swarm fund · swarm fund white paper april, 2018 / v0.91 contents of the white paper are subject to...

SWA R M F U N D

White PaperApril, 2018 / V0.91Contents of the white paper are subject to changes and improvements.

The Blockchain for Private Equity

The first globally live security token platform,

coming to market by tokenizing funds

and other assets

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.

Abstract

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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.

Disclaimer

1 Make sure to review: https://docs.swarm.fund/swarm-otc-risk-disclosures.pdf https://docs.swarm.fund/swarm-otc-token-term-sheet.pdf

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1. INTRODUCTION 51.1 Overview 51.2 The Ultimate Value Proposition 61.3 Current Investment Drawbacks 71.4 Mission Statement: Why We Created Swarm Fund 82. SWARM INNOVATIONS 102.1 Liquid Democracy 103. SWARM TOKEN 133.1 Two-tiered Token Model 133.2 Token Utility and Value 144. SWARM PLATFORM MODEL 204.1 Swarm Layers 204.2 Platform Components 225. SWARM APPLICATIONS 255.1 Characteristics of Pilot Asset Classes 255.2 Crypto Hedge Fund 265.3 Distressed Real Estate 265.4 Solar Installations 265.5 Purpose-driven Funding Pools 276. TOKEN OFFERING 286.1 Token Offering in Brief 286.2 Token Allocation 287. ROADMAP 297.1 Key Activities 297.2 Finances 307.3 Development Roadmap 318. LEADERSHIP 328.1 Core Team 328.2 Capital Market Advisors 358.3 Technology Advisors 368.4 Governance and Organizational Design Advisors 368.5 Partners 379. LEGAL INNOVATIONS 3810. MEDIA COVERAGE 4011. REFERENCES 41

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1.1 OVERVIEW

TheSwarmFundteamplanstohelpthecryptoworldgrowto$1trillionbybringingtokenizedreal-worldassetsthroughpartnerfunds.

TheSwarmFundteamhasmanaged$10Binportfoliosandbuiltplatformswhichhandle$25Bofmonthlydealflowandalreadyhasseveralpre-selectedfundswhichgenerate30+%IRRthroughscalablemodelspoweredbyartificialintelligence.

Swarmtokenholderswillgoverntheplatforminwhichallofthiswillhappenandreceiveadditionaltokensontheprivateblockchain.Thiswillallowthemtoparticipateinallofthesubfunds.

Thissystemisdesignedtobeadaptableforfullregulatorycomplianceinmultiplejurisdictions.ThecorridorbetweenthepublicandprivateblockchaintokensisadditionallydesignedtobefullyAML/KYCcompliantandtofollowthemodelofexistingexchanges.

1. Introduction

Swarmisbuildingtechnologybottom-up,withafullyoperationalliquiddemocracyplatformformakingkeydecisionsrelatedtoinvestmentopportunitiesonSwarm.

Ourtechnologyandblockchainco-opmodelwilllikelyalsobeusefulforotherindustryverticalsbesidesfinance.

People should participate if they believe in the

value proposition of democratizing finance,

collaborative ownership, high returns, and the

soundness of both the team and technology.

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SwarmgoesbeyondthetypicalICOapproach:

Standard ICO Approach Swarm Approach

Utilitytokenonpublicblockchain Utilitytokenonpublicblockchain,andunlimitedsecuritytokensonprivateblockchain

Unclearunderlyingvalue Sub-tokensbackedbyexistinghighlyprofitablesub-fundsholdingrealassets

SingleSwissnonprofitfoundation Seveninter-networkedlegalentitiesindifferentjurisdictionsunitedbyoneplatformco-op

Unclearrelationwithregulators Directrelationshipswithregulatorsinmultiplejurisdictionsandorganizedlegalconferenceswithextremelypositiveresponses

Prototypeproductornoproduct Workingalphaproductofutilitylayerandprivateblockchainassetstructure

Nogovernance Liquiddemocracymodelonfoundationlevelaswellasforeachsecuritytokenseparately–allowsuserstovoteonanykindofissue

Noexperiencedeliveringproduct TeamincludestwopreviousCEOswithproventrackrecordsbuildingandsellingcompaniesandprivateequitydomainexperience

Tokenvalueisderivedfromvelocityoftokentransfer Tokenvalueisderivedfromfunctioningas“gas”ofallfundoperationsandtokentransactionsonthenetwork

Unknownornon-existentAML/KYC Fullycompliantinvestorqualification(AML/KYC,etc.)throughprivateblockchainimplementationfullyimplementinglocaljurisdictions

1.2 THE ULTIMATE VALUE PROPOSITIONFromthestandpointoforganizationaldesign,WallSt.isacollectionofarchaicincentivemodelswaitingforafullypeer-to-peerorganizationtodisintermediateandredistributethewealththatismonopolizedbyasmallgroupofinsiders.WallSt.insidersareabletomanipulatemarketpricesbycreatingartificialscarcityandpromotingfearandignoranceofothermodels.

Peer-to-peermodelsconsistentlybeatprotectionistmonopoly-basedmodelsbecausetheydirectlyincentivizetopperformersratherthancreatingmultiplelevelsofopaquehierarchy,andbecausetheylayerdynamically-generatedreputationontopofthesemodels.

Additionally,peer-to-peermodelsareaperfectsubstratefortheutilizationofartificialintelligenceandamuchhigherdegreeofautomationingeneral.Peer-to-peermodelscombinedwithmodelsofcooperativeownershipalsoallowahighdegreeofresistancetoabuseofbigdata,aswellasintegrationwithothergovernancesystemstooffsetanypotentialabuses.

Systemsareaproductoftheirincentives.IftheexistingWallSt.modelhasincentivesforprotectionismandhierarchy,SwarmFundhasincentivesforearlyidentificationoftalentandrewardsthatproportionallyfollowhighperformance.

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1.3 CURRENT INVESTMENT DRAWBACKSCrypto Asset HoldersTheinvestmentlandscapeforcryptoassetholdersislargelylimitedinchoicetoeitheraselectionofestablishedcryptocurrencies,(e.g.Bitcoin,Ether,Rippleetc.)oraselectionofmorerecentlyissuedtokens(i.e.altcoins).Whileoverallcryptoassetdevelopmentsareextremelypositive,bothassetcategorieshavesignificantchallengesassociatedwiththemfromaninvestmentperspective.◆ ForBitcoinandEther,volatilityisamajorfactor.HoldingasignificantportfolioofBitcoinandEtherimpliesthatthenetassetvaluefluctuatesbyasignificantpercentageonamonthlybasis.Asaninvestment,thiscouldbedesired,butforthepurposeofpredictablepreservationofvalue,itishighlyundesirable.

◆ Forinvestmentinaltcoins,thechallengesareprimarilyrelatedtotheevaluationofassetspriortoinvestment,andlackofliquiditypostinvestment.Itisalsodifficultformanyinvestorstoclearlyunderstandthemarketdynamicsofthecoins.

◆ Althoughthetwomillioncryptoassettransactionseveryweekbetweenpeople,businesses,andcharitiessuggestasignificantvalueexchange,thegrandquestionoftheintrinsicvalueofBitcoinanditspeersremains.1

Meanwhile,tokensthatstoredigitalvaluearebreakingintothemainstreaminvestmentlandscapeasanewassetclassinwhichtoallocateinvestmentcapital.Thisislargelydrivenbyanincreasingawarenessoftheextremereturnsgeneratedbytheearlyinvestorsinthiscategory.Butforthemainstreaminvestor,thisnewassetclasspresentschallenges;namely,theworkflowbasicsofnavigatingtrading,andmaintainingassetsecurity.

Market Problems in Traditional InvestingOverthelast15years,asimpleS&P500indexfundoutperformed92%oflarge-capfunds.Meanwhile,thepercentagesofmid-capandsmall-capfundslaggingtheirbenchmarkswere95%and93%,respectively.Theoddsofanactively-manageddomesticequitymutualfundperformingbetterthananindexfundarenearlyasbadas1outof20.2

Findingproductswithhighinvestmentreturnisachallenge,whichincreasesasthetargetreturnincreases.Themarqueeproductsofferingmorethan10%returnsareinvariablyhardtoaccess(Bridgewatergenerallyrequiresthatitsclientshaveaminimumof$5billionofinvestableassets3).Takerealestateasanexample.Investors

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 Alley2 http://www.marketwatch.com/story/why-way-fewer-actively-managed-funds-beat-the-sp-than-we-thought-2017-04-243 https://www.elitetrader.com/et/threads/so-you-want-bridgewater-to-manage-your-money-there-is-one-small-condition.290936/

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mostlyfacethreemajorchallenges:◆ Themostexcitingdealsareforinsidersonly;accessingthemrequiresworkingthroughmiddlementhatarecostly,sometimesuntrustworthy,andwhooftenonlyoperatelocally.

