CP172: Exploring Token-to-Equity to Maximize Long-Term CFG Value

Centrifuge Governance Proposals
,
1 
Title: Exploring Token-to-Equity to Maximize Long-Term CFG Value
authors: bhaji
uses-component: cp4
technical-proposal: yes
requires-onchain: no
impacts/modifies: cp0, cp29, cp171
status: rfc
date-proposed: 2026-08-17
date-ended:

Exploring Token-to-Equity to Maximize Long-Term CFG Value

Important Notice

This document is for discussion purposes only and does not constitute an invitation or offer to sell, solicit, or otherwise to subscribe for any securities or tokens.

Short Summary

Nine years ago Centrifuge set out to bring real-world assets onchain. Most people thought it was a niche idea at best. We built anyway, through bear markets, through regulatory uncertainty, through a period when “tokenized assets” meant almost nothing to the institutions we were trying to reach.

That’s changed. Janus Henderson, Apollo, and New York Life; the institutions that once ignored this space are now racing into it. Centrifuge is the platform they’re building with.

As Centrifuge’s institutional adoption has grown, the trade-offs of operating with a public token have become more significant, including constraints around institutional participation and governance, regulatory exposure, and the ongoing costs of maintaining public token liquidity and market infrastructure.

The question we’re putting to the community is: would equity serve CFG holders better than a public token from here?

Why Explore This Now

We have spent years operating within the token structure, investing in listings, liquidity, market infrastructure, governance, and ecosystem development. The reason to revisit the structure now is that the structural costs have become clearer as Centrifuge’s institutional opportunity has grown.

As a public token, CFG is exposed to crypto volatility and legacy tokenomics, despite Centrifuge’s strong performance across TVL, revenue and partnerships. With shifting regulatory attitudes and our own role as a registered transfer agent, there is now a credible route to enable CFG holders to become equity holders without misaligned incentives.

Core objectives

  • Accelerate institutional capital formation: Unlock the VC and strategic investor pipeline that a token structure currently blocks.

  • Grow faster: Direct resources into product, partnerships, and growth.

  • Act in a decisive market window: The next 2 years will shape leadership in tokenization. We should be structurally prepared.

What Is Being Proposed

Token-to-Equity Details

Subject to the approval of the board of directors of Centrifuge Network Foundation, Inc. (Centrifuge Network Foundation), CFG token holders would be offered the opportunity to subscribe for equity.

In order for this to happen, Centrifuge Network Foundation would need to be restructured to issue equity and re-registered as a Cayman Islands exempted company with limited liability; Centrifuge Network Foundation is currently registered in the Cayman Islands as a foundation company and does not have any shareholders.

Once re-registered, a mechanism would be designed for eligible CFG token holders to receive equity in the company. It would not be a regulated offering of securities and would be limited to token holders that satisfy certain eligibility requirements.

The subscription price for one share in Centrifuge, Inc. would be one CFG token. This process would be run through the Centrifuge platform, and there will be no explicit cost to tokenholders for converting.

The new equity shares would be “tokenized”. Each holder receives a digital token that acts as a digital record of their interest, whether direct or indirect, in the shares. Ownership of such interest itself shall continue to be held and transferred in the usual way, through the company’s register of members or, for shares held in the trust discussed below, under the relevant trust arrangements.

For example, if you own 1,000,000 CFG tokens, you will be eligible to subscribe for 1,000,000 shares which you will pay for by transferring the 1,000,000 CFG tokens, subject to meeting applicable eligibility requirements and compliance with applicable law and regulations. Token holders who receive equity will retain the same proportional ownership they have today, relative to other converters. Team, community and partners all receive the same share class in connection with the conversion.

Eligible token holders with 100,000 CFG or more will be directly entered into the register of members. For eligible token holders with fewer than 100,000 CFG, we intend to partner with CoinList to structure a dedicated trust entity holding structure. There would be no additional fees or minimum for participating through the trust entity structure.

For the avoidance of doubt, the foregoing is subject to requisite corporate action being taken by the Centrifuge Network Foundation Board, as applicable, in accordance with Centrifuge Network Foundation constitutional documents and all applicable laws.

Optionality for Non-Participating Holders

Token holders who choose not to participate in the restructure are not required to. Tokens can be sold on the open market or retained as today. Centrifuge will work to ensure continued market liquidity during the conversion period.

To provide certainty for planning, there will be a defined window for the conversion to equity. The exact parameters, including launch date, duration, eligibility requirements and conditions, will be set in a follow-on communication to interested parties if the Board approves, the governance vote passes and once legal structuring is complete.

