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Thank you very much. So it's great to be here in Prague. It's not too far from my home, so it's right here.

So tokenization of companies. If you think about where all of this started, with Bitcoin essentially, it was always about digital ownership. This is what made Bitcoin great. And I was in 2013 and that's when I was starting to get interested in Bitcoin and buy some and experiment with it and get to know the technology. And so then in 2014 I got to know Ethereum.

So then in summer 2014 I joined the Ethereum Foundation. And if you think about the core of Ethereum, if you read

the white paper, a lot of the things actually happened, except of NFTs,

I think Vitalik prophesied almost everything. And in there you see, this is a snippet from the white paper, the first implementation of a token, which could represent almost anything. Later on, we got to standardize it. We called this ERC20, just the ERC20 standard, so it's easy to get compatible with wallets, exchanges and other things. But this digital ownership, this is how it evolved and it is always at the heart of what we do at most of the

applications in blockchain. So then after 2014

I started a company called Slogit and we did something called Lidao. I don't want

to talk too long about this.

For some of you, a really bad memory. For me, partially too, to say it lightly. Well, for those of you who have been not in the space in 2016, I'll give you a very, very short, condensed overview of what happened. So we got Ethereum now, we got smart contracts now, so it was so obvious we had to do something with it. And so the DAO, nobody really had an actual decentralized autonomous organization which should run on chain coded.

So I wrote the code, I wrote the white paper, we released it, we wanted to build something called the universal share network which is like a decentralized way of doing sharing economy similar to Airbnb or Uber. And yes, it was successful, meaning there was about 11.5 million Ether what

it raised. Back then it was 150, 160 million dollars. This was again, price was something like 5 to 10 dollars per ETH at the time.

Interestingly, we also got a lot of press. New York Times, actually globally, and a lot of attention towards Ethereum about what is the thing, a decentralized autonomous organization. So we got to explain it a lot and actually if you speak to people a lot of people came into Ethereum during that time because they got this thing got attention. Also it was fairly distributed. So the top 50 token holders collectively owned only 42% to see And also some of those were exchanges where a lot of smaller token holders were behind it.

So it was for DAO, for the first 1, actually a very good distribution. So we had about 23, 000 addresses. Of course you

don't know if 1 person has many addresses or behind 1 address could be an exchange of many persons. So we

do not know exactly how many participants we actually had. So you know the end of the story. We do not get into details of the hack and then the DAO wars and the white hats and then at the end the hard fork. I often like to end this story with this quote, you never know how far you can go until you've gone too far. And yes, we went too early, too much.

Another story for another day. So, but what we did learn is that tokens work very well for organizations, for governance, and for ownership. This is the main lesson from the DAO. Technically it failed, but conceptually we were on track. So what happened after the DAO?

So you see this little thing here in 2016 is $166 million. But actually, after that, we got this ICO craziness. We got billions of dollars being raised through ICOs. And a lot of them we know were scams, many, many bad ICOs out there. And I also don't want to get into those details.

But the fundraising process itself was really nice. You could just pay some ether, get some tokens. You could see on chain how many tokens

are in existence, the circulating supply. You could calculate the market cap. So the transparency and the process of fundraising was really good. Just the projects, some of

them or many of them, really bad. So this was the ICO area. And it was permissionless and was a crazy, really interesting time. So after that, so at about 2018, well, SEC coming in, you had all the regulators paying attention, what is happening here? They are always selling unregulated securities.

So and then people stopped this business model of setting up a Swiss foundation and having utility token which is somehow attached to the value of the product. So yes it's a utility token but it's scarce and you have limited supply

and if more people use the product, they need to buy it, so the price goes up. So they all had to

artificially create this nonprofit organization and somehow create a token which somehow is linked to the success of the product, which you could sell and not call it a security. Of course, this is a dangerous path for many.

So they went to pass to security tokens.

But what's security tokens, they are there, but they have not taken off. Maybe yet, maybe they will come. But there are some inherent problems in security tokens. That's for the most part, they leave everything as is and just put a token on top. So if you have to transfer the rights to dividends or some actually ownership rights, what you actually want to give to your token holders, that's the ironic thing.