◆ Largeamountsofmoneyarerequiredtoparticipateinthebestopportunities.

◆ Worstofall,investmentisoftentieddownforanindefiniteamountoftime.

Combinationsofthesechallengesarepartofanytraditionalinvestmentproductcategory,e.g.privateequityandhedgefunds.

1.4 MISSION STATEMENT: WHY WE CREATED SWARM FUNDSwarmisafullydecentralizedcapitalSwarmisafullydecentralizedcapitalmarketplaceplatformbuiltonblockchaintechnologythatisentirelyownedbythecommunity.Ourvisionistoallowanyone,anywhereintheworld,toparticipateinvaluecreationwithinthecryptoassetcategoryandtocaptureopportunityinnewtypesofasset-backedtokens,includinginrealestate,hedgefunds,solarinstallations,andmanymore.Swarmtransformsfinancialopportunitiesfromexclusivetoinclusive.Weprovideaccessandtradabilitysothatanyonecantakepartandhavetheircryptofundsworkforthem.WithSwarm,wewill:◆ Makeitextremelysimpleforhands-offornovicecryptoinvestorstoparticipateinacompositeofwealthcreationresultingfromutilizingthecryptospace.

◆ Createaviableframeworkandhubforcryptoinvestorstoinvestintoalternative,asset-backedtokenopportunities,inordertoescapemarketvolatility.

◆ Introduceanewalternativeliquidityhubforprojectownerswithattractiveunderlyingeconomicstofindcapitalandengagewiththeinvestorcommunity.

Core Objective: Follow The ExpertsSwarmallowsexpertstoruntheirownsyndicatesandhaveothercryptoinvestorsjointheminprojectsanddealopportunities,withnomiddlemeninvolved.Wearebuildinganecosystemofexpertswithanykindofedge(trackrecord,tradingability,uniquedata,uniquedealaccess,etc.)inordertoallowcryptoinvestorstofollowandco-investwiththem.Thischangesthemechanicsofthetraditionalfund/GPmodel,asinvestmentscanbeaslargeorsmallastheinvestorwantsthemtobe,andtheycanoperatethefundstructuresveryflexibly.Also,itbreaksupthesyndicatesofgatekeepersandrigidstructuresofinstitutionalcapitalasitisdeployedtoday.

Core Objective: Combine Token Flexibility With Real Opportunities Cryptoinvestorshaveappreciatedtheflexibilityandimmediatemarket-makingfunctionthattokenizationhasintroduced.Tokensandtheirunderlyingsmartcontractsrepresenttheultimateopportunityfortwopartiestocometogetherandinteractwithoutmiddlemen.Onebenefitisthefreedomtotradeorco-owntokens.Thatisthefreedomwewanttobringtoanykindofasset.WhenaparticipantlikesanopportunityrunningonSwarm,theywillbeabletopoolfundstogetherwithothersandinvestaslittleorasmuchastheywantinordertorealizetheprojectandseetheopportunitygrow.Atthesametime,allprojectsbecometradable,asset-backedtokens.Participantscanbuyorsellthesetokenswhenevertheywant;theydecidehowlongtoengage.Alltradesaremadeusingblockchaintechnology,makingthemfast,transparent,andsecure.

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Core Objective: Collective IntelligenceWebelieveintheswarmintelligencehypothesisthatdecentralizednetworkscanout-competetraditionalcentralizedentities,andthatthetrustandtransparencyembeddedinblockchainsgreatlyfacilitatesthis.Thefoundationalelementoftheblockchainisdatatransparency,whichprovidesabasisforanunprecedenteddegreeofmachine-drivenmethodstogenerateinsightsandtakeactions.Ultimately,withSwarmweenvisionadegreeofinvestmentautomationthathelpsparticipantsmakeinformedanddata-driveninvestmentdecisions,whileusingreputationalscorestomaintainthehealthofthemarket.Ourautomationcangoevenfurther,towhereeverystepoftheinvestmentprocess,fromworkflowstoestablishmentoflegalstructures,willeventuallybeautomated,creatinganefficientsystemwithoutsinglepointsoffailureorcontrol.

With Swarm we envision an unseen degree of investment automation.

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Swarmemploysanenhanced voting stakeprocess.Theenhancedvotingstakemakesuseofalockingperiodandisaproposedadditiontothestake-weightedliquiddemocracy(whichdoesnotallowtokenstobetradedforacertainperiod).Thiscanalsoallowapersontohaveaproportionallyhighervotingweightiftheyhaveaprovablelong-termstakeinthenetwork.

Traditionalmodel:

Afunding pool isanorganizationgovernedbynetworkdemocracythatdistributesfunds.Itcanbestructuredsimilarlytoaninvestmentfund,inwhichcaseitseeksopportunitiesorsomeotherpurpose(e.g.,advocacy,education).Fundsthatgointoanyfundingpoolcanbeallocatedbyahigher-levelnetworkdemocracyorreceivedindependently.

AkeyelementoftheSwarmPlatformistheuseoftokenized assets.Swarmmaybeusedtogovernotherreal-worldassets,suchasrealestateandothertokenizedelementsderivedfromclassicinvestmentvehicles.Specificdetailsofthesedealopportunitiesaremadeavailabletomembersofthenetwork.

2. Swarm Innovations

2.1 LIQUID DEMOCRACY Network Democracy as Liquid DemocracyNetworkdemocracyisastake-weighteddelegatedvotingsystem(liquiddemocracy)thatalsoprovidesoptionsforenhancedstakeandprogrammableliquidity.Stake-weightedmeansthatvotingpowerisdirectlyproportionaltotheamountofstakeyouhaveinaproject.Intheblockchainworld,thisistypicallycalledyour”tokens”or”coins.”Intheworldofstock,thiswouldbecalledyour”stock”or”shares.”Liquiddemocracyinvolves”delegatedvoting”andimpliesthatausercandelegatetheirvotetoanotherpartyatanypoint,foraslongadurationastheydesire.Thisallowsuserstomaintainadegreeofcontrolwithouthavingtoparticipateinminutedecisionmaking.Thisisinsomewayssimilartothedecisionaninvestormakeswhentheygivesomeonecapitalforaproject;thekeydistinctionisthatinaliquiddemocracy,theinvestorretainscontrolofthecapital.Stake-weightedliquiddemocracyisahighlyflexiblegovernancemodelthataccommodatesanystructure,fromone-member-one-vote,totraditionalcorporatearrangements,tonovelformsofcollectives.Italsoappropriatelyincentivizesthemanydifferenttypesofpossiblecontributionstoanetwork(code,communitycontributions,funding)andallowsforbothdecision-makingcapabilityandrewards.Italsointegrateswithotherautomateddecision-makingstructures,suchasfutarchy.

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Trust Network Thetrustnetworkismadeupofmanyindependenttrustendorsements(i.e.vectors),whichcreateaccountabilityandallowautomation.

Trust Equation

Thetrustisthesumofalltrustedpartiesandtheirrecommendationsfromthestandpointofanindividual(hererepresentedasvectors,whichcanbepositiveornegative).Inthiscase,werecordalloftheseendorsementsandallowmultiplelevelsofascriptionandderivation.Trustcurrencyismadeupbyindividualimmutabletrust vectors.Eachtrustvectoritisanendorsement.AendorsesBforX.Thishasatimestampandanoptionalweightrepresentedasanumberfrom[-1..0..1].Theabilitytoprovideanegativefilteraswell

asapositiveoneisimportantforseparatingsignalfromnoise(anexampleofasimilarproblembeingFacebookfakenews).Aswithotheropennetworks,ithasanopen-accesspolicyandthenatureoftheendorsementsispseudonymous.

Swarm Platform as a Representation of Holonic Principles

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Trust GraphThesevectorsareoptimallyrepresentedasagraph.Thisgraphillustratesthattrust(includingwhatwebelievetobetrue)canbederivedfromthevarioustrustvectorsonthenetwork.The implications of a trust modelarenumerous.AnopenreputationledgerbuiltofindividualtrustvectorsisacriticalelementintheSwarmPlatform.

Ithelpsincentivizepositiveoverallsocialcontributionsandaugmentsthenetworkmoregenerally.Italsoallowsfullautomation.Forexample,portfolioallocationdecisionscanbemadebyartificialintelligence.Italsomakescertainotheraccountabilitymechanismslessnecessaryduetothestrongsocialcomponent.

