Swarm Whitepaper

Friday, June 15, 2018
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S WA R M F U N D The Blockchain for Private Equity The first globally live security token platform, coming to market by tokenizing funds and other assets White Paper April, 2018 / V0.91 Contents of the white paper are subject to changes and improvements.

Abstract Swarm’s governance-first model has been designed to bring $1 trillion in real assets into the blockchain world by creating a platform for regulatory engagement and a fully compliant legal container for highly profitable and scalable investments. As with other highly successful network models like Visa, our infrastructure is fully accessible and entirely governed by its community members. We use a token-based, stake-weighted, liquid democracy system to provide both an early adopter incentive and input into long-term decision making. This is augmented by a reputational system, which helps streamline capital deployment and allow a fusion of human and artificial intelligence. We launch with multiple partner funds (distressed real estate, art, renewables, hedge funds) who have already deployed $100mm+ with 30+% IRR and team members who have built platforms that handle over $20B in transactions per month. Our market infrastructure allows funds to automate creation, fundraising, deployment, distribution, and reporting via a process language that is an enhancement of currently available smart contract technology. 2

Disclaimer The attached white paper is meant to describe Swarm’s currently anticipated plans for developing its business and its SWM Tokens. Nothing in this document should be treated or read as a guarantee or promise of how Swarm’s business will develop or of the utility or value of SWM; the document outlines our current plans, which could change at our discretion, and the success of which will depend on many factors outside our control, including market- based factors and factors within the cryptocurrency industries, among others.1 Any statements about future events are based solely on our analysis of the issues described in this document, and our analysis may prove to be incorrect. Purchasing SWM is subject to many potential risks, some of which are described in this paper, and some of which are provided in the FAQ on SWM Tokens and the Token Offering and in the risk disclosures for the Token Offering. These documents, along with additional information about our business and the SWM, are available on our website.1 Purchasers of SWM could lose all or some of the value of the funds used to purchase SWM. 1 Make sure to review: https://docs.swarm.fund/swarm-otc-risk-disclosures.pdf https://docs.swarm.fund/swarm-otc-token-term-sheet.pdf 3

1. INTRODUCTION 5 1.1 Overview 5 1.2 The Ultimate Value Proposition 6 1.3 Current Investment Drawbacks 7 1.4 Mission Statement: Why We Created Swarm Fund 8 2. SWARM INNOVATIONS 10 2.1 Liquid Democracy 10 3. SWARM TOKEN 13 3.1 Two-tiered Token Model 13 3.2 Token Utility and Value 14 4. SWARM PLATFORM MODEL 20 4.1 Swarm Layers 20 4.2 Platform Components 22 5. SWARM APPLICATIONS 25 5.1 Characteristics of Pilot Asset Classes 25 5.2 Crypto Hedge Fund 26 5.3 Distressed Real Estate 26 5.4 Solar Installations 26 5.5 Purpose-driven Funding Pools 27 6. TOKEN OFFERING 28 6.1 Token Offering in Brief 28 6.2 Token Allocation 28 7. ROADMAP 29 7.1 Key Activities 29 7.2 Finances 30 7.3 Development Roadmap 31 8. LEADERSHIP 32 8.1 Core Team 32 8.2 Capital Market Advisors 35 8.3 Technology Advisors 36 8.4 Governance and Organizational Design Advisors 36 8.5 Partners 37 9. LEGAL INNOVATIONS 38 10. MEDIA COVERAGE 40 11. REFERENCES 41 4

1. Introduction 1.1 OVERVIEW The Swarm Fund team plans to help the Swarm is building technology bottom-up, with crypto world grow to $1 trillion by bringing a fully operational liquid democracy platform tokenized real-world assets through partner for making key decisions related to investment funds. opportunities on Swarm. The Swarm Fund team has managed $10B in Our technology and blockchain co-op model portfolios and built platforms which handle will likely also be useful for other industry $25B of monthly deal flow and already has verticals besides finance. several pre-selected funds which generate 30+% IRR through scalable models powered People should participate if they believe in the by artificial intelligence. value proposition of democratizing finance, collaborative ownership, high returns, and the Swarm token holders will govern the platform soundness of both the team and technology. in which all of this will happen and receive additional tokens on the private blockchain. This will allow them to participate in all of the subfunds. This system is designed to be adaptable for full regulatory compliance in multiple jurisdictions. The corridor between the public and private blockchain tokens is additionally designed to be fully AML/KYC compliant and to follow the model of existing exchanges. 5

Swarm goes beyond the typical ICO approach: Standard ICO Approach Swarm Approach Utility token on public blockchain Utility token on public blockchain, and unlimited security tokens on private blockchain Unclear underlying value Sub-tokens backed by existing highly profitable sub-funds holding real assets Single Swiss nonprofit foundation Seven inter-networked legal entities in different jurisdictions united by one platform co-op Unclear relation with regulators Direct relationships with regulators in multiple jurisdictions and organized legal conferences with extremely positive responses Prototype product or no product Working alpha product of utility layer and private blockchain asset structure No governance Liquid democracy model on foundation level as well as for each security token separately – allows users to vote on any kind of issue No experience delivering product Team includes two previous CEOs with proven track records building and selling companies and private equity domain experience Token value is derived from velocity of token transfer Token value is derived from functioning as “gas” of all fund operations and token transactions on the network Unknown or non-existent AML/KYC Fully compliant investor qualification (AML/KYC, etc.) through private blockchain implementation fully implementing local jurisdictions 1.2 THE ULTIMATE VALUE PROPOSITION Additionally, peer-to-peer models are a From the standpoint of organizational perfect substrate for the utilization of artificial design, Wall St. is a collection of archaic intelligence and a much higher degree of incentive models waiting for a fully peer- automation in general. Peer-to-peer models to-peer organization to disintermediate and combined with models of cooperative redistribute the wealth that is monopolized by ownership also allow a high degree of a small group of insiders. Wall St. insiders are resistance to abuse of big data, as well as able to manipulate market prices by creating integration with other governance systems to artificial scarcity and promoting fear and offset any potential abuses. ignorance of other models. Systems are a product of their incentives. If Peer-to-peer models consistently beat the existing Wall St. model has incentives for protectionist monopoly-based models protectionism and hierarchy, Swarm Fund because they directly incentivize top has incentives for early identification of talent performers rather than creating multiple levels and rewards that proportionally follow high of opaque hierarchy, and because they layer performance. dynamically-generated reputation on top of these models. 6

