Welcome to the heart of the ASCEND Tokens.

Through a meticulous blend of strategy and foresight, we have designed a system that ensures transparency, rewards commitment, and lays the foundation for sustained growth.

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Shaping the Future through a Strategic Blueprint

Coin Supply 250,000,000,000 (250 Billion)	Total Supply	Ascend Coin (ASND) stands out with a total supply of 250 billion coins, underscoring its rarity and commitment to maintaining value. At Ascend Network, we’ve implemented a halving event every 12 months, further solidifying our commitment to maintaining scarcity and value. Setting a limit on our coin supply helps us manage growth responsibly, avoid excessive inflation and create a stable environment for our community.
Community Allocation 150,000,000,000 (150 Billion)	60% of Max Supply	The Pillar of ASCEND: We’ve reserved a major portion for our community because we believe in its power. This allocation represents our commitment to everyone who uses, promotes, and envisions the platforms potential. Platform Transaction usage (120 billion coins or 80% of Community Coins): reserved for the functioning as platform currency for P2P Lending and Fraternity Funds platforms. Community Building & Ecosystem (22.5 billion coins or 15% of Community Coins): Investments in strengthening and enriching the ASCEND community. Liquidity Pool (7.5 billion coins or 5% of Community Coins): To ensure smooth and stable trading experiences.
Presale Allocation 75,000,000,000 (75 Billion)	30% of Max Supply	Early Believers, Core Community: Before our coins are available to the wider public, our presale offers early supporters an exclusive opportunity to back our vision, often at a preferential rate. It’s more than just an initial fundraiser; it’s about building the cornerstone of our community.
Team Allocation 25,000,000,000 (25Billion)	10% of Max Supply	A 10% allocation of the total coin supply is dedicated to our devoted team members. This allocation aligns their interests with the long-term success of ASCEND and motivates active participation in its ongoing development and prosperity. This transparent and fair allocation underscores our unwavering commitment to the project’s success.

Through a meticulous blend of strategy and foresight, we have designed a system that ensures transparency, rewards commitment, and lays the foundation for sustained growth.

Legal Strategy for a Token Project

TABLE OF CONTENTS

This section will explain the different types of tokens and use cases of tokens, along with various methods of minting and distributing tokens. Based on the criteria that will be covered in this article, first thing is that to characterise our toke type

1. Identifying whether our tokens release can be characterized as a centralized token release or a decentralized token release
2. Understand what sort of legal strategy we need to take (hint: the legal roadmaps for centralized token releases look very different compared to decentralized token releases)

This article serves as a general information on how token issuance in the context of legal requirements, regional and global compliance requirements (if applicable), and the best legal practices for effective token legal structuring. key criteria to determine if a token issuance legal strategy is centralized or decentralized. Then, we will explore possible token release strategies and the legal work required for the implementation of each identified strategy. 

4 legal challenges that teams face before token issuance

When the team is approaching the token release stage, two distinctive legal needs arise. These are registering a company to issue tokens and developing documents for the tokens’ distribution.

However, often after starting work on these legal tasks, teams are faced with the following legal uncertainties:

1. How can we ascertain if the legal status of the token will be deemed a utility token or a security token?
2. Which jurisdiction should we choose to register our token issuance company?
3. Should we register an LLC or a foundation for our token issuance?
4. What are the requirements for conducting KYC (Know Your Customer) checks when selling tokens?

The importance of legal strategy for token issuance

we search for answers to these legal questions. However, finding accurate and helpful answers to these questions is only possible if we have deep and clear understanding of the business practices found in the token project market.

Taking into consideration what utilities (use cases) will be assigned to the tokens, how the token cap table will be structured, and what the methods of token distribution will be (direct vs via intermediaries, paid vs free, private vs public, etc.) will all impact the legal requirements of the project. Ultimately, these factors will dictate which legal strategy of token issuance should be followed: centralized or decentralized.

The legal strategy will outline all the possibilities (both preferential and disadvantageous), for choosing jurisdictions, entity types, documentation and compliance measures that will collectively ensure a successful token issuance.

Centralized vs decentralized token issuance strategies

The legal strategy for issuing tokens is built on the basis of five key features (criteria) for analyzing the token project:

1. Utilities (use cases) of the token
2. Technical layers of the project, within which tokens are issued and operate
3. Process of initial token minting and distribution
4. Token cap table
5. Marketing and promotion of token distribution

1. Token utilities (use cases)

Previously, the legal status of a token was determined by analyzing the various rights that a token granted to end users. The list of rights was quite diverse and included:

• Access to software
• Gas fee
• Voting rights
• Dividends
• Securitization (tokenization) or real-world assets (RWA)
• Loyalty program points
• MEM tokens
• And more…

Depending on the rights that the token granted, tokens would then be qualified as utility tokens, security tokens (financial instruments), payment tokens (eMoney), and so on.

