Liquifi

Avoid needless compliance/legal headaches by clearly setting expectations for off-ramping tokens. Here's how (3 steps) 👇 1️⃣ Set clear insider trading rules Always be clear with your employees/investors/stakeholders here. Failure to do so can significantly erode trust in your team/project. 2️⃣ Communicate selling windows Clearly communicate when your stakeholders will be allowed to sell (and when they won't). Communicate this information well ahead of predetermined selling windows. 3️⃣ Establish a detailed, documented process for selling insider tokens Implementing something similar to a Rule 10b5-1 trading plan (often referred to as a 10b5-1 plan) is a great way to establish rules and processes that protect against insider trading violations (more details on this in the comments). Additionally, consult your legal counsel/tax firm about working with a market maker or an over-the-counter (OTC) trading desk. Executing the bulk sale of tokens (especially during large unlock events) often requires coordination with one of these two entities. More on OTCs... In essence, they act like matchmakers between buyers + sellers, allowing them to finalize a price for a high-volume txn. Importantly, they do so without revealing the details of the trade to public. 2 types of OTC desks exist: (1) Principal desks — use their funds to fulfill the buyer's order at an agreed price (they take on the default risk themselves). (2) Agency desks — broker deals on the buyer's behalf, without using their funds. They charge a fee. Why they matter: OTC desks play the role of enabling early project adopters, whales, or institutions the option to buy/sell large amounts of a token without impacting the market price. Working with OTCs can be a great way to manage the visibility/privacy of large sales txns, in order to reduce impact on public liquidity (ex: DEX liquidity pools). As always, reach out with any questions on how to manage the off-ramping process — our team would love to help build your program with our Custody & OTC partners.

3 strategic considerations for choosing the right token custody partner: 1️⃣ Understand the different types of providers Common types of custody providers include: + Multi-signature wallets (ex: Gnosis Safe, Squads) + Multi-party computation (MPC) (ex: Fireblocks, Copper) + Qualified custodian (ex: Anchorage, Coinbase Prime, BitGo) Note that there are MANY potential partners/vendors in the market. DYOR, compare options, and do the upfront work to find the partner that best meets your projects needs + goals. 2️⃣ Adhere to rules + regs around RIAs (registered investment advisors) The type of custody partner you choose will — in large part — be determined by your cap table makeup. Certain funds and investors fall under the category of registered investment advisors (RIAs). If you have RIAs on your cap table, you'll be required to use a qualified custodian to both hold and manage their tokens. Projects without RIA investors aren't held to this specification. 3️⃣ Ensure your internal distribution system integrates with your custody provider Whichever provider you work with, always triple-check that your token distribution system *actually* integrates with your chosen custody provider. Full deep dive on what to consider as you prepare for launch in the comments 👇

The best projects differentiate themselves in the days post-launch. 6 steps to win the days/weeks after launch: 1 — Proactively plan for your employees' token taxes Help your employees plan for taxes to avoid legal & financial issues. The timing of tax calculations depends on: + Token agreement type (RTUs, RTAs, Token Options) + Jurisdiction (US, UK, Canada, Switzerland, etc.) Understand specific tax rules for all your employees' jurisdictions. (Ex: Germany has a 1-year holding period for personal capital gains). Full deep dive into tax withholding for tokens on our website (link in the comments) 👉 2 — Plan for off-ramp Ways to set clear expectations for your team: + Establish clear insider trading rules + Communicate selling windows + Process for selling insider tokens + Consider a Rule 10b5-1 trading plan to protect against insider trading violations + Coordinate with market makers/OTC desks for bulk token sales + Manage visibility & privacy of large sales to reduce impact on public liquidity 3 — Prepare for your first cliff / unlock Some things to keep in mind as you approach your first cliff / unlock: + Engage market makers/OTC sales for bulk token sales + Train employees on... a) Receiving tokens b) Using wallets c) Recording transactions for taxes d) Holding/using tokens responsibly 4 — Handle staking and other token utility functions Consider adding staking or governance voting to incentivize long-term token holding. Also, prepare for your initial token distribution with the following checks: ✔️ Payroll integration checks (Liquifi integrates with Remote, Rippling, Anchorage, SAFE, Fireblocks, etc.) ✔️ Custody integration checks ✔️ Tax withholding checks If your token has additional functionalities, like staking or governance, consider training your employees and investors on engaging in these activities. A great Loom tutorial or Lunch & Learn for your team goes a long way! 5 — Plan for ongoing employee RTU programs + Structure RTU programs based on incentives, performance, or both + Explore how RTU programs affect hiring plans + Decide if RTUs are part of overall compensation, OR tied to performance reviews/refresher grants + For a deep dive here, refer to "A Comprehensive Guide to Token Compensation" on Liquifi's website (linked in the comments) 6 — Plan for ongoing domestic and international hires ALWAYS stay aware of hiring restrictions & rules in different regions (US, Europe, Asia) Some countries have specific requirements around: + Local hiring entity + Limitations on token program duration + Ex: Canada may require a local entity & limit programs to 3 years + Ex: China & India may not allow token programs or impose high taxes Also, remember that: + Your contracting entity may affect which jurisdiction's rules apply + You must meet minimum wage requirements, even with token compensation Link to our full Post Launch deep dive below, in the comments!