1.3 CURRENT INVESTMENT Meanwhile, tokens that store digital value are DRAWBACKS breaking into the mainstream investment Crypto Asset Holders landscape as a new asset class in which The investment landscape for crypto asset to allocate investment capital. This is holders is largely limited in choice to either largely driven by an increasing awareness a selection of established crypto currencies, of the extreme returns generated by the (e.g. Bitcoin, Ether, Ripple etc.) or a selection early investors in this category. But for the of more recently issued tokens (i.e. altcoins). mainstream investor, this new asset class While overall crypto asset developments are presents challenges; namely, the workflow extremely positive, both asset categories have basics of navigating trading, and maintaining significant challenges associated with them asset security. from an investment perspective. ◆ For Bitcoin and Ether, volatility is a major Market Problems in Traditional Investing factor. Holding a significant portfolio of Over the last 15 years, a simple S&P 500 index Bitcoin and Ether implies that the net asset fund outperformed 92% of large-cap funds. value fluctuates by a significant percentage Meanwhile, the percentages of mid-cap and on a monthly basis. As an investment, this small-cap funds lagging their benchmarks could be desired, but for the purpose of were 95% and 93%, respectively. The odds of predictable preservation of value, it is highly an actively-managed domestic equity mutual undesirable. fund performing better than an index fund are ◆ For investment in altcoins, the challenges nearly as bad as 1 out of 20.2 are primarily related to the evaluation of Finding products with high investment return assets prior to investment, and lack of is a challenge, which increases as the target liquidity post investment. It is also difficult return increases. The marquee products for many investors to clearly understand the offering more than 10% returns are invariably market dynamics of the coins. hard to access (Bridgewater generally requires ◆ Although the two million crypto asset that its clients have a minimum of $5 billion of transactions every week between people, investable assets3). businesses, and charities suggest a Take real estate as an example. Investors significant value exchange, the grand question of the intrinsic value of Bitcoin and its peers remains.1 Bridge to the New Financial World 1 “Look, this is a perfect asset for a speculative bubble…There is a finite supply. There is no intrinsic value. If anybody is persuading you that it should somehow be related to some GDP or gold…put down the Kool-Aid and back away.” Henry Blodget, founder and CEO of Business Insider, on CNBC’s Squawk Alley 2 http://www.marketwatch.com/story/why-way-fewer-actively-managed-funds-beat-the-sp-than-we-thought-2017-04-24 3 https://www.elitetrader.com/et/threads/so-you-want-bridgewater-to-manage-your-money-there-is-one-small-condition.290936/ 7

mostly face three major challenges: Core Objective: Follow The Experts ◆ The most exciting deals are for insiders only; Swarm allows experts to run their own accessing them requires working through syndicates and have other crypto investors join middlemen that are costly, sometimes them in projects and deal opportunities, with untrustworthy, and who often only operate no middlemen involved. locally. We are building an ecosystem of experts with ◆ Large amounts of money are required to any kind of edge (track record, trading ability, participate in the best opportunities. unique data, unique deal access, etc.) in order ◆ Worst of all, investment is often tied down to allow crypto investors to follow and co- for an indefinite amount of time. invest with them. Combinations of these challenges are part of This changes the mechanics of the traditional any traditional investment product category, fund/GP model, as investments can be as e.g. private equity and hedge funds. large or small as the investor wants them to be, and they can operate the fund structures 1.4 MISSION STATEMENT: very flexibly. Also, it breaks up the syndicates WHY WE CREATED SWARM FUND of gatekeepers and rigid structures of Swarm is a fully decentralized capital Swarm institutional capital as it is deployed today. is a fully decentralized capital marketplace platform built on blockchain technology that is entirely owned by the community. Core Objective: Combine Token Flexibility Our vision is to allow anyone, anywhere in the With Real Opportunities world, to participate in value creation within Crypto investors have appreciated the the crypto asset category and to capture flexibility and immediate market-making opportunity in new types of asset-backed function that tokenization has introduced. tokens, including in real estate, hedge funds, Tokens and their underlying smart contracts solar installations, and many more. represent the ultimate opportunity for two Swarm transforms financial opportunities from parties to come together and interact without exclusive to inclusive. We provide access and middlemen. One benefit is the freedom to tradability so that anyone can take part and trade or co-own tokens. That is the freedom have their crypto funds work for them. we want to bring to any kind of asset. With Swarm, we will: When a participant likes an opportunity ◆ Make it extremely simple for hands-off or running on Swarm, they will be able to pool novice crypto investors to participate in a funds together with others and invest as little composite of wealth creation resulting from or as much as they want in order to realize the utilizing the crypto space. project and see the opportunity grow. ◆ Create a viable framework and hub for At the same time, all projects become crypto investors to invest into alternative, tradable, asset-backed tokens. Participants asset-backed token opportunities, in order can buy or sell these tokens whenever they to escape market volatility. want; they decide how long to engage. All ◆ Introduce a new alternative liquidity hub for trades are made using blockchain technology, project owners with attractive underlying making them fast, transparent, and secure. economics to find capital and engage with the investor community. 8

Core Objective: Collective Intelligence We believe in the swarm intelligence hypothesis that decentralized networks can out-compete traditional centralized entities, and that the trust and transparency embedded in blockchains greatly facilitates this. The foundational element of the blockchain is data transparency, which provides a basis for an unprecedented degree of machine-driven methods to generate insights and take actions. Ultimately, with Swarm we envision a degree of investment automation that helps participants make informed and data-driven investment decisions, while using reputational scores to maintain the health of the market. Our automation can go even further, to where every step of the investment process, from workflows to establishment of legal structures, will eventually be automated, creating an efficient system without single points of failure or control. With Swarm we envision an unseen degree of investment automation. 9

2. Swarm Innovations 2.1 LIQUID DEMOCRACY Swarm employs an enhanced voting stake Network Democracy as Liquid Democracy process. The enhanced voting stake makes use Network democracy is a stake-weighted of a locking period and is a proposed addition delegated voting system (liquid democracy) to the stake-weighted liquid democracy that also provides options for enhanced stake (which does not allow tokens to be traded for and programmable liquidity. a certain period). This can also allow a person Stake-weighted means that voting power is to have a proportionally higher voting weight directly proportional to the amount of stake if they have a provable long-term stake in the you have in a project. In the blockchain world, network. this is typically called your ”tokens” or ”coins.” In the world of stock, this would be called your Traditional model: ”stock” or ”shares.” Liquid democracy involves ”delegated voting” and implies that a user can delegate their vote to another party at any point, for as long a duration as they desire. This allows users to A funding pool is an organization governed by maintain a degree of control without having network democracy that distributes funds. It to participate in minute decision making. can be structured similarly to an investment This is in some ways similar to the decision fund, in which case it seeks opportunities an investor makes when they give someone or some other purpose (e.g., advocacy, capital for a project; the key distinction is that education). Funds that go into any funding pool in a liquid democracy, the investor retains can be allocated by a higher-level network control of the capital. democracy or received independently. Stake-weighted liquid democracy is a highly flexible governance model that accommodates A key element of the Swarm Platform is the any structure, from one-member-one-vote, to use of tokenized assets. Swarm may be used traditional corporate arrangements, to novel to govern other real-world assets, such as real forms of collectives. It also appropriately estate and other tokenized elements derived incentivizes the many different types of from classic investment vehicles. Specific possible contributions to a network (code, details of these deal opportunities are made community contributions, funding) and available to members of the network. allows for both decision-making capability and rewards. It also integrates with other automated decision-making structures, such as futarchy. 10

