VDP-140 - Tokenization of the ArtanBio IP-NFT

TLDR; VitaDAO will tokenize the ArtanBIO IP-NFT with a goal of raising $300,000 for research advancement. In exchange, the community will be granted voting power to govern the IP, and participate in R&D decision-making and capital allocation

Summary

This proposal aims to assess community interest in tokenizing the “Mutation-Specific Codon Suppression for Aging and Longevity” IP-NFT, which provides funding to ArtanBio - one of VitaDAO’s two spinout companies of 2023.

Background

As part of VitaDAO’s mission to help build communities around promising longevity research and therapeutics, the VitaDAO community is being offered an opportunity to further support the work of ArtanBio through participation in the crowdsale of IP Tokens raising $300,000 USD in support of the project.

This is the second IP Token offering, after the Korolchuk Lab, for VitaDAO and represents one of the many interesting scenarios for IP tokenization - in this case, the offering supports research through an existing corporate entity, as compared to an academic project, for which further funding is required to advance the research.

Artan Bio has proposed a novel approach to address genetic and age-related diseases caused by nonsense mutations. These mutations lead to premature protein translation stops, resulting in incomplete and nonfunctional proteins. The solution involves an engineered suppressor system that specifically recognizes these codons and restores normal protein translation. This technology, delivered through clinically validated modalities, shows promising preliminary results and offers various clinical opportunities.

VitaDAO’s initial support for Artan Bio, via a Sponsored Research Agreement (SRA), has been to fund the design and validation of their engineered suppressor system (VDP-103) in cells with targetable mutations to confirm validity of the approach.

Artan Bio seeks to continue development of the engineered suppressor system beyond the initial project with VitaDAO to further the IP development, and further validate the system in animal models to support preclinical translation and establish a development candidate for use in clinical trials.

Specification

In June 2023, the EU brought into force Markets in Crypto-assets (MiCA) regulation (EU) 2023/1114 and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937.

Effective June 2024, all crypto-assets and crypto projects must be compliant with these regulations.

From July through September 2023, the Coordination Working Group has been assessing the implications around issuing IPTs within the framework of MiCA in anticipation of its implementation in June 2024, and the further development of the IP-NFT and IPT technology stacks and products by Molecule AG.

To that end, the issuance of IPTs for ArtanBio will be conducted in compliance with MiCA Title II: Crypto-assets other than Asset-Referenced Tokens or E-money Tokens. .

The draft Whitepaper for the IPT crowdsale, can be found here.

Per the Whitepaper above, the issue of IP Tokens (5 000 000 VITARNA tokens to be minted) contemplated in this proposal will result in 20% of the IP Tokens (1 000 000 VITARNA tokens) being issued to up to 499 current VitaDAO tokenholders, and distributing the remaining 80% of the IP Tokens according to the proportions approved in VDP-103 resulting in a distribution as shown below.

Implementation

Upon approval of this proposal, the Coordination Working Group will be empowered to mint IPTs for the ArtanBio IP-NFT using the Molecule Marketplace and implement the offering in accordance with the Whitepaper and the required legal review and regulatory requirements.

Budget

The temporary use of 21,000 USDC as part of preparing for the IPT crowdsale. This will be reimbursed to VitaDAO from the proceeds of the crowdsale between 90-120 days after the close of the offering.

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How much flexibility is in the whitepaper? Can any of these ideas be modified by governance and remain compliant with the regulations?

What is the rationale for the 499 member cap or fixed price, especially with the bullish sentiment in crypto? With a 1 year vest, it seems like this will leave $$ on the table. Why not let as many $VITA holders dump as much as they want in, so long as they stake the $Vita?

If vVITA-RNA can be redeemed for VITA-RNA in 1 year, does that mean individuals can create a secondary market for vVITA-RNA? If the team is also being compensated in vVITA-RNA, this gives them early liquidity, too.

5 Likes

The allocation for VitaDAO’s genesis sale is 20%, with no allocation for the liquidity pool, unlike VITA-FAST which allocated 10% to its pool.

Additionally, it’s unclear whether US citizens can participate in the sale. Given the complex regulatory landscape in the US, how VitaDAO addresses this issue is crucial for potential US participants.

2 Likes

@bowtiedshrike great questions - as always !

It really depends on what specifically you want to change, so there is no one-size-fits-all answer. If proposed governance by tokenholders make a material change in what the whitepaper says, the whitepaper will have to be reissued with those changes, and a notice of the change will have to be available publicly (i.e. not just to current tokenholders), according to the regulations. Some things may not be relevant and require no adjustments.

We are straddling both EU and Swiss law with the IPT issue - we are of the understanding that Swiss legal requirements are that the offer done through the Molecule Marketplace cannot exceed 499 persons, and I believe a maximum raise of 8m CHF (not relevant for this raise). @Jesse may be able to provide some more texture on the limits under Swiss law. MiCA regulations do not put a limit on the number of token holders in our case, but there are additional regulatory requirements if the amount of funds raised within a 12 months period exceed 1m Euro.

