SAFT - Simple Agreement for Future Tokens Explained


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“SAFT” stands for “Simple Agreement for Future Tokens.” It is a way of attracting investment, which, in theory, is compatible with legal norms of the U.S. stock market, U.S. tax law, and the U.S. financial services market. A SAFT is a modern model of the token sale, which significantly reduces risks incurred by the seller by the signing of an investment contract between developers and investors.

Simple Agreement for Future Tokens

The mechanism consists of several stages:

• The signing of the deal, in which accredited investors put a certain amount of money in a startup in exchange for its promise to one day gives them a set amount of the tokens it sells in an ICO. The token issuance is not conducted at this stage;
• Development of the network using the raised funds;
• Creation of the tokens and sending them to the investors once the network functionality is ready;
• Management of the tokens, e.g., selling them on the open market or holding them as part of the crypto portfolio.

The title is a reference to another way of investing funds—Y Combinator SAFE (Simple Agreement for Future Equity).