There was founders who want to give them governance rights, dividends, the actual thing. But they cannot, because then they feel it's a security and they have

to follow all those laws. So this is hard part. But if you do something like this, a security token, you have usually contracts where the rights are transferred. And you have all the paperwork and Germany and if you have a GMBH, you

have the notary. And on top you get the token. But a token just makes things more complicated and doesn't really make things much better. So I like this quote. I use this a lot when I speak about the beginning of Ethereum, because a lot of the things we do in the Ethereum space can be brought down to

this thought at least. So you never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete. A lot of the things we do in this space are following this paradigm. So now think about companies and tokens again.

Let's take 1 step back. So what is a firm? A firm just unites a group of people with contracts and having a joint mission to do something. So it usually protects the owners of founders through limited liability. That's actually a gift now the government is giving us.

Limited liability is actually something very nice and help for a lot of innovation and people taking risks. So the management of shares are usually happening in contracts or public registries. That's the case in Germany for GmbH.

We now talk about governance. Some people ask me, would you do a DAO again or something like this?

And I would say actually no, not that kind

of DAO. Why? Because I do think that DAOs are really well suited for public goods, for maintenance of protocols such as ENS or many of the other things you hear here today, for community ownership. This is what DAOs are really good at. What DAOs are not really good at is for product development, finding product market fit.

Let's call the Silicon Valley style startup, which tries to find something what people like. For this period, you need a strong founder.

You need some kind of centralized governance maybe.

And for this, a traditional firm is usually more suited. But you still want to have the benefits of the tokens.

And how do we get them? So I will get to this.

So now, OK, I'm from Germany. I'm talking about GmbH. But for most other jurisdictions, it's very similar.

In the US, you have the LLC. And they act in a very similar way. But I'm talking about this 1 because that's how we start with our solution. We have to start in 1 jurisdiction. So most startups are private companies like LLCs or GMBHs.

Of course, they have a simple setup, simple governance, less rule compared to others. So it's much, much easier. But if you would now go to your lawyer and say, I want to tokenize my company, the first thing they would say is, go somewhere else, Cayman Islands, Bahamas, Singapore, whatever. Go there, Estonia. There are solutions for this, but don't do it here.

But this creates a lot of tax problems and other problems. So if you want to stay here, in my case, Germany, at least make an AG, which is similar to an ink in

the US. And then you don't need a notary. It's a bit easier. But even this is such a big hurdle financially and governance-wise and all the processes I have to follow that people don't like to do this. That's why we have about 1.15 million GmbHs and only 50, 000 HEs in Germany.

And the way people raise capital is often in using convertible notes. Well, that's just like a circumvention of the traditional way of doing it, meaning you just give

a loan, but you don't want to give

a loan, you want to

have ownership. And so there are a

lot of problems with this, and Those convertible notes, they don't dilute each other. That's not how it should be. And sometimes founders are very surprised when all those convertible loans are converting how much they have left in the company. So then you have in German, capital erhöhung. You have to

go to a notary, come up with some process. You don't want to

do this. And the other problem is you have those companies and you have a lot of stakeholders, but they have different assets So let's take the founder. He has actual shares in

the company. Then you have

an investor with a convertible loan Then you

have an employee they have something like virtual shares or ease up and house ops in Germany it's different assets. They are not secondary. You cannot trade them on the secondaries. It's just a different kind of thing. But they all have ownership, kind of, in the company.

So it's actually a really weird structure. So how do we fix this? Of course, there's a token. But how does this token work? So you could think about the public registry, the Germany Handelsregister, as something like the layer 1 of company ownership.

And yes, it's permission to write only to notary. It's slow. It's expensive. It's not digital.

And then you have layer 2, which in

our case is the public Ethereum chain, which has permission to write, it's the owner of the token, it's fast, cheap, programmable. I like to call Ether programmable money and this is now programmable equity if you want.