Swarm Platform as a Representation of Holonic Principles Trust Network as a positive one is important for separating The trust network is made up of many signal from noise (an example of a similar independent trust endorsements (i.e. vectors), problem being Facebook fake news). As with which create accountability and allow other open networks, it has an open-access automation. policy and the nature of the endorsements is pseudonymous. Trust Equation The trust is the sum of all trusted parties and their recommendations from the standpoint of an individual (here represented as vectors, which can be positive or negative). In this case, we record all of these endorsements and allow multiple levels of ascription and derivation. Trust currency is made up by individual immutable trust vectors. Each trust vector i t is an endorsement. A endorses B for X. This has a timestamp and an optional weight represented as a number from [-1 .. 0 .. 1]. The ability to provide a negative filter as well 11

Trust Graph It helps incentivize positive overall social These vectors are optimally represented contributions and augments the network more as a graph. This graph illustrates that trust generally. It also allows full automation. For (including what we believe to be true) can be example, portfolio allocation decisions can be derived from the various trust vectors on the made by artificial intelligence. It also makes network. certain other accountability mechanisms less The implications of a trust model are necessary due to the strong social component. numerous. An open reputation ledger built of individual trust vectors is a critical element in the Swarm Platform. Swarm Trust Vectors 4 TrustGraph.io - Harlan T. Wood, Adam Apollo 12

3. Swarm Token The token distributed during the token launch is known as the Swarm Token, or SWM. The SWM token is a standard ERC20 token (on the Ethereum platform) that allows one to use the Swarm software platform. The utility unlocked by the SWM token is the ability to create sub- funds, participate in token offerings of Swarm projects, get access to information that is exclusive to our network, and execute network governance functions. Member participation is key to the Swarm platform. Over time, more functionality will be released that helps generate swarm intelligence for the benefit of the network. This follows the model pioneered by Visa, SWIFT, and other consortia where common infrastructure is maintained by member organizations. 3.1 TWO-TIERED TOKEN MODEL The Swarm ecosystem has two types of SRC20 token standard. The SRC20 standard tokens. The Swarm token (SWM) is a utility implements fundamental characteristics to token, and the essential element that powers support regulatory compliant issuance of the Swarm ecosystem. It is used as Gas to security tokens, such as transfer restrictions. implement the token economics on Swarm. Proofs create a self-enforcing mechanism, encouraging a thriving decentralized network of participants. Participating providers and consumers on the network use the SWM token to settle transactions on the platform and provide other services to operate the network. The SWM token also grants access to Swarm’s governance technology, which is used to govern any significant decision made on the platform. The second token category on Swarm is the security token layer, whereby each investment opportunity on Swarm is represented by its own security token, supporting the 13

Basic structure of the Swarm Token 3.2 TOKEN UTILITY AND VALUE In general, incentives and counter-incentives - elements of Game Theory - are not new in blockchain projects, and act as core functions that encourage desired behaviour in a decentralized system. Bitcoin’s Proof-of-Work (PoW) incentivizes miners to process transactions on the network, thereby securing it in return for a monetary reward to the first miner that solves an arbitrary mathematical problem and creates a new block. The 2nd generation model with Proof-of-Stake (PoS) is a more efficient protocol for validating transactions. New block creators are chosen deterministically, there is no block reward, and instead, the chosen block creator is rewarded proportionally to their wealth, or stake in the network. In other words, with PoS, incentives are constructed to buy and hold some of the coins being minted, with miners incentivized by transaction fees. 14

Now we’re seeing the rise of projects inspired democratizing finance. We’re going further by “The Third Wave of Crypto” - decentralized than opening up alternative high-performing projects that provide incentives and rewards investment opportunities to all people rich and that promote deeper collaboration and poor. real-world interaction, incorporate machine learning and artificial intelligence, and bring At Swarm, we’re building a distributed system real assets to the blockchain. We’re now that is AI-powered, community-governed, and moving on from incentives that encourage will evolve into a self-sustaining and efficient support of the network and proving blocks, to global resource marketplace. rewarding important value-adding services to the community of token holders (in addition to the core value proposition central to the Swarm Token Utility Model system). The token model has two core elements: ◆ The SWM tokens are created for the network NEO’s users are rewarded GAS to create to govern a market infrastructure for a large a network that deploys and runs smart pool of assets running on the Swarm Network. contracts. SIA tokens incentivize data hosts to The Swarm (SWM) utility token has a limited stay online, building a network of decentralized supply of 100M tokens. storage with sufficient redundancy. ◆ The SRC20 tokens are security tokens, Simply put, we’re seeing the first signs of minted by the syndicate manager of each blockchain-based self-sustaining ecosystems investment opportunity, that represent that disentangle massive inefficiencies in the ownership of that investment. current economy. In that context, the SWM token has three In this spirit, we have been designing a crypto- essential functions on the Swarm platform, economic token model that we believe each of which add to its value in a unique way, achieves far more than its core vision of and each incentivized by the network. The SWM Token is the essential element which powers the Swarm ecosystem Proofs create a self-enforcing incentive mechanism encouraging a thriving decentralized network TOKEN HOLDERS SERVICE PROVIDERS PROJECT OWNERS SWM As Voice SWM As Value SWM As Gas SWM is used to govern by vote, the SWM is the incentive and the reward SWM is required to launch new direction of the platform for services provided on the platform investment opportunities and to keep them operational 15

SWM as Gas capital placements, allows for tradeability and SWM functions as the core element that liquidity. However, rather than directly paying powers investments to operate. GCD to the fund, Swarm offers investors a On the investment side, fund managers are strategic choice. required to pay SWM when they launch new investment opportunities and to keep them Investors choose between: operational for their duration. We call this Gas ◆ Liquidity: Investors can opt to keep their for Fund Operations (GFO), and it has the investment liquid and tradeable, in which case following characteristics: the corresponding GCD is forfeited, but they ◆ GFO is calculated as a percentage of Net receive regular returns on their investment, or Assets Under Value (in $USD) and is payable in ◆ Commitment: Investors can opt to lock SWM their investment for a fixed period of time, ◆ GFO is withdrawn on an ongoing basis, as correspondingly locking their GCD for the same needed, in order to fund operations amount of time. Capital, returns, and the full ◆ Subject to iteration by early adopters, initial amount of locked GCD is fully refunded at the GFO will be in the range of 0.6 - 1.0% end of the locking period. Note that investors could choose liquidity at first and once they Fund managers are required to continuously gain comfort with the investment, later move maintain a positive balance of SWM to into a commitment on a lower basis (as some cover their expected GFO needs. Managers of the GCD will already have been released on are able to plan their purchase of SWM at a prorated basis). Subject to iteration by early times optimal to them, taking into account adopters, initial GCD will be in the range of 1.0 market forces, their own expert analysis, and - 1.5% future investment requirements. In future iterations, this will be fully powered by artificial Strategically opting to lock one’s GCD acts as a intelligence. For example, a real estate fund Proof-of-Commitment, and brings enormous that expects to make a large investment benefits for both investors and fund managers: in a year’s time may opt to front-load their ◆ Fund managers can act on investments with purchase of SWM now, taking advantage of far greater certainty knowing investor funds current prices and known market conditions. are committed, and can recycle and reinvest capital rather than paying returns out regularly, SWM raised from GFO is automatically sent giving them a greater ability to negotiate using to a smart contract that acts as a Proof-of- their assets. Service pool. This pool is then used to reward ◆ Investors who lock their GCD can also third-party actors that provide additional benefit from potential appreciation in the value value-adding operational services such as of SWM once their chosen locking period has audit, accounting, or marketing services, ended. further adding value to the platform as a whole and promoting its growth. Swarm’s Proof-of-Commitment is so powerful that we’ve introduced a further incentive On the other side of the equation, investors mechanism to encourage it, especially for are required to pay SWM when they allocate those funds to whom capital commitment is capital to an investment. We call this Gas strategically important. Fund managers are for Capital Deployment (GCD) and it can given the option to match an investor’s GCD be thought of as a traditional placement commitment with their own, in any ratio they fee that, in contrast to other private equity like. This greatly amplifies investors’ potential 16