4 TrustGraph.io - Harlan T. Wood, Adam Apollo

Swarm Trust Vectors

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3. Swarm Token

3.1 TWO-TIERED TOKEN MODEL TheSwarmecosystemhastwotypesoftokens.TheSwarmtoken(SWM)isautilitytoken,andtheessentialelementthatpowerstheSwarmecosystem.ItisusedasGastoimplementthetokeneconomicsonSwarm.Proofscreateaself-enforcingmechanism,encouragingathrivingdecentralizednetworkofparticipants.ParticipatingprovidersandconsumersonthenetworkusetheSWMtokentosettletransactionsontheplatformandprovideotherservicestooperatethenetwork.TheSWMtokenalsograntsaccesstoSwarm’sgovernancetechnology,whichisusedtogovernanysignificantdecisionmadeontheplatform.

ThesecondtokencategoryonSwarmisthesecuritytokenlayer,wherebyeachinvestmentopportunityonSwarmisrepresentedbyitsownsecuritytoken,supportingthe

SRC20tokenstandard.TheSRC20standardimplementsfundamentalcharacteristicstosupportregulatorycompliantissuanceofsecuritytokens,suchastransferrestrictions.

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.

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3.2 TOKEN UTILITY AND VALUEIngeneral,incentivesandcounter-incentives-elementsofGameTheory-arenotnewinblockchainprojects,andactascorefunctionsthatencouragedesiredbehaviourinadecentralizedsystem.

Bitcoin’sProof-of-Work(PoW)incentivizesminerstoprocesstransactionsonthenetwork,therebysecuringitinreturnforamonetaryrewardtothefirstminerthatsolvesanarbitrarymathematicalproblemandcreatesanewblock.

The2ndgenerationmodelwithProof-of-Stake(PoS)isamoreefficientprotocolforvalidatingtransactions.Newblockcreatorsarechosendeterministically,thereisnoblockreward,andinstead,thechosenblockcreatorisrewardedproportionallytotheirwealth,orstakeinthenetwork.Inotherwords,withPoS,incentivesareconstructedtobuyandholdsomeofthecoinsbeingminted,withminersincentivizedbytransactionfees.

Basic structure of the Swarm Token

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democratizingfinance.We’regoingfurtherthanopeningupalternativehigh-performinginvestmentopportunitiestoallpeoplerichandpoor.

AtSwarm,we’rebuildingadistributedsystemthatisAI-powered,community-governed,andwillevolveintoaself-sustainingandefficientglobalresourcemarketplace.

Swarm Token Utility ModelThetokenmodelhastwocoreelements:◆TheSWMtokensarecreatedforthenetworktogovernamarketinfrastructureforalargepoolofassetsrunningontheSwarmNetwork.TheSwarm(SWM)utilitytokenhasalimitedsupplyof100Mtokens.◆TheSRC20tokensaresecuritytokens,mintedbythesyndicatemanagerofeachinvestmentopportunity,thatrepresentownershipofthatinvestment.

Inthatcontext,theSWMtokenhasthreeessentialfunctionsontheSwarmplatform,eachofwhichaddtoitsvalueinauniqueway,andeachincentivizedbythenetwork.

Nowwe’reseeingtheriseofprojectsinspiredby“TheThirdWaveofCrypto”-decentralizedprojectsthatprovideincentivesandrewardsthatpromotedeepercollaborationandreal-worldinteraction,incorporatemachinelearningandartificialintelligence,andbringrealassetstotheblockchain.We’renowmovingonfromincentivesthatencouragesupportofthenetworkandprovingblocks,torewardingimportantvalue-addingservicestothecommunityoftokenholders(inadditiontothecorevaluepropositioncentraltothesystem).

NEO’susersarerewardedGAStocreateanetworkthatdeploysandrunssmartcontracts.SIAtokensincentivizedatahoststostayonline,buildinganetworkofdecentralizedstoragewithsufficientredundancy.Simplyput,we’reseeingthefirstsignsofblockchain-basedself-sustainingecosystemsthatdisentanglemassiveinefficienciesinthecurrenteconomy.

Inthisspirit,wehavebeendesigningacrypto-economictokenmodelthatwebelieveachievesfarmorethanitscorevisionof

TOKEN HOLDERS SERVICE PROVIDERS PROJECT OWNERS

SWM As Voice SWM As GasSWM As Value

SWM is used to govern by vote, the

direction of the platform

SWM is required to launch new

investment opportunities and to keep

them operational

SWM is the incentive and the reward

for services provided on the platform

Proofs create a self-enforcing incentive mechanism

encouraging a thriving decentralized network

The SWM Token is the essential element

which powers the Swarm ecosystem

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SWM as GasSWMfunctionsasthecoreelementthatpowersinvestmentstooperate.Ontheinvestmentside,fundmanagersarerequiredtopaySWMwhentheylaunchnewinvestmentopportunitiesandtokeepthemoperationalfortheirduration.WecallthisGas for Fund Operations (GFO),andithasthefollowingcharacteristics:◆GFOiscalculatedasapercentageofNetAssetsUnderValue(in$USD)andispayableinSWM◆GFOiswithdrawnonanongoingbasis,asneeded,inordertofundoperations◆Subjecttoiterationbyearlyadopters,initialGFOwillbeintherangeof0.6-1.0%

FundmanagersarerequiredtocontinuouslymaintainapositivebalanceofSWMtocovertheirexpectedGFOneeds.ManagersareabletoplantheirpurchaseofSWMattimesoptimaltothem,takingintoaccountmarketforces,theirownexpertanalysis,andfutureinvestmentrequirements.Infutureiterations,thiswillbefullypoweredbyartificialintelligence.Forexample,arealestatefundthatexpectstomakealargeinvestmentinayear’stimemayopttofront-loadtheirpurchaseofSWMnow,takingadvantageofcurrentpricesandknownmarketconditions.

SWMraisedfromGFOisautomaticallysenttoasmartcontractthatactsasaProof-of-Servicepool.Thispoolisthenusedtorewardthird-partyactorsthatprovideadditionalvalue-addingoperationalservicessuchasaudit,accounting,ormarketingservices,furtheraddingvaluetotheplatformasawholeandpromotingitsgrowth.

Ontheothersideoftheequation,investorsarerequiredtopaySWMwhentheyallocatecapitaltoaninvestment.WecallthisGas for Capital Deployment (GCD)anditcanbethoughtofasatraditionalplacementfeethat,incontrasttootherprivateequity

capitalplacements,allowsfortradeabilityandliquidity.However,ratherthandirectlypayingGCDtothefund,Swarmoffersinvestorsastrategicchoice.

Investorschoosebetween:◆Liquidity:Investorscanopttokeeptheirinvestmentliquidandtradeable,inwhichcasethecorrespondingGCDisforfeited,buttheyreceiveregularreturnsontheirinvestment,or◆Commitment:Investorscanopttolocktheirinvestmentforafixedperiodoftime,correspondinglylockingtheirGCDforthesameamountoftime.Capital,returns,andthefullamountoflockedGCDisfully refundedattheendofthelockingperiod.Notethatinvestorscouldchooseliquidityatfirstandoncetheygaincomfortwiththeinvestment,latermoveintoacommitmentonalowerbasis(assomeoftheGCDwillalreadyhavebeenreleasedonaproratedbasis).Subjecttoiterationbyearlyadopters,initialGCDwillbeintherangeof1.0-1.5%

Strategicallyoptingtolockone’sGCDactsasaProof-of-Commitment,andbringsenormousbenefitsforbothinvestorsandfundmanagers:◆Fundmanagerscanactoninvestmentswithfargreatercertaintyknowinginvestorfundsarecommitted,andcanrecycleandreinvestcapitalratherthanpayingreturnsoutregularly,givingthemagreaterabilitytonegotiateusingtheirassets.◆InvestorswholocktheirGCDcanalsobenefitfrompotentialappreciationinthevalueofSWMoncetheirchosenlockingperiodhasended.

Swarm’sProof-of-Commitmentissopowerfulthatwe’veintroducedafurtherincentivemechanismtoencourageit,especiallyforthosefundstowhomcapitalcommitmentisstrategicallyimportant.Fundmanagersaregiventheoptiontomatchaninvestor’sGCDcommitmentwiththeirown,inanyratiotheylike.Thisgreatlyamplifiesinvestors’potential

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returnsattheexpirationofthelock.Asanexample,asolarinstallationinCalifornia,forwhomcapitalcommitmentisimportant,mayoffer2-for-1GCDmatchingasincentivefora3-yearlock,meaningthatinvestorswhochoosetocommittheirinvestmentreceiveabonusofdoubletheirlockedSWMtokensattheendofthelockingperiod.