And you can interact with the DeFi ecosystem. You can use these tokens on Uniswap or give yourself a loan using your token as collateral, all those nice things. The question is how do we combine those tokens and those rights? And here we have worked now for a very long time, paid a lot of money for lawyers to find the solution.

And I will now quickly go through this.

So first of all, what is it? It's a participation right. If you have your token, you can get dividends, liquidation proceeds, exit participation, and information rights. You can look into the

books of the company. And very important, you have a put option

to give the token back and have

a way to receive actual shares. So you can kind of convert it. So the details, you can find the paperwork on

our website. So therefore a token is economically speaking the same as being a shareholder, especially because you have this way of converting it. So that's the rights. So it's similar to security tokens. But now comes the innovative part where we

are the first 1 doing it that way.

I explained to you a security token has this problem of having actual contracts giving 1 the rights from the seller to the buyer. You always have this contract.

So it's a chain of contracts giving those rights to the next. So let's say you trade this token on Uniswap and this token has now history of hundred different owners. What if 1 of them was actually not authorized to do this, or his eight-year-old daughter signed this transaction, or for whatever reason this contract is invalid? Then you have the biggest problem ever, Because

the token continues to trade, but the rights over someone else. So if this token holder tries to exercise his rights, then the other guy comes and says, I want

to exercise my rights. And yes, my token is gone, but the rights are with me because this was invalid. Because the person who did it was not authorized to. And then you have a big legal mess. So the question is, how can you avoid any contract, any chain of contracts, and have the actual right with a token?

The solution to this is a German word called Auslobung. The best English translation I could find is public reward. How does it work? You basically say, I don't give you those rights based on a contract,

but based on an action

you can only do when you

own the token. So to compare it, so I could say publicly, I announce that whoever solves this math problem,

I give to this 1 person 1000000 dollars. The other person doesn't need to sign. It's like a one-sided contract. But I'm legally bound. If someone solves this problem, I have to give him 1000000 dollars.

And if he comes and solves it, he can bring me to court, and I have to give him the money. So I'm basically rewarding an action. The same thing we do with the token. We reward the action of holding the token with dividends. We reward the action of giving the token back to the company with the right to receive an actual share.

But we don't give you this right based on any contract. We give you this right based on an action you did. And this action you can only do if you have a token. And with this, we don't have this chain of contracts. That's the core idea.

This is why it doesn't matter how you

got the token. If you did get

it from Uniswap or if you get it

from a friend, just some transactions without any actual contract, it doesn't matter. If you have the token,

you have those rights because you can do those actions. So this is the core idea of how we combine or tie together those rights, economically speaking, like being a shareholder, to the token. And now we have access to this DeFi system. OK. So I want to go quickly, because I've only 6 minutes left, to what you can do with this token.

Because I think it becomes obvious. First of all, you have those programmable shares. You can use them in the DeFi ecosystem or the Web3 world. And you still have this GmbH, which gives you limited liability. Traditionally, a company with all the benefits you have from having this.

And if you have the token, you can do fundraising. And I call it fundraising as it's supposed to be. We have on our platform 2 different ways to fundraise. 1 is a private offer. We're actually using a smart contract with create 2 opcode, that you don't see beforehand the offer, but only when executed.

The complete deal is executed in

the constructor of the smart contract, which is just a nice thing to do this. And there

you give a particular investor a fixed offer for a fixed amount of token for a fixed amount, there's an expiration date, which he can execute to buy a token at a certain price. That's 1 usually for business angels, family and friends or some investors. We already executed this with our own company, So this works. The other 1 I think is a more interesting part This reminds me a little bit of this ICO time, which is the public offer Which I like to call continuous fundraising because why are we raising in rounds precedes? Seeds to ABCD because there's so much hassle and you don't want to do it all the time.

But what if you could just say you have an Invest Now button on your website, which everybody can push, and there you see the terms, like current company valuation or price per token, how much tokens are currently available, and if they want, they can just buy. It's a continuous public offer where the parameters can be set by the founder. If he is fundraising, he makes the tokens to

be sold high. If he

doesn't want the fundraising right now, he can just pause it. He can change the price. That's a continuous offer to the public that everybody can invest. Now everybody, of course, I get to regulation in a second. So another thing you can do is employee participation.

