2.8.2 AssetChain 10 Cardinal Rules

In line with the above, OAE and AssetChain are introducing a new, legally harmonized infrastructure of digital tokens, with a clear framework for digitization of assets, ownership and other assets related rights. This framework is based on ‘10 AssetChain cardinal rules’ as listed below:

RULE 1 Smart contract is digital representation of an asset RULE 2 Token standard is digital definition of specific legally recognized right RULE 3 Token sub standard is digital definition of specific legally recognizable limitation of the right RULE 4 Token is digital representation of specific right, based on specific token standard and sub-standard RULE 5 Not every asset right is transferable RULE 6 Not every asset right is is bearer right RULE 7 Not every asset right is ownership right RULE 8 Asset right can held by more than one person RULE 9 Asset right can held by more than one person RULE 10 Fractionalization of asset rights does not mean equal divisions

RULE 1: Smart Contract as Digital Representation of an Asset

This rule establishes that a smart contract on the blockchain serves as the digital counterpart of a physical or intangible asset. It codifies the characteristics, ownership, and other pertinent details of the asset into a programmable format that can be automatically enforced without intermediaries.

RULE 2: Token Standard as Digital Definition of Specific Legally Recognized Right

A token standard defines the structure and functionality of tokens to ensure they represent legally recognized rights consistently and interoperably across the digital ecosystem. This could include rights such as ownership, usage, or revenue sharing.

RULE 3: Token Sub-standard as Digital Definition of Specific Legally Recognizable Limitation of the Right

Token sub-standards introduce nuances to the rights defined by token standards, specifying limitations or conditions under which these rights apply. This allows for greater flexibility and precision in representing complex legal relationships in digital form.

RULE 4: Token as Digital Representation of Specific Right

This rule clarifies that tokens are not just digital objects but represent specific rights, such as ownership or access, as defined by their respective standards and sub-standards. This precise definition ensures clarity in what holding a token actually means.

RULE 5: Not Every Right is Transferable

Acknowledging that certain rights (e.g., personal privileges) cannot be transferred to others. This rule respects the legal nature of specific rights, ensuring that the digital representation adheres to these limitations.

RULE 6: Not Every Asset Right is Bearer Right

Bearer rights are those that belong to whoever holds the token at any given time. This rule states that not all digital rights function this way; some may be tied to specific individuals or entities regardless of token possession.

RULE 7: Not Every Right is Ownership Right

This distinction recognizes that tokens can represent a variety of rights beyond ownership, such as usage rights, licensing, or voting rights within a governance structure, expanding the utility and application of tokens.

RULE 8: Asset Rights Can Be Owned, and Can Become Independent Assets

Rights themselves can be considered assets, with intrinsic value and the potential to be owned, traded, or leveraged. This principle allows for the creation of a new class of digital assets based solely on rights.

RULE 9: Asset Rights Can Be Held by More Than One Person

Reflecting legal concepts like joint ownership or shared rights, this rule allows digital tokens to represent co-owned rights or assets, accommodating complex ownership structures.

RULE 10: Fractionalization of Asset Rights Does Not Mean Equal Divisions

The division of rights into smaller, fractional interests does not imply these fractions are equal or identical. This rule allows for the nuanced and proportional division of rights, reflecting the diversity of stakeholder interests and contributions.

Together, these rules provide a comprehensive legal framework for AssetChain digital tokens, addressing the nuances of asset representation, rights, and ownership in the digital domain.