How the Exchange Works

The primary function of the exchange is to provide a stable secondary market for buying and selling of fractional ownership of Fancy Diamonds in the $10k - $50mil price range.

Each Fancy Diamond that’s added to the exchange is first sold (at a discount to the appraised value) to accredited investors via a SEC approved Simple Agreement for Future Tokens (SAFT). This is referred to as an Initial Diamond Offering (IDO). Each and every diamond added to the platform will have an IDO.

Once all fractional shares have been sold and the IDO is fully funded, they’ll become available for regular commodity investors to trade on the exchange.

In simple terms, until further regulatory clarity is provided, we’re assuming the IDO has elements that could classify it as a security (even though the tokens are a 1:1 ownership in a commodity) but once the IDO is complete, the secondary trading of the fractional shares are treated as a commodity. Why? This is the pattern we’ve seen occurring in the market without challenge from the SEC.

To minimize the risk to traders, an AI driven social liquidity pool (SLP) - funded by transaction fees from the IDO, Secondary Trading of IDO tokens, and $BDE Buying/Selling/Trading - will provide both a floor and liquidity for each Diamond on the platform; ensuring diamond prices remain in line with appraised market values. To start, we expect fees to be close to 3% but this should come down to under 1% as trading volume on the exchange increases.

Finally, to ensure stability and integrity of the DAO, Staking of the Governance Token $BDE will be encouraged via a 5 year guaranteed 7.5% staking reward funded by the Ecosystem Development Treasury until profits from the Exchange are able to fully cover staking rewards. The expectation is that profits from the Exchange will fully fund the 7.5% staking reward in the mid-term and continue to increase as the platform scales. For all intents and purposes, staking rewards are the equivalent of profit sharing in whatever remains after the SLP and Admin, Marketing & Operational Expenses are covered.