Successfully launching your token requires flawless execution in the days leading up to launch. 8 tactical considerations to remember before launch: 1️⃣ Handle token tax planning for your employees Token tax treatment and calculation will vary on 2 main vectors: 1. The specific type of token agreements you issue 2. The jurisdiction/country in which you operate Examples of agreements include: RTUs, Restricted Tokens, Token Options, and others. Common jurisdictions that you might need to navigate include: US, UK, Canada, Switzerland, and others. 2️⃣ Understand strategies for domestic AND international hiring Consider regulations & tax implications when hiring domestically vs. internationally. Some countries restrict crypto payments or have unique tax considerations. Also, depending on your project's needs determine whether you need FTEs or contractors. Always stay current on tax withholding rules & timing of taxable income. 3️⃣ Select the right custody partner This is ESSENTIAL for ensuring your token security prior to launch. Some options (non-exhaustive) 👇 1. Multi-signature wallets — Gnosis Safe, Squads 2. MPC — Fireblocks, Copper 3. Qualified Custodian — Anchorage, Coinbase Prime, BitGo Important: Remember to ensure that your internal distribution system (or external distribution system) integrates seamlessly with your chosen custody provider. 4️⃣ Prepare for token liquidity Based on your long-term goals, decide between: - CEX (centralized exchange) - DEX (decentralized exchange) - Launchpad Consider engaging market makers to handle early volatility. Some options include: Gradient, Amber, Caladan, Wintermute, Jump, GSR, CLS, Skynet, Keyrock, Aquanow Understand the fee structure of each ☝️ — flat-rate, subscription, percentage, or based on call options. 5️⃣ Prepare for token distributions Gather wallet addresses, test transactions, & sign legal agreements. Set up necessary tools, including: - Payroll provider for taxable income & withholdings - Multi-sig wallets or custody accounts - Employer of Record (EOR) for international workers - Vesting & lockup mechanisms - Airdrop or token distribution solution - Crypto accounting tools Track employee tax obligations. Finalize all eligibility criteria, KYC/KYB, 83(b) elections, & CEX listing details (if applicable). 6️⃣ Choose the Right Payroll/PEO/EOR Partner The right partner will have: - Experience in crypto + token compensation across jurisdictions - Ability to calculate taxable amounts from token FMV & support real-time pricing for wage taxes - Ability to integrate with your distribution tech & knowledge of country-specific nuances. 7️⃣ Final Airdrop Preparations - Finalize eligibility criteria - Gather wallet addresses and conduct KYC/KYB checks - Consider geofencing requirements - Decide between token claims OR airdrops - Plan for custom parameters, redistributions, & vested airdrops Continued in the comments!

Excited that Liquifi reached #7 on NfinityLabs's list of 10 crypto dApps with the highest users over the past 30 days ⤵️ The past few months have pushed our team to execute *very* quickly on some of the largest recent crypto airdrops. Huge shoutout to some amazing partners, including Ethena Labs, Renzo Protocol, and Mode Network 🫡 More case studies on recent token launch work will drop this week — for now, check out our new, 3-part Token Launch Guide. Links below ⤵️

