or securities in our business, or in any of the companies using our marketplace to raise capital. Anyone who wants equity needs to invest in a security token.
How is CHX being used across our financial products?
With the introduction of the new WeOwn peer-to-peer lending marketplace in 2020, use cases for CHX have evolved and developed across all our services. These use cases now include:
- A reward mechanism for our many referring partners
- Staking CHX tokens to the investment and loan portfolio, through which end users (businesses and investors) can achieve significant discounts and access premium features on the marketplace
- Collateral pool – 1% of the total value of each equity or lending offer will be used as a “collateral pool”. After each successful completion, 50% of these tokens will be burnt and the remaining tokens will remain in the pool.
How does the reward/incentive scheme for referring partners work?
If you are a referring or affiliate partner, you will receive a number of CHX tokens at the start of your formal engagement with WeOwn. These CHX token balances are visible when you log in to the WeOwn platform – see the portfolio overview section.
During your referring partner contract engagement with WeOwn, we have established a referral and sales programme for you, including your sales and consultancy staff. Token distribution on the account is dependent on the sales commission we have set up for you.
Here is an example of the referral process:
- You refer a business who engages in a lending or equity contract with our investors
- The business pays the setup and installation fee and the contract starts
- 30% of the setup fee (percentage is based on the contract negotiation) is available to your organisation as a referral fee upon successful contract engagement between both parties
- Out of this 30% referral fee, a certain percentage is allocated as a sales commission for your staff, depending on organisational agreements and sales performance
- Based on the sales commission, WeOwn will convert a percentage and purchase CHX tokens on your behalf on the open market. The remaining commission will be paid out as a cash incentive
- Your sales staff will receive a commission for the cash equivalent, and a certain percentage in the form of CHX tokens as a long-term incentive
- The CHX tokens will be moved into the account of your sales staff and locked for a minimum of 6 months. After the 6-month holding period, these tokens can be further used.
Here is a working example…
- Our referring agreement is 30% of commission on the setup fee of a loan or equity contract with your organisation
- One of your sales staff refers us a business who will go into contract with one of our investors. The established loan is €100,000 (example)
- The setup fee is €3,000 (reminder: this is just an example – fee is always dependent on loan size, credit risk rating and repayment period)
- Your organisational commission is €900 (30%)
- Based on the €900 commission, we convert €300 into CHX tokens to be locked for a minimum of 6 months (33% of the commission)
- The remaining €600 will be transferred as a cash commission
- The sales representative who initiated the sale (depending on organisational agreement) will receive CHX tokens worth €300 within the sales and reward section of our platform
- After 6 months, the tokens can be sold or extended to be held
This model provides your sales team with an immediate cash commission, along a long-term incentive to be part of the platform’s success by holding and generating more CHX tokens. As the progress and utility of the platform increases, the more the CHX utility value rises.
What are the platform’s premium features and services?
As an investor and CHX holder on the WeOwn platform, you have an opportunity to lock and stake your CHX token holding against the investor portfolio by connecting your CHX wallet and holding/locking your tokens for a period of time.
By doing this, you will be eligible for a number of premium benefits:
- You will receive preferential premium platform service offers through the WeOwn marketplace
- You will get access to advanced reporting features
- You will receive early access to new product features
- You will get priority access to participate in new investment offers and get ahead of the line
The availability of these incentives and discounts are based on the CHX token balance you hold, and also the duration you lock in these holdings connected to (and staked against) your portfolio. Discount values will be visible on your portfolio screen.
What is the collateral pool?
Within our equity service offering, business owners are currently required to lock up a reserve of CHX tokens for the life of the equity they issue. These business owners must lock up at least 1% of the total value of the equity on offer, which is released at the end of the duration of the offer.
We are now introducing the same collateral pool concept for our lending service, as 1% of the lending offer value will be ‘pooled’ and locked away. The new model we are introducing is a token burn and an overall collateral pool against both equity and lending – after successful completion of an offer, 50% of the tokens will be immediately burnt.
The other 50% will remain part of an overall collateral pool (held in escrow) and will be used as security and collateral against future investments on the platform, further reducing the risks for investors and increasing the appetite to use our investor services. The total pooled amount by all investment offers (equity, debt etc.) is used to compensate investors when their equity/loan investments fail. The 1% lock up amount is in this way no longer tied to the specific issuer. It will also ensure that the CHX token supply gradually decreases.
Here is a working example of the collateral pool…
- A lending offer of €100,000 is established between business and investor, a contract has been signed and the loan amount submitted
- €1,000 worth of CHX tokens (1% of the loan amount) are purchased on the open market and moved into the collateral pool (held in escrow)
- After a successful completion of the lending offer (based on total lending duration or early repayment), 50% of the tokens are burnt
- The remaining 50% of tokens will be retained in the collateral pool. In case of any defaults across other investment products, these pooled tokens can be used (based on strict investment governance rules and guidelines).
A sophisticated collateral pool and token burn report will be made available publicly on the platform, so users and token holders will always be able to see the current burn and escrow amounts, as well as transactional movements.
We are gradually introducing these new CHX token utilities over the next weeks and months, and each element will get a transparent and detailed public reporting website with explorer references. Keep watching this space as we evolve, update and create more use cases while we continue to expand our services.
Got further questions about CHX? Get in touch and we’ll answer them.