What gives INX Tokens Value? The INX value equation.
Here we list what creates the initial value of INX plus the drivers behind growing demand for INX tokens in proportion to the quantity and quality of deals on the Investx platform. What benefits the INX token, also benefits platform users, creating alignment and a shared vision amongst the Investx community.
Let’s look at each item in the INX value equation…
INX is a reserve-backed means of exchange for shares in SME businesses: INX tokens will be used as payment for shares in businesses on the Investx platform. The equivalent GBP will be transferred from the Investx Reserve, our mechanism for providing liquidity for token backing.
INX reduces transaction costs — for investors and businesses: Using INX tokens to invest through the Investx platform means businesses and investors can benefit from a reduced cost of investment when compared to other possible routes including other crowdfunding platforms.
For growth capital, the Investx platform and therefore token is particularly valuable for smaller companies. For a raise of up to £500k the legal, corporate finance and due diligence costs for both sides can actually make investment completely impractical.
We illustrate below, how the lower transaction fees Investx creates means a more viable investment for smaller raises whilst still creating high value for larger deals.
This shows the result of the efficiencies gained over a range of deal sizes on the Investx platform, by using distributed ledger technology to reduce transaction fees for both sides of an equity deal.
Calculations are based on data provided by two of the top 20 corporate finance firms in the UK. They include legal and due diligence fees both buy and sell side, plus corporate finance/broker fees, which agreed with our own experience.
INX gives exclusive premium access to investments: Investors using INX tokens to pay for investments will be granted early access to investments, while investors not using INX tokens will be required to wait until general access to the relevant investment is made available or, alternatively, buy and use INX tokens themselves during the early access period.
For attractive opportunities completing funding quickly, premium access may be the only way to invest or miss out. The more value investors see in an opportunity, the more value we believe paying with INX tokens has.
INX payments give access to investments at lower cost: Investors using INX within the platform benefit from lower transaction fees, meaning more of their money goes towards shares in the business they’re investing in.
The incentive of purchasing more shares for their investment, with less wasted on fees will encourage non-INX holding investors to purchase INX tokens, thus applying upward pressure on the value of INX consistently.
In our Currency Paper we explain the beneficial effects on INX value created by investors paying for shares in INX compared with other currencies.
INX gives access to attractive investment types not currently accessible: There is real value in obtaining access to an investment class, with potential for attractive returns, which cannot be accessed otherwise.
The Investx platform will focus on stable SME businesses which are often unattractive to current crowdfunders (because they focus on early-stage or tech start-ups) but whose value is demonstrated by strong historic financials as well as genuine growth plans. These types of business are often already paying out regular dividends to shareholders, therefore investor returns can be predicted.
INX creates liquidity in a traditionally illiquid market: When calculating market value for an investment, liquidity is always a factor. Most crowdfunding platforms do not allow investors to independently sell their shareholdings, or buy previously funded companies’ shares.
The Investx platform secondary market will allow investments to be sold onto other investors, providing a more attractive opportunity than investing outside of the platform and creating a wider marketplace to attract investors. Transactions on the Investx secondary market will be made in INX tokens.
INX builds a complete investment cycle within the blockchain: Crypto investors and holders can use the Investx platform to purchase shares in stable SME businesses with cryptocurrency, be paid any dividends in cryptocurrency and sell their shares for cryptocurrency — all without using any fiat on or off ramps.
Please read our currency paper — which contains full details of our tokenomics model, and how we ensure reserve-backing grows with platform usage.
Our pre-sale ICO launches on 1st November — download our Litepaper, Whitepaper and Currency paper.
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