Gooood morning, Rainmakers! ☀️

Today, I am elated to welcome once again Peter Gaffney as a guest writer.

Peter is our Head of Institutional at STM and Head of Research at our sister company, Security Token Advisors.

For the last 18 months, he has embarked on a journey to tokenize every single industry in the world (figuratively) and break down the value adds for those that would be interested in doing so.

The series is called 'Tokenize This' where you can find about 75 examples of different products or industries being tokenized and I thought I'd share one of my favorites this week.

Without further ado, it's time to…

Get liquid & learn about the benefits of 'Tokenizing Private Plane Memberships' 💧

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✈️  Tokenized Private Plane Memberships

Yachts. Private Jets (“PJs”). Supercars. Rare Collectibles. Mountain homes. Beach homes. (Many more types of homes).

These are all luxurious items or categories that many, many people dream about, and that some directly strive for. There is certainly a high barrier to entry when it comes to accessing these — the wealth. And since we know security tokens can be designed to fractionalize ownership and reduce minimum buy-in fees — as Security Token Market has shown enabling retail investors to invest in the firm’s private fundraise via tokenized crowdfund — let’s take an opportunity to explore efficiencies that can be captured through the combination of private plane memberships and security tokens.

“Kickin my feet up, left the PJs on a PJ” isn’t reserved for just Don Toliver. Take a look at what the technology we’re building can do to open this line up to just about anybody.

Value Adds:

Private Plane Owner and Manager (Token Issuer)

• Gains the ability to fractionalize ownership of an aircraft and reach a wider investor base

• Can form a schedule and protocol for plane use that manages itself via token schedule (more on this later in article)

• Security token functionality enables early and partial liquidity for current investors and future investors, which is a STRONG differentiating factor relative to other aircraft investments

Private Plane Member (Token Holder)

• Receives alternative access to private flights

• Security token investment can double as a pure investment instrument and a utility token for access to the plane and surrounding perks

• Fluid nature of tokens enables tokenholders to trade with others (or with each other) which could affect the usage schedule as needed

I’ve mentioned it a couple times — What is the usage schedule? If you recall Tokenize This Week 16 ~ Miami Tech Week Edition: Tokenized Yachts, then you may have an idea. If not, the concept is that the blend of fractionalized ownership and utility of becoming a member to these private flights via holding a token can create a protocol/process by which members may actually use these flights.

It simply would not be feasible to allow every single token holder to fly whenever they wanted given the sheer demand that would overflow the flight capacity and crew. But rather, we can use the digitized cap table (which is one of my FAVORITE features of tokenization — the table of ownership is purely digitized and auto-updating since it works in tandem with the underlying tokens whenever tokens trade hands or asset value fluctuates) to show which token holders at any given time have priority to book a flight.

If the highest ranking token holder passes on a flight opportunity, then it goes to the second highest, and to the third highest, and so on and so forth. Additionally, as members DO make use of their booking abilities, they will be reset towards the end of the priority line in order to avoid having the same members ranked highest in perpetuity.

For those familiar with Fantasy Football, think of this as the “Waiver Wire.” In certain settings, you can either bid on a free agent, or you play by Waiver Priority and every time YOU win a waiver opportunity (i.e. you successfully pick a player up), you shift back to the bottom of the priority list.

Consider a matrix of 10 token holders called “Members.” Member 1 owns 30% of tokens, Member 2 owns 20% of tokens, Member 3 owns 15% of tokens, Member 4 owns 10% of tokens, and the Members 5–10 account for the remaining 25%.

• Member 1 gets first priority for booking each quarter

• Member 1 books a trip, and gets sent to the bottom of the priority list for the next one

• Member 2 books, and gets sent to the bottom of priority list for next one, pushing Member 1 up to Spot #9

• Member 3 passes and does not book a trip at this time; Member 3 remains in TOP priority for the next trip

• Member 4 books a flight at this time and moves down to the bottom priority slot; Member 1 moves up to Spot #8 and Member 2 to Spot #9

• And so on and so forth

What’s really cool about this is the near self-governing mechanism that determines these flights, and nobody is excluded from the opportunity to book so long as they are indeed token holders. If you were to continue the above bullet-pointed scenarios, you’d find that Member 3 retains priority #1 for each flight until that member decides to book. If Member 3 keeps passing on flights, no problem. There is never a bottleneck as the priority just shifts to the next member.

In theory, if all members pass on flights except for Member #1, that member will be able to book at every chance he/she gets, even at the bottom of the priority list.

Additionally, given that the number of seats on each plane varies from a mere 4 to 20+, the priority list will adjust accordingly to the flight size to ensure maximum usage (i.e. Member 1 books 4 seats, Member 2 books 3 seats, Member 4 books 4 seats,…, until the flight is filled).

For avid Tokenize This and security token enthusiasts, you already know there’s an investment component associated with all of this. As demand fluctuates for these memberships, as aircraft change in value, and as the ownership company expands revenue sources, token holders may see their investments appreciate. There could even be unique depreciation benefits associated with the underlying aircraft that token holders can write-off or use in similar fashion (although don’t quote me on this).

The official Wheels Up structure. (Source)

Where did the inspiration for this week’s edition come from?

None other than Wheels Up — a company that’s been pioneering the private travel industry with its unique Membership + Discounted Booking Fee structure. With the motto “Flying Private is now Public,” (reminiscent of security tokens’ “go public while staying private”) they’ve hit the nail on the head and I truly believe they’ve captured a niche area in the market — people who fly often enough to want to enjoy further comfort, but who are expense-conscious enough to not charter numerous private flights as an individual.

What’s really cool about Wheels Up is that they not only provide the service for passengers, but they’re actively looking for aircraft owners and managers to expand their lines of business. And I believe stepping into the tokenization realm would be a fantastic complement to incentivize these prospective owners, managers, and partners.

Pricing samples. Could all be facilitated with security tokens. (Source)

Disclaimer: This is not financial or investment advice and should not be interpreted as such. Please do your own research on investments and financial decisions before partaking in any ideas or ventures depicted in this publication.

If you enjoyed this be sure to follow Peter on Twitter. He just published an eye-opening report that breaks down every institution's involvement in tokenization!

Everything in this report is for informational and entertainment purposes only. Nothing in this report should be taken as financial advice or as an inducement to purchase or sell any security. Nothing in this market report should be used as legal advice. Always do your own research before making any decisions regarding financial transactions of securities.

Disclosures:

• No money or other consideration is being solicited, and if sent in response, will not be accepted;

 • No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is filed and only through the platform of an intermediary (funding portal or broker-dealer); and 

• A person’s indication of interest includes no obligation or commitment of any kind.