GCDProof-of-Commitmentallowsinvestorstoeffectivelyneutralizetheirplacementgasandthereforeboosttheirreturns,whilegivingplannabilityandcertaintytomanagers.Bothwin.

SWM as VoicePerhapsthemostrevolutionaryfeatureoftheSwarmplatform-andtheoneweareverypassionateabout-isitsLiquidDemocracyvotingmodule.Swarmisbuiltwithgovernancedesignedintothecore,andateverylevel.Blockchainismaturingbeyondpaymentsystems,storesofvalue,anddistributedapplications(Dapps).Weareenteringtheageofrealassetsontheblockchain.Artinstallations,marijuanaplantations,andcommunity-fundedinfrastructureareallgoingtobeconceptualized,debated,crowd-funded,realized,andmanagedontheblockchain.Noneofthesefunctionscanbeperformedwithoutalayerofgovernance,arguablythemostfundamentalandimportantutilityofSWM.

Directgovernanceofinvestmentsisnecessaryandimportant,aswearenotbuildingSwarmtobeanothermiddleman.Theultimategoalistofoundanecosystemofindependentlygovernedengagements;anupgradediterationoftheDAO.

Incentivized Governance

Proof-of-Participation

Self-governance ensures the

evolution of the platformGovernance is inherently key

to Swarm

The foundation allocates budgets

to incentivize governance

Participants get rewarded for

making proposals & voting on the

Only token holders have voting

rights in platform &

investment-level decisions

Swarm‘s governance model enables

direct representation for minorities

Through Liquid Democracy, votes can

be delegated to those with

domain-specific knowledge

Delegation grants better-informed

individuals greater voting power

Through incentivized governance, the

Swarm Foundation is building a fully

decentralized, self-governing

Voters are rewarded with SWM for

participating & taking actions to

improve the system

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SWM as ValueSWM’svaluederivesdirectlyfromitspowersasincentiveandreward;powersthatcombineassetmanagementwithresourceefficiency,powersthatstrengthencommunityengagement,andpowersthatderiveandkeepvaluewithintheplatform.Optimalbehaviorisclearwithinthesystem-forallactors-andissummarizedinthetablebelow:

◆Investorschoosebetweentwopowerfulstrategieswhenallocatingtheirresources.

◆Fundmanagersplanandoptimizetheiroperationalrequirementsaccordingtotheir

specializedknowledge,andfurthercompetebymatchingincentives.

Infrastructureandserviceprovidersareincentivizedtocontinuouslyinnovateandadvancethevirtuouscompetitivecycleofdeliveringmoreatlowercost.Whileinitialmonetarypoliciesforgaspriceswillbesetbythefoundation,futurepolicywillbevotedonanditeratedbyearlyparticipants.Successfulinteractionamongstallstakeholderswill,overtime,permittheSwarmFoundationtoactasmentorandguide,movingonfromitsroleasarchitectandadministrator.

Investors

Infrastructure Providers SWARM

Syndicates

The user decides his/her strategy

They can choose to forfeit or lock the SWM token, choosing between liquidity & commitment

The syndicate is incentivized to plan & purchase SWM from the market at the optimal time to power future requirements & in appreciation of SWM

As the ecosystem matures, the incentives to provide services to the network grow

At the same time, for any specific service, the greatest rewards naturally flow to actors who performed most efficiently

The foundation's core role is to develop the initial trials of the system components & hand them over to other actors over time

As SWM circulates amongst all network members, the foundation's role naturally devolves to a state of distributed self-governance

Matching investor commitments allow more mechanics to come into play

Investors

Infrastructure Providers SWARM

Syndicates

The user decides his/her strategy

They can choose to forfeit or lock the SWM token, choosing between liquidity & commitment

The syndicate is incentivized to plan & purchase SWM from the market at the optimal time to power future requirements & in appreciation of SWM

As the ecosystem matures, the incentives to provide services to the network grow

At the same time, for any specific service, the greatest rewards naturally flow to actors who performed most efficiently

The foundation's core role is to develop the initial trials of the system components & hand them over to other actors over time

As SWM circulates amongst all network members, the foundation's role naturally devolves to a state of distributed self-governance

Matching investor commitments allow more mechanics to come into play

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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

TheSwarmplatformwillbecomposedofthreeprimarylayers:Core,Services,andApplication.

Primary Layers of the Swarm Platform Layer 1: Swarm Core

TheCorelayerprovidesthefoundationalsystemcomponentsandsmartcontractsforSwarmuse:networkgovernancetokenmanagementwithconsensusvialiquiddemocracy,andamanagementinterface.Thisalsoincludessystemreplicationsofthepreferredlegalframeworks,reputationalengine,anddecentralizedcollaboration,aswellasfoundationalprocessesaroundsecurityanddatatransparency.TheCorelayerframeworkallowsforthecreationandmanagementofnewprojects.Itisandalwayswillbefreeandopentouse.

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Layer 2: Swarm ServicesTheSwarmServiceslayerwillofferadditionalservicesontopofSwarmCore.TheseservicesaremeanttomakeitextremelyeasyforanyparticipantstobuildinvestmentapplicationsontopofSwarmandservethemarketplaceinthemostcreativeway.Theseserviceswillincludefull-stacksetupofverticalSwarmfunds(viaSpecialPurposeVehicles,orSPVs),operatingSwarmsyndicates,assetcustodianservices,andanyautomationofongoinginvestmentoperations.Morefeatureswillbeintroducedtobestmeettherequirementsoftheevolvingmarketplace.Applicationtemplates,customizationtools,andadvanceddataprocessingcapabilitieswillallowouruserstoexecutetheirvisionsfasterwhileloweringthebarriertoentryfornewinvestmentapplicationstocometomarket.WhileapplicationsandparticipantsarewelcometointeractwithSwarmontheCorelevel,wewillbeofferingSwarmServicestoacceleratethego-to-marketprocessandreduceoperationalcosts.SwarmServiceswillbeofferedusingalicense-feemodel.

Layer 3: Swarm ApplicationsOnthehighestlayer,ontopoftheSwarmServiceslayerordirectlyoperatingontheSwarmCore,istheSwarmApplicationslayer.Theseapplicationsarebothfront-endaswellasinsomecasesapplicationback-endsthatarespecifictotargetinvestmentusecasesand/ortargetsegments.

SomeoftheseapplicationsmaybebuiltbySwarm,whileotherswillbebuiltbythirdparties.OurvisionforSwarmistohaveawidevarietyofinvestmentapplicationsbuiltonthesameplatformtechnologyandliquiditypool.Theseapplicationswilllikelychargeadditionalfeesorusealternativebusinessmodelssuchasmarketmaking,informationselling,orrevenue/profitsharing.Asfurtherdescribedinthefollowingsection,manyofsuchSwarmapplicationsmayincludethereleaseoftheirownutilitytokensasacorecomponentoftheirbusinessmodel.

Our vision for Swarm is to have a wide variety of investment applications built on the same platform technology and liquidity pool.

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4.2 PLATFORM COMPONENTS

Liquid Democracy Voting ModuleGovernanceiscoretoSwarm’smission.Andcoretothatmissionistocreateinfrastructurethatallowsparticipantstovoteonissuesinatrustless,transparent,andauditableway,whichcanpersistoutsideofSwarmasanorganization.

ThereforeSwarmiscreatinga“LiquidDemocracyVotingModule”(“LDVM”),whichhasbeenthebasisofallvotingthattheSwarmorganizationhasperformedinternallyandexternally,andfirstversionsarealreadyavailable.

TheLDVMisintendedtobeconfigurablebyanydeveloper,integratedwithotherplatforms,andexecutedoutsideoftheSwarmplatform.TheLDVMwillbeabletobecustomizedtospecificvotingpopulations,issuediscoveries,andconsensusmethods,aswellasvotingprocesses.Further,amajorobjectiveofnewvotingsystemsistorelieveparticipantsofongoingvotingobligationsorcomplexitiesaroundvoting.WiththeLDVM,usersareabletodelegatetheirvotestoothersinapersistentfashion,anddifferentiatedbyissuecategoryandduration.Withtheseabilities,thegovernanceofthefoundation,aswellaseachoftheunderlyingSRC20tokensandrelatedlegalentities,canbeperformedincompletelynewways;forexample,thereisnolongeranecessityforboardstructures.TheLDVMisintendedtobecomeauniversallyapplicablevotingengineforanypartoftheSwarmplatform,andtobeusablebeyondSwarminotherrelatedorevenunrelatedprojects.Inparticular,theopenarchitectureofthismodulewillleadtoexcitingnewapplicationsandusecaseswellbeyondSwarm.