Excited to share how we helped Renzo Protocol execute their airdrop campaign — and distribute $275M to +100k users 🚀 Here's what happened: The Challenge 👇 Renzo needed a partner to guide them through the token launch process—someone with the expertise to handle complexities like custom smart contracts and various wallet types. They also needed a partner with the ability and experience to spin up a complex airdrop campaign based on a dynamic Points program they'd run in prior months. Thus, Renzo's leadership was looking for a partner who could: 1️⃣ Ship on a tight timeline 2️⃣ Securely handle a massive amount of funds 3️⃣ Operate with scale, for +100k claimants 4️⃣ Handle a complex distribution process, with multiple claim variables Kratik Lodha, one of Renzo's founders, emphasized their team's main concern: "We needed a simple user experience that could securely handle the volume of users claiming $REZ." The Solution 👇 Liquifi's platform ensured that all Renzo stakeholders could easily claim the right token amount, within the appropriate eligibility parameters dictated by their Points program. Specifically, we spun up the following: + Built a dedicated $REZ claims page that enabled a seamless, intuitive claim experience. + Deployed customized airdrop contracts that handled Renzo's scale, supporting multiple wallet types and claiming methods. + Enabled geofencing for specific regions to ensure compliance across global distributions. + Facilitated one-time claims for the majority of users, alongside vesting for whales. Per Kratik: "The Liquifi experience was as smooth as it gets, allowing our team to focus on other TGE activities." The Results 👇 After launching their token with Liquifi: + Renzo stakeholders claimed over $275M in tokens + Renzo's airdrop encompassed ~100k total transactions After the seamless airdrop experience, Kratik explained, "Renzo plans to continue to work with Liquifi for future token distribution events." Linking the full case study below...

As you gear up for token launch, DO NOT forget 2 vital tax considerations: 1) Strategically handle the 83(b) Election We covered this extensively in our recent "How to Launch a Token" series — and in a stand-alone Liquifi blog — but the gist is this: ➡️ The 83(b) election is a tax provision that significantly impacts US-based employers and employees. ➡️ As an employer, you MUST understand the nuances of this election to optimize your employees’ tax obligations and help them (and you!) avoid unwanted penalties. ➡️ Executed correctly, the 83(b) election can offer a significant financial gain for your employees, so make SURE you work with your legal counsel to come up with a strategy for handling this event. Linking our full deep dive on the 83(b) election below — tons of practical insights packed in there. 2) Get a valuation for your tokens Redwood Valuation Partners and Teknos Associates are 2 examples of firms who can help you handle the valuation of your tokens *prior to launch.* Why does this matter? 👇 ➡️ You'll likely need token valuations in case you grant your employees or stakeholders some form of deferred compensation—either in the form of token grants or related grants (SAFTs, etc.) ➡️ If you do the above, the IRS WILL require there to be an established fair market value *as of the grant date* ➡️ Many quality firms simply aren't equipped to perform these valuations, given 1) a lack of deep industry knowledge and understanding, and 2) a lack of experience performing past token-specific valuations. Do your best to avoid unwanted legal/compliance hang-ups by only working with a token valuation partner who *really* understands the nuances of the crypto space, especially things like: • The nuanced legal, technical relationships between a project's 1) US-based companies and 2) its foundations/related entities. • The unique market position that token occupy (and what that means for token taxes). • The various validation methodologies / technicalities behind transactions. Link to more deep-dive resources below 👇

As you gear up for token launch, DO NOT forget 2 vital tax considerations: 1) Strategically handle the 83(b) Election We covered this extensively in our recent "How to Launch a Token" series — and in a stand-alone Liquifi blog — but the gist is this: ➡️ The 83(b) election is a tax provision that significantly impacts US-based employers and employees. ➡️ As an employer, you MUST understand the nuances of this election to optimize your employees’ tax obligations and help them (and you!) avoid unwanted penalties. ➡️ Executed correctly, the 83(b) election can offer a significant financial gain for your employees, so make SURE you work with your legal counsel to come up with a strategy for handling this event. Linking our full deep dive on the 83(b) election below — tons of practical insights packed in there. 2) Get a valuation for your tokens Redwood Valuation Partners and Teknos Associates are 2 examples of firms who can help you handle the valuation of your tokens *prior to launch.* Why does this matter? 👇 ➡️ You'll likely need token valuations in case you grant your employees or stakeholders some form of deferred compensation—either in the form of token grants or related grants (SAFTs, etc.) ➡️ If you do the above, the IRS WILL require there to be an established fair market value *as of the grant date* ➡️ Many quality firms simply aren't equipped to perform these valuations, given 1) a lack of deep industry knowledge and understanding, and 2) a lack of experience performing past token-specific valuations. Do your best to avoid unwanted legal/compliance hang-ups by only working with a token valuation partner who *really* understands the nuances of the crypto space, especially things like: • The nuanced legal, technical relationships between a project's 1) US-based companies and 2) its foundations/related entities. • The unique market position that token occupy (and what that means for token taxes). • The various validation methodologies / technicalities behind transactions. Link to more deep-dive resources below 👇