This proposal has been developed with legal guidance from Ogier and advisory support from Galaxy Digital Labs LLC and The Tokenized Asset Coalition.

Alignment with the Centrifuge Mission

We are bringing this proposal to the community because we believe the following conditions are met, and we want the community to test that belief:

  • A higher probability of long-term success for Centrifuge and its stakeholders

  • Clear benefit for CFG holders, including early supporters

  • A single value accrual mechanism. No fragmentation, no misaligned incentives

  • The ability to execute this transition cleanly, legally, and with certainty

Centrifuge exists to create a fundamentally better financial operating system. Periodically evaluating structure is consistent with that mission.

We started building with a community of people who believed in this before the institutions did. This proposal is an attempt to honor that. The goal is to build the structure that gets us to what comes next.

Next Steps

We invite feedback for a period of 14 days via the governance forum and email to the Centrifuge team at tokenizedequity@centrifuge.io as we evaluate the best path forward for CFG holders.

We will provide details about the upcoming tokenholder vote soon.

2

I have a few questions about CP-172 that I think are important from a CFG holder perspective:

  1. Valuation: How will the valuation of Centrifuge, Inc. be determined at the time of conversion? Will there be an independent valuation, will it be based on the latest funding round, or will another methodology be used?
  2. Liquidity after conversion: Will there be a secondary market or another exit mechanism for the tokenized shares, or should holders expect them to be effectively illiquid until an event such as an IPO, acquisition or share buyback?
  3. Change from CP-171: CP-171 explicitly proposed a “single value accrual mechanism: CFG, no equity business.” What has changed since then that led to this significant shift toward equity?
  4. Eligibility: What are the expected eligibility requirements for EU retail CFG holders? For example, will accredited/professional investor status be required, what KYC requirements are expected, and will there be jurisdictional exclusions?
  5. Non-converting holders: If a significant percentage of CFG supply is converted and removed from the market, what is the long-term plan for CFG exchange liquidity and for holders who choose or are unable to convert?
  6. Timing: Is there already an indicative timeline for the tokenholder vote after the 14-day feedback period?
3

Will CFG holders be able to freely transfer and sell the shares after conversion, and if so, on which secondary market or trading venue?

4

As long-term oriented investors we support the proposal to transition to tokenized equity since we believe it supports the strategic direction better than the current structure. (For transparency: Greenfield holds CFG and intends to convert. This is our view as a long-term holder, not advice to anyone.) Centrifuge itself has been at the frontier of representing traditional / real-world assets onchain and has been able to partner with very significant players in traditional finance, bridging the old with the new world of tokenized onchain finance, leveraging decentralized finance primitives from the earliest days. Equity enables creating further alignment with traditional players, while also leveraging Centrifuge’s own product suite (the conversion itself runs on the transfer-agent stack) and showcasing how to merge the best of both worlds.

While you can cleanly represent rights to onchain cashflows in non-equity token structures, this is considerably harder once you have a business that branches out into various tangential parts of the value chain, and especially parts that are offchain. Token mechanisms attach to a specific stream, and streams get rerouted as a business changes shape. A lot of projects end up splitting the company from the token, and that is exactly where token holders are left with the narrower claim. Converting CFG into tokenized equity avoids that fragmentation and keeps a single value accrual mechanism, while only the instrument changes. With equity we hold a claim on the whole business and the value it creates as the strategic growth initiatives taken today develop, even as products and business model evolve. And, yes, an early- and growth-stage project does need significant reinvestment to reach its full potential and compound early wins.

The reason I’ve been bullish on Centrifuge is that we’re going for the much bigger opportunity of tokenizing the assets that finance the actual real economy (including the digital parts), which I expect to be orders of magnitude bigger than what we have seen so far in the previous and current era of speculative DeFi, which in my mind has been the proof-of-concept to open the floodgates for real capital to come onchain and financing being facilitated on decentralized infrastructure (which we are increasingly seeing).

I’m really excited about the team around Bhaji, what they have built and will continue to build. While I believe Centrifuge has an exceptional solution atm, I don’t know how we will need to evolve to serve the market best and increasingly capture value. With equity we know that we hold a part of that value capture, even if products and solutions adapt to changing market needs. Equal treatment of all token-holders is important obviously and as I understand will be implemented as such. Go Centrifuge!

5

“One of the stated objectives is to ‘unlock the VC and strategic investor pipeline.’ Does this mean Centrifuge already has interest from potential strategic or institutional equity investors, or is this purely about creating the possibility for future fundraising?”

