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Financial assets

Fund Tokenization

Fund units issued and redeemed against NAV, with subscription windows, share classes, fees and gates modelled explicitly.

Standards, ordered by control over a transferFour token standards as rungs, from one where anyone may hold up to one where a transfer can be refused by the contract itself.ERC-20anyone may holdERC-1155batched, still openERC-4626a vault around oneERC-3643a transfer can be refused

Definition

Fund tokenization represents units in a collective investment vehicle as transfer-restricted tokens. Units are issued and redeemed against a net asset value struck on a schedule, and the register replaces the transfer agent’s book.

What it solves

  1. Transfer agency costRegister maintenance, subscription processing and redemption handling are a material recurring cost, most of it manual.
  2. Subscription frictionPaper subscription documents and manual eligibility checks are the reason onboarding takes weeks.
  3. Share-class administrationMultiple classes with different fees and preferences are error-prone to maintain by hand.

How it works

  1. NAV is struck on a cadenceThe administrator values the portfolio and publishes a NAV per unit.
  2. Subscriptions are dealt at the next NAVMoney received before a cut-off is allocated units at the following valuation point.
  3. Redemptions are dealt in the same wayUnits are burned and the holder is paid at the applicable NAV, subject to notice and any gate.
  4. Fees accrue and are chargedManagement and performance fees are recognised as they arise.

Architecture

An offering engine holding the subscription book with per-class terms; a valuation record providing NAV with a stated methodology; a register with per-class positions; and a redemption engine applying notice periods and gates before anything is burned.

How the platform is arrangedFour stages — asset, compliance, offering and register — connected left to right, all enclosed by a single transaction boundary that rests on a double-entry ledger.AssetStructured and documentedCompliancePolicy in forceOfferingA book that is derivedRegisterHolders of recordOne transaction boundaryA movement and the entries behind it commit together, or neither doesDouble-entry ledgerEvery movement, both sides, in minor unitsBalanced at COMMIT
Four stages inside one transaction boundary, on one ledger. A register that disagrees with the cash is not a state the software can reach.

Tokenization lifecycle

  1. Fund establishedVehicle, administrator, depositary, auditor and investment manager appointed.
  2. Classes configuredFees, preferences, seniority and minimums per class.
  3. DealingSubscription and redemption cycles against NAV.
  4. ReportingNAV, holdings, performance and statements.
  5. Wind-downRealisation, final distribution and closure.

Supported token model

Permissioned fungible token, one series per share class. Units within a class are interchangeable; units across classes are not, because they carry different economics. Modelling classes as separate series keeps the difference in the register rather than in a spreadsheet.

Asset requirements

What must be true before this can responsibly be tokenized at all.

  • A regulated or exempt fund vehicle appropriate to the strategy and investor base.
  • An administrator responsible for NAV, with a documented valuation policy.
  • A depositary or custodian where the structure requires one.
  • Dealing terms: frequency, cut-off, notice, and any gate or side-pocket mechanism.

Compliance considerations

  • Marketing restrictions differ sharply by jurisdiction and are the most common source of enforcement.
  • Investor eligibility per class, encoded as policy and evaluated on every subscription and transfer.
  • AML obligations sit with the fund and its administrator; the platform records the decision and its evidence.
A compliance policy as ordered rulesRules are evaluated in sequence and the first match decides. A subject matching no rule is denied, and a fact the platform does not know never satisfies a rule.Subjectan investor's facts#1Screening hit is openreject#2Country in the blocked listreject#3Professional or institutional, verifiedallowMatched no ruledenyFirst matchdecides. A laterallow cannot undoan earlier reject.Eligibility comesfrom a rule saying so.
Rules are data, evaluated in sequence, and the first match decides. A subject matching nothing is denied — eligibility comes from a rule saying so, never from no rule objecting.

Investor workflow

  • Verify and be assessed for eligibility against the class.
  • Subscribe before the dealing cut-off and fund by reference.
  • Receive units at the next NAV.
  • Redeem on notice, subject to any gate.

