Decoding SAFT agreements: a roadmap to understanding web3 investment contracts

SAFT (Simple Agreement for Future Tokens) is an agreement used in the realm of web3 projects to attract investments before token issuance. SAFT agreements represent investment contracts between investors and the project team, where investors fund project development in exchange for the promise to receive tokens in the future.

SAFT agreements have become an integral part of the over-the-counter (OTC) market, replacing previous forward contracts, which were essentially illegitimate and did not provide investors with the necessary rights and guarantees.

According to the MarsBase report, the most popular forms of transactions continue to be SAFT and SAFE, with SAFT constituting more than half of all agreements.

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Let’s take a closer look at what SAFT agreements are and how they work.

How SAFT agreements work

SAFT agreements are investment documents that offer investors the opportunity to invest in a project and receive tokens upon their issuance. These agreements involve the pre-purchase of future tokens at a discounted price. Investors contribute funds to the project in its early stages in exchange for tokens to be issued upon completion of development and token issuance.

Key principles of SAFT agreements:

• Pre-funding: Investors provide funding for project development at an early stage.
• Token commitments: The project team commits to issuing tokens to investors upon completion of development and token issuance.
• Agreement terms: SAFT agreements contain investment terms, token issuance rules, and other agreed-upon commitments.

Advantages of SAFT agreements:

• Early investment attraction: SAFT agreements allow projects to attract financing in the early stages of development when other funding sources may be unavailable.
• Investor guarantees: investors receive guarantees of receiving tokens upon project completion and token issuance.
• Risk protection: SAFT agreements can include various conditions and guarantees to mitigate risks for both parties.

What sets apart a token warrant from SAFT?

A warrant serves as an investment tool granting the buyer the right, though not the requirement, to buy an underlying asset from the issuer at a predetermined price and date. Specifically, a token warrant offers this option for purchasing cryptocurrency on a specified date and at a particular price, without any obligation to do so.

SAFT agreements are an important tool for attracting early investments in web3 projects. They provide investors with commitments regarding future token provision and help projects obtain necessary funding in their early stages of development. However, it’s essential to remember the risks and peculiarities associated with such agreements.

Our team is always ready to assist and advise our clients and partners on the conclusion and signing of SAFT agreements. And you can always find investment opportunities on our platform.