1 Like
6

Hi guys,

I currently hold a significant amount of CFG and would therefore fall into the direct registration as a shareholder under the proposed structure. While I appreciate the transparency and the long-term thinking behind the proposal, I have several significant concerns that I believe are shared by other long-term holders.

1. Value Accrual Preference

My primary preference remains for CFG to stay a public token with a clear and meaningful value accrual mechanism (fee share and/or buybacks). From my perspective, the upside potential of a well-designed token with real revenue sharing is significantly higher than that of private equity, especially given the growth trajectory Centrifuge is currently on. I would much rather see the team prioritize activating strong token utility and value capture than transitioning to an equity structure.

2. Privacy and KYC Requirements

Converting into registered equity would require KYC/AML processes and would turn me into a recorded shareholder. This represents a meaningful loss of privacy compared to holding a token. For many crypto-native holders, including myself, this is a substantial drawback.

3. Liquidity and Flexibility

Equity is inherently far less liquid than a publicly traded token. The ability to enter and exit positions freely is one of the core advantages of the current structure. Moving to equity would significantly reduce that flexibility.

4. Legal and Structural Implications

Becoming a registered shareholder introduces a different set of legal and compliance considerations that do not currently apply to token holders. I am not convinced that the potential benefits of the equity structure outweigh these additional complexities and risks for existing holders.

I understand the institutional and regulatory arguments behind the proposal. However, as a long-term holder who has supported Centrifuge through different market cycles, I believe the better path is to strengthen the token’s value accrual rather than replace it.

I would appreciate any clarity the team can provide on whether alternative approaches focused on fee distribution or buybacks are still being seriously considered.

1 Like
7

If CFG holders are asked to exchange tokens for equity on a 1:1 basis, what company valuation is that ratio based on? Did you compare it against the actual market cap of the CFG token? Long-term holders deserve a fair deal — the community’s interests must be protected, not just those of the team and institutional investors.

1 Like
8

I would vote “yes” only after receiving:

  1. A complete fully diluted cap table
  2. Audited or independently reviewed financial statements
  3. Company revenue, expenses, cash and liabilities
  4. A list of all subsidiaries, intellectual property and assets being included
  5. Shareholder voting, dividend, information and liquidation rights
  6. Country-by-country eligibility, including Mexico
  7. CoinList trust documents and fees
  8. Secondary-market and transferability plans
  9. Treatment of future dilution and preferred shares
  10. Tax guidance for exchanging CFG for Cayman equity
  11. A definitive plan for CFG that does not convert
9

# CP172 — Questions Before the Vote

Thanks for bringing this as an RFC rather than a done deal. It’s a big change, and the community needs clearer information before a vote means much. Here are the key questions, grouped by topic. (Sorry there is a lot)

1. What is a share actually worth?

The proposal sets a 1 CFG = 1 share rate but does not say what a share is worth or what the company owns.

  1. Will audited financials (what the Foundation owns, owes, earns, and who owns the IP) be published before the vote? Right now we’re being asked to approve a restructuring with no balance sheet.
  2. What does the company actually receive when people convert? We pay with CFG, so the company ends up holding a pile of its own token. Does it burn those tokens or keep them? If it burns them, the company receives nothing real for the shares. If it keeps them, its main asset is its own former token. Which is it?
  3. Has anyone independently checked that 1:1 is a fair exchange between a liquid token and an illiquid private share (not just proportional among converters)?
  4. The team argues CFG is undervalued relative to revenue, fees and TVL. Will those fundamentals set the basis for the first priced equity round, and will that price be visible before or after the conversion window closes?
  5. Why is this not treated as a securities offering? The proposal says it isn’t, while describing people subscribing for shares. What’s the legal reasoning, and does it hold in every country where holders live?
  6. Crypto markets often give protocols a valuation premium based on narrative and speculative upside that exceeds traditional cash-flow multiples. Do the team and current CFG holders currently benefit from that premium? Does moving to traditional equity risk permanently removing it?

2. Where do all the tokens go?

The proposal says converters keep “the same proportional ownership they have today, relative to other converters.” The details behind that phrase matter a lot.

  1. Do locked and unvested tokens (team allocation of roughly 12% vesting through 2030, and around 10.5% locked incentives) convert 1:1 alongside circulating tokens? That would change the final ownership picture versus today’s circulating supply.
  2. What happens to the treasury? Does it convert into shares (making the company its own biggest shareholder), get retired, or move to the new entity?
  3. What if most people don’t convert (by choice or because of eligibility)? Those who do convert would own a larger slice of the company than they currently own of the token, including insiders. Is there a minimum participation threshold below which the conversion does not proceed?
  4. Can we see projected ownership splits under low, medium and high participation scenarios? This is one of the most useful pieces of information that could be published before any vote.