Purpose-Driven Funding Wallets (“Blackbird”)OneoftheusecasespoweredbytheLDVMwillbetheBlackbirdwallet.ABlackbirdwalletisasmart,multi-userwalletthatcollectsfundsanddeploysthemtoatargetaddressthatisapprovedusingastake-weightedmajority.EachBlackbirdWalletcanpotentiallyhaveconnectionstorealizeitspurposeontheSwarmnetwork,butnotnecessarily.Blackbirdwillallowthepoolingofcapital,suchasforapurposethathasyettobespecified,andallparticipantstogethermakedecisionsalongthewayaboutthedeploymentofcapital.Asthepurposegetsfurtherspecified,moreparticipantsgainconfidenceandinvestmorecapital,andsoon.Whileasetuplikethiscanhavemanydifferent

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usecases,thefirstiterationofthewalletwillbeused(1)asaone-timefundcollectionanddeploymentinstrumentand(2)anevergreen(ongoing)fundcollectionanddeploymentinstrument.ThereareanumberofpowerfulusecasesthatcanbepoweredbyBlackbirdwallets.ThinkofUberdriverspoolingtheircapitaltobuyacornerpositioninUber.Orthecreationofafoundationtooffsetthecarbonfootprintoftheblockchain.

Artificial Intelligence Infrastructure for the AI-driven Investment EconomyThename”Swarm”isareferenceto“SwarmIntelligence,”aformofdecentralizedintelligence.Inthenaturalworld,itmanifestsinself-organizingcommunitieslikeantcolonies,flockingbirds,andschoolingfish.Swarmintelligenceisalsoemployedatthevanguardofartificialintelligencetechnology.Swarm(thecompany)istakingapractical,multi-phasicapproachtosolvingreal-worldproblems,whilebuildingtheinfrastructureandecosystemthatwillallowfordecentralizedintelligencetooccur.

ThefirstphaseofAIatSwarmisasimpleapproach:providingusersandindustryprofessionalswithtoolstomakemoreinformedinvestmentdecisionsviaproductsofmachinelearning.WithintheSwarmecosystem,wearerollingoutapracticalreinforcementlearningalgorithmthatusesamulti-armedbanditapproach(i.e.,analgorithmthatacquiresknowledgebyperformingmultipleexperimentssimultaneously,assessingresults,andquicklylearningtooptimizeoutcomes).Thiswillbecombinedwithsometraditionalfinancialanalyticsmodels(EMA,MACD,IchimokuCloud),alongwithmoresophisticatedMLmodels(LSTM,Phased-LSTMandothers).Weanticipatethistakingafewmonthstorollout,asthealgorithmsrequiresufficientdataandvotingwithintheecosysteminordertoprovidearobustmodel.AdeeprosteroffundsareinthepipelinetogetlistedontheSwarmplatform,andourastuteAIwillanalyzethemall.NotonlywillwedeployourbotsforthedirectbenefitofSwarmplatformparticipants;wewillalsoofferthesetoolsandinfrastructuretoSwarmsyndicatestocreatecryptohedgefundsthattradeusingmachinelearningalgorithms(ML)inadditiontotraditionaltradingstrategies.

Thesecondphasewilladvancetheplatforminafewveryimportantways:First,itwillallowforactivetradingbasedonindividualconfigurationandpreferenceswithintheSwarmplatform.Somemayindividuallyusethetools,andothersmaycreatefundsandofferthemassyndicatesontopoftheplatform.SwarmmemberswillbeabletoparticipateinthosestrategiesviatheSwarmplatform.Therearea

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fewkeyadvancementsinthisphase:Thegoalwillbetoemployalargeensembleofmodelswhosenumberwillbedeterminedbymarketfactors.Usingmanyreinforcementlearningagents,or”bots,”wecanprogramthemtocompetewitheachother,honingtheir“intelligence,”andmaximizingpotentialrewards.Amasteralgowillchoosehowtoexecutetradesbasedonobservedpotentialrewardsandobservedmarketbehavior.ThegoalistodecentralizetheAI,eventuallyachievingproperSwarmIntelligence(Todaywearegettingcloser,butstillnotentirelydecentralizedfromamodelperspective.).Akeycomponentofthisphaseistheabilityofmodelstogiveinformationtoothermodels.Thismutualinformingcanbebothadversarialandconstructiveinnature.Modelsthatcanwinthevoteofthetradegetmorereward.Bydoingso,modelslearntocaptureandmaximizerewardacrossmanydifferentmarketconditionswhiletailoredtodifferenttradingpreferencesbyinvestors.

Thethirdphaseisabigandextremelyexcitingone.InPhase3,wewillfullydecentralizetheabilitytotradewithintheSwarmnetwork,andlinkwithothertechnologies.WhilePhase2allowedtheSwarmprofessionalstobuildoutfundorganizationsuponwhichSwarmmemberscanvoteandinvest,Phase3willallowanyindividualquantandmodelbuildertotokenizetheirownmodelsandstrategies,andtoeffectivelycreatetheirownfunds.Thesemodelscanbetradingalgorithms,ormodelsthatserveothermonetarypurposes.Forexample,amodelbuildercanprovidealanguagemodelwiththeabilitytoparseandmakesenseofTwitterorTelegramfeeds.Then,othermodelscantapthatmodelforinformation.Thegoalistocreatethecoremarketinfrastructureandanetworkofincentivestoallowforbothmodelcompetitionandgeneticevolutionofperformanceandfitness,thusallowingformodelprimitivestoevolve,whichthengeneralizetodifferentdomains.Wewillreleasemoretechnicalinformationonthisinthenearfuture.

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5. Swarm Applications

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.

Swarm-Supported Asset Types

5.1 CHARACTERISTICS OF PILOT ASSET CLASSESWhenlaunchingamarketplacetechnologyitiscriticallyimportantto(a)buildtrustwiththeparticipantsand(b)providecuratedpilotusecasesthatallowthemarketplacetotakeoffintherightdirectionandwiththerightmomentum.Inidentifyingthefirsttargetassetusecases,wehavetriedtobalanceboth.ParticularlyinlightofissuesthatledtotheriseandfalloftheDAO,weapproachedthisprojectwithsignificantdiligenceandpreparation,beforebeingabletobringamarket-readyproposaltothecommunity.Westronglyfeltitwasimportantintheearlystagesto(1)demonstratetangibleplatformviability,(2)beabletoshowviabilityandmaterialattractivity,and(3)beabletoquicklyscalewithintheusecasesiftheyprovetheirefficacybymeetingorexceedingexpectations.

Therefore,weinvestedsignificanteffortsintoidentifyingassetclassesthathavethefollowingkeycharacteristics,amongothers:◆ Havetheabilitytostartwithsmallamountofinvestment.

◆ Showcontinuoustangiblereturns.◆ Representarangeofrisk-rewardprofilesthatarerelevanttothecryptoinvestorcommunityandproviderelevantalternativeassetprofiles(e.g.20%+ROIannually,focusedonglobalimpact,etc.).

◆ Arewell-establishedandunderstoodfromanassessment/ratingsperspective.

◆ Scaletosignificantsizequickly

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5.2 CRYPTO HEDGE FUNDInvestingincryptoassetspresentsuniquechallenges,revolvingaroundtradingworkflowsandassetsecurity.Itrequiresexpertknowledgetoproperlynavigatethemarketandbeawareofthelatestmarketdynamicsinspecializedmarketverticals,startingwithliquiditymovements,arbitrageopportunities,orproperassessmentofthelatestmarket-influencingindustrynews.Thesyndicatewithwhichwearecollaboratingformsacryptohedgefundthatstrivestobe“aheadofthecurve”withthegoaltosimplifyvaluecreationforcryptoinvestorsbyofferingthebestexperiencetoengagewithanetworkofinvestors,collaborators,andopinionmakers.Theobjectiveistopresentanincentivizedplatformforverticalexpertstotradeontheiruniquemarketknowledgeordataandtoprovideuncorrelated,risk-adjustedalpharelativetoindustrybenchmarks.Thecompositeinvestmentstrategyincludesright-frequencytradinginto1)ahighlycuratedportfolioofcryptoassets,2)derivativesmarket-making,and3)miningproof-of-staketokens.Thegoalistocreateablendofselectedbesttradesbasedonproprietaryalgorithms,market-neutralquantitativemodels,andfullyautomatedexecution.