returns at the expiration of the lock. As an example, a solar installation in California, for whom capital commitment is important, may offer 2-for-1 GCD matching as incentive for a 3-year lock, meaning that investors who choose to commit their investment receive a bonus of double their locked SWM tokens at the end of the locking period. GCD Proof-of-Commitment allows investors to effectively neutralize their placement gas and therefore boost their returns, while giving plannability and certainty to managers. Both win. SWM as Voice Perhaps the most revolutionary feature of the Swarm platform - and the one we are very passionate about - is its Liquid Democracy voting module. Swarm is built with governance designed into the core, and at every level. Blockchain is maturing beyond payment systems, stores of value, and distributed applications (Dapps). We are entering the age of real assets on the blockchain. Art installations, marijuana plantations, and community-funded infrastructure are all going to be conceptualized, debated, crowd-funded, realized, and managed on the blockchain. None of these functions can be performed without a layer of governance, arguably the most fundamental and important utility of SWM. Direct governance of investments is necessary and important, as we are not building Swarm to be another middleman. The ultimate goal is to found an ecosystem of independently governed engagements; an upgraded iteration of the DAO. Incentivized Governance Self-governance ensures the Governance is inherently key evolution of the platform to Swarm Swarm‘s governance model enables direct representation for minorities The foundation allocates budgets to incentivize governance Through Liquid Democracy, votes can be delegated to those with Only token holders have voting domain-specific knowledge rights in platform & investment-level decisions Delegation grants better-informed individuals greater voting power Voters are rewarded with SWM for participating & taking actions to Through incentivized governance, the improve the system Swarm Foundation is building a fully decentralized, self-governing Proof-of-Participation Participants get rewarded for making proposals & voting on the 17

SWM as Value SWM’s value derives directly from its powers specialized knowledge, and further compete as incentive and reward; powers that by matching incentives. combine asset management with resource efficiency, powers that strengthen community Infrastructure and service providers are engagement, and powers that derive and keep incentivized to continuously innovate and value within the platform. advance the virtuous competitive cycle of Optimal behavior is clear within the system - delivering more at lower cost. for all actors - and is summarized in the table While initial monetary policies for gas below: prices will be set by the foundation, future policy will be voted on and iterated by early ◆ Investors choose between two powerful participants. Successful interaction amongst strategies when allocating their resources. all stakeholders will, over time, permit the Swarm Foundation to act as mentor and ◆ Fund managers plan and optimize their guide, moving on from its role as architect and operational requirements according to their administrator. Investors Syndicates The user decides his/her strategy The syndicate is incentivized to plan & purchase SWM from the market at the optimal time to power They can choose to forfeit or lock the SWM token, future requirements & in appreciation of SWM choosing between liquidity & commitment Matching investor commitments allow more mechanics to come into play Infrastructure Providers SWARM As the ecosystem matures, the incentives to provide The foundation's core role is to develop the initial services to the network grow trials of the system components & hand them over to other actors over time At the same time, for any specific service, the greatest rewards naturally flow to actors who As SWM circulates amongst all network members, performed most efficiently the foundation's role naturally devolves to a state of distributed self-governance 18

“ Swarm seeks to not only create interesting software, but also a community of those interested in sharing their project opportunities with other Swarm participants.

4. Swarm Platform Model 4.1 SWARM LAYERS The Swarm platform will be composed of three primary layers: Core, Services, and Application. Primary Layers of the Swarm Platform Layer 1: Swarm Core The Core layer provides the foundational system components and smart contracts for Swarm use: network governance token management with consensus via liquid democracy, and a management interface. This also includes system replications of the preferred legal frameworks, reputational engine, and decentralized collaboration, as well as foundational processes around security and data transparency. The Core layer framework allows for the creation and management of new projects. It is and always will be free and open to use. 20

Layer 2: Swarm Services Layer 3: Swarm Applications The Swarm Services layer will offer additional On the highest layer, on top of the Swarm services on top of Swarm Core. These services Services layer or directly operating on the are meant to make it extremely easy for any Swarm Core, is the Swarm Applications layer. participants to build investment applications These applications are both front-end as well on top of Swarm and serve the marketplace in as in some cases application back-ends that the most creative way. are specific to target investment use cases These services will include full-stack and/or target segments. setup of vertical Swarm funds (via Special Purpose Vehicles, or SPVs), operating Swarm syndicates, asset custodian services, and any Our vision for Swarm is automation of ongoing investment operations. More features will be introduced to best meet to have a wide variety of the requirements of the evolving marketplace. investment applications Application templates, customization tools, built on the same and advanced data processing capabilities will allow our users to execute their visions platform technology and faster while lowering the barrier to entry for liquidity pool. new investment applications to come to market. While applications and participants are welcome to interact with Swarm on the Some of these applications may be built by Core level, we will be offering Swarm Services Swarm, while others will be built by third to accelerate the go-to-market process and parties. Our vision for Swarm is to have a wide reduce operational costs. Swarm Services will variety of investment applications built on the be offered using a license-fee model. same platform technology and liquidity pool. These applications will likely charge additional fees or use alternative business models such as market making, information selling, or revenue/profit sharing. As further described in the following section, many of such Swarm applications may include the release of their own utility tokens as a core component of their business model. 21