3. What do I actually get as a shareholder?

Everyone receives the same type of share at conversion, but the proposal does not say what rights those shares carry or what might sit above them later.

  1. Do the shares vote? Do they pay dividends? Do shareholders get regular financials?
  2. Who controls the board? CP171 already gave oversight to the Foundation board. How are directors appointed and removed once this becomes a company the community owns? Does anyone else get a say?
  3. Will future investors get better terms than converters? VCs typically receive preferred shares that get paid first (sometimes with multiples) in a sale or liquidation. If community members hold ordinary shares and preferred stock sits on top later, “1 CFG = 1 share” understates the downside. Will the team commit to a single share class, or at least to clear limits on future preferred terms?
  4. Can these shares be sold? Is there a secondary market, buyback, or tender process? Are there lock-ups or board approval requirements for transfers? For smaller holders in the CoinList trust structure, can that interest be transferred at all, and to whom?
  5. Will converting create a tax bill in many countries (treated as a sale of the token for an illiquid asset)? Has this been reviewed, and for which jurisdictions?

4. Why equity? Has the premise been tested?

The proposal claims the token structure is holding Centrifuge back. That may be true, but evidence is thin and some public facts point the other way.

  1. Coinbase made a strategic equity investment in Centrifuge in May 2026. The proposal says the Foundation has no shareholders, so which entity received that investment, and how does it relate to the Foundation and to CFG holders? If institutional equity was already possible somewhere in the structure, what exactly was blocked?
  2. Centrifuge has shown continuous growth and is already partnering with more and more major institutions, including New York Life Investment Management (their first tokenized fund, ~$807B AUM manager), Apollo, Coinbase, Janus Henderson and others. What specifically is still stopping further institutional adoption when the protocol is already working with some of the largest asset managers and platforms in the world?
  3. What’s the concrete evidence that the token cost deals or capital? Were there specific opportunities that fell through or investors who declined because of the token? Anonymised examples are fine; the claim needs more than assertion.
  4. BlackRock has engaged with Uniswap and Coinbase Ventures has invested in Aerodrome, both token-based protocols. What makes Centrifuge’s situation different?
  5. What do listings and market-making actually cost per year? The proposal cites this as a reason to change. A number would let the community weigh the cost against what is being given up.
  6. Why not pursue on-chain value accrual instead (fee switch, buybacks/burns, staking rewards, or fee distributions) the way other protocols have done within regulatory limits? Centrifuge’s own earlier fee-switch proposal failed to reach quorum, was low turnout the real issue rather than the token structure? Please share any analysis that compared these options against a full restructuring.

5. What happens to the token and the protocol?

The proposal focuses almost entirely on the company and says almost nothing about the token’s ongoing role or the protocol itself.

  1. Does CFG still have any function after the conversion window (gas, fees, staking, governance)? Do those uses continue, move, or stop?
  2. Who governs the protocol afterwards? If governance moves to shareholders, non-converters hold a token with no vote. If it stays with the token, shareholders own a company that does not control the protocol. Which is it?
  3. Will listings and market-making continue after the window closes, and for how long? Non-participants can only hold or sell if a market still exists. A concrete commitment with a date is more useful than a general assurance.
  4. Does anything change at the protocol level? Do the contracts, deRWA tokens and DeFi integrations remain open and permissionless? Institutions integrate with protocols like Morpho, Aave and Sky precisely because they are open infrastructure. If this restructuring only changes company ownership and leaves the protocol itself unchanged, please state that clearly.
  5. Centrifuge is currently viewed as a leading on-chain tokenization protocol alongside projects like Aave, Morpho and Uniswap. Does shifting to a traditional equity model risk diluting that “open protocol” identity and repositioning Centrifuge as just another centralized tokenization/FinTech company (like securitize or superstate)? Would it reduce the permissionless composability that currently makes it attractive to institutional capital?

6. Where does this end?

  1. What is the actual destination, remain private, eventually go public, or prepare the structure for acquisition? Each path has very different implications for people who convert. We’re being asked to approve step one without knowing what it leads to.
  2. If a public listing is the plan, look at the only pure-play public comparable: Securitize. It went public via the Cantor Equity Partners II SPAC at a $1.25 billion pre-money valuation, raised on the order of $400 million in the overall transaction, and listed on the NYSE under SECZ on 2 July 2026. The stock peaked near $14 and now trades around $5.25–$5.40 (near recent lows of ~$5.14), a decline of roughly 60%+, with a market capitalisation in the roughly $780–920 million range, below the original pre-money valuation even after the capital raised.