5.3 DISTRESSED REAL ESTATERealestateinvestmentspresentauniqueopportunityforprivateequityrealassetengagements.Especiallyinterestingaresub-marketsegmentslikedistressedrealestateprimarilyfocusedonjudicialforeclosurestates.Thesyndicateleaderwehavepartneredwithhascreatedamachine-drivenplatformtoidentifynegativeequityrealestateinforeclosureauctions,andacquirethese“SubjectTo”existingliensfromanimpartialfederalbankruptcytrustee.Duringtheverylongjudicialforeclosuretimelines,thisprovides2-3+yearsofrentalincome,andinsomecasesthefundisevenabletoclearliensatasteepdiscountandimmediatelysellthepropertyatprofit.Thisproducesexceptionallyhighcashreturnsandisanexcellentopportunity,eveninaneconomicdownturn.

5.4 SOLAR INSTALLATIONSThereisnodoubtthatrenewableenergy,andparticularlysolar,isontheriseandaninterestingassetcategory.Theuniteconomicsofproducing,installingandmaintainingsolarpanelshaveimprovedsignificantlyandmadetheinvestmentcaseaninterestingopportunitywith20%+annualreturns.Additionally,therearesignificanttaxbreaksinvariousregionsglobally,especiallyinCalifornia,whichpresentsadditionalmajoreconomicbenefits.Thesyndicateoperatorswehavebeenevaluatinghavebeensuccessfullybuildinganinvestmentplatformspecificallyforthisapplication.

We’ll create a blend of selected best trades based on proprietary algorithms, market-neutral quantitative models and fully automated execution.

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5.5 PURPOSE-DRIVEN FUNDING POOLSSwarmisalsoaimingtohelpgenerateimpactinvestmentsfornonprofitsandsocialenterprisesthathelpmeetsignificantcommunityneedsandaddresshumanity’sgrandchallenges.Weareworkingtoensurebasicneedsaremetforallpeople,whilesustainingandimprovingqualityoflifeandmitigatingfuturerisks.Wehopetoinvolveindividualsandinstitutionswhoareusingtheirresourcesforsocialgood,andarelookingbeyondsimplymakingtraditionalphilanthropicgifts.Weseektohelpthemleveragetheircapitaldirectly,withapurposetheydeeplycareabout,andperhapsevenearnasmallgainovertime.Webelievethecryptocommunityhassuccessfullyproventhatitcanbuildincentivesforthecommunityitselftocreatedesiredoutcomes.Weenvisionpurpose-drivenfundingpools,thatincentivizetheentrepreneurialcommunitytocreatesolutionstomeetthechallengesandcompeteforthe“bounty”bydeliveringa“socialProof-of-Stake”,similartothewaytheX-Prizeshavefueledinnovation.

We believe the crypto community has successfully proven that it can build incentives for the community itself to create desired outcomes.

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6. Token Offering

6.1 TOKEN OFFERING IN BRIEFTheSwarmorganizationcreated100Mtokens,andbudgeted33Mtokenstobesoldtopurchasers.Ofthese,8.2MweresoldinQ42017.

Inthecurrenttokenoffering,weareprojectingtosell20Mtokens,targetingaraiseof$23.75MUSDdenominatedinETH.Shouldthedemandbehigher,theSwarmFoundationcandecidetore-allocatetokenbudgetstoexpandthesale.Withtheabove,thecapsharedistributionchangesinfavorofthecommunity.Assuch,ahighermarketdemandwithinthesalesimplyallowsformoreexchangelistingsontheSUNnetworkandaugmentsthevalueoftheplatform.

Ourmethodofdripliquidityensuresthatearliertokenholderscannotimmediately“dump”alloftheirtokensafterthepurchase.Afterthetokengeneration,themembersvotedtointroducealiquidityoptionthatreleasesthetokenliquidityin4equalreleasesevery84days.ThefirstliquidityreleasestartedonNov6,2017,andfullliquiditywillbereachedonJul16,2018.

6.2 TOKEN ALLOCATIONOfthetotal100Mtokenscreated,33Mtokenswillgotocontributors(pastSwarmmembers,advisors,apoolforfuturecontributors),while33Mtokensareassignedtothecoreteam.

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7. Roadmap

7.1 KEY ACTIVITIESForthepast6monthswehavebeenexecutingonkeyactivities,includingthelaunchoftheliveSwarmplatform:

◆ Ourteamdevelopedconcrete,trustedinvestmentopportunities,withagoalofshowingsuccessesandpushingthemarketplaceintherightdirection.

◆ TheinitialdeploymentoftheSwarmplatformwentliveonJan29th2018.

◆ SubstantialworkhasbeenperformedtowardviablelegalframeworksforSwarminitiatives.

◆ Implementationofaregulatoryframeworkacrossdifferentjurisdictionsforsecuritytokenshasstarted,includingintegrationwithserviceprovidersfore-infrastructureandAML/KYC.

◆ Rampingupcommunityengagementefforts,Swarmhas14,000+investorsregisteredontheliveplatform,withongoingsignificantgrowth.

◆ Wehavedevelopedapipelineof35+fundsthatwanttolistontheplatform;wearedevelopingonboardingprocessesandlaunchingthemsoon.

◆ WehavecreatedpartnershipswithexchangestosupportSRC20securitytokens.

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7.2 FINANCESInourtokensale,weareprojectingaraiseof$23.75MUSDdenominatedinETH.Forcapitalallocation,themainprincipleisthatfundswillgotowardsoperationalexpensesandplatformdevelopment.

Ourcurrentteammembershavemanagedindividualportfoliosinexcessof$3Bandbuiltplatformswithanexcessof$32Bindealflow.Fundusagewillbesplitapproximatelyevenlybetweenplatformandapplicationdevelopment.

Use of Contributions

Product / Development Costs: Platformdevelopmentwillincludebuildinguponandsecuringcoresmartcontracts,additionalframeworkssuchasadecentralizedreputationalengine,tradingandmanagementinterfaces,service-levelapptemplatesandcustomizationtools,andintegrationswithfutureEthereumorotherblockchaininfrastructuresuchasexchanges,custodianserviceproviders,andstablecoins.WewilldevelopcertaincustodiancomponentsforSwarmwalletholdersandworkwithexpertsforcustodianservices(e.g.,Ledger).Legal & Regulatory Costs: Legalrequirementsincludecorporatesetupsindifferentlocationsforcrowdsale,operations,andotherlicenses.Post-launch,wewillworkwithlegaladvisorsandregulatorsindifferentjurisdictionstodeveloplegalopinionsoftheinterpretationwithlocallaws,andbecomecompatiblewithe-infrastructureandAML/KYCandaccreditationinfrastructuresinvariousmarkets.Ongoingresourcesarerequiredforinvestmentandpossibleotherusecasesoflegalwork.Alegalcontingencyfundwillbereservedincaseoffutureneed.

Marketing & Sales: SalesandbusinessdevelopmenteffortswillbefocusedonidentifyingandformingrelationshipswithnewprojectsandexistingpartnershipsthatcanbebuiltonSwarm.MarketingwillbefocusedonpromotingSwarmapplicationstopotentialcustomersegmentsandmarkets.AdditionaleffortswillbespentonincreasingawarenessandknowledgeoftheSwarmPlatformandwhatcanbebuiltwithit(applications,etc.).

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7.3 DEVELOPMENT ROADMAPCurrent StateSwarmhasbeenunderdevelopmentforover18months.SincethentherehavebeenmultipleiterationsofthecoreelementsofSwarm.Theseincludethesmartcontractspoweringtheframeworkaswellasthegeneralwebinterface.

TheSwarmplatformhasafullyoperationalliveimplementationsinceJanuary2018.Thecurrentoperationalplatformsupportskeyusecases,suchasvotingwithinnetworkdemocracy(includingdelegation),wallettransfers(ETH/BTC/SWM),andallocationofcapitaltowardsinvestmentopportunities.

Future DevelopmentPhase1(Quarter22018):◆ Legalautomation:UnderlyingtheSwarmplatform,ourgoalistoautomatemostoftheadministrativeprocessesrelatedtofoundationofSPVs(specialpurposevehicles)andfunddeployment.Weseektoworkwithe-governanceproviderstomakethisasseamlessandscalableaspossible.

◆ SRC20tokenstandardprotocol,withintegrationtoexchangessupportingsecuritytokens.

Current Active Interface - Live platform at http://invest.swarm.fund

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8. Leadership

8.1 CORE TEAM

Philipp PieperCo-founder & Chief Executive Officer (CEO)Philippisaserialtechentrepreneurandbecameinterestedindecentralizedtechnologiesin2015,wheninteractingwithBitTorrent,Inc.andtheMozillaFoundation.Philipphasbeenastart-upentrepreneurforthepast15yearsandisaveteraninthedigitaldataspace.AfterholdingvariousprivateequityandmanagementpositionswithinDeutscheBankandAllianzGroup,PhilippwasfounderandCEOofProximic,aglobaldataproviderfordigitalmediabuyers(acquiredbycomScorein2015),andismentoratvariousacceleratorssuchStanford’sStartX,SingularityUniversity,aswellasTechCode.HeholdsdegreesinengineeringandbusinessadministrationandattendedBerlinUniversityofTechnologyandUCBerkeley,HaasSchoolofBusiness.