4.2 PLATFORM COMPONENTS Liquid Democracy Voting Module Governance is core to Swarm’s mission. And core to that mission is to create infrastructure that allows participants to vote on issues in a trustless, transparent, and auditable way, which can persist outside of Swarm as an organization. Therefore Swarm is creating a “Liquid Democracy Voting Module” (“LDVM”), which has been the basis of all voting that the Swarm organization has performed internally and externally, and first versions are already available. The LDVM is intended to be configurable by any developer, integrated with other platforms, and executed outside of the Swarm platform. The LDVM will be able to be customized to specific voting populations, issue discoveries, and consensus methods, as well as voting processes. Further, a major objective of new voting systems is to relieve participants of ongoing voting obligations or complexities around voting. With the LDVM, users are able to delegate their votes to others in a persistent fashion, and differentiated by issue category and duration. With these abilities, the governance of the foundation, as well as each of the underlying SRC20 tokens and related legal entities, can be performed in completely new ways; for example, there is no longer a necessity for board structures. The LDVM is intended to become a universally applicable voting engine for any part of the Swarm platform, and to be usable beyond Swarm in other related or even unrelated projects. In particular, the open architecture of this module will lead to exciting new applications and use cases well beyond Swarm. Purpose-Driven Funding Wallets (“Blackbird”) One of the use cases powered by the LDVM will be the Blackbird wallet. A Blackbird wallet is a smart, multi-user wallet that collects funds and deploys them to a target address that is approved using a stake-weighted majority. Each Blackbird Wallet can potentially have connections to realize its purpose on the Swarm network, but not necessarily. Blackbird will allow the pooling of capital, such as for a purpose that has yet to be specified, and all participants together make decisions along the way about the deployment of capital. As the purpose gets further specified, more participants gain confidence and invest more capital, and so on. While a setup like this can have many different 22

use cases, the first iteration of the wallet will be used (1) as a one- time fund collection and deployment instrument and (2) an evergreen (ongoing) fund collection and deployment instrument. There are a number of powerful use cases that can be powered by Blackbird wallets. Think of Uber drivers pooling their capital to buy a corner position in Uber. Or the creation of a foundation to offset the carbon footprint of the blockchain. Artificial Intelligence Infrastructure for the AI-driven Investment Economy The name ”Swarm” is a reference to “Swarm Intelligence,” a form of decentralized intelligence. In the natural world, it manifests in self- organizing communities like ant colonies, flocking birds, and schooling fish. Swarm intelligence is also employed at the vanguard of artificial intelligence technology. Swarm (the company) is taking a practical, multi-phasic approach to solving real-world problems, while building the infrastructure and ecosystem that will allow for decentralized intelligence to occur. The first phase of AI at Swarm is a simple approach: providing users and industry professionals with tools to make more informed investment decisions via products of machine learning. Within the Swarm ecosystem, we are rolling out a practical reinforcement learning algorithm that uses a multi-armed bandit approach (i.e., an algorithm that acquires knowledge by performing multiple experiments simultaneously, assessing results, and quickly learning to optimize outcomes). This will be combined with some traditional financial analytics models (EMA, MACD, Ichimoku Cloud), along with more sophisticated ML models (LSTM, Phased-LSTM and others). We anticipate this taking a few months to roll out, as the algorithms require sufficient data and voting within the ecosystem in order to provide a robust model. A deep roster of funds are in the pipeline to get listed on the Swarm platform, and our astute AI will analyze them all. Not only will we deploy our bots for the direct benefit of Swarm platform participants; we will also offer these tools and infrastructure to Swarm syndicates to create crypto hedge funds that trade using machine learning algorithms (ML) in addition to traditional trading strategies. The second phase will advance the platform in a few very important ways: First, it will allow for active trading based on individual configuration and preferences within the Swarm platform. Some may individually use the tools, and others may create funds and offer them as syndicates on top of the platform. Swarm members will be able to participate in those strategies via the Swarm platform. There are a 23

few key advancements in this phase: The goal will be to employ a large ensemble of models whose number will be determined by market factors. Using many reinforcement learning agents, or ”bots,” we can program them to compete with each other, honing their “intelligence,” and maximizing potential rewards. A master algo will choose how to execute trades based on observed potential rewards and observed market behavior. The goal is to decentralize the AI, eventually achieving proper Swarm Intelligence (Today we are getting closer, but still not entirely decentralized from a model perspective.). A key component of this phase is the ability of models to give information to other models. This mutual informing can be both adversarial and constructive in nature. Models that can win the vote of the trade get more reward. By doing so, models learn to capture and maximize reward across many different market conditions while tailored to different trading preferences by investors. The third phase is a big and extremely exciting one. In Phase 3, we will fully decentralize the ability to trade within the Swarm network, and link with other technologies. While Phase 2 allowed the Swarm professionals to build out fund organizations upon which Swarm members can vote and invest, Phase 3 will allow any individual quant and model builder to tokenize their own models and strategies, and to effectively create their own funds. These models can be trading algorithms, or models that serve other monetary purposes. For example, a model builder can provide a language model with the ability to parse and make sense of Twitter or Telegram feeds. Then, other models can tap that model for information. The goal is to create the core market infrastructure and a network of incentives to allow for both model competition and genetic evolution of performance and fitness, thus allowing for model primitives to evolve, which then generalize to different domains. We will release more technical information on this in the near future. 24

5. Swarm Applications Swarm-Supported Asset Types With the Swarm investment platform serving as a technology reference framework as well as a global liquidity hub, decentralized application developers will be able to create new classes of investment assets that can be used in any number of simple or complex applications. The following section lays out defining characteristics of asset classes in which to pilot the Swarm Platform, followed by subsequent sections that highlight a number of use cases that Swarm has identified as interesting target markets and which are readily deployable using the Swarm Platform. 5.1 CHARACTERISTICS OF PILOT ASSET CLASSES When launching a marketplace technology it Therefore, we invested significant efforts is critically important to (a) build trust with into identifying asset classes that have the the participants and (b) provide curated pilot following key characteristics, among others: use cases that allow the marketplace to take ◆ Have the ability to start with small amount off in the right direction and with the right of investment. momentum. In identifying the first target asset ◆ Show continuous tangible returns. use cases, we have tried to balance both. ◆ Represent a range of risk-reward profiles Particularly in light of issues that led to the rise that are relevant to the crypto investor and fall of the DAO, we approached this project community and provide relevant alternative with significant diligence and preparation, asset profiles (e.g. 20%+ ROI annually, before being able to bring a market-ready focused on global impact, etc.). proposal to the community. ◆ Are well-established and understood from We strongly felt it was important in the early an assessment/ratings perspective. stages to (1) demonstrate tangible platform ◆ Scale to significant size quickly viability, (2) be able to show viability and material attractivity, and (3) be able to quickly scale within the use cases if they prove their efficacy by meeting or exceeding expectations. 25

5.2 CRYPTO HEDGE FUND 5.3 DISTRESSED REAL ESTATE Investing in crypto assets presents unique Real estate investments present a unique challenges, revolving around trading workflows opportunity for private equity real asset and asset security. It requires expert engagements. Especially interesting are sub- knowledge to properly navigate the market market segments like distressed real estate and be aware of the latest market dynamics primarily focused on judicial foreclosure states. in specialized market verticals, starting with The syndicate leader we have partnered liquidity movements, arbitrage opportunities, with has created a machine-driven platform or proper assessment of the latest market- to identify negative equity real estate in influencing industry news. foreclosure auctions, and acquire these The syndicate with which we are collaborating “Subject To” existing liens from an impartial forms a crypto hedge fund that strives to federal bankruptcy trustee. During the very be “ahead of the curve” with the goal to long judicial foreclosure timelines, this simplify value creation for crypto investors by provides 2-3+ years of rental income, and in offering the best experience to engage with some cases the fund is even able to clear liens a network of investors, collaborators, and at a steep discount and immediately sell the opinion makers. The objective is to present property at profit. This produces exceptionally an incentivized platform for vertical experts high cash returns and is an excellent to trade on their unique market knowledge or opportunity, even in an economic downturn. data and to provide uncorrelated, risk-adjusted alpha relative to industry benchmarks. The 5.4 SOLAR INSTALLATIONS composite investment strategy includes right- There is no doubt that renewable energy, frequency trading into 1) a highly curated and particularly solar, is on the rise and an portfolio of crypto assets, 2) derivatives interesting asset category. The unit economics market-making, and 3) mining proof-of- of producing, installing and maintaining solar stake tokens. The goal is to create a blend panels have improved significantly and made of selected best trades based on proprietary the investment case an interesting opportunity algorithms, market-neutral quantitative with 20%+ annual returns. Additionally, there models, and fully automated execution. are significant tax breaks in various regions globally, especially in California, which presents additional major economic benefits. The syndicate operators we have been evaluating We’ll create a blend of have been successfully building an investment selected best trades platform specifically for this application. based on proprietary algorithms, market- neutral quantitative models and fully automated execution. 26