This analysis was particularly relevant for the period between 2017 and 2020, when Distributed Ledger Technology (DLT) was still nascent.During this time, the primary token release method was through Initial Coin Offerings (ICOs), representing a centralized approach to token distribution.

However,with the evolution of DLT and increasing regulatory attention, a need emerged for more nuanced legal categorization of tokens beyond their utility.This led to the examination of additional factors beyond utility, including the technical layer within a Web3 project and the initial minting and distribution process of the token itself.

The initial regulatory explorations and court cases during this period attempted to establish the legal classification of various tokens.These emerging qualifications, including utility tokens and security tokens, were then applied to ICO campaigns, providing a framework for understanding their regulatory implications.

However, if we fast forward a few years, decentralized technologies have evolved a lot, and Web3 projects have become a lot more complex in terms of their technical layers. This, in turn, has added additional criteria for the legal qualification of tokens besides just the tokens’ utilities, among which are two key questions:

• Which technical layer of the Web3 project does this token have utilities in (where/how is it being used?)
• How exactly was the token initially minted and released? 

2. Technical layer of the project where tokens are issued and function

A native token within a blockchain network, which is used by builders to pay the gas fee of the network and support the PoS consensus algorithm, is highly likely to be viewed as a utility token. However, a token at the protocol level that has been launched on top of a blockchain network (in other words, it is a token within the project’s “settlement layer”), then the token utilities are more likely to be recognized as governance. This is because the token is being used to incentivize users to use the protocol more actively (through various staking / yielding mechanisms); for structuring token-based DAO membership; and for launching proposal-based decision-making.

Lastly, a token at the dApp level that is used for hedging the volatility risks of other cryptocurrencies (it has a peg / fiat backing), or is a tokenized RWA (for example, tokenized real estate), then this token is likely to be considered a payment token (eMoney) or securities token, as it is tied to a centralized backing.

ASND Tokens are on SUI Blockchain – Potential Utilities: Payment for DeFi services, collateral in lending protocols, governance participation in the DeFi ecosystem, access to exclusive features. *Legal Status: The specific use cases will dictate the legal status (utility token vs.security token).

3. Initial token minting and distribution

The advent of decentralized technologies has significantly broadened the scope of token use cases within the diverse layers of Web3 projects.Furthermore, these advancements have facilitated a wider range of token minting and distribution methods beyond the traditional ICO model.

Since2020, innovative token distribution approaches have emerged, including Initial Decentralized Offerings (IDOs), launchpads, and fair token launches.These methods prioritize community involvement and enable decentralized distribution, often through mechanisms like liquidity bootstrapping pools (LBPs).

This shift towards decentralization reflects the evolving landscape of Web3, where community ownership and autonomous governance are increasingly valued.

Consequently, The process of the initial token minting and distribution has become an additional criterion when performing a legal analysis of a token. This is because the following questions have emerged, such as:

• Was the genesis token release planned or not?
• Who specifically controlled the wallet with pre-minted tokens?
• Who priced the token?
• Who will make decisions about the distribution of tokens among different pools?
• Were tokens distributed directly from pools to end recipients or through intermediaries (DEXs, launchpads, LBP)?

The answers to these questions contain important details required for analyzing who had the technical and market ability to manage the tokens and—as a result—who could be considered as an ‘insider’ of this process, and hold a potential ‘unfair competitive advantage’. This leads to the recognition of these insiders as a ‘common enterprise’, and the tokens themselves as ‘unregistered securities of such enterprise’.

4. Structuring the token cap table

Project teams should always be wary of any situation where they might be deemed ‘insiders’. Another instance in which this may happen is when the team is structuring token pools via the Token Cap Table, and managing the process of each pool.

The reason why structuring token pools is another important criterion for token qualification, is because it allows us to understand the level of ‘decentralization’ of the management process of the intended tokens. The allocation of tokens among the different pools can indicate if any parties have control over a significant portion of tokens. So, if it is clear that the project team or any other centralized 3rd parties do control a significant part of the tokens, that can contribute towards the qualification of the team as a group of project ‘insiders’. To mitigate any risks, the token pool (the token cap table) should be balanced, so that tokens are proportionally distributed among the different participants (stakeholders) of the ecosystem.

5. Marketing and promoting token.

Marketing of tokens and any activities used to promote tokens are another important criterion of token legal analysis.