Its first public quarter showed revenue of $14.4 million (down ~5%), a widened net loss of $21.7 million, and rising costs, while tokenized AUM and transaction volumes grew strongly. Public markets are treating growth and profitability as separate questions. Centrifuge’s case for CP172 rests on similar growth momentum. What makes the path different here?

  1. If the plan is acquisition, say so. It is a legitimate strategy. What cannot be evaluated is a restructuring whose purpose remains unstated.

7. The vote and who gets to take part

  1. Publish the eligibility rules (countries, KYC, accreditation, etc.) before the vote, not after. People should not be asked to vote on a conversion without knowing whether they can participate. Anyone later found ineligible would effectively have voted to exclude themselves.
  2. Can team, Foundation and treasury tokens vote? They represent a large share of supply and the team wrote the proposal. Will the team abstain, or at least publish a separate tally excluding insider holdings? What are the exact quorum and approval thresholds?
  3. Can the comment period be extended? Fourteen days is short for a change of this scale when key information (financials, ownership projections, eligibility, share rights) is still missing.
  4. How does this square with Centrifuge’s original mission? The early idea was that anyone, anywhere could own a piece of this infrastructure. A private company with eligibility screens is a narrower version of that. It may still be the right call, but it is a trade-off that should be argued for openly rather than presented purely as an upgrade.

I’m not opposed to restructuring in principle. The institutional progress is real and the team has earned some trust. A vote only carries weight, however, if people can see what they are actually voting for. Right now the proposal asks for approval of a direction while leaving out most of the details that determine whether it is a good deal for the people being asked to approve it.

1 Like
10

If we are going to have tokenized equity on chain then what’s the point of the conversion? We want to attract liquidity to this project’s token/share. That will happen only on a stock exchange. Not on a tokenized equity platform on chain.

11

Questions before voting

I appreciate the ambition behind CP172 and understand the rationale for exploring an equity structure, especially if the current token structure is becoming a limitation for institutional adoption and long-term growth.

As a CFG holder with more than 100,000 CFG, I am potentially directly affected by this proposal. I am therefore neither in favour nor against the proposal at this stage. Before forming an opinion, I would like to understand much more clearly what this means economically for existing CFG holders.

I have several questions and concerns that I believe should be addressed before any decision is made:

1. How will the 1 CFG → 1 share conversion be valued?

The proposed 1:1 conversion sounds straightforward, but the number of shares alone does not tell us the economic value of the conversion.

What will be the valuation of Centrifuge Inc. at the moment of conversion? Will this be based on an independent valuation, the latest funding round, a market-based valuation, or another methodology?

I believe existing CFG holders should be able to calculate exactly what percentage of Centrifuge Inc. they will own and what their CFG represents economically.

2. What will the fully diluted cap table look like?

This is particularly important given the current CFG supply, future emissions and existing allocations.

Will all existing CFG convert on a 1:1 basis? What happens to CFG that is not converted? What happens to unvested tokens, treasury holdings and future token emissions?

I would like to see a fully diluted cap table both before and after the conversion, including the percentage ownership represented by each major stakeholder group.

3. What happens to CFG itself after the conversion?

This is probably my biggest concern.

If I decide not to convert my CFG, what exactly will CFG represent after the proposed transition?

Will CFG continue to have:

  • transaction utility?

  • staking utility?

  • governance rights?

  • fee-related utility?

  • potential value accrual mechanisms?

  • exchange liquidity?

Or is the long-term intention for CFG to eventually cease being the primary economic representation of the Centrifuge ecosystem?

Existing holders need clarity on this before deciding whether to convert.

4. What happens to liquidity?

Today, CFG is a liquid, publicly traded crypto asset that I can buy or sell.

If I convert it into equal amount of shares of a private company, I may be exchanging a liquid asset for a potentially illiquid one.

Will there be a secondary market for the tokenized equity? Will shareholders be able to sell their shares freely? Will there be transfer restrictions or lock-up periods?

This is a very important difference between holding CFG and holding equity.

5. What rights will the new shares provide?

Will the shares provide voting rights, information rights, dividend rights, liquidation rights and other standard shareholder protections?

Will all converted CFG holders receive the same class of shares, or will there be different share classes and preferences?

6. What happens to CFG holders who are not eligible to receive equity?

The proposal mentions eligibility requirements and a structure for holders below 100,000 CFG.

I would appreciate much more clarity regarding geographical and regulatory eligibility, particularly for retail holders in the EU.

