An Overview of Cadence and our Tokens
When you make an investment into any one of our offerings, upon close we simultaneously issue tokens that represent investors’ digital proof of ownership in this investment. As a result, these tokens, or digital assets, are immutably linked to the underlying investment contracts and holders of these tokens are entitled to all the cash flows and economics of the transaction. Investors’ allocations are publicly viewable yet fully anonymized on explorers like Etherscan. This creates a level of transparency in private credit transactions that has simply never been possible before.
What Does The Redemption Do Exactly?
Upon a distribution event within an offering, investors are given the option to “Redeem” their digital assets in exchange for cash proceeds. If elected, the tokens are “burned” and the cash proceeds are made available under “Investable Balance”. While there is no clear advantage in keeping proceeds in this digital asset form today, we have every intention to make it a more compelling option in the near future.
Distribution Events on Cadence Offerings
We offer a diverse set of investment offerings with standardized structures and payment frequencies that allow for various different types of distribution events. Below are three standard formats you can expect from most of our offerings:
- Bullet Notes: Interest and principal are paid only upon maturity
- Amortizing Notes: Principal and interest are paid periodically over the life of the offering at predetermined frequencies and amounts
- Interest-Only Notes: Interest is paid periodically over the life of the offering at predetermined frequencies and amounts before principal is paid back in full upon maturity
In each of these instances, investors have the ability to redeem their tokens for their eligible final or interim distributions at each point in time based on the format of the offering.
How to Redeem Tokens
1. When a distribution has been made for an investment, a blue Redeem button appears at the bottom of the respective deal box under My Portfolio
2. Clicking Redeem triggers one of the following scenarios:
a) If this was an investment held to maturity, the amount available for redemption will be credited to Investable Balance. Prior to clicking Redeem, investors will see the total amount currently available for redemption underneath the Redeem button.
b) If this was an investment that was rolled over into a subsequent offering and the investor elected to roll less than the Final Token Value, there will be returns outstanding. This remainder will be credited to their Investable Balance. Prior to clicking Redeem, investors will see the total remainder available for redemption underneath the Redeem button.
Investors can choose to redeem their tokens whenever they prefer and at their own discretion. It will always be available following a distribution event until an investor elects to Redeem.
What is Happening Behind the Scenes
Since we issue tokens for each offering and the tokens represent digital ownership interest in these investments, a redemption triggers an action on the blockchain to call the requisite amount of tokens back to Cadence. Upon receipt, Cadence “burns” the digital assets in exchange for crediting the respective investor’s account with cash proceeds. Every redemption made by an investor can be traced back to an action on the blockchain, maintaining a perfect digital ledger to track an investor’s investments, redemptions and distributions for any and all offerings we list on the platform.
While the redemption feature may appear perfunctory today from a process perspective, it will prove to be a vital functional layer reducing friction costs which will ultimately translate into even higher yields for investors. Most importantly for now, it allows investors control over the digital assets they own. In the spirit of creating the ultimate level of transparency, we simply wouldn’t want it any other way.