Timo LehesCo-founder & Chief Investment Officer (CIO)Timohasover20yearsofexperiencefromstarting,running,exitingandinvestinginsoftwarecompanies.Timohasservedasaninvestorandexecutiveintechnologycompanies,withextensiveexperiencefrombuilding,runningandinvestinginsoftwarecompaniesandleadingvariousmergerandacquisitiondeals.Throughouthiscareer,Timohasinvestedinmorethan40companies.WithaspecificfocusonFinancialTechnologyorfintech,hehascontributedtothecreationofseveralalternativeinvestmentplatforms.HecurrentlyservesasaboardmemberatBankerBay,theworld’slargestdealoriginationplatformformid-marketPrivateEquitydeals.HeholdsdegreesinengineeringandbusinessadministrationfromChalmersUniversityofTechnologyandearlystageinvestingfromcontinuingstudiesatStanfordSchoolofBusiness.

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Chris EberleChief Operating Officer (COO)Chrisisadigitalveteranwithapassionforbuildingglobalbusinessesandcommunities.HebuilttheMediaPartnerServicesandOperationsteamsatFacebook,withglobalresponsibilityforconnectingpublicfigures,creators,andpublisherstocreateauthenticcontentonFacebookandInstagram.HethenledteamsinGlobalBusinessMarketing,responsibleforrealworldexperiencesthatdriveonlinebusinessresultswithFacebookpartners.PriortoFacebook,EberlewasapartofstartupexitsatFederatedMediaandMeebo(acquiredbyGoogle).Earlierinhiscareer,EberlespentadecadeatAOL,wherehestartedasacontractworkerandeventuallyservedinexecutiverolesinmarketingandadvertising.ChrisisanalumnusofSyracuseUniversityandTheHarvardBusinessSchool.

Frank TaylorHead of AIFrankbringsnearly20yearsofexperiencewithexpertiseinStatisticalModelingandMachineLearning.HehasservedasSeniorDataScientistandMLengineeratHotelTonight,EarnestInc.,andPersonagraphamongothers,andisadvisortoandhasprovidedsolutionsforamultitudeofstartups.Heiscurrentlydirectinghiseffortstowarddecentralizedmachinelearninganddifferentialprivacy,andisworkingtoadvancethedomainofArtificialIntelligenceinthefuturedecentralizedecosystem.

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“Jazzwall” Sharad JaiswalHead of Product & OperationsJazzwallhasbeenimplementingandorchestratingenterpriseITprojectsandgraduatetech-trainingprogramsatSwissandWallStreetbanksforthelastdecade.Hardtoputinabox,heisaprojectmanager,fullstackdeveloper,professionalphotographer,entrepreneur,andveryinterestedincryptomarkets.

Katerina KanKaterinaisavisionaryentrepreneurfocusedonbuildingasustainableglobalparadigminbusinessandcommunication.Sheappliestheprinciplesofsymbioticenvironments,energyoptimization,andhumanwellnesstoherbackgroundinadministration,management,commerce,andcustomerservice.

Vivian Jane SmithProject AdminVivianJaneispassionateaboutconnectingrealpeopletorealpowerinwaysthatsupportbothindividualpotentialandaharmoniousglobalparadigm.Tothatend,employingtwodecadesofexperienceasatopsalesleader,humanwellnessguide,andenergymedicinepractitioner,sheisaferventadvocateforthewidespreadadoptionofblockchaintechnologiesthatallowdecentralizedgovernanceandfinancialsovereignty.Hergoalistoempowereverydaypeoplebyspreadingawarenessandapplicationoftheserevolutionarynewsystems.

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8.2 CAPITAL MARKET ADVISORSChris KitzeCEOatSafeCash,co-creatorofFlashcoin,andchairmanoftheAlphabitDigitalCurrencyFoundation,Chrisisaserialentrepreneurwhohascreatedcompanieswithover$7billionofmarketcapitalizationoverhis25-yearcareer.He’sbeenpartoftheLycos’IPOteam,wasfounderandCEOofXoom.com(IPO:1998),andwasCEOofNBCi,formedbythemergerofXoom.comandSnap.com,inadditiontoothercompaniesindigitalmediaandpayments,suchasWine.comandUnseen.

Anthony Di IorioCEO&FounderatJaxx&Decentral,FounderatEthereum.AnthonyDiIorioisaserialentrepreneur,VC,communityorganizer,andthoughtleaderinthefieldofdecentralizedtechnologies.BornandraisedinToronto,DiIorioistheformerChiefDigitalOfficeroftheTMXGroupandTorontoStockExchange,founderandCEOofDecentral,asoftwaredevelopmentcompanyfocusedonblockchaintechnologies,andfounderandCEOofJaxx,amulti-token,blockchaininterfacethatprovidesaunifiedexperienceacross9platformsanddevices.In2013,DiIoriofunded,andalongwithVitalikButerinand3othersfoundedthesmartcontractplatformEthereum.

Michael TerpinCEOTransformGroup(75+ICOs),CoinAgenda,AlphabitFund;BitAngels;founder,Marketwired;advisortoblockchaincompanies.Terpinco-foundedBitAngels,theworld’sfirstangelnetworkfordigitalcurrencystartups,whichgavebirthin2014tothesuccessfulCoinAgendaseriesofblockchaininvestorconferencesinNorthAmerica,Europe/EMEA,AsiaandCaribbean/LatAm.Heco-foundedearlyblockchainincubatorbCommerceLabs;theBitcoinSyndicateonAngelList(withlegendarysuper-angelGilPenchina),andthe

DappsFund,whichwasaleadinvestorintheinitialcrowdsaleforEthereum,Factom,MaidSafeandStorj.HecurrentlyheadsuptheICOinvestmentcommitteeforAlphabitFund,andadvisesnumerousblockchaincompanies.TerpinhasledthePReffortsformorethan150blockchaincompaniesandfoundations,includingsomeoftheleadingtokencrowdsales.ClientsuccessesincludethelaunchesofAeternity,Augur,Bancor,Ethereum,Factom,Gnosis,GolemNetwork,Lisk,MaidSafe,Qtum,andTether,aswellasongoingcampaignsforBittrex,Counterparty,Dash,Eos,Kraken,NEM,Neo,StorjandShapeshift.

Mark OeiUntilendof2016,MarkwasatSequoiaCapitalwhereheservedasManagingDirectoroftheventurecapitalfirm’sHeritageFund,amulti-strategyvehicleofferinginstitutionalinvestorsandfamilyofficesinvestmentexposuretomultipleassetclasses.AsleaderoftheRealAssetgroupMarkhasbeenseekingopportunisticrealestateinvestmentsbothdomesticallyandabroad.Earlier,MarkwasamanagingdirectorfocusedonrealestateatOaktreeCapitalManagement,oneofthelargestinstitutionalalternativeinvestmentmanagersintheUnitedStates,andwasVPatMorganStanleyfocusedonacquisitionsfortheMorganStanleyRealEstateFunds.

Vivek KrishnappaVivekisaboardmemberfortheWattTime.org,anadvisorforNexleafAnalytics,anadvisorforFinTechandCleanTechAstiaandaformermanagingdirectorforsecuritieslendingatBlackrock.

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8.3 TECHNOLOGY ADVISORSNoah ThorpFounder, CEO at COMAKERYNoah’scareerasatechnicalentrepreneurisbuiltontheprinciplesofrapidfeedbackthroughexperiments,continuouslearning,spiritedcreativity,anditeratingtowardsexcellence.TheseprincipleshavedirectedNoah’spaththroughagilesoftwaredevelopmentasadeveloper,leanproductmanagement,responsiveorgbuildingasacofounder,andecosystembuildingasaplatformcreator.

Bogdan FiedurFullstackdeveloperandentrepreneur.Sincethebeginningof2016involvedin“SmartContract”designandimplementationforEthereum,usingSolidity.Knowledgeableinallaspectsofe-commercewebsite,back-endandfront-end.Experiencedinsettingupnetworkenvironment,runningandmaintainingservers.Experiencedinsupervisingteamsofdevelopers,preparingtechnicaldesigndocuments,preparingtestingplansandintegratingexistingapplicationswithnewertechnologies.