In particular, the following three areas of token marketing and promotion need to be examined:

1. How the token is positioned in the project (indicated by how it is marketed/promoted)
2. Which laws apply to token distribution (indicated by which user market(s) are targeted by the project) 
3. What consumer protections might be triggered (indicated by user expectations created via marketing/promotional campaigns)

Let’s explore each of these in turn.

Token positioning

How was the token marketed and promoted? What does this tell us about how the token is positioned in the project? Why does the positioning of the token matter?

The manner in which a token is marketed and promoted directly influences its perceived position within the project.This positioning, in turn, shapes the expectations of potential buyers or recipients.

Importantly, the token’s positioning has a significant bearing on its legal classification. Regulatory requirements applicable to financial promotions and the marketing of financial instruments play a crucial role in determining the legal qualification of the token.

Forinstance, if a token is marketed as a means to access exclusive features or services within the project, it might be classified as a utility token.However,if the marketing emphasizes the token’s potential for financial gain or investment opportunities, it could be categorized as a security token, subject to stricter regulations.

Therefore, carefully considering the token’s positioning and ensuring alignment with its intended purpose is crucial for navigating the complex legal landscape surrounding token offerings.

Target market

A comprehensive understanding of the token marketing campaign’s organization is essential. This includes identifying the specific markets targeted, the communities and jurisdictions reached, and the user groups engaged.

Determining the project’s target market users is crucial for identifying the applicable laws governing the token distribution process. If the campaign utilizes localized languages, media, and direct advertising within specific regions, the laws of those targeted countries will apply.

However, if the campaign adopts a borderless approach, targeting diverse communities across various jurisdictions without specific localization, the laws of the country where the entity responsible for the distribution is registered will govern the process.

Accurately identifying the target audience and applicable laws is critical for ensuring compliance with relevant regulations and mitigating potential legal risks associated with the token distribution.

If the campaign was targeted, and included local languages, media, and direct advertising, then this will be the basis for applying the law of the country where the campaign was targeted.

If the campaign was not targeted, and could be described as community marketing, then it will be considered a borderless campaign. In this case, the country where the entity that organized the borderless campaign for the distribution of tokens (Token SPV or protoDAO) is registered should be identified, as it is that country’s regulations that must be taken into account.

Consumer protections

Finally, the criterion of the token recipients’ expectations, which were formed following the promotional campaign, must be considered. 

If in the future, expectations differ from what the token actually represents, then this will have legal consequences for the organisation which distributed the token, as they will be viewed as ‘deceiving buyers’. For example, if a team promised users the possibility of using the token in the protocol immediately after receiving the token, but the protocol or product simply isn’t ready yet, then this could be qualified as violation of the users’ consumer rights.

The principle of consumer expectations, shaped by the promotional campaign, holds significant legal weight. Any discrepancy between these expectations and the actual functionalities of the token can have legal repercussions for the organisation, potentially leading to accusations of misleading buyers.

Furthermore, the presence of calls to action (CTAs) and investment-related language on the project’s website can serve as evidence that the project team intended to use the tokens primarily for fundraising rather than community building and network incentivization. This can potentially lead to the reclassification of the token from a utility token to a security token, subjecting it to stricter regulatory requirements.

Therefore, it is crucial for project teams to manage consumer expectations responsibly through accurate and transparent communication, ensuring alignment between promised functionalities and actual token capabilities.

Centralized & decentralized tokens

Based on the five criteria that we have just analyzed above, we can now clearly differentiate centralized token release strategies and decentralized token release strategies.

In a centralized token strategy:

• A centralized token strategy is characterized by the following key attributes: Service-Financial Utilities: The token serves a dual purpose, providing access to software or gameplay functionality while also offering financial benefits such as real-world asset backing, fiat peg, dividend payouts, or investment potential.Typically, these tokens are issued within the dApp layer of the Web3 project. Team Control: The project team retains control over the token issuance process, managing the wallet of minted tokens and setting the token sale price. Additionally, the team maintains a significant portion of the tokens within the treasury. Targeted Marketing: The project team engages in targeted marketing campaigns, focusing on specific markets to attract investors and secure funding for product development.

In a decentralized token strategy:

• The token has protocol management utilities: it is used as a gas fee to incentivize stakeholders who support the consensus protocol of the decentralized network, for staking/yielding mechanisms, and for structuring DAO membership and proposal-based decision-making. Tokens are autonomously issued or deployed by the proto-DAO with subsequent autonomous distribution to token pools. Token Price Discovery occurs through decentralized market mechanisms such as liquidity bootstrapping pools (LBPs) and automated market makers (AMMs). Token pools are distributed proportionally among stakeholders of the decentralized ecosystem. Token promotion campaigns are organized through the community and are borderless, lacking any targeting of specific jurisdictions.