Fraction sales have a discount mechanism, which can serve OTC (Over-The-Counter) deals and reputation-based incentives.

Prices and discounts

The base price is the default cost per fraction of the asset in any currency specified by the market.

On the other hand, the discounted price is calculated as a percentage of the base price. It can also hold, optionally, a burn mechanism of a new token in addition to the base currency discount. In this scenario, issuers will not have access to the burnt token, only to the discounted amount.

There can only be on base price, but there can be many discounted prices.

Use cases

In the context of fraction sales, discounts and their burn mechanism serve two main purposes:

1. OTC deals
2. Reputation-based discounts

OTC deals

Definition

OTC transactions happen outside of the TMI, where participants exchange funds in a private arrangement, either off-chain (bank wire) or on-chain (other network).

In this case, the investor still expects to acquire fractions of the sale: The discount mechanism allows the OTC operator (entity that has received the payment) to get a fraction at a 100% discount, provided they burn a token only they have access to. This ensures:

• No on-ramping: If money is handled off-chain and destined to invest in a real-world asset, the fraction sale can be set to require no payment - except the burn.
• Guaranteed fraction acquisition: The OTC operator is still able to get the fraction on behalf of the investor by burning the token associated with the discounted price.
• No asset allocation: Issuers do not need to allocate the number of fractions and assets sold for OTC deals versus non-OTC deals, as a single sale can have multiple price tiers.

Flow

Below is a simplified business flow for running a 100% discount OTC sale:

1. Create an ERC-20 token for the OTC Operator
2. Onboard the OTC operator and send the token to burn during the sale
3. Create the Fraction sale as an issuer with
   1. A base price
   2. And a 100% discount price and the token to burn
4. Approve as an admin and kickstart the sale
5. OTC operator collects funds from investors during OTC deals
6. OTC operator buys a fraction on-chain with the token to burn while keeping the fund off-chain
7. Outside the TMI, OTC operator transfers the fraction to the original investor

Reputation-based discounts

While discounts can also incentivize community engagement and serve as an incentive for recognized or high-reputation participants.

For example, suppose there is a reputation token held by users who have met certain criteria (e.g., amount of assets staked, community contributions) in a tokenized ecosystem, network or DAO. A fraction sale might offer a discount off the base price if a user burns a certain quantity of their Reputation Tokens.

Relationship with Staking Pools

Tying up discounts on fraction sales with staking pools allows issuers to provide value for their Utility token. For instance:

1. A user acquires 100 Utility token
2. Then stakes them in a staking pool to receive 1,000 Reputation tokens
3. Which then can be burnt to get a 10% discount on a sale

Additionally, issuers can create multiple discount tiers (10% discount for the silver tier, 25% for the gold tier, etc.), each gated by a different amount of burn tokens to attract different levels of community members and encourage holistic engagement.