For example, will an EU-based retail CFG holder be able to participate directly in the conversion?

7. What happens to holders who choose not to convert?

Will there be a clearly defined period during which CFG holders can decide?

Will there be sufficient liquidity and market support for CFG during and after the conversion period?

And most importantly, will non-converted CFG continue to have meaningful utility and economic value?

8. How will future value accrual work?

One of the reasons I invested in CFG is the belief that the growth of the Centrifuge protocol should ultimately create value for CFG holders.

If equity is introduced as the new value-accrual mechanism, I would like to understand why this is expected to create more value for existing CFG holders than mechanisms such as protocol revenue sharing, buybacks, staking rewards or other forms of token value accrual.

A quantitative comparison would be extremely helpful.

My overall position

I am open-minded and potentially supportive of the proposal, because I understand the strategic argument that equity could allow Centrifuge to attract institutional capital and build a much larger business.

However, as an existing CFG holder, I don’t want to make this decision based solely on the potential growth of Centrifuge as a company.

I need to understand whether my economic position as a CFG holder is actually improved by the proposed transition.

I am above the proposed 100,000 CFG threshold, so the outcome is particularly relevant to me.

Before I can support the proposal, I would therefore like to see:

  1. A clear valuation methodology for Centrifuge Inc.

  2. The complete pre- and post-conversion cap table.

  3. The exact economic value represented by 1 CFG → 1 share.

  4. The rights attached to the new shares.

  5. Clear information about liquidity and secondary-market possibilities.

  6. The long-term role and utility of non-converted CFG.

  7. The eligibility requirements, particularly for EU retail holders.

  8. A clear explanation of how this structure improves CFG-holder value compared with keeping CFG and implementing direct token value-accrual mechanisms.

I believe CP172 could potentially be a very important step for Centrifuge, but precisely because it could fundamentally change what CFG represents, existing CFG holders need enough information to make an informed decision before the proposal moves forward.

I would appreciate detailed answers to these questions before the final proposal/vote.

Thank you to the team for opening this discussion and giving the community the opportunity to comment.

1 Like
12

What is the intended secondary-market structure for the tokenized Centrifuge shares, and is the goal to enable regulated onchain liquidity comparable to models such as Securitize?

13

Hello. Could you please provide detailed answers to the following questions:

  1. Jurisdictional Exclusions & Sanctions Compliance: Considering that Centrifuge Network Foundation plans to re-register as a Cayman Islands exempted company under the legal guidance of Ogier, what are the anticipated jurisdictional restrictions for the equity subscription? Specifically, will citizens and/or residents of the Russian Federation (my case) be eligible to pass the KYC/AML screens to be directly entered into the register of members?

  2. Contingency for Ineligible Large Holders: If a holder with >100,000 CFG wishes to convert but is legally barred from doing so due to country-of-origin restrictions or geopolitical compliance, what remediation mechanisms will be provided? Will there be an alternative value-accrual or synthetic asset structure for excluded holders?

  3. Post-Conversion Token Utility & Liquidity: For holders who either choose not to convert or are restricted from doing so, what is the guaranteed timeline for maintaining public exchange liquidity and market-making support for the legacy CFG token after the conversion window closes?

    Thanks.
    CFG holder since Coinlist ICO. Holding 100k+ tokens

1 Like
14

Thank you Bro! Все те же самые вопросы хотел задать =)

1 Like
15

CP172: What does token-to-equity actually mean for CFG holders?

I think CP172 could become one of the most important proposals in Centrifuge’s history.

The idea of converting CFG into actual equity is potentially very attractive. It could finally create a much clearer link between the success of Centrifuge as a business and the economic interests of CFG holders.

However, before holders can reasonably decide whether this is beneficial, I think we need substantially more information about what exactly we would be receiving in exchange for CFG.

The headline “1 CFG = 1 share” sounds simple, but by itself it tells us very little about economic value.

A share only has meaning when we know the fully diluted number of shares, the rights attached to that share, what assets and revenues sit inside the company, what dilution can occur in the future, and whether that share can realistically be transferred or sold.

There are also some broader questions arising from Centrifuge’s recent history that I think deserve clarification.

1. From CP171 to CP172: what changed?

CP171 was presented less than a year ago around a very different structure.

One of its important ideas was that CFG would become the single value-accrual mechanism for the Centrifuge ecosystem, with the Foundation structure explicitly designed around there being no separate equity business competing with the token.

Now CP172 is exploring essentially the opposite direction: converting CFG itself into equity.

This may very well be the right decision. Businesses evolve, and changing strategy when the facts change is not inherently negative.

