1.

BLOCKCHAIN OF CHOICE

Security tokens should choose massively popular blockchains. Thus the main thing about blockchain is
its rate of adoption. Not its scalability, speed and consensus. It's easier to fix technical problems of an
existing blockchain, than launch a new one.

2. REGULATION DOES NOT ADD ECONOMIC VALUE

Regulation is necessary but not a guarantee of security token success. Regulation does not create new
qualities of a digital asset. It's importance is overvalued.

3. FRACTIONAL OWNERSHIP

Fractional ownership is necessary but not a guarantee of a security token success either. Fractional
ownership adds secondary market liquidity for existing assets, but does not create new qualities of
digital assets.

4. DECENTRALIZED OWNERSHIP

Ownership registration on blockchain cuts costs of changing ownership registration. It enables multi-
origination, decreases barriers for securitization, and improves liquidity on secondary market for existing
assets. It does not create new qualities for digital assets.

5. CONTINUOUS SECURITIZATION

Decentralized ownership decreases minimum sizes of portfolios required to access capital markets. It
enables the process we call “Continuous Securitization.” Continuous securitization is the key process for
lowering barriers to capital markets for traditional security assets.

6. INSTANT AUDIT

Instant audit, asset tracking and scoring create new digital asset qualities. It's important for
securitization of assets that are rare or do not have access to securitization, such as movies or objects of
art. It creates new qualities for digital assets.

7. TOKENS = SECURITIES

7.1. Security tokens are a digital representation of traditional capital market financial instruments:
equities, security bonds, commodities and commodity futures. They do not require new regulation
because it already exists.

7.2. Security tokens will be traded as tokens on token exchanges and as securities or commodities on
traditional securities or commodites exchanges.

7.3. Utility and currency tokens continue to exist, in a parallel universe with security tokens. The two
are different by nature.
 7.4. Security Token Offerings will provide an alternative to IPOs.

8. SECURITY TOKEN ASSET CLASSES

Crowdfunding doesn’t work, institutional capital markets do work: group tokens into “Security Token
Asset Classes”. This is the process behind Token Asset Class creation:

8.1. Standard of industry transaction settlements and contracts for money flow are the basis
of “Security Token Asset Class.”It enables asset pooling to portfolios.

8.2. Pooling enables diversification. Diversification decreases risks for investors. Tokenization
eliminates borders and grants global access to investors.

8.3. Instant digital audit of money flows creates transparency of portfolios. Decentralized ownership
enables pooling of portfolios from multiple stakeholders. Continuous securitization of portfolios enables
granular refinancing and capital markets access -- eliminating the need for all intermediates, such as
banks, placement agents, etc. It decreases the cost of capital for asset holders and unlocks liquidity.

8.4. Blockchain is not controlled by one organization. Neither should Token Asset Class be
controlled and dominated by one issuer. Ownership, audit and operations should be decentralized in
the same way as during securitization of traditional assets.

8.5. Stable coins are backed by commodities or fiat. They are important for avoiding currency volatility
and for safety of movement of funds through blockchain. The latter is a prerequisite for institutional
capital getting involved with security tokens.

9. CAPITAL MARKETS WILL DOUBLE IN SIZE

Security tokens will enable new “Security Token Asset Classes” issues and trading on capital markets
that will generate volume comparable in size with the current $200 trillion in traditional securities
traded annually on capital markets worldwide.

10. FOR GREATER GOOD

The newborn Token Asset Classes will improve access to capital for people who create new things,
qualities and meanings. This will decrease the role of financial and legal intermediates. This time all of
mankind -- not just the 1 percent -- will be eligible to get a share of these financial benefits.