Issuer workflow

  • Configure classes, fees and dealing terms.
  • Publish policy and open subscriptions.
  • Run each dealing cycle: strike NAV, allocate, issue or redeem.
  • Charge fees and report to holders.

Payments

Subscription money is held as an investor liability until it is dealt. Redemption proceeds become a payable at the moment units are burned. Neither is ever recognised as fund revenue, because it is not.

The payment railMoney is matched to a subscription by its reference and no other attribute, then screened and settled. Provider adapters for card and crypto rails are not built, and are drawn as an absent component.ReferencechecksummedFunds arrivebank or custodyReconcilereference or nothingScreenAMLSettlesecond authoriserSuspense (2900)unidentified, and visibleNo reference matchProvider adaptersCard, local rail, stablecoinNot built — the registry ships empty
A reference is the only thing that matches money to a payment. Everything else is an exception for a person, and unidentified credits post to suspense where they stay visible.

Lifecycle servicing

Fund servicing is a cycle rather than an event: value, deal, report, repeat. An oversubscribed close is accepted and scaled back deterministically rather than turned away, so the manager keeps the information about demand.

How a distribution is splitA funded pool is divided among holders of record as at the record date using largest-remainder allocation, then withholding is deducted from each holder's gross rather than from the pool.Funded poolone exact amountRegister as atthe record dateRebuilt from confirmedmovements, not today’sbalancesNet to the holderWithheld, from that holder’s grossThe lines sum to exactly what was fundedLargest-remainder allocation, so no minor unit is created or lost. Rounding each slice independently leaves the issuer a few units out every cycle.There is no per-jurisdiction withholding matrix in this build — one rate is entered per run.
Holders of record as at the record date, split by largest remainder so the lines sum exactly, with withholding taken from each holder’s gross rather than off the top of the pool.

Secondary transfer

Most funds restrict transfers to eligible investors with manager consent. Both constraints are expressible as policy, and the manager’s consent is an approval step rather than an email.

The transfer gateA transfer request passes through eight compliance checks. Any single failure refuses the transfer; the same gate is evaluated off-chain and on-chain.Senderholds unitscanTransfer( )Sender holds the unitsNeither party frozenLockup expiredRecipient eligible under policyJurisdiction permittedInvestor type permittedHolding limit not breachedSanctions screening clearRecipientunits move, or none doOne implementation. The Solidity module and the register evaluate the same rules.
One implementation of the gate, not two. The function the register calls is the same one that mirrors the Solidity compliance module check for check, so an off-chain gate and an on-chain gate cannot drift.

Risks

Named plainly. An instrument whose risks are only in a footnote has been mis-sold before it has been issued.

  1. Valuation riskNAV is only as good as the valuation policy, and illiquid holdings make it a judgement.
  2. Liquidity mismatchOffering monthly redemption against annually-realisable assets is the classic fund failure, and it fails all at once.
  3. Fee complexityPerformance fees with hurdles and high-water marks are easy to compute wrongly and hard to correct afterwards.
  4. Gate reputational costGates protect remaining holders and are read as distress. Both are true.

How we support it

  • Per-class terms and per-class positions on the register.
  • Oversubscription resolved by a deterministic, reproducible scale-back so an investor’s complaint can be checked rather than argued about.
  • Allocations rounded down to whole units with the residual returned, because a fraction of a unit cannot be issued and the difference is the investor’s money.

Questions

Does this replace the fund administrator?

No. The administrator still strikes NAV and owns the valuation policy. The platform replaces the register and the dealing paperwork.

Can multiple share classes have different fees?

Yes — classes carry their own price, fees, preferred return and voting rights, and positions are held per class.

How are gates handled?

As an explicit refusal at the redemption eligibility check, with the reason recorded, rather than as an unexplained delay.

Next steps

Bring an instrument you are actually considering. Structuring something real is the only way to judge whether the model fits.

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