5.5 PURPOSE-DRIVEN FUNDING POOLS Swarm is also aiming to help generate impact investments for nonprofits and social enterprises that help meet significant community needs and address humanity’s grand challenges. We are working to ensure basic needs are met for all people, while sustaining and improving quality of life and mitigating future risks. We hope to involve individuals and institutions who are using their resources for social good, and are looking beyond simply making traditional philanthropic gifts. We seek to help them leverage their capital directly, with a purpose they deeply care about, and perhaps even earn a small gain over time. We believe the crypto community has successfully proven that it can build incentives for the community itself to create desired outcomes. We envision purpose-driven funding pools, that incentivize the entrepreneurial community to create solutions to meet the challenges and compete for the “bounty” by delivering a “social Proof-of-Stake”, similar to the way the X-Prizes have fueled innovation. We believe the crypto community has successfully proven that it can build incentives for the community itself to create desired outcomes. 27

6. Token Offering 6.1 TOKEN OFFERING IN BRIEF The Swarm organization created 100M tokens, and budgeted 33M tokens to be sold to purchasers. Of these, 8.2M were sold in Q4 2017. In the current token offering, we are projecting to sell 20M tokens, targeting a raise of $23.75M USD denominated in ETH. Should the demand be higher, the Swarm Foundation can decide to re-allocate token budgets to expand the sale. With the above, the cap share distribution changes in favor of the community. As such, a higher market demand within the sale simply allows for more exchange listings on the SUN network and augments the value of the platform. Our method of drip liquidity ensures that earlier token holders cannot immediately “dump” all of their tokens after the purchase. After the token generation, the members voted to introduce a liquidity option that releases the token liquidity in 4 equal releases every 84 days. The first liquidity release started on Nov 6, 2017, and full liquidity will be reached on Jul 16, 2018. 6.2 TOKEN ALLOCATION Of the total 100M tokens created, 33M tokens will go to contributors (past Swarm members, advisors, a pool for future contributors), while 33M tokens are assigned to the core team. 28

7. Roadmap 7.1 KEY ACTIVITIES For the past 6 months we have been executing on key activities, including the launch of the live Swarm platform: ◆ Our team developed concrete, trusted ◆ Ramping up community engagement efforts, investment opportunities, with a goal Swarm has 14,000+ investors registered on of showing successes and pushing the the live platform, with ongoing significant marketplace in the right direction. growth. ◆ The initial deployment of the Swarm ◆ We have developed a pipeline of 35+ funds platform went live on Jan 29th 2018. that want to list on the platform; we are ◆ Substantial work has been performed developing onboarding processes and toward viable legal frameworks for Swarm launching them soon. initiatives. ◆ We have created partnerships with ◆ Implementation of a regulatory framework exchanges to support SRC20 security across different jurisdictions for security tokens. tokens has started, including integration with service providers for e-infrastructure and AML/KYC. 29

7.2 FINANCES Product / Development Costs: Platform In our token sale, we are projecting a raise of development will include building upon and $23.75M USD denominated in ETH. For capital securing core smart contracts, additional allocation, the main principle is that funds will frameworks such as a decentralized go towards operational expenses and platform reputational engine, trading and management development. interfaces, service-level app templates and customization tools, and integrations Our current team members have managed with future Ethereum or other blockchain individual portfolios in excess of $3B and infrastructure such as exchanges, custodian built platforms with an excess of $32B in deal service providers, and stablecoins. We will flow. Fund usage will be split approximately develop certain custodian components for evenly between platform and application Swarm wallet holders and work with experts development. for custodian services (e.g., Ledger). Legal & Regulatory Costs: Legal requirements Use of Contributions include corporate setups in different locations for crowdsale, operations, and other licenses. Post-launch, we will work with legal advisors and regulators in different jurisdictions to develop legal opinions of the interpretation with local laws, and become compatible with e-infrastructure and AML/KYC and accreditation infrastructures in various markets. Ongoing resources are required for investment and possible other use cases of legal work. A legal contingency fund will be reserved in case of future need. Marketing & Sales: Sales and business development efforts will be focused on identifying and forming relationships with new projects and existing partnerships that can be built on Swarm. Marketing will be focused on promoting Swarm applications to potential customer segments and markets. Additional efforts will be spent on increasing awareness and knowledge of the Swarm Platform and what can be built with it (applications, etc.). 30

7.3 DEVELOPMENT ROADMAP Current State Swarm has been under development for over 18 months. Since then there have been multiple iterations of the core elements of Swarm. These include the smart contracts powering the framework as well as the general web interface. The Swarm platform has a fully operational live implementation since January 2018. The current operational platform supports key use cases, such as voting within network democracy (including delegation), wallet transfers (ETH/BTC/SWM), and allocation of capital towards investment opportunities. Current Active Interface - Live platform at http://invest.swarm.fund Future Development Phase 1 (Quarter 2 2018): ◆ Legal automation: Underlying the Swarm platform, our goal is to automate most of the administrative processes related to foundation of SPVs (special purpose vehicles) and fund deployment. We seek to work with e-governance providers to make this as seamless and scalable as possible. ◆ SRC20 token standard protocol, with integration to exchanges supporting security tokens. 31

8. Leadership 8.1 CORE TEAM Philipp Pieper Timo Lehes Co-founder & Chief Executive Officer (CEO) Co-founder & Chief Investment Officer (CIO) Philipp is a serial tech entrepreneur and Timo has over 20 years of experience from became interested in decentralized starting, running, exiting and investing in technologies in 2015, when interacting with software companies. Timo has served as BitTorrent, Inc. and the Mozilla Foundation. an investor and executive in technology Philipp has been a start-up entrepreneur for companies, with extensive experience from the past 15 years and is a veteran in the digital building, running and investing in software data space. After holding various private equity companies and leading various merger and and management positions within Deutsche acquisition deals. Throughout his career, Timo Bank and Allianz Group, Philipp was founder has invested in more than 40 companies. and CEO of Proximic, a global data provider for With a specific focus on Financial Technology digital media buyers (acquired by comScore or fintech, he has contributed to the creation in 2015), and is mentor at various accelerators of several alternative investment platforms. such Stanford’s StartX, Singularity University, He currently serves as a board member at as well as TechCode. He holds degrees in BankerBay, the world’s largest deal origination engineering and business administration and platform for mid-market Private Equity deals. attended Berlin University of Technology and He holds degrees in engineering and business UC Berkeley, Haas School of Business. administration from Chalmers University of Technology and early stage investing from continuing studies at Stanford School of Business. 32