But this is a fundamental change in the economic thesis for CFG holders.

It would therefore be useful for the team to explain:

What specifically changed between CP171 and CP172?

Did the team conclude that token-based value accrual was structurally unable to capture the full value being created by Centrifuge?

Were institutional investors, regulatory considerations, future fundraising requirements, or the increasing importance of the operating company major reasons for the change?

Understanding why the previous model was abandoned is important for evaluating the durability of the new one.

2. What exactly does one share represent?

The proposal currently says:

1 CFG = 1 share.

But what will the fully diluted share count be immediately after conversion?

For example, if 100,000 CFG are converted into 100,000 shares, holders need to know what percentage of the fully diluted company those shares represent.

Could the team publish a pro-forma post-conversion cap table showing at minimum:

  • total common shares;

  • CFG-holder shares;

  • team shares;

  • existing investor shares;

  • treasury shares;

  • employee/options pool;

  • unvested allocations;

  • any other reserved or authorized shares?

Without this denominator, it is impossible to economically value the conversion.

3. How are existing CFG allocations treated?

CFG currently includes circulating tokens, treasury tokens, locked incentives, team allocations and other unvested or reserved supply.

How will each category be treated?

In particular:

  • Can treasury CFG convert into equity?

  • Can unvested CFG convert?

  • What happens to the remaining incentive allocations?

  • What happens to the current 3% annual CFG issuance?

  • Will token inflation permanently end?

  • What happens to CFG surrendered during conversion — is it burned or held by the company?

The treatment of these categories could materially affect the percentage ownership received by existing circulating holders.

4. Which company are CFG holders actually going to own?

This is probably one of the most important questions.

If CFG holders exchange their tokens for equity, we need a clear picture of what sits inside the entity whose shares we receive.

Which entity owns:

  • the Centrifuge IP;

  • software and protocol-related IP;

  • commercial contracts;

  • customer relationships;

  • management/service fees;

  • Centrifuge Labs;

  • Anemoy;

  • subsidiaries;

  • future business lines?

Would it be possible to publish a simple corporate structure diagram showing the relevant entities, ownership relationships and where the major economic assets and revenue streams reside?

The objective should be to make sure that CFG holders are receiving equity in the entity that actually captures Centrifuge’s enterprise value.

5. How does Coinbase’s investment fit into this structure?

Centrifuge recently announced a strategic investment from Coinbase.

It would be useful to understand which legal entity Coinbase invested in and what type of economic interest Coinbase received.

More generally, how will existing equity investors be treated relative to CFG holders after the restructuring?

Will CFG holders and existing investors ultimately own the same operating company?

6. Will CFG holders receive the same class of shares as investors and the team?

The proposal says that the team, community and partners would receive the same share class during the conversion.

That is encouraging.

But what happens afterwards?

Could future investors receive preferred shares carrying:

  • liquidation preferences;

  • anti-dilution protections;

  • senior dividend rights;

  • special voting rights;

  • redemption rights?

If future financing creates preferred equity above CFG-derived common shares, this could materially alter the economics for converted holders.

It would therefore help to understand the intended long-term capital structure.

7. What shareholder rights will CFG holders receive?

What rights will the shares actually provide?

For example:

  • voting rights;

  • dividend rights;

  • information rights;

  • participation in future capital raises;

  • pre-emption rights;

  • liquidation rights;

  • rights relating to a sale of the company;

  • tag-along or similar protections.

For holders using the CoinList/trust structure, will these rights be passed through economically and/or through voting instructions?

8. Direct shareholders vs CoinList/trust holders

The proposed 100,000 CFG threshold creates two different structures.

Holders above the threshold may become directly registered shareholders, while smaller holders would participate through a trust/CoinList structure.

What are the practical differences?

Do both groups receive exactly the same:

  • economic rights;

  • voting rights;

  • information rights;

  • dividend rights;

  • exit proceeds?

If there are differences, they should be clearly disclosed before holders decide whether to convert.

9. What happens to liquidity?

Today CFG is a liquid cryptoasset.

Private-company equity may not be.

Tokenizing the shares does not necessarily mean there will be a liquid secondary market.

What is the expected path for liquidity after conversion?

For example, is Centrifuge considering:

  • CoinList secondary trading;

  • an ATS or regulated secondary venue;

  • periodic tender offers;

  • company buybacks;

  • investor-to-investor transfers;

  • eventually listing the shares on a public market?

Could shareholders potentially be unable to sell their position for several years?

This matters enormously when comparing the value of liquid CFG today with potentially illiquid private equity tomorrow.

