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Sia, the first decentralized storage platform secured by blockchain technology, is a product of Nebulous Incorporated. The Delaware-based Nebulous is currently conducting a tokenized securities offering of Siafunds to fund Sia development.
However, Siafunds has opted to be classified as a security under SEC rules. Furthermore, the sale will be structured as modified Dutch auction and will be offered only to accredited investors. What was the reason behind such a decision? To understand that we shall look at how Sia is structured.
Structure of Sia
Nebulous is a for-profit company and Sia is intended to become a primary source of income for the company. For this, Nebulous issued two kinds of assets: Siacoin (SC) token and Siafund token. Nebulous intends to generate revenue from Sia in a manner proportional to the value added by Sia, as determined by the value of the contracts set up between clients and hosts. This is accomplished by imposing a fee on all contracts. When a contract is created, 3.9% of the contract fund is removed and distributed to the holders of siafunds.
There are 10,000 Siafunds, and they are indivisible. Nebulous, the company that funded most of the core development for Sia prior to launch, currently holds 8,750 Siafunds, and the other 1,250 Siafunds are held by members of the Sia community.
Siafunds can be sent to other addresses, in the same way that Siacoins can be sent to other addresses. They cannot, however, be used to fund contracts or miner fees. The supply of Siacoins will increase permanently, and all fresh supply will be given to miners as a block subisdy. The first block had 300,000 coins minted. This number decreases by 1 coin per block, until a minimum of 30,000 coins per block is reached. Now, Nebuluous is planning to sell 750 Siafunds to qualified investors in an upcoming Tokenized Security Offering (TSO).
How Siafunds tokens are sold?
As mentioned earlier, up to 750 Siafunds is made available to qualified investors (Australia, Canada, Germany, Russia, UK, and the US) through a modified Dutch auction. The winning price will be the lowest price at which we sell not more than 750 siafunds, rounded to the nearest cent. All winning investors will pay the clearing price for their siafunds, even if their bid was higher than the clearing price. To prevent last-second price manipulation, the auction will be closed at a random, unannounced time between the second and fifth day of the auction.
After bidding, investors may change or withdraw their bids at any time until the auction closes.
Why Siafunds are sold to ONLY accredited investors?
There is an element of risk associated with buying tokens to see returns In the form of additional Siacoins. Therefore Siafund token is treated as a security. The SEC framework, which would allow Siafund token to be offered to public, is called Regulation A+. However, assets offered under Regulation A+ have to be listed in a centralized exchange. To avoid making Siafund a centralized asset, Nebulus resorted to Regulation D. However, such an offering is allowed only to accredited investors. Therefore, it is not open to public.
Alternative way for public to invest in Siafunds token
There are nearly 1150 Siafund tokens held by the Sia community. As long as somebody is willing to sell it, an investor can purchase in the following manner:
1. Create a Sia wallet (can be downloaded from Sia website)
2. Join the Sia slack channel.
3. Trade using escrow.
Overview of Sia storage facility
The Sia blockchain stores file contracts. File contracts are smart contracts contained within the Sia blockchain that are used to enforce a standard set of storage rules without the need of trust between the host and the renter. When renters store files with hosts on the Sia Storage Platform, the file contract defines the terms (such as the price) upon which hosts make their storage available. The stored files are encrypted, broken up into fragments, and intelligently distributed across dozens of nodes throughout the world.
The Sia network launched with its genesis block on June 6, 2015. The Sia software is in use by thousands of users and contributors across the world. As of the February 8, 2018 , the Sia blockchain height is approximately 141,000 and there are approximately 81,00 active file contracts on the network.