Chris Eberle Frank Taylor Chief Operating Officer (COO) Head of AI Chris is a digital veteran with a passion for Frank brings nearly 20 years of experience with building global businesses and communities. expertise in Statistical Modeling and Machine He built the Media Partner Services and Learning. He has served as Senior Data Operations teams at Facebook, with global Scientist and ML engineer at Hotel Tonight, responsibility for connecting public figures, Earnest Inc., and Personagraph among others, creators, and publishers to create authentic and is advisor to and has provided solutions content on Facebook and Instagram. He for a multitude of startups. He is currently then led teams in Global Business Marketing, directing his efforts toward decentralized responsible for real world experiences that machine learning and differential privacy, and drive online business results with Facebook is working to advance the domain of Artificial partners. Prior to Facebook, Eberle was a Intelligence in the future decentralized part of startup exits at Federated Media and ecosystem. Meebo (acquired by Google). Earlier in his career, Eberle spent a decade at AOL, where he started as a contract worker and eventually served in executive roles in marketing and advertising. Chris is an alumnus of Syracuse University and The Harvard Business School. 33

“Jazzwall” Sharad Jaiswal Vivian Jane Smith Head of Product & Operations Project Admin Jazzwall has been implementing and Vivian Jane is passionate about connecting orchestrating enterprise IT projects and real people to real power in ways that support graduate tech-training programs at Swiss and both individual potential and a harmonious Wall Street banks for the last decade. Hard global paradigm. To that end, employing two to put in a box, he is a project manager, full decades of experience as a top sales leader, stack developer, professional photographer, human wellness guide, and energy medicine entrepreneur, and very interested in crypto practitioner, she is a fervent advocate for markets. the widespread adoption of blockchain technologies that allow decentralized governance and financial sovereignty. Her goal is to empower everyday people by spreading awareness and application of these revolutionary new systems. Katerina Kan Katerina is a visionary entrepreneur focused on building a sustainable global paradigm in business and communication. She applies the principles of symbiotic environments, energy optimization, and human wellness to her background in administration, management, commerce, and customer service. 34

8.2 CAPITAL MARKET ADVISORS Chris Kitze Dapps Fund, which was a lead investor in CEO at Safe Cash, co-creator of Flashcoin, the initial crowdsale for Ethereum, Factom, and chairman of the Alphabit Digital Currency MaidSafe and Storj. He currently heads up the Foundation, Chris is a serial entrepreneur who ICO investment committee for Alphabit Fund, has created companies with over $7 billion of and advises numerous blockchain companies. market capitalization over his 25-year career. Terpin has led the PR efforts for more than He’s been part of the Lycos’ IPO team, was 150 blockchain companies and foundations, founder and CEO of Xoom.com (IPO: 1998), and including some of the leading token was CEO of NBCi, formed by the merger of crowdsales. Client successes include the Xoom.com and Snap.com, in addition to other launches of Aeternity, Augur, Bancor, Ethereum, companies in digital media and payments, Factom, Gnosis, Golem Network, Lisk, such as Wine.com and Unseen. MaidSafe, Qtum, and Tether, as well as ongoing campaigns for Bittrex, Counterparty, Dash, Eos, Anthony Di Iorio Kraken, NEM, Neo, Storj and Shapeshift. CEO & Founder at Jaxx & Decentral, Founder at Ethereum. Anthony Di Iorio is a serial Mark Oei entrepreneur, VC, community organizer, and Until end of 2016, Mark was at Sequoia Capital thought leader in the field of decentralized where he served as Managing Director of the technologies. Born and raised in Toronto, venture capital firm’s Heritage Fund, a multi- Di Iorio is the former Chief Digital Officer of strategy vehicle offering institutional investors the TMX Group and Toronto Stock Exchange, and family offices investment exposure founder and CEO of Decentral, a software to multiple asset classes. As leader of the development company focused on blockchain Real Asset group Mark has been seeking technologies, and founder and CEO of Jaxx, a opportunistic real estate investments both multi-token, blockchain interface that provides domestically and abroad. Earlier, Mark was a unified experience across 9 platforms and a managing director focused on real estate devices. In 2013, Di Iorio funded, and along at Oaktree Capital Management, one of the with Vitalik Buterin and 3 others founded the largest institutional alternative investment smart contract platform Ethereum. managers in the United States, and was VP at Morgan Stanley focused on acquisitions for the Michael Terpin Morgan Stanley Real Estate Funds. CEO Transform Group (75+ ICOs), CoinAgenda, Alphabit Fund; BitAngels; founder, Marketwired; Vivek Krishnappa advisor to blockchain companies. Terpin Vivek is a board member for the WattTime. co-founded BitAngels, the world’s first org, an advisor for Nexleaf Analytics, an advisor angel network for digital currency startups, for FinTech and CleanTech Astia and a former which gave birth in 2014 to the successful managing director for securities lending at CoinAgenda series of blockchain investor Blackrock. conferences in North America, Europe/EMEA, Asia and Caribbean/LatAm. He co-founded early blockchain incubator bCommerce Labs; the Bitcoin Syndicate on AngelList (with legendary super-angel Gil Penchina), and the 35

8.3 TECHNOLOGY ADVISORS 8.4 GOVERANCE AND Noah Thorp ORGANIZATIONAL DESIGN Founder, CEO at COMAKERY ADVISORS Noah’s career as a technical entrepreneur Christian Jacken is built on the principles of rapid feedback Co-founder Liquid Democracy, former Global through experiments, continuous learning, Bitcoin Alliance, EFF supporter. spirited creativity, and iterating towards excellence. These principles have directed Adam Apollo Noah’s path through agile software Adam is the founder of the Guardian Alliance development as a developer, lean product and trust.exchange. management, responsive org building as a cofounder, and ecosystem building as a Brad Nye platform creator. Founder of Tribalize summit and Burning Man organizer. Bogdan Fiedur Full stack developer and entrepreneur. Since the beginning of 2016 involved in “Smart Contract” design and implementation for Ethereum, using Solidity. Knowledgeable in all aspects of e-commerce website, back- end and front-end. Experienced in setting up network environment, running and maintaining servers. Experienced in supervising teams of developers, preparing technical design documents, preparing testing plans and integrating existing applications with newer technologies. David Kammeyer Software developer and platform manager. Matthew Tan CEO and founder of Etherscan. 36