David KammeyerSoftwaredeveloperandplatformmanager.

Matthew TanCEOandfounderofEtherscan.

8.4 GOVERANCE AND ORGANIZATIONAL DESIGN ADVISORSChristian JackenCo-founderLiquidDemocracy,formerGlobalBitcoinAlliance,EFFsupporter.

Adam ApolloAdamisthefounderoftheGuardianAllianceandtrust.exchange.

Brad NyeFounderofTribalizesummitandBurningManorganizer.

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8.5 PARTNERS Distributed Labshttps://distributedlab.com/DistributedLabsispartnerindevelopingSwarmportalapplicationlayerandcustomblockchaindevelopment.

SecureVotehttps://secure.voteTheaward-winningteamofSecureVoteisresponsibleforthedevelopmentoftheSwarmFundLiquidDemocracyVotingModule(LDVM).TheLDVMisauniversallyapplicableanddecentralizedvotingenginewhichcanbeusedforanypartoftheSwarmplatform.

TokenSofthttps://www.tokensoft.ioTokensoftisafull-servicesmartcontractdevelopmentservicecompanywithspecializationintokensaleapplications;TokensofthelpeddeveloptheSWMtokensmartcontractsandrelatedtechnology.

AmaZixhttps://www.amazix.comAmaZixprovidesfullcommunitymanagementservicesandaidsSwarminspreadingthemissionofourcompanyacrosstheglobe.

Wingshttps://www.wings.aiWeintendtousetheWingspredictionservicetoestimatethetargetsizeofourownraiseandothersub-assettokens.

Jaxxhttps://jaxx.io/

FusionICOhttps://fusionico.proFusionICOisafull-serviceblockchainadvisoryfirmspecializinginAsiamarkets,andisprovidingtranslation,communitymanagement,PR,andmarketingservicesforSwarminChinese,Japanese,andKorean,aswellasperformingoutreachtoinvestorsandinstitutionsinChina,Japan,Korea,Malaysia,Taiwan,Thailand,andVietnam.

Distributed LabBlockchain experts

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9. Legal Innovations

Swarmco-organizedlegalsummitsatHarvardandStanfordinwhichtheDistributedCollaborativeOrganisationmodelwasestablished5.Legalexpertssuggestedthattheintegrationofacollaborativegovernancelayertoadistributedorganizationwouldmakeitamembershiporganizationsimilartoaco-op.Wehaveremainedactiveparticipantsintheevolvingplatformco-opmovementandInternetofOwnership(https://ioo.coop/)movements,includingasectioninthebook“OurstoHackandtoOwn.”(https://platform.coop/book).

SwarmhasconsistentlyandopenlystateditsintenttodemocratizefinanceandproactivelyengagedwithregulatorsincludingtheSEC,FCA,andregulatorsinseveralothercountries.Asaresultofadvicefromtoplegalexpertsandregulators,Swarmhasoperatedforthelasttwoyearsundertheunincorporatednon-profitassociationtermsasdescribedintheresultsoftheHarvardsummitwiththeintentofcreatingaglobalplatformcooperative.

Toactualizetheseaims,Swarmhasestablishedthefollowinglegalentities:

Swarm Foundation (Liechtenstein)Swarm Operations GmbH (Germany)Swarm OperationsLLC(USA)Swarm IP (Singapore)

Thecontributionperiodisacollaborationbetweentheaboveentitieswiththeintentoftakingthe“DistributedCollaborativeOrganization”modelandacreatingalegalentityownedandgovernedbythetokenholders.Ratherthandependonasinglelegalfirmtoimplementthis,wewillcreateabountysystemtoawardthefirstseveralteamsthatmanagetocreatetoken-governancesystemsthatintegrateintothelegalandtaxsystemsofrespectivenationstates.

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ThecurrentboardmembersarePhilippPieperandTimoLehes,withthreespotslefttobefilledbyeithercommunitycontributorsormanagingdirectorsofpartnerfunds,dependentonavotebythetokenholders.

Additionally,allofthecurrency-relatedaspectsofourimplementation,includingactionsofallsub-funds,areperformedonaprivateblockchainimplementation.ThisallowsustoimplementallstandardAML/KYCproceduresandreportingasestablishedbyindustrybestpractice.

Duetotheretrospectivenatureofregulatoryaction,theSwarmteamcanmakenoguaranteesregardingthelegalityoftheplatformorlaunchinanygivenjurisdiction.Regardless,weareconfidentin,andproudof,theworkwehavedonetoshapeSwarmintowhatwehopeisamodelofregulatorycompliancefordecentralizedapplicationsandtokenlaunches.Wewillberesponsiveandcollaborativewithanyregulatorsasnecessarygoingforward.

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10. Media Coverage

SwarmFundhasearnedinternationalattentionfrommainstreamandlargercryptomedia.Someexamples:

Can Swarm Fund Help The Cryptocurrency Market Finally Enter The Mainstream?Forbes,August16,2017https://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 EnvironmentCoinTelegraph,September6,2017https://cointelegraph.com/press-releases/swarm-fund-launches-compliance-oriented-token-offering-tailored-to-evolving-regulatory-environment

Swarm Fund Aims to Democratize InvestingBanklessTimes,October17,2017https://www.banklesstimes.com/2017/10/17/swarm-fund/

Swarm Closes $5.5 million ICO for Alternative Investment FundCoindesk,October31,2017https://www.coindesk.com/swarm-closes-5-5-million-ico-alternative-investment-fund/

Swarm Fund brings institutional investment opportunities to crypto investorsAlphaQ,InstitutionalAssetManager,Nov27,2017https://www.alphaq.world/2017/11/23/258631/swarm-fund-brings-institutional-investment-opportunities-crypto-investors

2017: The Year of the Initial Coin OfferingFTAdviser,December13,2017https://www.ftadviser.com/investments/2017/12/13/2017-the-year-of-the-initial-coin-offering/

How Will Cryptocurrency Impact the Housing Crisis?InternationalBusinessTimes,February10,2018http://www.ibtimes.com/how-will-cryptocurrency-impact-housing-crisis-2651489

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11. References

Blodget,Henry.2017.Bitcoinaperfectassetforspeculativebubble:Blodget.[ONLINEVIDEO]Availableat:http://www.cnbc.com/video/2017/05/25/bitcoin-a-perfect-asset-for-speculative-bubble-blodget.html.[Accessed16July2017].

Dietz,Joel,GregXethalis,KattenPrimaveradeFilippi,JimHazard.2017.ModelDistributedCollaborativeOrganizations.[ONLINE]Availableat:https://swarm.gitbooks.io/dco-book/content/dco-model-template.html.[Accessed16July2017].

Durden,Tyler.2015.SoYouWantBridgewaterToManageYourMoney?ThereIsOneSmallCondition.[ONLINE]Availableat:https://www.elitetrader.com/et/threads/so-you-want-bridgewater-to-manage-your-money-there-is-one-small-condition.290936/.[Accessed16July2017].

Hulbert,Mark.2017.Thisishowmanyfundmanagersactuallybeatindexfunds.[ONLINE]Availableat:http://www.marketwatch.com/story/why-way-fewer-actively-managed-funds-beat-the-sp-than-we-thought-2017-04-24.[Accessed16July2017].

Herold,Jelle.2017.Statebox.[ONLINE]Availableat:http://statebox.org.[Accessed16July2017].

Herold,Jelle.2017.Typedefs.[ONLINE]Availableat:http://typedefs.com.[Accessed16July2017].

Lewis,Michael,1989.Liar’sPoker.1sted.NewYork:W.W.Norton&Company,Inc..

PlatformCooperativismConsortium.2016.PlatformCooperativism.[ONLINE]Availableat:https://platform.coop/book.[Accessed16July2017].

VanValkenburgh,Peter,JoelDietz,PrimaveradeFilippi,HoumanShadab,GregXethalis,DavidBollier.2017.DistributedCollaborativeOrganizations.[ONLINE]Availableat:http://www.bollier.org/sites/default/files/misc-file-upload/files/DistributedNetworksandtheLaw%20report,%20Swarm-Coin%20Center-Berkman.pdf.[Accessed16July2017].

Wood,HarlanT.,AdamApollo.2017.TrustGraph.[ONLINE]Availableat:https://github.com/trustgraph/trustgraph.[Accessed16July2017].

Yang,Paul.2017.google/protobuf.[ONLINE]Availableat:https://github.com/google/protobuf.[Accessed16July2017].

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SWARM FUND WHITE PAPER

March2018

V0.91

Philipp Pieperphilipp@swarm.fund

Timo Lehestimo@swarm.fund

www.swarm.fund