You can give the exact same assets to employees. We have vesting smart contracts with the cliff which you can just use as you use in other programs to incentivize your employees. They are tax optimized. I don't get into those details, but it's also available on the platform. So now with circulation,

I like this tweet from Alex.

A lot of people would do exactly this they have a company would

love just to put the equity on you swap Without going to jail. So so far what I explained to you is the civil right part of it mean the league the law How we tied it rights to the token now the other side You

would say in Germany of 6 rest or what in the US would be the SEC, in Germany, the BaFin. So there are rules for those kinds of tokens which you have to follow, and we have

to follow them as well. So Tokenized acts under a liability umbrella of Bitalo, which means they have a broker license, we have to of course fulfill all those requirements, KYC, AML check and so on. So this is

the 1 part. The other thing is if you do an offer, now I'm speaking only of Germany and it's similar in other countries, you usually have to make

a prospectus, which is very expensive and takes

a lot of time. But there are some exceptions. And we, of course, make use of those exceptions, 1 of them being if you make an offer for only up to 149 investors, in our case, the private offer, that's OK. You don't need to have a prospect. So that's 1 thing you can do on our platform of create 149 links which you can send to people to invest.

The other 1 if you want to raise up to 5 or 8000000 and then you need something called the Wertpapier-Informationsblatt which is also not too hard to get takes about 3 to 4 weeks cost you about 3 to 5000 euro. It's doable. With this, because we

do have this poker license under the

Haftungsdach, or liability umbrella, we can help you basically do this public crowdfunding. Everybody can invest, We check if they are allowed to invest and if yes they can do. And most of them actually can. So with this we have created a solution within the legal framework we are living in, which gives you a very similar experience to what we have back then with the DAO or ICOs and others. But giving you something which is not just utility somehow tied to a product but actually Dividends actually right to do to convert or a pathway to convert to shares all of those things So that's what we have built So our mission is actually to enable everyone to become a co-owner of a company.

So it becomes as easy to become a member of a DAO or some token-based project. You can become a member of a GMPH or some limited liability company. And We want to work towards all jurisdictions. We're just starting in Germany because that's where we

are based. And our homework we have

to do is now go through all the other jurisdictions, all the other countries, we start with Europe, to build exactly the same solution and adopt our legal templates we have on our platform to allow founders to do exactly this. Fundraising is supposed to be incentivization of employees, customers, and whoever, like you do in the Web3 world. So that's our mission and

I hope you join us, helping us, using it, giving us feedback, And we hope we have a Dao-like world also in the traditional world. So thank you very much. Thanks. We have a bit of time

for questions. So if you have some questions, go ahead. OK, I have 1 minute left here. So 1 minute left here, so this gives 1 minute for questions. Yeah, go ahead.

Recently, Tokeney and other tokenized providers were putting out on LinkedIn that Free tradable securities as ERC 20 is bad for the ecosystem. What's your comment to that? So it's a complicated question. Now. First of all to all the stuff I said here I'm

not a lawyer lawyer disclosure have your own lawyer and so on

You have to separate between you can trade with your friend, just doing a private deal, and a public offer. A public offer, this is the more complicated part. And if you, for example, I said you can trade them on Uniswap. Yes, this is technically true. But if you go on the Uniswap user interface, they would not list any securities there because they are not a broker.

But if I'm building a user interface, what we intend to do on our side, using Uniswap contracts, following the laws of a broker, we can use this. So this just is a question of user interface and the requirements you have for letting the general public invest in companies. But if you do private deals, it's a complete different thing than letting the general public on it. And yes, it is unfortunately not that easy, but it's also not impossible. Sometimes people think it's absolutely

not doable. You can, yes, you have

to do KYC, yes, you have

to do AML, you have to do those checks, that's the law, but after that, we can let you invest. But I don't think it hurts to have them as ESC20s.

So unfortunately my time is up, but you can contact me on Tokenize's website, there's

some contact forms, just christoph at tokenize. You can reach me.