10. Which holders will actually be eligible?

The proposal mentions regulatory and jurisdictional eligibility.

Could the team clarify whether ordinary retail holders in jurisdictions such as the EU will be eligible?

In particular:

Will a normal German/EU retail CFG holder, who is not an accredited or professional investor, be able to convert CFG into shares?

If some jurisdictions cannot participate, what happens to holders there?

This could materially affect CFG’s value before the conversion.

11. Financial information

If CFG is moving from a crypto-token investment thesis to an equity investment thesis, holders will need company-level financial information.

Could the Foundation provide at least basic historical and forward-looking information such as:

  • annual revenue;

  • major revenue categories;

  • operating expenses;

  • cash position;

  • assets and liabilities;

  • runway;

  • profitability or losses;

  • expected 2026 revenue;

  • expected capital requirements?

TVL is useful for understanding adoption, but it is not enough to value equity.

If CFG holders are being asked to become shareholders, some level of shareholder-grade financial disclosure seems necessary.

12. Dilution and future fundraising

How should CFG-derived shareholders think about future dilution?

Does Centrifuge expect to raise additional institutional equity?

Will existing shareholders have any right to participate pro-rata?

Will there be a defined employee option pool at conversion?

A fully diluted cap table today together with a description of the expected financing strategy would make this much easier to assess.

13. What happens if a holder does not convert?

Is conversion optional or ultimately mandatory?

If someone keeps CFG:

  • Will CFG continue trading?

  • Will it retain governance rights?

  • Will it retain any economic function?

  • Will there be a deadline for conversion?

  • Could the conversion ratio change later?

  • Could remaining CFG eventually lose utility?

This is important because the value of the conversion option depends heavily on what happens to the non-converted token.

14. How should we think about valuation?

I am not asking the team to promise a valuation.

However, holders need enough information to independently estimate one.

Today CFG represents a relatively modest fully diluted valuation compared with the scale of assets currently using Centrifuge infrastructure and the institutional relationships Centrifuge has built.

That potentially makes CP172 extremely interesting.

But the potential opportunity can only be evaluated if we know the relationship between:

CFG supply → post-conversion shares → percentage ownership → enterprise economics.

A pro-forma cap table plus basic company financials would allow the market to do this analysis itself.

Why I think this proposal could still be very positive

Despite all these questions, I see a strong argument in favor of what CP172 is trying to accomplish.

One persistent problem with crypto is that protocol success does not necessarily translate into tokenholder value.

A company can build valuable IP, customer relationships, revenue streams and new business lines while a token remains attached to only one narrow part of the economics.

Real equity could solve that problem.

If CFG holders become genuine owners of the entity capturing Centrifuge’s entire economic value, rather than relying on an engineered token-value-accrual mechanism, this could be a much stronger and cleaner ownership model.

It could also align:

the team, investors, employees, partners and community

around the same underlying asset.

That would be meaningful.

But the quality of the proposal will ultimately depend on its details.

For me, the central question is not:

“Is 1 CFG equal to 1 share?”

It is:

What percentage of the fully diluted Centrifuge business does that share represent, what economic and governance rights does it carry, what assets and revenues does that business own, and how can the shareholder eventually realize that value?

If those questions are answered well, CP172 could represent a major improvement in the investment case for CFG.

If they are not, holders risk exchanging a liquid token for an illiquid minority interest whose economics are difficult to evaluate.

I would therefore strongly support publishing a detailed conversion term sheet, pro-forma cap table, corporate structure and basic financial information before a final binding vote.

That would allow CFG holders to evaluate CP172 as shareholders rather than simply voting on a concept.

16

I totally disagree. You must keep this token alive and find a proper solution for his value acrual.

17

This proposal is massively lacking in detail for something that is so gamechanging for this business and each holder’s investment. A serious proposal to make this shift would include your financials, future projections, tangible KPIs/milestones that will be achieved as a result of this move (that couldn’t be replicated under a token-ran model), terms of the deal, the current cap structure of the equity. How can I make an educated governance vote on this topic without those details?

This move to equity is a cop out “woah is me” excuse to not add value accrual to the token: As can be seen in the replies to @itsbhaji tweet on this, all CFG holders want is for value accrual to go to the token.

  1. Buyback if there are excess earnings after OpEx.
  2. Use those tokens for future fundraising if needed.
  3. If Centrifuge actually becomes the size of Securitize or others, the platform will be making plenty of revenue/earnings to buyback more tokens than inflation
  4. Post monthly financial reports so the community can confirm. You can’t expect people to value the business correctly if no one knows the state of the financials.