8.5 PARTNERS Distributed Labs https://distributedlab.com/ Distributed Labs is partner in developing Swarm Distributed Lab portal application layer and custom blockchain Blockchain experts development. SecureVote https://secure.vote The award-winning team of SecureVote is responsible for the development of the Swarm Fund Liquid Democracy Voting Module (LDVM). The LDVM is a universally applicable and decentralized voting engine which can be used for any part of the Swarm platform. TokenSoft https://www.tokensoft.io Tokensoft is a full-service smart contract development service company with specialization in token sale applications; Tokensoft helped develop the SWM token smart contracts and related technology. AmaZix https://www.amazix.com AmaZix provides full community management services and aids Swarm in spreading the mission of our company across the globe. Wings https://www.wings.ai We intend to use the Wings prediction service to estimate the target size of our own raise and other sub-asset tokens. Jaxx https://jaxx.io/ FusionICO https://fusionico.pro FusionICO is a full-service blockchain advisory firm specializing in Asia markets, and is providing translation, community management, PR, and marketing services for Swarm in Chinese, Japanese, and Korean, as well as performing outreach to investors and institutions in China, Japan, Korea, Malaysia, Taiwan, Thailand, and Vietnam. 37

9. Legal Innovations Swarm co-organized legal summits at Harvard and Stanford in which the Distributed Collaborative Organisation model was established5. Legal experts suggested that the integration of a collaborative governance layer to a distributed organization would make it a membership organization similar to a co-op. We have remained active participants in the evolving platform co-op movement and Internet of Ownership (https://ioo.coop/) movements, including a section in the book “Ours to Hack and to Own.” (https://platform.coop/book). Swarm has consistently and openly stated its intent to democratize finance and proactively engaged with regulators including the SEC, FCA, and regulators in several other countries. As a result of advice from top legal experts and regulators, Swarm has operated for the last two years under the unincorporated non-profit association terms as described in the results of the Harvard summit with the intent of creating a global platform cooperative. To actualize these aims, Swarm has established the following legal entities: Swarm Foundation (Liechtenstein) Swarm Operations GmbH (Germany) Swarm Operations LLC (USA) Swarm IP (Singapore) The contribution period is a collaboration between the above entities with the intent of taking the “Distributed Collaborative Organization” model and a creating a legal entity owned and governed by the token holders. Rather than depend on a single legal firm to implement this, we will create a bounty system to award the first several teams that manage to create token-governance systems that integrate into the legal and tax systems of respective nation states. 38

The current board members are Philipp Pieper and Timo Lehes, with three spots left to be filled by either community contributors or managing directors of partner funds, dependent on a vote by the token holders. Additionally, all of the currency-related aspects of our implementation, including actions of all sub-funds, are performed on a private blockchain implementation. This allows us to implement all standard AML/KYC procedures and reporting as established by industry best practice. Due to the retrospective nature of regulatory action, the Swarm team can make no guarantees regarding the legality of the platform or launch in any given jurisdiction. Regardless, we are confident in, and proud of, the work we have done to shape Swarm into what we hope is a model of regulatory compliance for decentralized applications and token launches. We will be responsive and collaborative with any regulators as necessary going forward. 39

10. Media Coverage Swarm Fund has earned international attention from mainstream and larger crypto media. Some examples: Can Swarm Fund Help The Cryptocurrency Market Finally Enter The Mainstream? Forbes, August 16, 2017 https://www.forbes.com/sites/giovannirodriguez/2017/08/16/can-swarm-fund-help-the- cryptocurrency-market-finally-enter-the-mainstream/#5f4cbdc32e77 Swarm Fund Launches Compliance-Oriented Token Offering Tailored to Evolving Regulatory Environment CoinTelegraph, September 6, 2017 https://cointelegraph.com/press-releases/swarm-fund-launches-compliance-oriented-token- offering-tailored-to-evolving-regulatory-environment Swarm Fund Aims to Democratize Investing Bankless Times, October 17, 2017 https://www.banklesstimes.com/2017/10/17/swarm-fund/ Swarm Closes $5.5 million ICO for Alternative Investment Fund Coindesk, October 31, 2017 https://www.coindesk.com/swarm-closes-5-5-million-ico-alternative-investment-fund/ Swarm Fund brings institutional investment opportunities to crypto investors AlphaQ, Institutional Asset Manager, Nov 27, 2017 https://www.alphaq.world/2017/11/23/258631/swarm-fund-brings-institutional-investment- opportunities-crypto-investors 2017: The Year of the Initial Coin Offering FTAdviser, December 13, 2017 https://www.ftadviser.com/investments/2017/12/13/2017-the-year-of-the-initial-coin-offering/ How Will Cryptocurrency Impact the Housing Crisis? International Business Times, February 10, 2018 http://www.ibtimes.com/how-will-cryptocurrency-impact-housing-crisis-2651489 40

11. References Blodget, Henry. 2017. Bitcoin a perfect asset for speculative bubble: Blodget. [ONLINE VIDEO] Available at: http://www.cnbc.com/video/2017/05/25/bitcoin-a-perfect-asset-for-speculative- bubble-blodget.html. [Accessed 16 July 2017]. Dietz, Joel, Greg Xethalis, Katten Primavera de Filippi, Jim Hazard. 2017. Model Distributed Collaborative Organizations. [ONLINE] Available at: https://swarm.gitbooks.io/dco-book/content/dco- model-template.html. [Accessed 16 July 2017]. Durden, Tyler. 2015. So You Want Bridgewater To Manage Your Money? There Is One Small Condition. [ONLINE] Available at: https://www.elitetrader.com/et/threads/so-you-want-bridgewater-to-manage- your-money-there-is-one-small-condition.290936/. [Accessed 16 July 2017]. Hulbert, Mark. 2017. This is how many fund managers actually beat index funds. [ONLINE] Available at: http://www.marketwatch.com/story/why-way-fewer-actively-managed-funds-beat-the-sp-than- we-thought-2017-04-24. [Accessed 16 July 2017]. Herold, Jelle. 2017. Statebox. [ONLINE] Available at: http://statebox.org. [Accessed 16 July 2017]. Herold, Jelle. 2017. Typedefs. [ONLINE] Available at: http://typedefs.com. [Accessed 16 July 2017]. Lewis, Michael, 1989. Liar’s Poker. 1st ed. New York: W.W. Norton & Company, Inc.. Platform Cooperativism Consortium. 2016. Platform Cooperativism. [ONLINE] Available at: https:// platform.coop/book. [Accessed 16 July 2017]. Van Valkenburgh, Peter, Joel Dietz, Primavera de Filippi, Houman Shadab, Greg Xethalis, David Bollier. 2017. Distributed Collaborative Organizations. [ONLINE] Available at: http://www.bollier.org/sites/ default/files/misc-file-upload/files/DistributedNetworksandtheLaw%20report,%20Swarm-Coin%20 Center-Berkman.pdf. [Accessed 16 July 2017]. Wood, Harlan T., Adam Apollo. 2017. TrustGraph. [ONLINE] Available at: https://github.com/trustgraph/ trustgraph. [Accessed 16 July 2017]. Yang, Paul. 2017. google/protobuf. [ONLINE] Available at: https://github.com/google/protobuf. [Accessed 16 July 2017]. 41

SWARM FUND WHITE PAPER March 2018 V0.91 Philipp Pieper Timo Lehes [email protected] [email protected]