The amount of funds we’re raising are to be used to fund the research for the next steps / part of the year - this is still a very early stage project, so the thinking has been we don’t want to over raise until we get more data in and understand what further development will be needed. We could do as you suggest and let price discovery occur as part of the crowdsale, but the discussions have been that it is more interesting for the tokenholder for price discovery to be established through liquidity pools, and a result of that is that funds are generated as part of the LP fees which can be used by the project.

Your question on vVITARNA is a interesting one - @benji maybe able to tell you if what you’re suggesting is possible theoretically as the vesting contract is owned by Molecule, and I am not sure if they are able to support that use case currently, or if it would have implications for them under Swiss Law as it would in fact be the issuance of another token for which VitaDAO is not the issuer.

My belief is that allowing the vVITARNA to operate on a secondary market would defeat the whole point of vesting. vVITARNA is intended to allow for voting power to be delegated without access to secondary market liquidity. It stabilizes a base of governance contributors who are committed to the project. Also, to the discussion about about price discovery - ensuring a stable pricing of entry for the earliest contributors and their commitment to a 1 year vest means that price discovery will reward their contributions.

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@gustavian the VITARNA crowdsale allocates 10% for liquidity pool, along with selling 20% to VITA holders. VITA-FAST was 10% sold in the sale, but basically used all of that for the liquidity pool.

Per the whitepaper, we’ve addressed the issue of US participation by simply not offering the tokens to US citizens in the crowdsale - see the whitepaper, Part I.1, Para 10(a). Sadly, until the US regulatory regime changes, we can’t see a path to offering tokens to US citizens in our crowdsales.

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@bowtiedshrike

Law aside and speaking exclusively technically, the vVITA-RNA, if the proposal here is to use the same contracts that were used for VITA-FAST, would not allow for secondary markets / liquidity to vVITA-RNA holders. The v (vested) may actually be a misnomer. The tokens are actually locked (non-transferrable) for the time period. It’s basically a vesting contract that all vests after the cliff (1 year). Hope that makes sense.

3 Likes

Thanks for the information. With some of these legal proposals, if there’s a legal reason, it’s better to leave it alone. For example, the 499 makes a lot more sense. But if there aren’t regulatory limits until you hit 1m Euro, why not push to that limit?

I would propose the following two changes: 1) change the cap to $1m euro, and allow any extra funds beyond $300k to be split 50-50 between PI lab and the Vita-RNA governance. 2) shorten the vesting period for the genesis auction to 3-6 months, leave the other groups at 1 year lock.

If the goal is “price discovery for tokenholders”, why the 1 year vest for the genesis sale? 1 year in a bull market is a big risk. Even 3 months is a long time in crypto. I’m not convinced the LP fees are worth the loss to price discovery. For example, I don’t think the LP fees for VITA-FAST reached $570k yet. This si why I think allowing for price discovery during the auction would benefit the research the most. I also note Vita-FAST is around $13 now, so even if the initial round had raised the full $600k and sent that money to the lab, genesis token holders would still be sitting on a 3-4x.

Most good PIs can always make use of extra money, either to push the technology further, or to do pilot studies on the next round of tech. If nothing else, having some pad money available helps reduce new raises necessitated by setbacks or other problems, and gives the IPT holders some flexibility in funding new ideas. Plus it would incentivize the IPTs-- the chance that PIs can get extra money out of a raise would be tempting.

@benji If I understand correctly, these are ‘vote-locked’ tokens similar to EPS and Curve? People will not receive a receipt in their wallet that can be redeemed for the tokens? That makes sense to me for locking the tokens.

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I believe Curve does some sort of APY distribution the longer you lock, so ours is a bit different. Best way to explain is probably just to point you to the code, written by the one and only @stadolf and audited by Pashov Audit Group. The account (VitaDAO) that locks the tokens (locked VITA-RNA) sets an expiry date for the tokens (1 year from sale), and then puts them into a contract where they can be claimed. The recipient can claim the lVITA-RNA tokens (and see them in their wallet), but they aren’t transferrable until the expiry date, then lVITA-RNA can be swapped for VITA-RNA tokens, which will be more canonical ERC-20s.

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Vita-RNA is an upgradable contract? or just the lVita-RNA?

I wasn’t even thinking about the interest for locking with Curve.

2 Likes

Here’s direct answer from @stadolf. But in short, no :slight_smile:

The ipt contract(s) are not upgradable, no. They are immutable minimal clones of the base ipt implementation that was registered at the time when they created. In terms of risk, that implementation is updateable by the molecule dev multisig but that has no effect on already created ipts.

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