Introducing the Open Cap Table Protocol

Transcript

[applause] >> My name is Tibo. I'm the CEO and co-founder at Fermints. And today I'm going to introduce you to the open capturable protocol. A year ago now, like the world changed, right? Like it or not, like it or not, but the new administration has completely reshuffled like the deal when it comes to crypto and by opening up the floodgates when it comes to asset tokenizations.

Tokenization. And Wall Street listened. Wall Street heard the message loud and clear and they started figuring out how to tokenize everything. And you heard it here like in the main stage, like the DTCC and all the market participants are now scrambling to basically tokenize everything. So, as a crypto guy has been I've been in the field for like now way too long. Like it doesn't show yet, but way too long.

Uh is that it? Is all the work that we've been doing for like the past 16 years is now being co-opted by Wall Street and they use it to build faster horses? Like was it was it all for nothing? I don't think so and I'm here to explain you why. Everything they do today, everything Wall Street is doing by tokenizing equity, they do it on the public market. They tokenize public equities and they can do that because there is an infrastructure that exist and here's how it looks like.

It's old. It's complex. It runs on mainframe by the way. Like there's a monopoly at the I at the at the center here. She's like the DTCC. So, the DTCC is this huge monopoly that do like the post trading operations. And so, you can say everything you want, but it works. It works. Like you go on Robinhood, you click on that button, no matter if there's like nine intermediaries between like when you do this this trade, it does work.

And so, what Wall Street is doing right now is really like they're doing like the low-hanging fruits. And the low-hanging fruit is saying, "Okay, we're going to take all this. We're going to add another layer, another intermediary, and basically sell US securities offshore." That's perfectly fine. Um But so, what's left? Like what can we do? Because this doesn't change anything. As I said, it's like, "Okay, faster horses." We cannot fight this infrastructure. It's too big. It works. But what we can do is we can come up with a better one, a simpler one, one that will have different use cases.

And the wedge in which we're going to do that is the private market. Because everything I've said before happens on the public market. On the private market, like the market is literally exploding because now it's so complicated, so expensive to become a public company, that every action the action happens on the on the private market. And the proof is like now the amount of secondaries is kind of like the same amount of the tech ICO ICO, sorry, IPO proceeds.

And so, that shows the amount of activity that happens in the private market. Every company now is mostly private. Like there's more than a thousand unicorns globally. There's more than $4 trillion in valuation on the on the private market. It's literally exploding. Yet, here's the infrastructure of the private market. That's the infrastructure today. Like all this value when it comes to moving equity, like we use lawyering. We use PDF, Excel sheets, sometimes databases, okay? But the lawyers are the expensive glue that makes the this market move.

And that is the opportunity. Now the challenge because the private market, okay? Like there's no infrastructure, but also it's much more difficult than the public market. In the private market, shares are much more constrained. Like stocks are restricted. Like so the transferability has to obey certain rules. The ownership structures are much more complex, layered inside the cap table and also outside because now you see all these SPVs coming up. Um privacy is stable stakes, which is not a a fact like a not a thing in the in the public market.

And all the intermediaries that you need on the private market to make equity move are off chain. And so we can tell that from firsthand like because at Fairmint so we've been 7 years doing this and we started like everybody like doing what seems simple at the time. Hey, let's issue tokens that represent equity on chain. Well, turns out once you've done this, nobody can do anything with it because if you want to make it move, you need to interface with the transfer agent. Guys off chain. Cap table software. Guys off chain. Maybe a broker dealer. Guys off chain. So why did you issue a token on chain in the first place? Like you just created more complexity.

And so the solution the solution to this is to put the source of truth of who owns what in a company on chain, which is the cap table, right? So what Fairmint is doing is bringing cap tables on chain. And by doing this, this is the only way you can realistically have end-to-end on-chain transactions because now you have the source of truth on chain. And this is why we created like the open cap table protocol.

So, the open cap table protocol is basically a protocol that turns these cap tables into programmable smart contracts. And to do that, we also along the way became one of the first SEC registered transfer agent in 2023 exactly to be able to help our customers manage the open cap table protocol and use it. What is the open cap table protocol? I won't go into like great details here, but what you need to know is that it's not a new standard. It's not something that people need to learn, that we need to educate people about.

What we did is we took a standard that was already existing. In 2023, we joined the open cap table coalition. It's a coalition that gathers all the top securities law firm, like the Cooley's, the Gunderson, and like every law firm that you can think of. They are part of this coalition. And we created like the open cap table format, which is an open source format for like uh representing cap tables. And so, the open cap table protocol is the extension of that format on chain, which means that from day one, the open cap table protocol is actually compatible with the industry.

There is no need to change things if the lawyer, the law firm knows the open cap table format in the open cap table coalition, it is de facto compatible. And it delivers on everything you would expect from an on-chain protocol. It allows for self-custody, so you can have like direct asset ownership. It allows for programmability, so instant settlement, automated compliance. It allows for borderless markets.

Obviously, everything's on-chain, full traceability, and also composability, the ability to use smart contracts, so we call it like regulated device smart contracts because uh this is this is there's still regulation happens for securities. But so it is really a protocol made to put the native asset of equity on chain versus just like having the asset being off-chain and then creating wrappers or creating like some sort of representation that is not native. It is live today.

So today, through Fairmont, our customers have put more than 1.5 billion dollar of equity on chain. And we're just getting started because in the coming months, we're going to evolve like the protocol to incorporate a lot more new features because what we do is we grow with our customers, right? We take our customers and we grow with them and we deliver the feature that they expect from us. And what is the end game? The end game is to make IPOs great again. So because this is where this new infrastructure that is simpler can shine.

So the goal here is to say remember this big infrastructure that I showed you before, like this. Uh this exists all these layers they exist because it's not technically possible today to have everybody trade on the cap table. The cap table is at the transfer agent on top and the transfer agent says to the DTCC, "Okay, now you hold those shares." And then like there's these layers and layers of intermediaries to enable the the trading of the shares. Our goal is really to simplify this infrastructure so that everybody can trade directly on the cap table.

And by doing so through a system that is compatible with the existing system. So, if you're a founder and you go public using up, let me come back. Yeah. And you go public using this new stack, not only you'll be compatible with the existing system, but on top we will enable new use case. I'll give an anecdote on Fairmint. When we started in 2018, we went to interview Airbnb. And Airbnb, they were about to IPO at the time. And we asked them like, what would be your dream? If you had a magic wand, what would you do?

And they said, well, one of the big thing that's like we don't like about going public is that we are going to lose the connection with all our shareholders. All of a sudden we pass we go from a cap table that we know everybody off on the cap table to a system where we don't know who our shareholders are, even though our best shareholders are coming to our website and using our app and our service every single day. And this is typically a case that will be possible with this new equity stack that we're developing. If you want to be traded on your brokerage account, fine. If you want to be traded directly on your website in a fully decentralized way, this will be possible. This is use cases that are not possible with today's infrastructure. So, a native

infrastructure to put equity on chain that allows for self-custody, like immediate like collateral mobilization, that's what we're uh the journey we're in. If you want to join us, it's very simple. You can go to fairmint.com. So, Fairmint is basically we're building all the tools that founders and investors need to be able to leverage the open cap table protocol. So, you don't need to interface directly with the open cap table protocol. You just go to Fairmint. And if you are you're a founder and you're dealing here in the in the room and you're dealing with other founders or you want to integrate the Open Capital Protocol, come talk to us. It's very easy and we'll be happy to guide you through how you can integrate this protocol into

your product. Thank you very much. >> [applause]