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How to Distribute Tokens to Investors

This article explains the procedure for distributing tokens directly to investors. It explains the reasons why an issuer might choose to use a token distribution rather than an offering to distribute tokens, as well as the procedure for doing so.

In This Article

  • What is a Token Distribution?
  • How to Distribute Tokens to an Investor
  • Distributing Tokens - Video Demo

What is a Token Distribution?

A token distribution is a method that an issuer can use to distribute tokens directly from their Asset's treasury wallet to an investor's self-custody wallet, without using a primary purchase on a token offering.

Most investors will create their investor account in your Marketplace, complete KYC and accreditation (if required), then invest in your Asset by making a primary purchase in an Offering.

However, there are cases where you may wish to distribute tokens to investors who have not gone through the process of making an investment by paying for a primary purchase in your token Offering. 

You may prefer to use a Token Distribution when:

  • You are issuing tokens to an advisor, board member, investor, vendor, etc without them making a direct cash investment, and that person would like to hold their tokens in self-custody.
  • You previously held tokens on an investor's behalf as an Issuer-Custodied Owner, and that investor would now like to take possession of their tokens in self-custody. 

How to Distribute Tokens to an Investor

  1. Login to your issuer account and enter your Marketplace.
  2. From the Marketplace dashboard, click Companies and enter your Company.
  3. From your Company dashboard, click  Owners managements   to launch the cap table management tool for your Asset.
    1. If you have more than one Asset listed under the same company, you will need to use the drop-down menu on the Owners managements page to select the correct asset. 
  4. Click Distribute Tokens on the right side of the screen and follow the prompts: 
    1. Select the investor you wish to distribute tokens to. Only investors who have created their investor account in your Marketplace and completed KYC are eligible to receive a token distribution. Investors who are not currently eligible will be displayed in grey, unclickable text in the menu.
    2. Enter the number of tokens you wish to distribute to the investor. This amount will be withdrawn from your Asset's treasury wallet and sent to the investor's wallet.
    3. Enter the price per token, if money was raised/paid in exchange for this distribution. Otherwise, enter $0. 
    4. Click Confirm when ready. 

Once you distribute the tokens, you will see the investor's allocation update in the Owners management (cap table) tool. Your Asset's Treasury balance will be reduced by the quantity of tokens distributed, and the number of outstanding tokens will increase by the same amount. Finally, all investors' ownership percentage will be adjusted to account for the new distribution of tokens.

Distributing Tokens - Video Demo

This video walkthrough provides an overview of how to configure and launch a token distribution to an investor: