A Gamified Fandom
A single digital gathering spot for the world’s biggest fandoms does not yet exist for any sports or entertainment verticals to accommodate a worldwide religion of fanaticism. Despite the fact that many fans utilize social media sites such as Facebook, Twitter, Instagram, and TikTok to express their fanship, none of these networks have an established framework for connecting them, engaging them with delightful experiences, or rewarding them for their phenomenal passion. Hence, we went to take a deeper look at these multi-billion fandom industries in order to better grasp the motivations and commercial potential that exist in this specific industry. As a human-focused organization that believes in the design that focuses on the human drive to take action against self-interest, we mix game theory, behavioral economics, motivational psychology, user-centric design, neuroscience, and technology to alter and inspire human behavior. We have examined the interaction between these disciplines to capture the essential concepts that contribute to what effective gamification design can achieve inside a unique gamification framework. People are naturally drawn to play games, and the gamification framework developed by SuperOne take advantage of this natural desire to influence their behavior and activities. As a consequence of this intrinsic motivation, SuperOne will grow to be a significant business. With this gamification framework, all fandoms now come together under one social roof at SuperOne, a new gamified social network for sports and entertainment. Traditional sports and entertainment fans are connected to one another around provocative experiences that allow them to enjoy fame, fortune, and friendship opportunities that never existed before. On the other side, increasingly, marketers and brands are depending on social media to develop direct connections with customers and to deliver compelling live in-game experiences that improve customer loyalty and raise brand awareness. As a result, the convergence of sports, entertainment, and social media will represent huge and substantial economic possibilities. In this letter, I’ll do my best to layout our strategy at SuperOne, explaining why we do the things we do, how we go about making choices, and what we’re trying to achieve.
A Happiness Brand
A brand’s greatest success comes when it transcends its product offerings and strikes a chord with the broader trajectory of human development. We believe a growing number of customers are placing a greater emphasis on their emotional and mental well-being, which is prompting more companies than ever to take note. At SuperOne, we aim to make people happy because this will achieve feelings of joy, curiosity, contentment, and love. These positive emotions widen an individual’s instantaneous thought-action repertoire: joy stimulates the impulse to play, curiosity sparks the drive to explore, contentment sparks the desire to enjoy and integrate, and love sparks a recurrent cycle of each of these urges in intimate partnerships. A creative, competitive, cognitive, and confident brand rather than a functional brand has been established by SuperOne, as we’re in a fast-paced industry, functionalities can’t be utilized as long-term differentiators. While firms throughout the globe are experimenting with new ways to achieve consumer’s happiness in a competitive marketplace, the potential value of incorporating more game-like features over the next few years is expected to be significant, with businesses increasingly focusing on using games to drive engagement and fuel closer interactions between consumers and a company’s products and services, as well as educational institutions focusing on improving the learning experiences with games to motivate and engage learners. Based on solid science, gamification is an effective method to design. It is all about taking what makes games so enjoyable and applying it to other circumstances that aren’t as enjoyable. However, many systems claim to have gamification capabilities. If you look at these platforms, you’ll see that the majority merely add some points and badges. If gamification is to be effective, it must be included in the product’s core. If this is the case, it functions as a catalyst for participation. People are naturally drawn to play games, and the gamification framework developed by SuperOne tries to take advantage of this natural desire to influence their behavior and activities. As a consequence of this intrinsic motivation, a new brand has been born, Super One.
A Trivia Metaverse
The history of trivia has been very transformative throughout the years, and as fandoms are growing more and more widespread both socially and culturally, we believe the history of trivia has to be completely rewritten. Over the years, sports and entertainment fanaticism has evolved into a worldwide movement and religion. Fans constantly want to be able to relate to one another, engage with their shared interests, and lookout for new methods to prove their fanship.SuperOne is introducing a metaverse of trivia built on the world’s biggest fandoms with ultimate sports and entertainment adventures for endless exploration. In this massive realm, fans will take on quests, challenges, and meet new friends along the way in the search of hidden rewards. They can achieve mastery via our unique games, and use the vaste collection of NFT Cards while playing against opponents across the world in tournaments with billions of fanativcal questions combinations to swipe left and right like racing around massive tornadoes in the friendship wilderness.So far, we have issued more than 90,000 Cards in the Football, Basketball, and American Football Collections. More than 30,000 Cards have been purchased by our business community members. In addition to the successful launch of the Cards, we created a gamified go-to-market idea for players to really engage and show their love for Club Games. Recruiting new members in Club Games earns players rare Non-Fungible Token Club Cards, making this a genuine “Play to Earn” experience. Manchester United, Liverpool, FC Barcelona, and Real Madrid will be the first four teams to compete in the Club Games’ initial iteration. About 2 billion people throughout the globe follow these teams, and they account for more than half of all football supporters in the world. As part of a major game roll-out, the Club Games are now being tested and are expected to be introduced in early 2022.
A Business Community
The emergence of modern web technologies has radically changed the meaning of ideas, creativity, and innovations during the last several decades. Because of this, businesses are adapting their strategies in new ways. Data collection, insight, and innovation are all possible in today’s interconnected society. Increased market speed and more lean and agile operations are anticipated as a result of this long overdue revolution in markets. Breaking down the value chain has made it possible for new business models to arise, and this is now evident. As a result, new business models will have to be built on the foundation of deconstruction. Blockchains, cryptocurrencies, and non-fungible tokens (NFTs) are all now part of SuperOne’s main business as the internet and gaming environments evolve owing to Web 3.0’s rise in recent years. Observation of our players’ demographics, and behaviors, such as their age, gender, and the sports and entertainment pursuits that interest them, yields a wealth of detailed information. As a consequence, we’ll be able to design more effective campaigns if we focus on generating characters for each of our gamers. Because of this, SuperOne will be able to leverage cognitive advertising to better target their customers.It’s no longer enough to just provide games; instead, SuperOne has developed a unique fan ecology, a super community, and a tokenized terrain to unleash incredible competitive advantages for three diverse players driving three strong economies: Fan Economy, Creator Economy, Investor Economy. There is one fungible token, Super, and two other non-fungible tokens, Cards and Spaces, that we use in our completely tokenized business model.Relationships and connections are made more valuable via the economy at SuperOne. Entrepreneurial communities at SuperOne are known for their innovative and forward-thinking collaborations. Using the recruitment power of our community-based application, communities increase their human capital to produce effective and sustainable revenue. These entrepreneurial communities encourage a culture of creativity and entrepreneurship, allowing any user to establish his or her own business and realize his or her entrepreneurial potential via community-based partnerships.
A Look Backward
NFTs and blockchain-based games have both contributed to the development of new terms and phrases in our vocabulary. For individuals who are interested in “playing to earn,” where real-world value can be extracted via in-game activities, SuperOne has the potential to further extend the gaming umbrella, much as mobile games have done.Several years ago, we embarked on our first venture into the trivia games industry by creating an early version of the game that has since been refined and improved. Retention rates in the early test version of our game exceeded 80%. We were overjoyed by the enthusiastic response and the promising future of this brand-new kind of game. Because of this, we designed a business community model and the SuperOne brand came to life.We established the world’s first business community model on the Ethereum blockchain as a result of our enthusiasm for modern blockchain technology. We were able to effectively transition our business community to utilizing the XRP ledger in summer 2020 after encountering the shortcomings relating to transaction capacity, speed, and prices. As a result of this change, our more than 30,000 paying business community members have executed over 60 million transactions on the XRP ledger to date.A new and even better version of the game is scheduled for release in early 2022, thanks to the assistance of Fantasy Interactive (www.fantasy.co). With companies like Facebook, Tesla, and Netflix, they have built digital experiences for billions of consumers, and together we embarked on a genuinely wonderful adventure in producing the next thrilling edition of our game. New and better game concepts were developed from a user and conceptual perspective.So far, we have issued more than 90,000 Cards in the Football, Basketball and American Football Collections. More than 30,000 Cards have been purchased by our business community members. In addition to the successful launch of the Cards, we created a gamified go-to-market idea for players to really engage and show their love for Club Games. Recruiting new members in Club Games earns players rare Non-Fungible Token Club Cards, making this a genuine “Play to Earn” experience. Manchester United, Liverpool, FC Barcelona, and Real Madrid, along with selected Asian teams, will be the first teams to compete in the Club Games’ initial iteration. Billions of people throughout the globe follow these teams, and they account for more than half of all football supporters in the world. As part of a major game roll-out, the Club Games are now being tested, tuned and are expected to be introduced early in 2022.
A Look Forward
Throughout the year 2021, many gaming organizations showed mainstream legitimacy. A billion-dollar value against a trivia gaming business may sound far-fetched if you’ve missed the point: it’s not all about playing. SuperOne has become a content marketing factory with a unique value proposition of serving a hard-to-reach audience (young gamers) in a genuine manner. As a result of our wide market appeal, legacy brands will have new engagement territories to explore in 2022. Rather than focusing just on games in these relationships, the cultural context surrounding a larger message approach is the primary emphasis. SuperOne will be a new breed of content organizations whose gaming ability is only equaled by their marketing acumen.As the pandemic raged on, gaming became a major topic of conversation as homebound consumers increased their media consumption. Two years after the first spike in interest, the gaming industry has continued to expand, thanks in part to the explosive rise of mobile gaming. The year 2022 is expected to be one of the most exciting in gaming history, but it will need a greater level of depth in the themes of the year before. Gamification has a significant impact on developing themes for entertainment, enterprises, and education, and this move toward utilizing games as cultural backdrops. When it comes to this transformation, companies who have invested time in learning about the gaming environment will have a strategic edge over those who have not. As we have learned a lot from the market dynamics over the previous decade, the cultural effect of how games are utilized will take a turn with the release of SuperOne. The Future, Today.
A Gamified World
Evolution of Media
From telegraphs to radios and televisions, decades of changes and phases in the development of traditional media and how it may be accessed occurred. Significantly, the New Information Age of social media has unquestionably succeeded in making each person’s life more efficient and easy. Social media has made everything possible, from reading news online to interacting through mobile apps, engaging in different social groups with a high-quality phone call, accessing entertainment shows or literary works with a single click of a finger, listening to songs on-the-go, and even learning about many different aspects of the world through online education.However, if the previous decade was about abandoning conventional media in favor of social media, the next decade will be about abandoning social media in favor of interactive media. This tendency has further intensified in recent years, making gaming a fundamentally social medium. Rather than only providing a way of escape, we think that play has the capacity to develop a healthy sense of connection, location, and ambition. Gaming has always been social as gamers have the same aims and experiences, and this is what created a sense of community that gave their life direction and meaning.The paradigm will transition away from exploiting user data and toward supporting and empowering user intent, allowing us to construct a unified identity and persona independent of the physical realm’s artificial constraints.Welcome to the era of interactive media.Welcome to the era of gamification.
A New Paradigm
Most successful brands are the ones that have transcended their products to strike a chord in humankind evolution. However, the biggest gaming brands didn’t unlock the power of gamification as a transformation catalysts far beyond fun and entertainment. What if we use game thinking and game mechanics to engage the audience to solve problems?In a world where companies compete ferociously for our undivided attention, firms throughout the world are trying more inventive techniques to attain this aim.Gamification is one of the most intriguing – and, in some cases, challenging – of those techniques. The potential value of incorporating more game-like features over the next few years is expected to be significant, with businesses increasingly focusing on using games to drive engagement and fuel closer interactions between consumers and a company’s products and services, as well as educational institutions focusing on improving the learning experiences with games to motivate and engage learners.At SuperOne, we seek new means of user involvement to a dramatic influence across a variety of industries far beyond entertainment.
The introduction of game-style features to typically non-game environments is referred to as gamification.We have a natural predilection towards entertaining activities, especially those with a competitive component, as humans. And when there are prizes to be won, we are typically much more driven to perform to our full potential. This is where gamification can – and has – been used as a highly successful incentive mechanism in many circumstances.Simply the prospect of a joyful activity may be extremely uplifting during these challenging times. Many parts of the world have seen problems in the previous year, the likes of which many may never see again in their lives. The mere act of introducing a slightly interesting game can be revolutionary in terms of helping individuals stay happy and optimistic at a time when it may be easier than normal to lose motivation.
Similarly, gamification of specific areas of the job may significantly boost employee engagement and productivity.The importance of gamification for improved results was highlighted in different polls conducted over thousands of employees by cloud-based learning management systems. Respondents said gamification made them more productive, and happier at work; majority of those who received gamified training felt motivated; while those who received non-gamified training felt bored and unproductive. Many believed they’d be more productive if their work was more gamified; and that gamification in the recruiting process would make a company more desirable. Furthermore, the poll discovered that gamification in the workplace enhanced employee engagement, motivation, and psychology greatly.While most of us think of online games with high-definition graphics when we hear the phrase gamification, even the most basic incentive systems are classified as a game. The loyalty card you get from your coffee shop, the air miles you get for flying after buying specific products and services or using certain credit cards, and the points you get from airport lounges for merely checking in to a spot are all instances of incentivised games, although simple ones. They’re all still enjoyable ways for consumers to interact with apps and businesses, and the possibility of being rewarded for their devotion just adds to the excitement.
Applying a game-like challenge to educational activities might significantly boost one’s ability to absorb new concepts or develop one’s skill set.The use of gamified components including points, badges, awards, leaderboards, and levels resulted in favorable impacts on learner motivation among post-secondary students, according to hundreds of global researches. By incorporating the benefits of game-like components into traditionally game-free situations like learning, fresh life may be breathed into generally antiseptic surroundings, resulting in better levels of engagement and, eventually, higher levels of achievement than would otherwise be achievable.Indeed, it appears that gamification is already on a rapid rising trajectory in terms of its applicability in educational applications. The increased usage of digital learning and cloud computing among organizations to incentivize learners to embrace web-based gamification solutions is driving this phenomenal rise. It also noted that the North American region will lead the market due to the presence of a large number of prominent educational institutes and their focus on interactive education, which is leading to the growth of the market in the region.
We Make People Happy
At SuperOne, we are cognitive scientists who believe in the power of gaming to help us feel better for many physiological and biological reasons. The brain’s response to stimuli may be altered by as little as 30 minutes of play, releasing potent endorphins and other feel-good chemicals. Endorphins, oxytocin, dopamine, and serotonin are all part of the “feel-good” family of neurotransmitters that have been linked to enhanced mood, decreased stress, increased joy, and a more vibrant sense of well-being.
Oxytocin – The Love Hormone – It forges connections with everything we interact with. This is why we love games and play them for lengthy periods of time because we feel emotionally invested in the game. As a result of the release of Oxytocin, we feel more relaxed. People often call it the love drug because of how it makes us feel when we’re among other people and how it helps us form connections with them. That’s why at SuperOne, we incorporate shared experiences that demand collaboration and communication with others to produce oxytocin.
Endorphins – The Pleasure Hormone – Endorphins are released by the body when we’re having a good time playing a game. Because they provide a sense of well-being and contentment, these substances are sometimes referred to as a “natural high.” Endorphins are released into the body in response to the mental and physical strain of gaming. Winning a trivia battle or a global tournament, for example, might leave us feeling euphoric for the remainder of the day owing to an increase in endorphin chemicals.
Dopamine – The Reward Hormone – Gaming has long been related with the release of dopamine, a neurotransmitter that has been shown to have positive effects on the human body. Reward-motivated behavior is driven by dopamine. When a task is completed or the player feels a feeling of achievement, they are freed. Bliss and euphoria are two emotions often linked to elevated levels of dopamine. Thought to assist attention, it inspires individuals to take action toward their objectives and gives encouragement to attain them.
Serotonin – The Mood Hormone – The pleasure circuit is thought to be activated in part by playing skill games. Happiness may be achieved via the regulation of our brain and body activities by this complex molecule. It is affected by how important we feel. This is why we love games as it gives us the chance to feel significant and make us feel we can change the world by being a hero.
At SuperOne, we strive to make people happy since doing so will result in sentiments of joy, curiosity, and love, among other things. A person’s instantaneous thought-action repertoire is expanded as a result of these positive emotions: joy stimulates the impulse to play, curiosity stimulates the drive to discover, contentment stimulates the desire to enjoy and integrate, and love stimulates a recurrent cycle of each of these urges in intimate relationships. SuperOne has built a brand that is creative, competitive, cognitive, and confident rather than a brand that is functional. Because as we work in a fast-paced business, functions cannot be used as long-term differentiators.
A Disruptive FrameworkAs a human-focused company who believe in the design that emphasizes the human motivation to take action against self-interest, we combine game theory, behavioral economics, motivational psychology, user-centric design, neuroscience, and technology to affect and inspire human behavior. We have explored the interplay between these disciplines to capture the core principles that contribute to what good gamification design can do for various industries and sectors within a unique gamification framework.
Decoding Human Motivation
Our “proprietary” gamification framework helps us to understand what motivates human behavior by responding to various business goals while positioning the Super rewarding token as the rocket fuel to drive meaningful transformative impact. We highly believe in the power of experiences that taps into recognition, reputation and rewards as motivational factors to drive unprecedented behaviors striking a chord in humankind evolution.SuperOne’s gamification framework aims to take use of people’s natural urge to play games in order to influence their behavior and actions. As a result, games are a major industry because of this inherent drive. Our gamification framework is all about discovering what actually drives people and then utilizing a number of approaches to urge them toward the desirable behaviors they want to achieve.With the use of gamification, it is possible to collect data on the desirable behaviors that users execute, and when we have data, we have the ability to act on it. Gamification can definitely be used to encourage individuals to participate in actions they otherwise wouldn’t.The creation of a comprehensive gaming experience involves much more than merely applying different game concepts to existing items. Our framework has a great deal of analysis, thinking, testing, and tweaking is required. As the framework encompasses the gamification principles and focuses on what actually motivates and engages people, it is possible to reach a point where there is no longer a distinction between the things that people must do and the things that they want to do.As a result, everyone’s quality of life will be greatly improved, firms will perform better because individuals will truly want to do the job, and society as a whole will become more productive as a result of these efforts. This is the world that SuperOne has committed its primary goals to making it a better place for others.
What makes a game exciting and engaging is the combination of many factors. Inspired by the MDA (Mechanics, Dynamic, Aesthetics) framework, the methodical architecture of SuperOne game creation consists of three components that work together to create a cohesive whole; mechanics, dynamics, and aesthetics.
Game’s mechanics are defined as a portion of the rule system, a summary of rules and the many sorts of interactions that can occur in a game. SuperOne goals, rules, and feedback loops constitute the game’s mechanics, and the game’s appealing features of points, leaderboards, levels, challenges, achievements, and badges encourage players to participate actively in the game’s mechanics.
What tactics are formed from the rules and how players engage with the game are evoked by the dynamics of the game. There are different motivators for different players. One group of players may be more interested in competitiveness, whilst another group may be more interested in social cooperation. SuperOne mechanics of the game are tailored to the specific incentives of the users based on the game dynamics. Players are guided to the next step at the appropriate moment with the assistance of a well-designed dynamic aid. It’s possible that they will lose interest if we allow them to level up too quickly. Those who are impatient may get irritated if we allow them to go too slowly.
The term “aesthetics” refers to the general sensations that players get when engaging with the game. The emotions associated with a SuperOne game can be very strong with players, and include things like fun, frustration, fantasy, and friendship. The aesthetics of SuperOne games allow players to have a stimulating experience with provocative fanatical audio-visual content providing an immersive gaming experience.
A Meaningful Application
Joy in Mastery
Mastery is characterized by the sensation of having control over something. SuperOne offers real-time multiplayer experiences where players compete against one another in real time. It takes a certain amount of proficiency in a fanatical field to perform successfully and win matches. Gamers will put in thousands of hours into a single game in order to improve their abilities and achieve mastery. As people are fascinated by the goal of mastery, SuperOne empowers players to reach their potential because there is only one champion. SuperOne provides a provocative environment in which to enhance users ability and get better at anything. There are inherent motivators and incentives that will keep players coming back for more, even if they are rotten. The more they play, the more incentives they get. Moreover, the more they practice, the more proficient they get.
Joy in Winning
Everyone has a strong drive to win and to compete. In SuperOne’s competitive experiences, a great deal of skill and speed are required. Players work hard to complete goals and defeat the other player’s efforts. For example, a football fan has to put in endless hours and put in tremendous effort to improve his football knowledge to reach higher levels on the leaderboards. Competitiveness in one’s life makes it interesting, enjoyable, and engaging. SuperOne provides fans with the possibility to try completely different competitive experiences. With each new fanatical field players explore, from sports to entertainment, they will experience a new level of difficulty. They will establish alliances with other players, meet new friends, perform tasks, and gain various rewards. All of these encounters involve the creation and development of a fan identity.
Joy in Exploration
SuperOne allows players to travel freely in a virtual trivia world. In these virtual worlds, players have the ability to choose any fanatical field to conquer. Players will explore a world of like-minded people, where they are required to complete quests and missions to achieve fame and glory. Exploring such surroundings is a thrilling experience since players never know what they could come upon. On the other side, SuperOne provides players the freedom to adopt whatever fandom they desire. They can project the image of a confident, powerful fan online, yet they can come across as timid and weak in person. SuperOne provides them with the opportunity to take on whatever fan persona they like. All these encounters help gamers to openly explore ideas and emotions that they may not feel comfortable doing in other settings.
Whether a company has a low retention rate or a poor conversion rate, consumer communities are deserted, loyalty program has reached a stalemate, customers may seem to have completely forgotten about a brand at times, onboarding procedure is as sluggish as molasses, employees do not work along well; perhaps one of these issues is familiar to many.People just don’t perform – an issue exacerbated by the fact that expectations of workers have risen over time, and the systems we want them to utilize have become more complex. The fact is that all of these issues spring from the same source: a lack of participation. In reality, a lack of involvement, whether among consumers or staff, may have a significant impact on every business. Customers who aren’t engaged are more likely to be disloyal; given enough options, they will associate with our rivals as much as (or more than) they do with us. Employees, on the other hand, just do not perform. Wouldn’t it be wonderful if we could discover a method to engage these people so that they begin to execute the behaviors we desire?SuperOne’s gamification framework allows to motivate, track, and reward high-value actions in consumers and workers alike. Game mechanics in corporate contexts employ design and behavioral psychology concepts seen in today’s social games to motivate and reward certain user actions.In practically any sector or workplace application, we can use smart gamification components like rewards, achievements, levels, leaderboards, missions, and competitions to encourage desired behaviors. SuperOne gamification framework is less about games and more about determining what inspires individuals to perform, as well as transforming the commonplace into the fundamental.The finest gamification systems, on the other hand, encourage individuals to participate in activities that they are already inclined to engage in or are compelled to engage in. To put it another way, our gamification framework enhances the enjoyment of a task with game-based incentives.
The use of gamification instructional tactics has attracted substantial attention in the present landscape of learning and performance as a way of engaging learners across age groups, cultures, and situations. Enjoying learning like gaming offers a thorough examination of the reasons for using games to teach, as well as extensive instruction on the characteristics and procedures of excellent educational game creation.SuperOne starts by delving into the psychological and behavioral components of gamification, with an emphasis on ideas such as learner engagement and enjoyment, as well as some of the possible consequences of game usage, such as addiction. The link between learning and performance is also explored in-depth, providing evidence of the good results that may be achieved via the implementation of gamification tactics.SuperOne also explored an outline of what constitutes an effective game, as well as an examination of how gamified frameworks can evolve through time and a range of factors to consider when defining them. Recognition, reputation, and rewards are all common aspects. When developing game-based learning environments and making decisions, being aware of the many learning theories related to educational game design is beneficial.That’s where our gamification strategy had begun.Self-determination, achievement goal theory, social learning theory, and contextual learning theories and studies have all been used to better understand learner involvement and behavior in educational games. Within SuperOne’s game-based learning systems, the function of feedback and its usefulness in learning and performance is also crucial in developing learner interactions and outcomes. Learning outcomes and learner engagement benefit from knowing how and when to include feedback into activities.SuperOne’s gameplay induces a range of psychological states, needing our knowledge of various reactions and responses in such learning situations. Control, competition, and exploration, are just a few of the various circumstances that learners will experience when playing our educational games.
The Emergence of a Super App
“There is an app for that” said Steve Jobs. Today an average person has 80 apps on their phone but only uses less than ten on a daily basis. Users and advertisers are still left with a fragmented landscape despite the booming app economy.The emerging solution is super apps, a destination platform for users and merchants that aggregate a broader set of services like entertainment, lifestyle, and financial, often with embedded payment capabilities for users to transact within the app.Super apps create a frictionless experience for users and a beneficial realm for merchants to tap directly into massive user bases within an existing infrastructure and immediately benefit from scale and user insights.We believe gamification will be ubiquitous in the digital economy in the future. With our unique gamification platform, we have a tremendous future potential of expanding our platform to embed other services like financial, shopping, and travel, thus tapping into a digital economy north of $10 trillion.Frontier financial disruptors like NuBank, Coinbase, and Revolut are valued at premium rates beyond $1,000 per user. In contrast, social media services like Facebook, Tencent, and Snap are valued upwards of $300 per user.Our strategic vision is to use the popularity of gaming as the principal catalyst to amass a vast user base and then introduce additional services by utilizing the massive cognitive intelligence derived from gaming.We envision SuperOne as a disruptive super-app fostering a plethora of value-added services, thus sparking a “There is a button for that” economy.
A Secret Sweetspot
In Pursuit of the Trivial
One of the most intriguing things about trivia is the fact that it’s taken from the Latin word “trivium,” which means “crossroads.” Trivia became popular among students in the latter half of the twentieth century, when they debated questions and answers pertaining to their course material and beyond.When Chris Haney and Abey Scott brought “Trivia Pursuit” to the globe a few years later in 1979, it quickly became one of the most popular board games ever. The winner of this well-known game is determined by how well he or she answers a series of general knowledge questions devised by the game’s designers.In 1984, the game alone made nearly $800 million in sales. The game has sold over 100 million copies globally and has been played by an estimated 1 billion people since its release.Quiz programs like Dotto, The $64,000 Question, and Twenty One were very popular in the 1950s, making this a pivotal decade in the history of trivia. There was no quiz show on network television until 1982, when Merv Griffin came up with the concept to resurrect “Jeopardy!” After the success of “Jeopardy!” in the 1980s, other series like Who Wants to be a Millionaire began to appear in the 1990s. The international versions of the game show have broadcasted in over 160 countries since it’s premiere.Trivia games have gone from being a board game, a TV game show to an online phenomenon thanks to the rise of the Internet. There were trivia games on computers much like that. When it comes to online trivia quizzes, Funtrivia was the first to make it seem like one. Founded by Terry Ford, the site has become the most popular in the United States for trivia games.As trivia has influenced our cultural consciousness throughout the years, we believe the history of trivia has yet to be fully re-written with the introduction of how the world’s biggest fandoms can consume trivia and how it can satisfy the fans’ trivia cravings.
Fandoms as Social Universes
In today’s society, fandoms are becoming an increasingly common social and cultural phenomena. This last three decades has seen the rise of fandoms, which have grown in size and influence over the general population. Fans play an important part in developing a consumption-related fandom, where cultural meanings and economic values are socially negotiated and traded.SuperOne defines consumer fanaticism as the degree one is invested in the like or interest in a specific celebrity, football flub, trend, artwork, film, etc. Not just inside the fandom, but also outside of it, SuperOne wanted to offer players with sources of meaning for the formation of their identities. This is where we contribute to the fans’ feeling of social belonging and status by connecting them with other people who share their interests. Because when it comes to their own identities, fans are entwined with the joys of popular culture.A fan is someone who has a strong, positive emotional conviction about someone or something renowned, frequently expressed via the acknowledgment of style or originality. As well as being curious about and interested in fannish practices, he/she has a strong desire to do so.Fandom is defined in a variety of ways, but they all express the same phenomenon: fan loyalty to a fan culture or fandom. Consumer tribes, brand communities, and subcultures of consumption are all terms used to describe fandoms in the consumer research we have conducted. It is clear from our studies that fandom is a social and cultural universe of meanings and practices that aids players in developing their sociality; religiosity, production activities, and alternative ideologies.
Driving the Future of Fandoms
Many sports and entertainment fans use Facebook, Twitter, Instagram, Discord and Reddit to discuss their fanaticism, but these platforms do not have a consistent structure for bringing them together as a community. As it is, there aren’t any national sports verticals that have a single digital meeting point for fans to connect. Social media sites may be home to the most fanatical interests, but they aren’t devoted only to fans.Digital social media for sports and entertainment enthusiasts has a fragmented market. In the digital era, it seems odd that one of the most loyal and passionate groups does not have a dedicated home where they can communicate and connect.A closer look at these fandom industries is warranted to better understand the motives, as well as the possibilities, that exist in this particular sector.Sports and entertainment fans want to be able to relate to one another and talk about their shared interests, regardless of how they feel about their favorite celebrity. Social and psychological well-being is enhanced when one feels passionately about a prominent local club and other supporters are present. People who “just get them” or who are up for pleasant and well-informed competitive talking want to be a part of a community. They want a location where they can chat and compete with others who “just get them.”In the past, social media has changed the way sports and entertainment fans consume information about their favorite interests. Over the decades, sports and entertainment fanaticism became a universal phenomenon and a global religion that is found all over the world. Because of their passionate support, fans are a valuable marketing target. It’s a gold mine for SuperOne. Only in the United States, more than a hundred million die-hard sports and entertainment fans, and this number is only going up. Millennials are in fact sports and entertainment enthusiasts, but they’re always looking for new ways to keep up with their favorite teams and players to express their fanship.SuperOne is a platform that will change the social sports and entertainment scene by bringing all fandoms together under one social roof. As we link traditional sports and entertainment enthusiasts with each other, create provocative content around gamified experiences, and let users connect and earn incentives for connecting with like-minded fans, we’re transforming the trivia scene and revolutionizing how fans engage with what they love. A unique game moving in a totally new direction.This also provides marketers a wealth of opportunities to create sponsor communications that may help boost sales. Marketers and brands are increasingly relying on social media to establish direct relationships with consumers and to provide engaging live in-game experiences that increase customer loyalty and raise brand exposure. To read more about that, please read the business chapter for in-depth exploration on how the intersection between sports, entertainment, and social media is representing a substantial commercial potential.
A Fandom MetaverseSuperOne is a fanatical trivia world where fans take on quests, challenges, and meet new friends along the way in search for hidden rewards. Fans start by choosing their landing fanatical arenas in accordance with their skills as they encounter explorable levels with different pathways that allow a diversity of options for players interests.Fans achieve mastery via thousands of unique NFT Cards while playing against opponents across the world in tournaments with an extremely sophisticated gaming engine with billions of question combinations to swipe left and right for the greatest score. They would challenge the globe in tournaments or challenge a buddy to beat his greatest records on different levels. All wonderfully complimented with a hand-picked selection of NFT Spaces featuring the world’s greatest brands of all time. Across this tumultuous fantasy realm, SuperOne brings fame, fortune, and friendships for every fan who decided to throw his adventuring boots, and become a Super One!The Ultimate Trivia Adventure is waiting for you! Drop into a new world to explore SuperOne’s delightful and ever-changing fanatical trivia metaverse with a plethora of the world’s best celebrities in an endless amount of entertaining experiences. As long as you’ve got an adventurous spirit, you’re invited to participate in the fun!
Adventurous Trivia World
An epic journey filled with fantasy, passion, and high-powered swipes is just around the corner.
Swipe left and right like racing around massive tornadoes in the friendship wilderness. False is swiped to the left while true is swiped to the right. Wrong answers will be shown as X, while correct ones will be shown as V – for victory. Take on the world’s most brave fandom to become the next fan legend in the most exhilarating trivia on the market with pulse-pounding swipes of agility and speed.
For those who want to be in command of a Fandom metropolis, SuperOne puts you in the driver’s seat. Transform your fanatical knowledge into an infinite fuel as you take the wheel of over questions with every fast-paced, high-octane gaming session on multiple rounds. Random Number Generators (RNGs) will choose questions from a database depending on the chosen category. The rulebook is filled out to be 40% simple questions, 40% medium questions, and 20% hard questions. We also use advanced algorithms to make sure that the game always provides adequate resistance, and that the average success rate does not exceed various thresholds.
Choose your battleground, meet new friends and feel the thrill of hundreds of tournaments across gravity-defying racing leaderboards where you need to keep an eye out for landslides in the Himalayas as the timer is ticking down to zero, each time you are answering a question. Each question has a maximum time frame of 10 seconds, and the sooner you respond correctly, the higher your score will be.
For those who want to achieve greatness, winning is always in style. Your score will be determined by how quickly you swipe. A maximum of 10,000 points will be awarded for each round of 10 questions. One point will be deducted for each millisecond while the timer is running on the questions. Scores are connected to the leaderboards at the end of each round.
Social Trivia World
In the most intriguing trivia game ever, you’ll have to damage friendships and shatter scores in order to find your wealth. Heroes have long been a part of our culture. Now, let’s become one!
Indulge in a variety of gaming modes and competing dynamics that reward skillful play and risk-taking abilities. Four immersive modes will let you fight for the game’s greatest rewards, but there’s just one rule: remain alive no matter what happens. That may be easier said than done, though, since there are several perils hiding around every turn.Quick Play is a short, fast and informal game option in a whirlwind of questions for sheer pleasure in the category of choice. This is an exhaustive trivia revolving around top 4 football clubs in the world, with the intention to swiftly grow this to top 20 clubs.Fan Challenge gives a genuine and honest struggle vs other fans throughout the globe on your fave celeb in a quest to achieve fame and glory. Allowing influencers and celebs to create quests between themselves, in the form of pre-recorded gameplays, and the fans, either individually or as a group, opens a whole new business model with direct interactions and massive engagement and profit opportunities.Ranked Matches allow experienced players to compete for matchmaking-rating, incentives, and a chance to show the world that you are the best, besserwisser in a variety of themes and categories.Big multiplayer tournaments in a variety of categories will be held for the strongest warriors, with significant rewards and prizes for the winners that will drive participants to adjust their calendar and clock to the event’s schedule. Only the fans with the greatest perseverance have a shot at ascending the million dollar staircase and vie for the ultimate jackpot prize of a million dollars.
When you are ready to play, you may choose among your old friends to invite, or just make some new ones by connecting with like-minded fans who share the same interest with you. Whether you are seeking a shot at the top of the leaderboards or two tickets to the Maldives, you will play together to build a lasting connection. Play together, travel together. SuperOne’s fascinating and ever-changing passionate trivia rewards feature a cornucopia of the world’s finest entertaining spots in a never-ending variety of engaging encounters.
The iceberg of “fun” will cause many friendships and partnerships to crash and sink. Despite the fact that SuperOne is a skill-based game and relies heavily on your fanatical knowledge, you will discover that you can not win because of some enemies hiding around every turn. All game modes and categories now have leaderboards, which are regularly reset and updated. Because the leaderboards only display the highest score, a player may appear on more than one leaderboard at the same time, but not on the same leaderboard more than once. Each game mode has its own set of leaderboards, each of which is tied to a distinct topic. Epic conflicts that resemble historical events like the Normandy Invasion in their scale and scope.
Regardless of how easy, medium, or hard a question is, a card may be used to bypass it. There are three levels of cards; Bronze, Silver, and Gold, which correspond to the difficulty levels of the game’s questions: easy, medium, and hard respectively. Using Cards may help you perform better in the game, get a higher score, and move up the leaderboards. On-demand, they may be purchased or rented by gamers, or even pre-loaded in ahead of gaming sessions. As long as players keep staking their cards, card owners will split the money they earn.
Diverse Trivia World
Discover a trivia world filled with vast categories where no two experiences are identical. With a diverse fanatical world built for unlimited exploration, SuperOne sets new benchmarks in fandoms scale, depth, and complexity.
Everyone has a favorite sport they like watching, whether it’s football or basketball. However, how well-versed are you in the nuances of the sports world? You’ll have to put your knowledge to the test with an extensive collection of sports trivia questions. Explore a variety of sports from football, basketball, American football, cricket, golf, tennis Formula 1 to Olympic Games and every type of sport you could ever imagine. All trivia questions cover a wide spectrum of difficulty, making them suitable for all levels of fans.
Drop into a large overworld full of gorgeous cities, gloomy films, cheerful music, exotic cars and more! The entertainment category revolves on interesting facts about many forms of entertainment, such as movies, music, television, radio, books, automotive, cities and much more. All trivia questions cover a wide spectrum of difficulty, making them suitable for all levels of fans. It’s time for you to go on the ultimate entertainment quest! With an ever-expanding roster of the world’s most joyful experiences, SuperOne’s trivia metaverse offers a never-ending supply of entertainment.
A Fanatical Game
Passion for the game, the fans and the clubs is our entry point to attract the interests of billions of fans across the globe. A void in the market has emerged for too long– and we will connect fans through shared interests, as they compete, brawl and connect within a community that revolves around their favorite club.In the wake of social media, fans out there are creating their own channels or are an active participant in others – all to discuss and promote their opinions and point of view. Club Games offers the fans to display their knowledge level as well as improving it through gameplay. Which may be visible across the platform in various communities.
The power of our game engine combined with fast and easy access to the game mode make it convenient for players to jump in and out of game sessions. Swipe your favorite club and showcase your knowledge to the rest of the world! We encourage multiple gameplay sessions for players to improve their scores and knowledge, as well as competing for prizes on leaderboards that will reset frequently.This mode will be a part of both the casual and the competitive side of the platform and game, thus it’s a game for all fans out there– at any given time.
Backed by a plethora of content, Club Games will always feel fresh and non-repetitive. Our massive content database is updated frequently with new questions, imagery and ever-expanding with clubs. Currently we are set to go with four of the biggest football clubs in the world; Manchester United, FC Barcelona, Real Madrid and Liverpool. Collectively, these clubs have upwards of 2 billion fans.We are also quickly adding selected popular Asian football clubs in Japan, Indonesia, Vietnam, Philippines, and Thailand; reaching more than 650 million people.Overall, football excites more than nearly 4 billion fans, and rapid expansions in the next phase are set to include clubs such as; Manchester City, Chelsea, Tottenham, Arsenal, Borussia Dortmund, Bayern Münich, Inter Milan, AC Milan, Juventus and Atletico Madrid, just to mention some. This is to delight more fans across the world and our end-game is to cover all major clubs across the world, as well as some local and regional clubs where the fan base is huge.Different leaderboards for each club, as well as one unified for all clubs will make the competition ever thrilling.This is the platform where fans earn the rights to brag, collect achievements and claim rewards, through making the headlines of the leaderboards.Who will stay on top and and prevail as the number #1 fan in the world?
A Disruptive Concept
Third Generation of Business
From the production and marketing era to the relationship and intelligence era, business models have been evolving over the centuries. Over the years, the rise of Web 3.0 has fundamentally transformed the very meaning of ideas, innovation, and inventions. As a result, business models are evolving further. In today’s connected world, organizations have the opportunity to gather more data, get insights, and innovate. Markets are likely to undergo a long-overdue change as a consequence, bringing with it increased market speed as well as more lean and agile operations. As we witness businesses across industries undergo a profound and dramatic shift in the relative balance of intelligence power, cognitive technologies and adoption are offering each business entity new opportunities to grow and prosper.
Before 2000, the Internet was known as the “Read-Only” web. The job of an internet user was confined to reading what was offered to him. There was no active communication or information exchange between the information consumer and the producer. The information era, on the other hand, had begun!
The year 2000 heralded the beginning of a “Read-Write-Publish” phase. The new publishing web arose from the absence of active contact between ordinary people and the internet. Using various blog systems, even non-technical users were able to actively participate and contribute to the web. This period introduced new ideas to the average user, such as blogs, social media, and video streaming. It was simply a few clicks away from publishing material!
The modern web may be thought of as the Internet’s “read/write/own” phase. Using the power of AI systems, the Internet is growing more intelligently during this phase to process information in a manner similar to that of a human brain. Because programs will be able to communicate with each other autonomously, the content development and dissemination would be very intelligent and targeted. User participation in the revenue generation and operation of protocols rather than merely utilizing free tech platforms in return for our data is an option. This implies that instead of merely being consumers or goods, individuals may participate and own a stake in the company.
The Turning Point
We’ve now reached a turning point; how SuperOne utilizes modern technology to alter Trivia gaming’s standard business model?
While technology and information are available to everyone, the way each company makes use of that information — and the purposes and objectives for which they employ it – are different. Ads have traditionally been static things that were just exhibited for the sake of the viewer’s enjoyment until recently. Advertising may be targeted based on your knowledge of consumer desires and requirements, but the ads themselves did not have the ability to respond to customer feedback. That no longer holds true.At SuperOne, we believe emotion and intellect play a large role in purchasing decisions. When it comes to ad effectiveness, SuperOne uses strategies that concentrate more on the emotional and behavioral components of customer choices. These “smart ads” are the outcome of using cognitive systems to evaluate customer data. As a result, they may serve up advertising that is more relevant to the individual seeing them. This will revolutionize the way brands promote products and services.Fanatical data is obtained via observing our players’ demographics, activities and behaviors such as age, gender, sports interests, entertainment interests, etc.. Focusing on creating a character for each of our players: Many of his choices will be guided by this, and we’ll be able to build more successful campaigns as a result.By gathering the facts listed above, we’ll have a better grasp on our target audience and their problems. As a result, SuperOne will be able to use cognitive advertising to send them more relevant and effective messages. Cognitive marketing enables brands to connect with customers on a more personal level. Cognitive ads will undoubtedly play a significant part in internet marketing in the future, as will cognitive marketing in general. Consumers get a more personalized and appealing experience when commercials use these approaches to “come to life.”
Previously, video game businesses made money by simply selling their products. The overall return on a game was completely determined by the number of physical copies sold. Larger brands were able to include extra products or other revenue sources, but for the most part, sales would decide the game’s destiny after it was released. Then a new paradigm emerged, one including downloadable content (DLC) and microtransactions. Known as the Web 2.0 model, this saw a steady stream of money through add-ons, which might be as complex as additional characters and campaigns or as simple as in-game cash or accessories. Gamers have reacted to this approach in a variety of ways, but many games have established a balance between the value offered by in-game purchases and the real cost of doing so.Free-to-play (F2P) gaming arose as a result of this new income source. This is when creators design a game that is intrinsically free to play with its basic features, but allows players to choose from a range of methods to grow and monetise the game. Many gamers have found this to be appealing. They can play the game for free and without risk, and if they want to, they can customize their experience with any extra material they choose.However, there is a snag in the works. Despite the genre’s enormous popularity, just 2.2 percent of free-to-play players spent money on these sites. Despite this, the free-to-play gaming industry produced $88 billion in worldwide revenue in 2018, and that figure is set to climb. But it raises the question: what may be possible if even more players joined in the fun?SuperOne is adopting an even more innovative monetization strategy that is already evolving. As internet and gaming landscapes are starting to shift due to Web 3.0’s emergence in recent years, blockchains, cryptocurrencies, and non-fungible tokens (NFTs) are all part of SuperOne’s core business now.Generally, NFTs are generated by using blockchains as immutable ledgers to record all network transactions in a cryptographic manner. Data that can be confirmed as unique from all other data and can be linked to almost anything — even in-game objects — is represented by NFTs in their most basic form. Since every item in the game may be made as a non-fungible token (NFT), it is possible to make everything in the game one-of-a-kind and collectible.SuperOne uses cards and spaces as NFTs to enhance the gameplay experience of the game and they are even resold to other players on the secondary market for a profit. This makes the transactions less like dumping money into a black hole and more like investments. There is no reason to spend a large sum of money on goods that are gone once the user loses interest in playing SuperOne or if our game is no longer available.. NFTs won’t lose their value.As we allow players to purchase NFT in-game assets, cards and spaces, at a substantially cheaper cost might encourage a far bigger number of gamers to participate. Thus, players may feel certain that they have not “lost” that value, but rather transferred it into the game world, and they can reclaim it at any moment if they so choose—and perhaps even make a profit on top of it. A win-win situation for everyone involved: players and SuperOne alike.Similarly, using the blockchain’s decentralization principle, Decentralized Finance (DeFi) brings it to the realm of finance. Staking is one of the major principles that brings our GameFi project to life. In-game passive income may be earned with staking. In-game assets, cards and spaces, may be staked to earn interests each time they’ve been used by other players, as well as can be used to unlock new levels or enter tournaments.
Scale, Speed & Security
As the world of cryptocurrencies continues to evolve, the use of blockchain technology in the SuperOne one million marketeers business community has been a major development. While an open and distributed ledger, the blockchain, is used to record transactions between two individuals, in order to guarantee the integrity of the data, it employs a decentralized and encrypted database that cannot be manipulated. Since only completed activities are compensated for in a Blockchain-based system, SuperOne can rest assured that the money is safe in the hands of the business community members. The days of payments being delayed or contested are past thanks to the blockchain. Bonus payments are made immediately in real-time.
A Disruptive Business Model
A Stakeholder Concept
Now it’s clear that breaking down the value chain has opened up a lot of doors for new business models to emerge. Deconstruction might be regarded as an essential and fundamental prerequisite for new business models to arise because of this. Hence, a new market maker has been established: SuperOne.SuperOne has gone from merely offering a game to establishing a unique fan ecology, a super community, and a tokenized landscape to unleash remarkable competitive advantages to both generate and sustain a better economic model for 3 different participants driving 3 powerful economies:
Play to earn in the economy of “Crazy”Every fan has characteristics that impact his or her social behavior and consumption habits. While it’s very uncommon for a fan to form or join a “fan group” these groups may evolve into “fan cultures” with distinct conventions, attitudes and behaviors. The one thing that unites fan groups is their devotion to their heroes and the joy they feel when they see them succeed. What if we capitalized on this culture to build a Fan economy.Rather than focusing just on following idols on social media, SuperOne offers a unique fan sports and entertainment ecology that is built on the power of fascinating fanatical content, imagery and social experiences for fans to connect and compete nurturing a Fan Ecosystem. Because followers actively follow the rituals and other daily updates of their idols, SuperOne fanatical games will become even more relevant and engaging by offering unique ways to express their fanship.Brands can’t only depend on celebrities or clubs to sway customers from the top down. SuperOne focuses its marketing efforts on the fanbase so that fans become active participants, helpers, and benefactors of the brand’s marketing strategy. Celebrities and companies can’t be successful without the help of their followers in today’s fan economy. While it requires a sensitive and exact approach, SuperOne will redefine fan marketing to leverage the idol’s popularity to promote effective experiences for brands.
Engage to earn in the economy of “Relationships”.One of SuperOne’s major goals is to reward entrepreneurial communities. In order to influence the economic destiny of tomorrow’s society, we empower today’s entrepreneurs with powerful opportunities and scalable tools to achieve happiness in life.SuperOne’s creator economy monetizes passion and relationships. Innovative, forward-thinking relationships are the hallmark of the entrepreneurial communities at SuperOne. At our community-based application, entrepreneurial communities enhance their human capital in order to provide effective and sustainable income by leveraging the power of recruiting. Community-based collaborations are a key component of these entrepreneurial communities, which foster a culture of innovation and entrepreneurship enabling every user to start his own business and unlock his entrepreneurial potential.Increasing participation leads to an increase in SuperOne’s community intelligence, accessibility across borders, and value generation, all of which have very substantial networking effects. As a consequence of members’ enthusiasm in these incentive based economies, SuperOne’s customer acquisition expenses are reduced, and as a consequence of higher retention and lifetime value, members are less likely to leave the group than before, further extending SuperOne’s success.
Invest to earn in the economy of “Now”.Cryptocurrencies are becoming more popular. The worth of all cryptocurrencies has topped trillions of dollars, a decade after their inception with the development of Bitcoin.All cryptocurrencies are preferred by millennial and institutional investors over conventional investment vehicles, and many see them as digital gold. It’s no surprise that investor optimism has led to gains of up to 2500 percent in little over six months for a couple of these cryptocurrencies. Cryptocurrency is traded by retail investors on more than 125 exchanges across the world. One of the largest exchanges, Coinbase, attracted 100,000 new members in a single day, bringing its total user base to around 12 million.Several institutional investors and technological corporations, including Microsoft, Facebook, Amazon, and others, have expressed trust in the blockchain technology that underpins these cryptocurrencies. All cryptocurrencies are one of the primary factors affecting the financial services sector, and investor desire for cryptocurrencies and other digital innovations has gone well beyond Bitcoin, as more institutional investors get interested in cryptocurrencies, allocators and crypto managers are seeking for possibilities within new alt coins with disruptive business models to trust and grow with.
A Disruptive Ecosystem
As kids growing up in the 1990s, we spent a lot of time playing games on arcade machines at neighborhood game shops. Gamers would fight for the best score if they had a wallet full of coins. In the present day, many of us use smartphones to entertain themselves while waiting for a bus or train or just relaxing at home. Technology has made it easier for people to play games, which has led to a shift in business structures also.Play-to-Earn model is the most recent advancement in the GameFi industry. The “open economy” of SuperOne is a business strategy that embraces the notion of revenue sharing to reward all players who contribute to our environment with cash compensation. When gamers play to earn, all of the things they’ve collected will have a monetary worth. There is always a possibility for gamers to generate money even when they are not actively playing at that time.In our play-to-earn business model, we compensate players for their time and work. Our disruptive ecosystem relies on the in-game assets that players control and may grow in value via active participation. By engaging in the in-game economy, value is created for both players and SuperOne.The SuperOne disruptive ecosystem proposes a new kind of innovation by embracing four powerful dimensions to produce shared benefits for all stakeholders; the market, the economy, the technology and the team.We are seeing whole industries being shattered to their foundations and reassembled into new patterns by a new generation of business models. In this chapter, we will explain how the foundation of the SuperOne movement is creating a disruptive ecosystem with a tokenized economy that is capable of absorbing the power of digital modern technologies within a sky rocketing market.
A Skyrocketing Market
In-app purchases in the world’s 5 million mobile apps reached a stunning $380 billion in 2021, accompanied by an even more significant mobile advertising revenue of $580 billion. Add another $50 billion from the fast-emerging crypto gaming market, and we are at the center point of a $1 trillion business.With more than 6 billion smartphone users, reaching more than 80% of the world’s population, the world has gone mobile. Smartphones have fundamentally changed consumer behavior – we are now always on and spend up to 6 hours a day looking at our phones.The lion’s share of this is attributed to gaming, and the lifestyle only continues to grow. In-game purchases reached a record-breaking $270 billion in 2021, while gaming-related mobile advertising grew to $400 billion. Combined with the crypto gaming craze, the mobile gaming industry tipped a record-breaking $700 billion last year.Billions of sports and entertainment fans are our central audience within this global sweet spot. Worldwide there are more than 3 billion football fans, billions of cricket, basketball, hockey, and tennis fans, and more than 4 billion people using and adoring celebrities in social media daily. The potential is huge, very huge.Billions of the technology- and crypto-savvy millennials form our key demographic. Millennials, between 20 and 40 years, have come of age during technological change, globalization, and economic disruption. That’s given them a different set of behaviors and experiences. Millennials are thriving on adopting new digital thrills into their smartphone-centric existence, and their digital lifestyle sparks mobile commerce.Millennials are now entering their prime working and spending years, and their impact on businesses is enormous. We believe gaming is the highway to millennials. We strongly believe profound gamification techniques are crucial to fostering engagement and retaining this digital generation, thus sparking stratospheric growth, massive revenue, and strong user engagement.The emergence of cryptocurrencies has opened for decentralized transactions and ownership of digital assets over the past years. With the innovations in Game Finance (GameFi), tokenization of gaming assets opens vast new opportunities and business models. The financial components of GameFi include on-chain leasing solutions, fractionalization, staking, non-fungible game tokens (NFT), and marketplaces.GameFi is bringing crypto to the mass market, and play-to-earn models mean that many will receive crypto assets for the first time. For many, this also opens up a new source of income, free from the problems that beset the real world.”There is an app for that” said Steve Jobs. Today an average person has 80 apps on their phone but only uses less than ten on a daily basis. Users and advertisers are still left with a fragmented landscape despite the booming app economy.The emerging solution is super apps, a destination platform for users and merchants that aggregate a broader set of services like entertainment, lifestyle, and financial, often with embedded payment capabilities for users to transact within the app.Super apps create a frictionless experience for users and a beneficial realm for merchants to tap directly into massive user bases within an existing infrastructure and immediately benefit from scale and user insights.We believe gamification will be ubiquitous in the digital economy in the future. With our unique gamification platform, we have a tremendous future potential of expanding our platform to embed other services like financial, shopping, and travel, thus tapping into a digital economy north of $10 trillion.Frontier financial disruptors like NuBank, Coinbase, and Revolut are valued at premium rates beyond $1,000 per user. In contrast, social media services like Facebook, Tencent, and Snap are valued upwards of $300 per user.Our strategic vision is to use the popularity of gaming as the principal catalyst to amass a vast user base and then introduce additional services by utilizing the massive cognitive intelligence derived from gaming.We envision SuperOne as a disruptive super-app fostering a plethora of value-added services, thus sparking a “There is a button for that” economy.We are bringing to the market a new stakeholder business model that we believe will first disrupt the trivia gaming industry; then, it will expand into other segments of gaming and other services. We believe that future business models will be shaped by innovations converging with the impact of these new opportunities. Anyone failing to keep abreast of these radical changes is losing out and will become sitting ducks in the next few years.The future is brimming with opportunities, and the digital future has only just begun. We have every reason to believe that we can and will be one of this new market’s strongest competitors. Welcome to the head of the new market!
A Tokenized Economy
Three Bespoke Tokens
SuperOne is offering a disrupting business model with a highly rewarding player-powered economy, both in terms of revenue model and token model. We operate a fully tokenized business model utilizing one fungible token, Super, and two non-fungible tokens, Cards and Spaces.Super is our principal currency and main utility token used throughout the SuperOne ecosystem as the basis of all transactions and interactions. Cards are non-fungible tokens representing our unique and limited collection of game assets. Spaces are non-fungible tokens representing our unique and limited collection of advertising assets.All our tokens are utility tokens carefully designed to have a powerful combination of strong utility value while also reaping great financial benefits in the form of staking bonuses. The emission of our tokens is carefully aligned with player and community growths, as well as the performance and capitalization of the company.To provide immediate liquidity to Super token holders, we are listing the Super token on the fast emerging European licensed exchange GoKu Market in the form of an Initial Exchange Offering (IEO) on February 1, 2022. The offering will be directed towards GoKu Market’s nearly one million users and will be followed by global trading of the token. Prior to the public IEO, we are conducting an invitation-based Pre-IEO sale in two tranches.
Super is our principal currency and main utility token used throughout the SuperOne ecosystem as the basis of all transactions and interactions. Super is used across the ecosystem by players, brands, and the community to access games, access advertising, for prizes and achievements, to seed and trade collectibles, and as incentives for player and community growth, as well as staking.All transactions on the platform are processed and validated by endorsing nodes. This allows Super token holders to stake their respective Super tokens with nodes on the platform and receive staking bonuses for their participation in endorsing transactions. Every transaction on the platform is subject to a fixed staking fee of 10% to all Super tokens participating in the staking pool at all times.The Super tokens are issued on the Binance Smart Chain (BSC) as BEP20 tokens. We have designed a very strong demand model combining extensive usage and deposit requirements to receive the attractive staking rewards; thus limiting the number of Super in free circulation, most likely having a favorable effect on the supply and demand equation, and the market price.The demand for Super is driven by three stakeholders; players, brands and the community. Each of these stakeholders have their respective use cases and demand dynamics;
First and foremost players will need Super to access and play certain premium games. There are also a well of other great spending opportunities within the game sphere. In relation to Cards, players will use Super to seed and buy additional seeds, as well as for trading of Cards and Stories at the marketplace. Finally, comes the staking; in addition to the regular deposit requirements, we might require a certain amount of Super staked at the platform to access certain premium game features and perks.
Brands will use Super to access the platform, advertise and utilize the extensive and unique cognitive intelligence. Access and usage of our unique advertising concept, Spaces, also required brands to use Super. We also contemplate requiring brands to stake a certain amount of Super to access certain premium advertising features.
The community will primarily use Super for trading and growing the community. An active trading environment for the Super token is important to obtain good liquidity and make investing in Super exciting and tradeable. Deep liquidity of the Super token will strengthen the player’s desire to obtain more tokens and thereby incentivize growth. Growing the community will also create a significant demand for Super. Also for the community, staking will be a material part of the demand to hold Super; we might in the future require a certain amount of Super being staked at all times to receive community bonuses.
Super Token Supply
There is a maximum supply of 1 billion Super tokens and currently, about 150 million is sold or committed, whereas only about 50 million is issued and released in the contract.We endeavor a highly growth-oriented emission of the tokens revolving around three principal stakeholders; the players, the community, and the company. Growing the user base on the platform is our first priority and therefore we have allocated as much as 700 million (70%) of the total tokens to the players and the community. The balance of 300 million (30%) is allocated to the company including the team members and alike, to provide a solid foundation for its operation and as incentives.We also subdivide each of these three stakeholders into three tranches; seed, growth, and reserves, based on the purpose and maturity of these allocations.
We have allocated 350 million (35%) of the total tokens to grow our player base.The first 150 million (15%) tokens are allocated to grow the player base to 15 million players by the end of 2022. We expect to issue on average 5 tokens to each new player, and another 5 tokens to their referral, hence we will issue 10 new tokens for every new player. We expect a 10% conversion from free to paid, hence we estimate to reach 1.5 million paying players from this first player seed allocation.The next 150 million (15%) tokens are allocated to further grow the player base to a total of 30 million players by the end of 2023. Also here we expect a 10% conversion from free to paid, and consequently, expect to reach a total of 3 million paying players from this second tranche of player growth allocation.For a player to be able to trade or withdraw its free tokens there will be adequate activity and other requirements in place. Also, for a referral to be eligible for referral tokens, the member needs to be a premium community member; thus cordially growing and fostering a prosperous community, while also limiting abuse by registering dummy accounts.The last 50 million (5%) tokens are allocated towards a long-term player reserve beyond 2023 and should in principle never be circulating.
We have allocated 350 million (35%) of the total tokens to grow our community.The first 150 million (15%) tokens are allocated, committed, and sold to 30,000 initial community members, in more than 200 countries, for an aggregated amount in excess of $10 million over the past 18 months.Of these community seed tokens, 50 million have already been released, while the balance of 100 million will primarily vest daily over a three-month period starting from May 1, 2022. This allows for a reasonable balance between increasing the circulating supply and caretaking early contributors.The next 150 million (15%) tokens are allocated to aggressively grow the community towards one million members. With fast player growth, the community will quickly follow suit, and we expect to drive home substantial sales north of $100 million by 2023 from this community growth allocation. Tokens sold to the community via Business Tiers on the platform are primarily sold at market rates; however, some larger Business Tiers contain certain token bonuses; in such cases, the tokens are always locked for 30 days to avoid arbitrage between the platform and external exchanges.The last 50 million (5%) tokens are allocated towards a long-term community reserve beyond 2023 and should in principle never be circulating.
We have allocated 300 million (30%) of the total tokens to provide traders with liquidity tokens, facilitate additional working capital for growth and expansion, and incentivize the team.The first 100 million (10%) tokens are allocated to facilitate the listing, and trading of the token, as well as provide an influx of additional working capital. Upwards of 50 million tokens of this company seed allocation will be used to facilitate the Pre-IEO sale and the main IEO sale, while the additional 50 million tokens are available to provide trading liquidity.The next 150 million (15%) tokens are allocated to aggressively grow the company within the entertainment vertical, and to expand its business into the enterprise and education segments. Upwards of 100 million tokens will be released during 2023, and any such releases will be made over a period of time, and subject to prevailing market conditions, in order not to cause any unfavourable impact.Included company growth allocation is also an allocation upwards of 50 million tokens as incentives for the team at the company’s discretion. We strictly enforce a performance based set of team incentives, which are adopted to each individual team member based on position, tenure and performance. All team incentives tokens are subject to daily vesting over one year, starting January 1, 2023.The last 50 million (5%) tokens are allocated towards a long-term company reserve beyond 2023 and should in principle never be circulating.
Token Release Schedule
We believe our growth and purpose based vesting make the Super token economics very strong and viable. With years of preparations, and a proven platform, we are set for exponential growth over the next two years, aiming to rapidly reach 30 million players and 3 million paying players. We believe the time is now; game finance (GameFi) is the next craze and we should act aggressively and secure a massive and loyal player base for the future. We have aligned the token release schedule with our goals.The growth oriented release and circulation allows for a limited initial supply, corresponding in scarcity and reasonable market capitalization, resulting in favorable arbitrage opportunities for early traders. With a limited circulating supply of maximum 100 million tokens at the time of listing, we are set to kick-off well and create winners.
The Pre-IEO sale commences on Saturday, January 15, 2022, on our website (ieo.super.one) using a smart contract on the Binance Smart Chain with payments in two stablecoins; BUSD and USDT (BSC). With an invite code, participants will be able to obtain a substantial discount over the IEO price $0.50 per token (see IEO Sale below).The discounted price is $0.10 per tokens until whatever comes first of 10 million tokens sold or midnight UTC Monday, January 31, 2022.In total, the maximum allocation towards the Pre-IEO is 10 million tokens, which will, if all sold, generate gross sales of $1 million.To incentivize engagement and recommendations, we have developed an influencer referral system to be used during the Pre-IEO. Every buyer is issued a discount code after their first purchase, this code could be distributed to other prospective buyers, and when they use that code, the code owner will receive a 20% real time commission to the wallet address initially used to purchase Super tokens.
The IEO towards GoKu Market’s nearly one million users will start on Tuesday, February 1, 2022, at 00:00 UTC. A maximum of 10 million tokens will be offered during the Initial Exchange Offering (IEO). The IEO price and the first trading price are set to $0.50.The IEO will end whatever comes first of all offered tokens sold, or 7 days from the sale started. The IEO will close latest on February 7, 2022, UTC 23:59, and the trading will open immediately thereafter.If all offered tokens are sold, the IEO will generate gross sales of $5 million.
Cards are non-fungible tokens (NFT) representing our unique collection of game assets directly connected to the questions in the games. A user could either hold a Card and get a free pass for every question related to the subject matter of a Card, or a user could use in-app purchases to rent a Card for one or more free passes. When renting a Card, a staking fee of 5% is rendered collectively to the owners of that Card tier, and higher tiers, who participate in the Cards’ staking pool at all times.All Cards transactions on the platform are processed and validated by endorsing nodes. This allows Cards token holders to stake their respective Cards tokens with nodes on the platform and receive staking bonuses for their participation in endorsing transactions.
The Cards are issued in five tiers; Bronze, Silver, Gold, Legend and Origin.Bronze Cards are staking 5% on all in-app purchases of free passes for easy questions; Silver Cards are staking 5% on all in-app purchases of free passes for easy and medium questions; Gold Cards are staking 5% on all in-app purchases of free passes for all easy, medium and hard questions.Legend Cards are also staking 5% on all in-app purchases of free passes for all easy, medium and hard questions; and also Origin Cards are staking 5% on all in-app purchases of free passes for all easy, medium and hard questions. What sets the Legend and Origin Cards apart from the Gold Cards, are their features, pricing and rarity. Please review the game section for more details.To be eligible for staking bonus, the Cards need to be deposited with the platform, as the staking bonus is received for their participation in endorsing transactions.
The supply of Cards is diversified equally into Sports and Entertainment Cards, with two tiers each; free and paid.The free Cards are used as incentives in our Collect Fans feature, with the purpose of rewarding players for recruiting other players. As the new players being recruited prove their fandom to a category by passing a certain score in a qualification game, we issue free Cards to their referral.For every 2 players, a Bronze Card is issued, for additional 2 players, a Silver Card is issued, and for an additional 2 players, a Gold Card is issued. Further, when 12 players have been recruited a Legend Card is issued, and ultimately when 24 players have been recruited a Origin Card is issued.The free Cards collections never interfere or duplicate with the paid Cards collections, and the supply of free Cards are directly aligned with the user growth, engagement and corresponding revenues. We also allocate free Cards collections to very large and popular game categories like football clubs like Manchester United with more than 600 million fans; hence the number of users playing these categories will be huge and counterweight the higher supply in relation to staking bonuses.The free Cards is a great concept for rewarding engagement and at the same time building an intrinsic value in the form of players benefitting all stakeholders.To date we have completed the following free Cards collections;Football Collection, Club Cards, All 5 tiers, Manchester United Football Collection, Club Cards, All 5 tiers, Liverpool Football Collection, Club Cards, All 5 tiers, FC Barcelona Football Collection, Club Cards, All 5 tiers, Real MadridThese will be released and available for distribution when we open the Club Games later in the first quarter this year. Covering clubs with approximately 2 billion fans world-wide, it is an advantageous starting point to grow our user base exponentially.In addition, we are also currently preparing additional international football clubs like Manchester City, Chelsea, Bayern Munchen, PSG, Juventus, Arsenal, Atletico Madrid, Borussia Dortmund, AC Milan, Inter Milan, Tottenham, and a range of the leading football clubs in Asia. In addition to football, we will also release free Cards within popular sports like Basketball, American Football, Cricket and other sports.Our free Cards strategy is to cover all of the most popular areas of interest within sports and entertainment where large fan groups unite.While the free Cards could be earned by recruiting users, the limited paid Cards are only purchasable in the internal marketplace using allocations embedded in the Business Tiers as follows;Bronze, 3 Bronze Silver, 3 Bronze, 3 Silver Gold, 3 Bronze, 3 Silver, 3 Gold Legend, 3 Bronze, 3 Silver, 3 Gold, 3 Legend Origin, 3 Bronze, 3 Silver, 3 Gold, 3 Legend, 3 OriginThe offering of 3 Cards in each tier will be reduced to 2 Cards, and further to 1 Card, as we grow our user base; hence we currently offer great early participant benefits.The limited paid Cards are allocated in unique category collections with a total of 31,100 Cards each. Every collection has 100 subcategories, and there are 311 Cards in each subcategory, and these are again divided into 100 Bronze Cards, 100 Silver Cards, 100 Gold cards, 10 Legend Cards and 1 Origin Card.To date we have released in excess of 90,000 paid Cards in our internal marketplace, and we have sold about 30,000 of these to our community members. The following collections have been issued;Football Collection, Top 100 Players, 31,100 Cards Basketball Collection, Top 100 Players, 31,100 Cards American Football Collection, Top 100 Players, 31,100 CardsIn addition we have prepared and ready for release;Artists Collection, Top 100 Artists, 31,100 Cards Bands Collection, Top 100 Bands, 31,100 Cards Movistars Collection, Top 100 Stars, 31,100 CardsWith these upcoming releases, we have a total paid Cards collection of more than 180,000 Cards available in the marketplace. Of these, 150,000 are available for purchase; hence we have a substantial inventory available for immediate growth.Our content team is constantly developing new Cards, and we expect to have upwards of 300,000 paid Cards available in our marketplace by the middle of this year. We will then become one of the world’s leading providers of game NFTs.New paid Cards collections will never interfere, duplicate, overlap or otherwise deteriorate previously issued paid Cards collections and their inherent utility and financial value.Our non-fungible Cards have valuable and notable advantages over most other game NFTs. Cards have a profound native utility value within our game, and a great collector and creator value, and they also participate in endorsing transactions on the permissioned blockchain, rendering substantial financial value in terms of staking bonuses.
A Story is an additional historic piece of information related to the featured subject matter on a Card. To every tier of Cards in a subcollection, we have created a large range of Stories as non-fungible tokens that could be attached to the main Card. The Stories are created based on major events related to the subject matter on the Card. For example, it could be a football player’s personal or professional merits like a marriage, trophies or famous goals; or it could be a football club’s pivotal moments in history.The Stories create valuable enhancement opportunities for the Cards. Every Card has three available slots for Stories, and the holder needs to complete the Card with three different Stories to activate the Card for double staking bonus. The Stories are permanently attached to the Card, and significantly enhance the value of the Card.Stories are created by seeding, which is our equivalent of a breeding feature like seen in Axie and CryptoKitties. Once you hold a Card, you can seed this card and create Stories. The Card will then over a certain randomized timeframe release a random Story within the selected subcategory Card tier. Stories are also tradeable at the marketplace.To start seeding you need a Seed, which is an internal fungible tokenized ticket to start seeding. Along with every Card being issued, we issue two complimentary Seeds. Additional Seeds are available to purchase using Super.The Cards Stories and seeding feature provides opportunities for creators to create enhanced Cards and collections that could be traded on the marketplace at a premium, thus sparking our creator economy.
The free Cards are issued as delightfully designed artistic pictures, while all our paid Cards are issued as unique artistic video animations. All our Cards are designed by our own content team, and are unique, proprietary digital art created and sold by SuperOne.
We opened our Cards marketplace in August 2021, and over the past months, we have released more than 90,000 Cards, and sold about 30,000 of these to our community members. Over these months we have gained valuable experience in handling large numbers of files, and in particular video files over IPFS, as well as constantly enhanced our internal publishing system.The current version of our marketplace allows for purchase of paid Cards embedded with the Business Tiers packages. An upgraded version is set to open during the first quarter this year; this update will include trading and exchange, as well as deposit and withdrawal, functions.To date the Cards have been issued with Content Identifications (CID) and public IPFS URI links on our internal marketplace and permissioned blockchain. However, once we open the fully fledged marketplace, we will also enable withdrawals of transferable Cards as non-fungible tokens to public blockchains. The solution will allow for withdrawal and deposit to and from Binance Smart Chain (BSC) as BEP 721 tokens, Solana as single-set authority tokens, and later when available on XRPL.To be eligible for staking bonus, the Cards need to be, and remain, deposited with the platform, and can not be traded at the marketplace, or withdrawn out of the platform. This limits the number of Cards in circulation at the marketplace, and has a favorable effect on the supply and demand equation; most likely resulting in higher prices.
Spaces are non-fungible tokens representing our unique collection of advertising assets in the form of boards, interstitial and video formats natively embedded in the gameplay experience and rewarding the users with free access to premium games, prizes, and other incentives. Brands will also within the Spaces concept be able to access cognitive intelligence and segmented campaigns. When brands use Spaces, a staking fee of 5% is rendered collectively to the owners of that Spaces class who participate in the Spaces staking pool at all times.Spaces have much of the same characteristics, functions and requirements as Cards; we are therefore limiting the descriptions to only major differences.
The Spaces are also issued in five tiers; Bronze, Silver, Gold, Legend and Origin.Each of these five tiers of Spaces receives a staking bonus of 5% on all advertising transactions within its own tier, as well as in the lower tiers. For example, this means that the Spaces Gold tier will receive a 5% staking bonus on all advertising transactions within the Bronze, Silver and Gold tiers.
The supply of Spaces is diversified equally into Sports and Entertainment Spaces, with two tiers each; free and paid.The free Spaces are also used as incentives in our Collect Fans feature, with the purpose of rewarding players for recruiting other players, however, the qualification games are different from those being used to earn Cards.While the free Spaces could be earned by recruiting users, the limited paid Spaces are only purchasable in the internal marketplace using Super.The limited paid Spaces are also allocated in unique category collections with a total of 31,100 Cards each. Every collection has 100 subcategories, and there are 311 Cards in each subcategory, and these are again divided into 100 Bronze Cards, 100 Silver Cards, 100 Gold cards, 10 Legend Cards and 1 Origin Card.The paid spaces are available in 10 collections; whereas 5 collections are allocated to Sports and 5 collections are allocated to Entertainment; each collection assigned to one of the five continents in the world; Africa, Asia, North America, South America, and Europe. With this, users can purchase Spaces within their desired genre and continent.The Spaces have not yet been released, however, with the planned releases, we have a total paid Spaces collection of more than 300,000 Spaces available. Of these, all will be available for sale; hence we have a massive inventory available for immediate growth.
We also have the Stories concept for Spaces. Space Stories are created based on major continental brands and their products and history. Spaces will also be added to our existing marketplace when it launches later this year.We believe our Spaces concept will disrupt mobile game advertising, and the innovative tokenized concept enables everyman to participate and benefit from the vast mobile advertising market, while also providing great value to the players. Combined with the creator values, and the potent financial value in terms of staking bonuses, Spaces is set to create a new standard in mobile game advertising.Please note that Spaces have not yet been finalized, released or sold, hence we reserve the right to make changes, adjustments as we deem necessary to provide a best possible product for all the stakeholders.Spaces is set to launch towards the end of 2022, in conjunction with high user growth.
A Prosperous Economy
[THIS SECTION WILL BE PUBLISHED SHORTLY]
A Modern Technology Platform
We are technology owners and use technology to do business. Our business technology platform is uniquely designed using the best and fastest technologies available. Our products and services are created to potentially delight billions of users, therefore we are using a hybrid combination of well-proven centralized technologies and modern blockchain solutions.We combine a private system, a permissioned blockchain, and public blockchains into a feasible, versatile and powerful business platform. A business platform built for the future, but available and proven today.Blockchain technologies are still in their early stages, especially when it comes to high-performance services, therefore certain ultra-fast centralized services are required to provide services with extremely low latencies. At the same time, our platform embraces the latest technology advances in permissioned and public blockchains, enabling us to provide novel and disruptive business models.
Our technology platform consists of three principal layers; applications, abstraction, and data layers, all working in concert to provide fast and reliable services.The application layer is where the user-facing part of the services like mobile and web applications takes place. Over the past two years, we have released more than 50 updates to these applications. The application layer is twofold; both centralized and decentralized. The centralized mobile applications are distributed in the Apple and Google app stores, while the decentralized services are accessible through dedicated Web3 intermediaries like MetaMask and TrustWallet. Reaching billions of potential users requires well-engineered centralized mobile applications capitalizing on the huge and proven ecosystems that support them.The abstraction layer is where most of the logic like gaming and community algorithms are executed. The abstraction layer applications are extremely scalable and can handle a large number of concurrent requests from either the applications or the data layer.The data layer consists of three different data handling and storage systems.The private system utilizes the fastest centralized databases and servers required to deliver high-capacity services to the end-users.The permissioned blockchain is a purpose-built private blockchain with extremely high processing capacity and with superior security provisions to facilitate the latest privacy regulations.The public blockchains are where we provide publicly available transactions and store immutable data like our NFT Cards. We are blockchain agnostic in the sense that we are using the best available blockchain for each type of service.The business platform is designed for high performance and interoperability enabling cross-chain services via atomic swaps, chain code, and hash timelock contracts. This provides us with a great deal of flexibility to create bespoke services and use the best available technology in each use case.
The private system is designed to function as a super-fast and high-capacity data processing and storage system. All our services are in one way or another connected to the private system.The principal software used are high-capacity and concurrent processing scripting languages like Node, Golang, and Rust. The main database technologies in use are fast relational and graph databases in combination with storage buckets and Internet Planetary File System (IPFS) decentralized storage.On the server side, we have a comprehensive setup with Amazon Web Services (AWS), the world’s leading hosting provider. The private system facilitates secure VPC connections, load balancers, and interoperability with the two other data layer services, the permissioned blockchain, and the public blockchains.
Modern applications involve two or more parties exchanging monetary values; a third trusted party is required to verify and approve the transactions. The third trusted party will make sure that a transaction is rejected or accepted and finalized. To enable a tech-based platform without the third-party intermediaries, the capabilities of blockchain and smart contracts can be leveraged.There are many blockchain-enabled platforms that allow using smart contracts, but they are not equally good for enterprise use cases. Many existing smart-contract blockchains follow the order-execute architecture in which transactions are first ordered and then broadcasted to all the peers and then each peer executes on the transaction sequentially.Most of the blockchain platforms are not suitable for various industry use cases, which require the flexibility to choose a subset of permissioned participants to validate and approve the transactions. Enterprise blockchain use cases demand privacy, performance at scale, compliance and regulations.
We have built our permissioned blockchain on Hyperledger Fabric, the world’s leading enterprise-grade blockchain framework. The solution is highly modular with a pluggable consensus model, and an open smart contract feature allowing low latency and finality confirmation. The permissioned blockchain also uses channels for private data on a need-to-know basis in combination with private data collections and anonymous client authentication with Identity Mixer.The solution has separated transaction processing into endorsement, ordering, and commitment. This separation confers several advantages as fewer levels of trust and verification are required across node types, optimizing network scalability and performance.Combining a cost-free and high-capacity transaction capability with very good privacy provisions, the solution is ideally suited for our gaming and marketing services.We have created a decentralized governance structure where users can stake their tokens and be eligible for a staking bonus. The staking bonus is calculated and distributed in real-time. The structure uses a Raft ordering service, also incorporating a Zero Knowledge Proof (ZKP) transaction audit feature.A key feature is the channel structure that allows creating networks of networks and facilitates a comprehensive and selective access control.
Another imperative feature is the data controller which handles data authentication and authority, making the service fully GDPR compliant and designed for any new privacy rules that might come into force in the future.By separating the data subject and its personally identifiable information (PII) from the actual data with secure hashes, we are able to burn any connection, hence complying with privacy by design and the right to be forgotten. All data is stored in pervasive encrypted data storage on IPFS separated from the PII.We use our permissioned blockchain as our data logistics ledger to store pointers to our data, which are stored in the IPFS. The private IPFS network uses the Mutable File System (MFS), enabling treating the files like a regular name-based filesystem.As the data set corresponding to the data subject is stored in the IPFS, the hash of the content is returned by IPFS as the data pointer. The data pointer is then encrypted with asymmetric keys and the encrypted data pointer is generated and saved into the vault.Whenever a transaction processor requests access to a data set, a session identification is generated. A session identification comprises the public key of the data subject, data controller, data processor and the pointer to the data. In this way, we clearly define the entities associated with the data set according to the GDPR guidelines.The data usage policy depends on the requester’s role, and can be considered as an access control list or rules for a dataset, updated when consent is granted or revoked.The session identification is stored after being digitally signed by both the data subject and the data controller. Whenever a data subject grants access to the data processor, the private key of the data set pointer is retrieved from the vault. The private key is used to decrypt the data pointer and retrieve the private data from the IPFS. Private data is then shared with the data processor. The session identification is updated and the log of all the transactions is stored in the ledger which can be used as a proof of access.
Immutable Data Storage
From the fast CouchDB, we are able to retrieve the instant world state of the records, as well as complete transaction logs. We are also using other immutable storages like the QLDB solution from AWS and IPFS to ensure that our data sets are redundant.As the private system databases offer significantly faster response times, we also use these as “first responders” in order to keep the latency at a minimum. All communications between the various sections of the platform take place within a confined and secure VPC environment with the AWS ecosystem.
The permissioned blockchain is the principal ledger for all transactions on the platform, and we are below, detailing how the channels, validation, and staking features work.
The transaction processing utilizes channels that enable a unique separation of transactions and the ability to attach separate nodes to one or more channels. It also enables separate chain codes, staking fees, and ledgers for each channel.Smart contracts and chain code governance are completely decentralized in the platform. Chaincode life cycle uses the decentralized governance model where the operator and validator organizations must agree on an endorsement policy and other parameters before the chaincode becomes active on a channel.Validators could be connected to one or more channels, and the flexible processing structure opens a wide range of configuration opportunities not available in other blockchains.
The validation process is how a transaction is initiated, submitted, and finalized. All transaction validations are done by the designated validators, which must hold sufficient tokens to participate in the validations of the transactions. Validators must agree and approve all transitions before committing to the ledger. This unique model of transaction processing involves only the designated stakeholders but still ensures a democratic process of validation making the transactions secure, reliable, and verifiable.The validation system has a pre-designated validator set to ensure the liveliness of the system. Validator quorum validates the transaction related to the onboarding of the new validators.All validators are grouped and connected to a group node, and these nodes act as a proxy for the group for executing and validating the endorsement with respect to the endorsement policy configured for the validation chain code. Transactions are validated according to the validation logic of the respective transactions written in the validation chain code.An endorsement policy specifies the number of organisations that must execute chaincode and endorse the execution results in order for the transaction to be considered valid.As sufficient endorsements are received, the transaction proposal is sent to the ordering phase and then to the committing phase. In the committing phase, endorsements are validated to ensure that the endorsement policy is fulfilled and to ensure that there have been no changes to the ledger state for reading set variables since the read set was generated by the transaction execution. Transactions in the block are tagged as being valid or invalid. Each peer appends the block to the channel’s chain, and for each valid transaction, the write sets are committed to a current state database. Transaction validation outcomes are stored in the ledger and zero-knowledge proof is generated in the encrypted IPFS.Endorsing peers who signed the endorsement are listed and the validators associated with these endorsing nodes are listed and their designated staking bonuses are transferred to them.Third-party auditors are able to join the network by enrolling in specific auditor organizations. Auditors can view the customized automated audit report via smart contracts. Auditing partners will be able to access and check the Proofs Of Transactions (zero-knowledge proofs) on demand.
All transactions on the platform are processed and validated by endorsing nodes. This allows token holders to stake their respective tokens with nodes on the platform and receive staking bonuses for their participation in endorsing transactions.The permissioned blockchain utilizes Raft, which is a crash fault tolerant (CFT) ordering service. The Raft protocol uses a “leader and follower” model, in which a leader is dynamically elected among the ordering nodes in a channel (this collection of nodes is known as the “consenter set”), and that leader replicates messages to the follower nodes. Because the system can sustain the loss of nodes, including leader nodes, as long as there is a majority of ordering nodes (what’s known as a “quorum”) remaining, Raft is said to be “crash fault tolerant” (CFT).We operate both fungible (Super) and non-fungible tokens (Cards and Spaces) on the platform. In addition, these are equally issued on both the permissioned blockchain, as well as on one or more public blockchains.If the user has retained their tokens on the platform, the staking feature will automatically handle allocation of the tokens towards the designated staking contract. If, on the other hand, the users have withdrawn their tokens, they will manually have to transfer their tokens to the platform’s designated staking contract.Once the tokens are transferred to the platform’s designated staking contract, an internal bridge in the form of an atomic swap will lock the tokens and allocate a corresponding amount of internal tokens within the permissioned blockchain.Staking bonuses are always rendered in real-time. When staking bonuses are rendered either in tokens or cash, the tokens or cash will be added to the user’s account in real-time. However, pending on volumes there are limitations and minimum requirements for withdrawals in order to keep the transaction costs under control. There is also a requirement that stakers will need to be registered with the platform.
The Super tokens are Fungible Tokens (FT) issued both on the permissioned blockchain and on the public Binance Smart Chain (BSC) as BEP 20 tokens.Take into account that the crypto industry is still in its infancy, and the technology is advancing rapidly, we are, if required in the future, able to issue Super tokens on other blockchains like i.e. Solana or XRPL. However, in any such case, this will require a lock-up of the corresponding tokens issued on the BSC. Hence the total number of issued Super tokens will never exceed the initial cap.As the Super tokens are fungible tokens, every token participating in the bonus distribution, in principle, is deemed to receive the same bonus. However, in in order to encourage larger and long-term holders, we have certain incentives in place as outlined further in the Token Economy section.
The Cards are Non-Fungible Tokens (NFT) issued both on the permissioned blockchain and on a public blockchain. Each Card token has a unique identifier called Content Identification (CID) which is linked to the IPFS Uniform Resource Identifier (URI) through metadata stored with the IPFS URI. The Card gaming asset is stored on the public IPFS, a decentralized, immutable storage.To date the Cards have been issued with CID’s and public IPFS URI links on our internal system. However, once we open the fully fledged marketplace, we will also enable withdrawals of transferable Cards to public blockchains. The solution allows for withdrawal and deposit to and from Binance Smart Chain (BSC) as BEP 721 tokens, Solana as single-set authority tokens, and later when available on XRPL.As the Cards are non-fungible tokens issued in specific categories and limited series, their participation in the validation and endorsing process, as well as eligibility for staking bonuses, will vary accordingly. For further details, please see the Token Economy section.
The Spaces are Non-Fungible Tokens (NFT) issued both on the permissioned blockchain and on a public blockchain. Each Space token has a unique identifier called Spaces Identification (SID) which is linked to the IPFS Uniform Resource Identifier (URI) through metadata stored with the IPFS URI. The Space advertising asset is stored on the public IPFS, a decentralized, immutable storage.To date no Spaces have been issued. However, when we decide to start issuing Spaces, they will be issued with SID’s and public IPFS URI links on our internal system, as well as enabling withdrawals of transferable Spaces to public blockchains. The solution allows for withdrawal and deposit to and from Binance Smart Chain (BSC) as BEP 721 tokens, Solana as single-set authority tokens, and later when available on XRPL.As the Spaces are non-fungible tokens issued in specific categories and limited series, their participation in the validation and endorsing process, as well as eligibility for staking bonuses, will vary accordingly. For further details, please see the Token Economy section.
Introduction to Public Blockchains
Blockchain is a distributed ledger that records transactions in a series of blocks that are linked with cryptography, forming a chain of immutable records. Blockchain enables multiple stakeholders to share information and value in a secure and confidential manner without the need of intermediaries.Blockchain essentially provides a new type of trustless infrastructure with a decentralized transparent append-only ledger and computational capabilities of the smart contracts. The ledger is shared and stored on various nodes, spread across the world ensuring no single point of failure and attack.Blockchain enables tokenization of assets and creation of decentralized marketplaces. As all the transactions in a ledger are visible to all the stakeholders in real-time, blockchain is capable of building trust and faith on the system.We are blockchain agnostic in the sense that we are using the best available blockchain for each type of service. Below we outline the usage of four main public blockchains.
The XRP Ledger is a decentralized public blockchain. XRPL uses a consensus protocol, in which designated servers called validators come to an agreement on the order and outcome of XRP transactions every few seconds. All servers in the network process each transaction according to the same rules, and any transaction that follows the protocol is confirmed right away. XRP is the native cryptocurrency for products developed by Ripple Labs. Its products are used for payment settlement, asset exchange, and remittance systems that work more like SWIFT, a service for international money and security transfers used by a network of banks and financial intermediariesThe result is that XRP remains decentralized and is faster and more reliable than many of its competitors. It also means that the XRP consensus system consumes negligible amounts of energy as compared to certain other blockchains. We have successfully used XRP for payments since mid 2020 and have made more than 60 million transactions on the XRP ledger. The transaction costs of XRP are very low and we pay only about $10 to execute 1 million transactions. The XRP Ledger is in the process of preparing smart contract and NFT (NOn-Fungible Tokens) features; however, these are not commercially available yet. A major drawback with XRP since December 2020, has been the allegations and court case raised by the US Securities & Exchange Commission (SEC) claiming that XRP is a security, thus violating US Securities Laws.This situation has halted the feasibility of transacting XRP on all major exchanges. We are very satisfied with the performance of XRPL and hope the situation will be resolved shortly.
Binance Smart Chain
The Binance Smart Chain (BSC) is a blockchain network built for running smart contract-based applications. BSC uses a Proof of Staked Authority consens derived from 21 validators. BSC runs in parallel with Binance’s native Binance Chain (BC), which allows users to get the best of both worlds; the high transaction capacity of BC and the smart contract functionality of BSC. The Binance Smart Chain also implements the Ethereum Virtual Machine (EVM), which allows it to run Ethereum-based applications. The platform enables developers to build decentralized applications (DApps) and help users manage their digital assets cross-chain with low latency and large capacity.The BSC blockchain enjoys quick processing time with only a few seconds and reasonable costs with levels around $0.15-0.20 per transaction. We currently use the BSC for our main token contract for the Super token, as well as for other smart contracts like the private sale and staking features.
The Solana blockchain is designed to host decentralized, scalable applications. Solana is much faster in terms of the number of transactions it can process and has significantly lower transaction fees compared to rival blockchains. Solana’s blockchain operates on both a Proof of History (PoH) and Proof of Stake (PoS) model. PoS permits validators to verify transactions based on how many coins they hold; while PoH allows those transactions to be time stamped and verified very quickly. The PoH is a proof for verifying order and passage of time between events, and it is used to encode trustless passage of time into a ledger.The cryptocurrency that runs on the Solana blockchain – also named Solana and with the ticker symbol SOL – has become one of the fastest growing crypto currencies in 2021. Solana also boasts numerous notable NFT projects, as well as a cooperation with Circle enabling usage of the stablecoin USDC in fast and low fee transactions on the Solana blockchain.The Solana chain code is scripted in Rust, which is an advanced programming language designed for performance, safety and safe concurrency. We are thrilled by the performance of Solana, and truly believe Solana is set to become the Ethereum killer as many predict. We have dedicated Rust developers and are creating services based on the Solana blockchain.
The USD Coin (USDC) is technically not a public blockchain, but the world’s leading digital dollar stablecoin. As an open standard and public smart contract, USDC has rapidly grown the largest stablecoin industry ecosystem in the world. Many companies, products and services support the USDC standard, including digital wallets, exchanges, DeFi protocols, savings, lending and payment services. USDC is creating value for the entire blockchain ecosystem.USDC represents a major breakthrough in how we use money. Digital dollars work like other digital content – they move at the speed of the internet, can be exchanged in the same way we share content, and are cheaper and more secure than existing payment systems.USDC is fully backed by cash and equivalents and short-duration U.S. Treasuries, so that it is always redeemable 1:1 for U.S. dollars. Each month, they publish attestation reports by Grant Thornton regarding the reserve balances backing USDC. We believe the usage of a stable and secure USD denominated currency is of great advantage in mass adoption of our services. USDC is already present on the Solana blockchain, and through a multichain swap API, as well as connected banking services, USDC provides great features for seamless transactions. We are also using USDC to securely store funds for operations and reserves.
A Diligent Team
Our Knowledge Ecosystem
One of the most important foundations behind a successful product is a great team in which members can rely on and push each other harder than they ever thought possible. SuperOne is no different.With years of operation we have proved our execution as we built our comprehensive platform. We have ensured our platform’s perfection, built a massive network for lightning-fast resource acquisition, and successfully crowdfunded from over 30,000 stakeholders. Now, we are ready to actualize our vision and gamify the world.Our powerful global team fosters cooperation and communication with a flexible structure of principal management teams; corporate, technology, game and community. In addition, we strongly leverage our extensive network of highly experienced advisors.We already have many core and contributory members throughout the tech spectrum. From our core business managers and move makers who have operated together for years with a proven track record to our most occasional contributing creatives, every team member is versed in tech culture and familiar with modern start-up success.The team does far more than work together. We are an ecosystem, a vivid blend of outright experts in every key sector across mobile, gaming, advertising and blockchain. We draw upon every astute intellect and harness each key talent, aligning our interests to push the boundaries of our gaming and community platform as it enters fertile market space.It’s an exciting space to frequent and we are at its helm, with centuries’ worth of cumulative industry insight to ensure we remain ahead of our competitors.Winning isn’t everything, it’s the only thing!
The Brightest Minds
[THIS SECTION WILL BE PUBLISHED SHORTLY]
A Powerful Roadmap
[THIS SECTION WILL BE PUBLISHED SHORTLY]
A Safe Legal Harbor
Legal Assement of the Game
Skill-based gaming has a well-established legal, social and commercial history. From classic board games to major sports tournaments, games of skill have long offered participants a chance to compete based on one’s ability. Today, games of skill are available on most major media sites, and are complemented by an emerging electronic sports (eSports) industry that lets professional gamers compete in popular video games with real money prizes at stake.SuperOne is a platform that advances this trend, enabling skill-based multiplayer tournaments on mobile devices while offering gamers the ability to compete for real prizes.Prize-based tournaments in games of skill are not considered gambling because the accepted definition of gambling involves three specific things; the award of a prize, paid-in consideration, and an outcome determined by chance. Without all these elements, a money-based competition is not gambling and thereby legal in most jurisdictions.A game of chance is a game whose outcome is strongly influenced by some randomizing device, and upon which contestants may choose to wager money or anything of monetary value. A game of chance is one in which the result depends less upon the skill and experience of the player than upon purely fortuitous or accidental circumstances. A game of chance that involves anything of monetary value is, therefore, deemed to be gambling.A game of skill might have an element of chance, but with skill playing a much greater part in determining the outcome. Players, through the use of outstanding skills, will eliminate the element of chance. It is regarded that although the element of chance necessarily cannot be entirely removed, it is one in which success depends principally upon the superior knowledge, attention, experience and skill of the player, whereby the element of chance or luck in the game is overcome, improved or turned to his advantage.In SuperOne, one has to possess a considerable degree of knowledge of a category of subjects to succeed. With the additional time factor, the chance element is even further reduced. The skill is then not just knowing the correct answer, but answering a question faster than your opponents and building a score made up of correctly responded to questions.With ten questions and two alternative answers, the degree of chance is so far reduced that it is made up of even less than 0.1% to determine winners. The element of knowledge, creativity, speed, uniqueness and clarity of expression combine in lessening the chance factor to almost zero.Whether a game is a game of chance or a game of skill can determine whether it is legal in many countries or states. Many countries and states allow people to pay money to participate in games of skill but forbid paying to enter games of chance. In many cases, no laws have been written, as yet, governing the online gaming worlds and, where the law is lacking, governments, and courts have attempted to bridge the gap to regulate it. The regulation and legality of online skill gaming varies from jurisdiction to jurisdiction. In general, though; games of skill are in most jurisdictions freely allowed and do not require any further licensing subject to certain fulfilment of the skill elements.In certain jurisdictions, there are conflicting laws and regulations, conflicting interpretations of applicable laws, divergent approaches by enforcement agencies and inconsistent enforcement policies. Moreover, the legality of online skill gaming may be subject to uncertainties arising from differing approaches among jurisdictions as to the determination of where skill gaming activities take place and which authorities have jurisdiction over such activities and those who participate in them and whether the domestic law applies to services offered from abroad.SuperOne takes the clear distinction as being games of skill – and not games of chance – a difference which makes SuperOne legal in the majority of the world.
U.S. Skill Game Regulations
In the United States, the legality of skill based competition is determined at a state level, and extensive measures are required to ensure that a game offered is in full compliance with all applicable laws.SuperOne games are allowed in roughly 80% of the world, including 80% of the US population in 41 states – the exceptions being Arizona, Arkansas, Connecticut, Delaware, Louisiana, Montana, South Carolina, South Dakota, and Tennessee.Cash-based tournaments in games of skill are not considered gambling because the generally accepted definition of gambling involves three specific things: (1) the award of a prize, (2) paid-in consideration (meaning entrants pay to compete) and (3) an outcome determined on the basis of chance. Without all three of these elements, a competition that rewards real prizes is not gambling.Games of skill require a physical or mental ability and a learned capacity to carry out a result. These games commonly include the use of strategy, tactic, physical coordination, strength, technical expertise, or knowledge.Games of chance are games with an outcome strongly influenced by random chance or uncertainty. Common randomization devices include dice, playing cards, or numbered balls drawn from a container.Games of chance may have some skill, and games of skill may have some chance, however, most U.S. courts use either the predominance test or the material element test to look at the role that skill and chance each take in determining the outcome of the game.
The Predominance Test
The predominance test is the most commonly used indicator of whether a game is skill- or chance-based. Under this test, one must envision a continuum with pure skill on one end and pure chance on the other. On the continuum, games such as chess would be almost at the pure skill end, while traditional slot machines would be at the pure chance end. Between these ends of the spectrum lie many activities containing both elements of skill and chance. A game is classified as a game of skill if the game falls predominantly closer to the skill end of the continuum.
The Material Element Test
The material element test is the second most commonly used test in the U.S. and is relied upon by 8 states to evaluate whether a game is skill or chance based. The test asks the question of whether chance plays a material role in determining a game’s outcome. As an example, in games like Minesweeper, a great deal of skill is generally exercised by players, but there are moments when players are forced to guess at random, with the results of that guess determining the winner and loser of the game. Skill predominates but chance plays the material role in determining the game’s outcome.
Play for Free Games
The “Play for Free” versions of the SuperOne games do not constitute gambling under U.S. law, as there is no paid-in consideration (meaning entrants do not need to pay to compete).
Compliance in the U.S.
SuperOne games are clearly defined as skill based games under the U.S. Federal and State laws, and could freely operate in 41 of 50 states. The 9 red flagged states have particular regulations preventing prize games in general.In conclusion, SuperOne can – without any licensing – offer its games to more than 260 million Americans in the world’s largest and most sought after commercial market for sports, entertainment and advertising.
UK Skill Game Regulations
In the United Kingdom, they have adopted a regulatory approach to the industry rather than passing laws against it. The UK Gambling laws were overhauled as a result of European Union directives and internal market pressures for standardization across the EU as well as a Political response to the prohibition of gambling in the United States.The law which governs these issues in the United Kingdom, is the Gambling Act 2005. Section 339 of the Act provides that participating in a competition or other arrangement under which a person may win a prize (a ‘prize competition’) is not gambling for the purposes of the Act unless it constitutes gaming, betting, or participating in a lottery.
Section 6 of the Act defines gaming as “playing a game of chance for a prize”. A game of chance includes games involving both chance and skill, even where the chance element can be eliminated by superlative skill.The Gambling Commission released guidance in December 2009 to clarify the meaning of prize competitions and free draws, which do not require licensing under the Act (Gambling Commission, “Prize competition and free draws: The requirements of the Gambling Act 2005”, December 2009).According to this guidance, a prize competition is “one where success depends on the exercise of skill, judgment, or knowledge by the participants and does not, as it does in a lottery, rely wholly on chance.” However, per Section 14(5) of the Act, “a process which requires persons to exercise skill or judgment or to display knowledge” shall be treated for the purposes of this section as relying wholly on chance if;
- The requirement cannot reasonably be expected to prevent a significant proportion of persons who participate in the arrangement of which the process forms part from receiving a prize; and
- The requirements cannot reasonably be expected to prevent a significant proportion of persons who wish to participate in the arrangement from doing so.
It follows from this that a genuine prize competition is one that contains a requirement to exercise skill or judgment or to display knowledge and where it can reasonably be expected that the requirement will either;
- Prevent a significant proportion of people who wish to participate from doing so (section 14(5)(b) of the Act); or
- Prevent a significant proportion of people who participate from receiving a prize (section 14(5)(a)).
If either one of these barriers to entry or success can be shown, the process will not be deemed to rely wholly upon chance, and the arrangement will not be a lottery.The 2009 Guidance gives two examples of what would and would not constitute a prize competition;
- On the one hand, a crossword puzzle, where entrants have to solve a large number of clues and where only fully completed entries are submitted, is an obvious example of a prize competition.
- Conversely, a competition that asks for one simple question, where the answer is widely and commonly known or is blatantly obvious from the material accompanying the competition, would not be considered a prize competition based on skill.
Between these two examples there is not an obvious line that can be drawn. The 2009 Guidance articulates the test as “whether there is a reasonable expectation that the skill, judgment or knowledge requirement would either deter a significant proportion from entering or prevent a significant proportion from receiving a prize.” There are therefore two elements to this test;
- Did the skill, judgment or knowledge requirement in fact eliminate a significant proportion from participation or success and;
- If it did not, on what basis did the organizers conclude it was reasonable to expect that it would have done so?
While a “significant proportion” is not defined, it is given its plain and ordinary meaning. The 2009 Guidance specifies that organizers may be invited to demonstrate how they calculated a “significant proportion”, for example by carrying out research to test types of questions with viewer or reader panels to establish if a significant proportion would be deterred from entering, or would get the answer incorrect.In SuperOner, users are required to answer a series of qualification questions in an initial qualification round correctly. While they are able to attempt the qualifying rounds as many times as desired, a significant proportion, 50%, of users will not clear the qualifying round at any given time. 50% would qualify as a significant proportion unless indicated otherwise by the Gambling Commission.In addition, the SuperOne monitors the number of players who provide answers for questions at each level of the game, and that if the number of players that answer all questions correctly exceeds a certain threshold the system automatically raises the difficulty level of future questions at that level. This type of automated difficult-ensuring system would provide sufficient evidence that a significant proportion of users are eliminated from participation in the game.At the same time, a significant proportion of users are eliminated from success, both because due to the challenge model only one winner can be selected, and because the games are designed at an anticipated 70% correct answer rate. Together with the challenge model and increasing level of difficulty, this design would ensure a significant proportion of users are eliminated from success. In addition to the test in the 2009 Guidance, a number of additional indicators are also specified;
- Where a competition uses a multiple answer format, whether there are sufficient plausible alternative answers;
- “Joke” answers are only used where there are sufficient plausible alternatives;
- The correct answer is not obviously given close to the question;
- The number of questions asked;
- The types of formats used, for example, complex logic or mathematical puzzles which are demonstrably not simple to complete;
- The cost of entry and/or the value of the prize; for instance the level of skill or knowledge needed to deter potential participants from entering a competition with a high value prize is likely to be greater than in the case where the value of the prize is low.
As an example; a popular game like Who Wants to be a Millionaire, involving multiple choice questions based on skill and increasing difficulty, would ordinarily not be considered a game of chance, depending on the level of difficulty of the questions and the anticipated incorrect response rate from players.Based on these indicators, the SuperOne games would be more likely to be considered a prize competition. There are sufficient plausible answers in the multiple choice questions, and they increase in difficulty. There are also a significant number of questions asked and the correct answer is not obvious, nor are joke answers offered as answer choices.While prize competitions run by SuperOne do not meet the definition of gaming, the 2009 Guidance clarifies that other rules and regulations may be applicable to SuperOne, such as unfair trading regulations and consumer protections laws.
The definition of “betting” is set out in Section 9 of the Act as making or accepting a bet on;
- The outcome of a race, competition, or other event or process, the likelihood of anything occurring or not occurring, or whether anything is or is not true.
A transaction that relates to the outcome of a race, competition or other event or process may be a bet within the meaning of subsection (1) despite the facts that;
- The race, competition, event or process has already occurred or been completed, and one party to the transaction knows the outcome.
Section 11 of the Act gives further guidance on how activities which might fall within the scope of a prize competition could qualify as betting;
- For the purposes of section 9(1) a person makes a bet (despite the fact that he does not deposit a stake in the normal way of betting) if he participates in an arrangement in the course of which participants are required to guess any of the matters specified in section 9(1)(a) to (c), he is required to pay to participate, and if his guess is accurate, or more accurate than other guesses, he is to win a prize, or enter a class among whom one or more prizes are to be allocated (whether or not wholly by chance).
In subsection (1) a reference to guessing includes a reference to predicting using skill or judgment.An example of how Section 11 could apply to a prize competition is as follows; (1) users are required to pay money to participate in a competition; (2) the competition requires the users to guess who will win a race to be held the following weekend; (3) the prize is awarded to the user who correctly guesses the winner of the race. This would constitute betting.It would also constitute betting if the question was who had won a particular race the previous weekend if the result of that race was only known to the competition organizer and therefore the answer could only be guessed and could not be known through skill or knowledge.The questions that the players are required to answer to qualify for in the SuperOne games and when participating in the games do not require the users to guess at the outcome of a race, competition or other event, the likelihood of anything occurring or not occurring or whether anything is true or not true in so far as a guess and not skill or knowledge would inform the answer.Therefore the SuperOne games do not constitute betting under the Act.
Section 14 of the Act identifies two types of lotteries, a “simple” lottery and a “complex” lottery. An arrangement is a simple lottery if it satisfies all of the following three conditions;
- Persons are required to pay in order to participate in the arrangement;
- In the course of the arrangement one or more prizes are allocated to one or more members of a class; and
- The prizes are allocated by a process which relies wholly on chance.
The SuperOne games satisfy the first two limbs of this test as participants are required to pay a cash sum in order to play the games and, after the round of qualifying questions, the winner at each level of the games wins a monetary prize. It must therefore be determined whether those prizes are allocated by a process which is determined wholly on chance.Section 14 of the Act sets out conditions on which a promotion which purports to require participants to display skill, judgment, or knowledge may still be deemed to rely wholly on chance. These are where the “skills” requirement cannot reasonably be expected to prevent;
- A significant proportion of persons who participate in the promotion from receiving a prize; or
- A significant proportion of persons who wish to participate in that promotion do so.
For the purposes of determining whether the SuperOne games constitute a simple lottery, it is not necessary to examine the skill element at the qualification stage. In order to receive a prize in round one and subsequent rounds, a player must defeat the nine other players in their virtual group, whether at the initial stage or following one or more head-to-head challenges. As only one prize is awarded for each round, the skill requirements serve to prevent a significant proportion of persons who participate in the promotion from receiving a prize.The SuperOne games therefore clearly do not constitute a simple lottery.An arrangement is a complex lottery under the Act if it satisfies all of the following four conditions;
- Persons are required to pay in order to participate in the arrangement;
- In the course of the arrangement one or more prizes are allocated to one or more members of a class;
- The prizes are allocated by a series of processes, and
- The first of those processes relies wholly on chance.
The first two limbs of this test are the same as for a simple lottery and, as with the simple lottery, the SuperOne games satisfy these limbs.The key difference between a simple lottery and a complex lottery is that in a complex lottery the prizes are allocated by a series of processes, and the first of those processes relies wholly on chance.It is clear that the SuperOne games comprise a series of processes. As a minimum, the qualifying questions and round one, but also the head-to-head challenges and subsequent rounds would create processes. It is therefore necessary to determine whether the first of those processes, the qualifying questions, relies wholly on chance.In order not to be deemed to be determined wholly on chance, the qualifying questions must be of sufficient difficulty that a significant proportion of persons who attempt the questions will not answer all of them correctly. The Act does not provide a definition as to what classifies as a “significant proportion” but the Gambling Commission, in the 2009 Guidance, has given indication that this expression must be given its normal ordinary meaning.The SuperOne system monitors game difficulty and raises it accordingly to keep the success rate of answering questions at maximum around 70%, meaning that a minimum of 30% will fail. As stated above, 30% of users would qualify as a significant proportion. The SuperOne games do not therefore rely wholly on chance, and are instead prize competitions where users use their skill and knowledge to compete and win prizes.In line with the Gambling Commission’s guidance, SuperOne should keep detailed records of the difficulty levels at which the questions in the SuperOne games are set, so that SuperOne can reasonably demonstrate why it expected the applicable percentage of participants to fail to answer the requalification questions correctly.
Play for Free Games
The “Play for Free” versions of the SuperOne games do not constitute gambling under English law, as there is no payment to enter and there is no prize offered for success.
Compliance in the UK
SuperOne games are clearly defined as prize competitions under the UK Gambling laws, and could freely operate across the nation. No license is required under the Act to conduct or facilitate a prize competition.In conclusion, SuperOne can – without any licensing – offer its games to more than 65 million Britons in one of Europe’s largest and most sought after commercial markets for sports, entertainment and advertising.
EU Skill Game Regulations
In the European Union member states may enjoy their freedom to regulate gambling and gaming as they see fit, it is unquestionable that this must be embedded in and done with respect for the larger framework of Europe. That does not impose some restrictions on the member states’ autonomy.The most important is to follow from the supremacy of the European Internal Market Freedoms. While gambling is explicitly excluded from the scope of application of the Directive on Electronic Commerce, the Services Directive, and the Audio-visual Media Services Directive, some impact may follow from other Directives such as the Notification Directive, the Third Money Laundering Directive, and the VAT package.The regulation of skill games varies widely amongst the member states, but, in general, most of the jurisdictions have regulations similar to those of the United Kingdom. However, there are a few notable exceptions like Belgium, Italy, Norway and Spain.
Legal Assessment of Tokens
Introduction of Super Tokens
SuperOne intends to issue a number of tokens (“SuperOne tokens”) to affiliates (“Affiliates”) of the SuperOne platform (“SuperOne token holders”) in return for cryptocurrency, traditional currency, and/or other crypto assets. SuperOne tokens may be made available for trading on secondary exchanges. SuperOne tokens are available for purchase from SuperOne for an indefinite period. SuperOne token holders are intended to be SuperOne Affiliates who purchase Super tokens to participate as affiliates on the SuperOne platform. SuperOne tokens will be issued via a blockchain specifically created for the SuperOne tokens, or directly connected to such via interoperable and/or directly pegged intermediaries, which uses a proof-of-stake validation process to validate transactions (the “SuperOne Blockchain”). In accordance with the proof-of-stake model, owners of SuperOne tokens can stake their tokens to attest, or validate, blockchain blocks into existence (the “Validators”) and thereby facilitate transactions on the SuperOne Blockchain. Validators participate in the SuperOne Blockchain network by contributing their staked tokens to nodes. Validators contribute to the SuperOne Blockchain network by attesting to a block proposed by the Master Validator Nodes. These blocks correspond to transactions made on the SuperOne Blockchain network. Validators then receive rewards for these activities. By attesting to blocks, Validators facilitate the transactions made on the SuperOne Blockchain. Depending on the complexity of the transaction, the SuperOne Blockchain is designed to classify transactions in different tiers of complexity and, therefore, in different levels of rewards received from validating transactions depending on the different tiers. As ultimately, more complex games require more complex transactions, Validators facilitating transactions for these games will incur greater rewards, as the validation required for these games is more complex. SuperOne token holders will be able to stake Super tokens through the validation process and receive corresponding staking rewards in proportion to the number of staked Super tokens (the “Staking Rewards”). SuperOne token holders may contribute their Super token to Validator Nodes and earn rewards from being Validators on the SuperOne Blockchain. SuperOne token holders are able to connect their Super tokens to Validator Nodes and participate in staking, allowing the SuperOne token holders to participate in staking without surrendering ownership and control of their Super tokens. In exchange for validating transactions on the SuperOne Blockchain, SuperOne token holders will earn Staking Rewards. SuperOne Staking may be in soft lockup (no minimum duration for staking) or hard lockup (minimum period for staking tokens) as defined by SuperOne. Minimum amounts of Super tokens contributed to staking will be set by the SuperOne Blockchain and may change over time, depending on the needs of the SuperOne Blockchain network. SuperOne Affiliates will be eligible for Staking Rewards from staked Super tokens. SuperOne Affiliates will also be able to earn commission from customers and transactions driven to the SuperOne Platform. As part of the SuperOne Blockchain facilitation, SuperOne may also choose to offer a redemption or buy-back program for Super tokens, in the event that the SuperOne tokens sold and not staked create the situation where the SuperOne Blockchain is not validating transactions in time to keep up with the demands of the SuperOne Blockchain. Such redemption or buy-back would happen at a fixed-price determined at the time the redemption or buy-back program is announced and would be made to ensure the SuperOne Blockchain proof-of-stake model continues operating within normal parameters. In the sections below we set out the legal framework for the SuperOne tokens and consider whether the SuperOne tokens would be considered a security under US, UK, and German law.
US Legal Framework
The Howey Test
The applicable securities regulations in the United States are prescribed in the United States Securities’ Act of 1933 and its implementing regulations (as amended, the “Securities Act”). As relevant to this analysis, the Securities Act defines a “security” as “any… investment contract” (15 U.S.C. Section 77b(a)(1)). The U.S. Securities and Exchange Commission (“SEC”) has expressed that those who offer and sell securities in the United States are required to comply with federal securities laws. The principle framework for determining whether a specific digital token may be considered a security under the Securities Act is the “Howey Test.” The Howey Test is often divided into four elements to determinate the existence of an investment contract, analyzing four elements: (i) whether there exists an investment of money; (ii) whether there exists a common enterprise; (iii) whether there exists an expectation of profits; and (iv) whether any expected profit is derived from the entrepreneurial or managerial efforts of other third parties. All four elements of the Howey Test must be met for an investment contract and therefore a security to exist. This assessment is limited to the likelihood that the SuperOne token may be considered a security under the Securities Act and is not a full legal opinion. It does not include a comprehensive analysis of the United States’ federal or state laws, or international laws, rules, or regulations except as referenced herein. Such laws, rules, or regulations may apply to the SuperOne tokens. Additionally, this assessment does not address compliance with the Securities Exchange Act of 1934, the Commodities Exchange Act, banking laws, including but not limited to money laundering regulations, state securities laws, money transmitter laws, consumer protection or consumer product safety laws, or other laws, rules, or regulations. We also do not address whether SuperOne may be an investment company under the Investment Company Act or whether it must register a specific type of entity pursuant to any other federal or state securities law. The Howey Test is composed of criteria enunciated for “investment contracts” by the U.S. Supreme Court in SEC v. W.J. Howey Co., 328 U.S. 293 (1946) and subsequent judicial and administrative decisions.
Application of Howey to Digital Tokens
The SEC has provided additional guidance when considering the applicability of the Howey Test to digital tokens, namely in the “DAO Report”, the “Munchee Order”, and has issued further guidance when analyzing digital tokens under the Howey Test (the “Digital Asset Framework Guidance”). For further legal references, please see; SEC Exchange Act Rel. No. 81207, Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO (July 25, 2017) The “DAO Report”; in the Matter of Munchee Inc., Securities Act Rel. No 10455 (December 11, 2017) the “Munchee Order”; and also, the SEC Framework for “Investment Contract” Analysis of Digital Assets. On July 25, 2017, the SEC released the DAO Report. The DAO Report described the SEC’s investigation of DAO, a virtual organization, and its use of blockchain technology to facilitate the offer and sale of DAO Tokens to raise capital for indeterminate projects. After considering the facts and circumstances of the initial offering and marketing of DAO Tokens, as well as the underlying technology, governance, and curation mechanism, the SEC determined that the sale of DAO Tokens constituted an unregistered sale of securities. Following this enforcement action, on December 11, 2017, the SEC filed the Munchee Order, concluding that the Initial Coin Offering (“ICO”) of self-classified utility tokens issued by the sponsor of a restaurant review community application constituted an unregistered offering of securities. The SEC analyzed the MUN Token under the Howey Test and focused primarily on the test’s third element, a reasonable expectation of profits, and the fourth element, profits derived from the entrepreneurial and managerial efforts of others, construing each of those elements broadly to conclude that the MUN Token constituted an investment contract. Relevant to this analysis is that fact that the Munchee Order found an expectation of profit by citing multiple public statements by the ICO sponsor and its agents promising significant returns for purchasers of MUN Tokens (The Munchee Order at para. 5 – 6), efforts by the ICO sponsor to facilitate secondary trading in MUN Tokens, and an increasingly valuable ecosystem wherein MUN Tokens could be used to buy and sell services. For further legal references, please see; Id at para 8-9. More recently, a federal court in California echoed the emphasis in the Munchee Order on public statements by a token issuer. On February 14, 2019, the U.S. District Court for the Southern District of California, found that the tokens at issue were a security under the Howey Test, focusing on the economic realities of the transaction and specifically, the objective terms or promotional materials, information, economic inducements or oral representation at seminars. See SEC V. Blockvest LLC et all., case number 3:18-cv-02287. The Munchee Order also noted that the MUN Tokens did not have utility since they had no use cases at the time, adding, however, that even “if the MUN Tokens had a practical use at the time of the offering, it would not preclude the token from being a security.” (Id at para. 9). After these and other enforcement actions, the SEC issued the Digital Asset Framework Guidance to clarify its position on digital assets and further guide digital asset issuers. The SEC clarifies that while an investment of money and a common enterprise are usually found via the issuance and distribution of digital assets, a reasonable expectation of profits derived from the efforts may not always exist. Within this guidance is a series of questions and factors to evaluate the mechanics of the distribution of the digital asset, and ultimately is focused on whether the digital asset is more like an investment or more like a purchase made for consumer use. Further elaboration on the Digital Asset Framework Guidance and its applicability to the Super tokens can be found below. The SEC has also issued no-action relief to a select few digital asset issuers, the key characteristic of these digital assets being a closed-loop system preventing the external transfers of the digital assets, and the digital assets being pegged to a fixed price. For example, see SEC Response of the Division of Corporate Finance Re: TurnKey Jet, Inc. 3 April 2019.
Analysis of the SuperOne Tokens Under the Howey Test
Overall, SuperOne can make reasonable arguments that the SuperOne tokens do not meet all four requirements of the Howey Test. As discussed below, the primary purpose for purchasing and using SuperOne tokens are for consumptive use on the SuperOne Platform. Further, any Staking Rewards received for staking SuperOne tokens are derived from the performance of a service in exchange for remuneration for providing that service, rather than for any profit proceeds received from an investment contract.
Investment of Money
The first element of the Howey Test is likely met because SuperOne members purchase SuperOne tokens with fiat currency or digital assets, which constitutes an investment of money.
Courts apply two different tests to determine whether the element of a common enterprise is met. SuperOne can make reasonable arguments that the SuperOne tokens do not meet this requirement.
According to this test, a common enterprise exists if multiple investors pool assets and share in the profits and risks (Revank v. SEC Realty Corp.,18 .3d 81, 87 (2d Cir. 1994). SuperOne token holders may join with other SuperOne token holders to stake their tokens. In such an instance there may appear to be a pooling of assets. In operation, however, the assets are not pooled in the sense of sharing both profits and risks. Profits are not shared by validators in a pooled Validator Node; profits are derived from the exact allocation of SuperOne tokens staked from each individual SuperOne token holder joining the Validator Node. Likewise, risks are not shared. When adding SuperOne tokens to a pooled Validator Node, the SuperOne token holder never gives up ultimate control of their SuperOne tokens. By integrating their digital wallet with the Validator Node, the SuperOne token holder connects their SuperOne tokens to the Validator Node, rather than sending and thereby giving up control of their SuperOne tokens into a pooled account. The SuperOne token holder can disconnect their SuperOne tokens from the Validator Node at any time. In addition, because of the smart contract technology connecting the SuperOne token holder’s wallet to the Validator Node, no change or action by the Validator Node can change the system parameters of the staking feature, in practice meaning the Validator Node has no control over the SuperOne token holder’s SuperOne tokens.
The vertical commonality test turns on whether SuperOne token holder’s fortunes are bound up with the actual fortune of the promoter or issuer of the security. Vertical commonality can exist even when the fortunes of investors do not rise and fall together or even where there is no pro rata sharing of profits and losses. SuperOne token holders purchase SuperOne tokens for consumptive use on the SuperOne Platform. They may also stake SuperOne token to facilitate the validation process on the SuperOne Blockchain network. Because both the consumptive use of SuperOne tokens and the staking use of SuperOne tokens rests solely on the continued existence of the SuperOne Blockchain, vertical commonality may exist. Ultimately, whether horizontal or commonality exists, SuperOne token holders are relying on SuperOne to deliver certain services and facilitate the SuperOne Blockchain, rather than delivering a capital return or other profit on an anticipated price increase of the SuperOne tokens. Expectation of Profits
The Supreme Court noted that under the Howey Test, “profits” should be construed as “capital appreciation resulting from the development of the initial investment… or participation in earning from the use of investors’ funds…” (United Housing Federation v. Forman, 421 U.S. at 825 – 53). Another consideration is whether SuperOne token holders are relying on the efforts of others, particularly managerial as opposed to ministerial efforts. SuperOne token holders do not have a reasonable expectation of profit derived from an investment product. SuperOne tokens are used to participate in the affiliate program on the SuperOne Platform. SuperOne token holders may wish to stake their SuperOne tokens to facilitate the validation process of the SuperOne Platform, which is a proof-of-stake blockchain requiring staking to operate the SuperOne Blockchain. It is anticipated that SuperOne Affiliates, who may initially purchase large quantities of SuperOne tokens, may wish to stake SuperOne tokens and earn Staking Rewards for their validation services. In this sense, SuperOne Affiliates are earning remuneration purely from the services they provide, namely their staking services, from which they derive Staking Rewards. SuperOne Affiliates are not deriving any profit from an investment contract. The mechanics of the SuperOne token are inherently designed to facilitate the proof-of-stake SuperOne Blockchain, rather than designed as an investment whereby SuperOne token holders can anticipate an expectation of profits from any rise in the SuperOne token value. SuperOne token holders may earn Staking Rewards by facilitating the SuperOne Blockchain proof-of-stake mechanism via validation of transactions. This also discourages trading of SuperOne tokens on a secondary market, but SuperOne token holders can use the secondary market to sell their tokens when they no longer wish to participate in the affiliate or staking program. As ultimately SuperOne is making SuperOne tokens available for purchase, it is not anticipated, based on fundamental economics, that a SuperOne token holder would be able to find a buyer on a secondary market that would purchase SuperOne tokens at a higher price than what SuperOne is currently offering via token sales on the SuperOne Platform. SuperOne has also locked the tokens for transfers during the token. Likewise, any redemption or buy-back made to facilitate the proof-of-stake SuperOne Blockchain would not create an expectation of profit as, ultimately, SuperOne would announce a fixed-price buyback to facilitate the SuperOne Blockchain. Further analysis of the Digital Asset Framework Guidance clarifies that the SuperOne token does not carry a reasonable expectation of profit. The SuperOne tokens “do not give the holder rights to share in the enterprise’s income or profits or to realize gain from capital appreciation of the digital asset” (SEC Digital Asset Framework Guidance.), nor does it grant the holder rights to dividends or distributions. Importantly, the Staking Rewards are derived from the validation process and the services of maintaining the SuperOne Blockchain. SuperOne token holders do not reasonably “expect that an [Active Participant’s] efforts will result in a capital appreciation of the digital asset and therefore be able to earn a return on their purchase.” The SuperOne tokens are targeted in the first instance toward SuperOne Affiliates and “expected users of the goods or services or those who have a need for the functionality of the network”, rather than “broadly to potential purchasers”. While the SuperOne tokens may be traded on a secondary market, any expectation of profit from those trading activities would be ancillary to the purpose of the SuperOne tokens, which is to facilitate the affiliate program and to validate transactions on the SuperOne Blockchain. SuperOne Affiliates are also encouraged to use tokens to facilitate the proof-of-stake SuperOne Blockchain, rather than trade the tokens on a secondary market. From these and other factors, it is indicative to SuperOne that the SuperOne tokens would not meet the element of the expectation of profits within the Howey Test.
Profits from Entrepreneurial or Managerial Efforts of Others
The final factor of the Howey Test asks whether any profit that comes from the investment is largely or wholly outside of the investor’s control. If so, the investment might be a security. If, however, the investors’ own actions largely dictate whether an investment will be profitable, then that investment is probably not a security. Any remuneration gained from the SuperOne tokens is derived from provision of services, rather than the entrepreneurial or managerial efforts of SuperOne or others. SuperOne token Holders may receive remuneration in the form of Staking Rewards via staking their SuperOne tokens, but those Staking Rewards are received in exchange for staking services provided. Those staking services facilitate the validation process of the proof-of-stake SuperOne Blockchain and are completely within the SuperOne token holders’ control. SuperOne Affiliates may also participate in an affiliate program with SuperOne, thereby driving users to the SuperOne Platform in exchange for a commission, but that remuneration is plainly not an investment contract and is derived from the provision of services. For these reasons, any profits gained from the use of the SuperOne tokens are largely and decisively in the SuperOne token holders’ control. A digital asset must meet all four elements of the Howey Test to be characterized as a security. SuperOne has identified reasonable arguments as to why the SuperOne token might fail one or more of those elements.
SuperOne tokens do not constitute a security under applicable US regulations as the token functions as a utility token which grants access to the SuperOne Affiliate functions and is therefore used for commercial purposes rather than investment purposes. SuperOne Affiliates may earn commissions from services they perform, rather than any appreciation in the SuperOne token. Further, the Staking Rewards they receive originate from contributing SuperOne tokens to the staking feature and facilitate the transactions made on the SuperOne Blockchain via the validation process. Such staking, which pays out Staking Rewards in exchange for validating transactions via the Proof of Stake method, constitutes a fee received for a service, rather than a gain received from an investment.
UK Legal Framework
Type of Tokens
The UK regulatory regime covers certain activities relating to “specified investments”. These specified investments include shares, deposits, and contracts for insurance. The regulatory regime is technology neutral. That is, it does not consider the technology used to determine whether a product is a specified investment but rather considers the underlying investment. Therefore, cryptoassets in themselves will not be considered a specified investment without meeting the requirements of a security. The UK securities regulator, the Financial Conduct Authority (“FCA”), has acknowledged three categories of crypto assets (FCA, ‘Cryptoassets: our work’, First Published: 23 January 2019, Last Updated: 25 October 2019);
Payment Tokens or Exchange Tokens
Tokens are used as a means of exchange or for an investment. These tokens are usually decentralized and designed to be used primarily as a medium of exchange. They do not provide the types of rights or access as provided by security or utility tokens. Bitcoin and Litecoin are specified by the FCA as examples of these types of tokens. Payment Tokens are not regulated by the FCA.
Tokens that are not a security token or e-money token, and which can be redeemed for access to a specific product or service that is typically being provided using a Distributed Ledger Technology (“DLT”) platform. Utility Tokens are not regulated by the FCA.
Tokens that amount to a ‘specified investment’ under the Regulated Activities Order (“RAO”), excluding e-money. These tokens may provide rights such as ownership, repayment of a specific sum of money, or entitlement to a share in future profits. They may also be transferable securities or other financial instruments under the EU’s Markets in Financial Instruments Directive II (“MiFID II”). Security Tokens are regulated by the FCA. In addition to Security Tokens, we have E-money tokens, which meet the definition of e-money under the Electronic Money Regulations, and are regulated by the FCA. Generally, Payment Tokens and Utility Tokens are not regulated by the FCA, while Security Tokens and E-money Tokens are regulated by the FCA. In practice, some Utility Tokens are promoted as Security Tokens, even if the Security Tokens do not grant the token holder equity or debt rights. Some issuers of these tokens may believe there is a limited market for Utility Tokens and prefer to promote their tokens as Security Tokens in order to attract purchasers or investors to their token. To the extent a Utility Token is promoted as a Security Token, the promotion requirements for securities will apply to these tokens, even though the tokens themselves are not in actuality Security Tokens. It is also indicated, albeit not clear, that the MiFID regime would apply to Utility Tokens promoted as Security Tokens, and therefore trades in relation to these tokens may be regulated or required to be done on a recognized exchange, multilateral trading facility (“MTF”) or organized trading facility (“OTF”). Upon reviewing the proposed mechanics and use of the SuperOne tokens, the argument can be made and the conclusion can be drawn that within the framework published by the FCA, the SuperOne tokens would be classified as a Utility Token and do not meet the classification of a Security Token for the following reasons;
- The SuperOne tokens represent no ownership rights in SuperOne and in the event of a sale of SuperOne, SuperOne token holders will have no involvement or rights in the sale of SuperOne;
- SuperOne token holders have no right to regular payments that would qualify the SuperOne tokens as a “specified investment” or indicate any type of security, such as dividend payments or profit-sharing payments;
- On the winding up of SuperOne, there will be no rights for SuperOne token holders to a proportion of the proceeds;
- The value of the SuperOne tokens to each SuperOne token holder will be determined by their use of the SuperOne Platform and their staking activities. SuperOne tokens may be traded on a secondary market, but any value derived from such activities would be ancillary to actual use of SuperOne tokens within the SuperOne Platform;
- The purpose for the SuperOne token is for affiliate access and use on the SuperOne Platform, rather than for investment;
- SuperOne does not owe a debt or repayment obligation to the SuperOne token holders and SuperOne has no obligation to pay any dividends, distributions, or interest;
- If SuperOne were to list its shares on a recognized exchange, the SuperOne token holders would have no rights or involvement in the listing process, nor be able to trade the SuperOne tokens on a recognized exchange (unless the SuperOne tokens are separately listed, which they are);
- There are no voting rights given to SuperOne token holders in relation to future issuances of SuperOne tokens, SuperOne operations, or the SuperOne Platform; and;
- The SuperOne tokens do not grant the SuperOne token holders any rights in relation to future issuance of shares or debentures by SuperOne, nor do they provide the SuperOne token holders with an option to acquire securities.
As the FCA has stated in its guidance on crypto assets, the ability for a token to be tradable on secondary markets and used for speculative investment purposes in and of itself does not classify a token as a Security Token. In light of the factors above, SuperOne does not consider the SuperOne token to be classified as a Security Token, a security, or a ‘specified investment’ under applicable UK regulations.
Collective Investment Scheme
Units in a collective investment scheme are a specified investment and therefore will be subject to the applicable regulatory regime. The Financial Services and Markets Act 2000 (“FSMA”) definition of ‘collective investment scheme’ is very broad. Collective investment scheme means any arrangements with respect to property of any description, including money, the purpose or effect of which is to enable persons taking part in the arrangements (whether by becoming owners of the property or any part of it or otherwise) to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income. The arrangements must be such that the persons who are to participate (“participants”) do not have day-to-day control over the management of the property, whether or not they have the right to be consulted or to give directions. The arrangements must also have either or both of the following characteristics; the contributions of the participants and the profits or income out of which payments are to be made to them are pooled; or the property is managed as a whole by or on behalf of the operator of the scheme (The United Kingdom Financial Services and Markets Act 2000 Section 235). While the contributions of the participants in this case will be pooled together by SuperOne for its use and the SuperOne Platform is managed by SuperOne and not the SuperOne token holders, the SuperOne token holders will not receive any income or profits, nor any payments from SuperOne’s profits or income. In addition, while SuperOne token holders may connect their SuperOne tokens to Validator Nodes to facilitate the SuperOne Blockchain, they are not pooling their SuperOne tokens by giving up control over their SuperOne tokens and may disconnect their SuperOne tokens from Validator Nodes at any time. As such, the issuance of the SuperOne tokens will not meet the definition of a collective investment scheme.
Where crypto assets fall within the current regulatory parameter, any EU regulations or directors governing that area will be applicable. It is noted that there is currently no harmonized EU-wide approach in relation to crypto asset regulation, but a draft framework has been announced and is discussed in more detail below. Because of the current lack of an EU-wide approach, some jurisdictions have produced their own domestic requirements and regulations. Such jurisdictions include France, Germany, Malta, and Gibraltar, which may require a more careful analysis.
MiFID requires EU jurisdictions to regulate certain activities, including reception and transmission of orders, portfolio management and dealing on own account, in relation to financial instruments. These financial instruments include transferable securities, options, futures, swaps, and units in collective investment undertakings, among others. Transferable securities and units in a collective investment undertaking are the two instruments which are potentially applicable to the SuperOne tokens. Transferable securities are defined as “classes of securities which are negotiable on the capital market” (EU Directive (2014/65/EU) Article 4(1)(44)). Negotiable on the capital market does not require listing, but rather includes securities which are capable of being traded on the capital market, including shares, bonds, and warrants. Given that the SuperOne token is not considered to be a security, it will not meet the definition of a transferable security. However, were the SuperOne token to be considered to be a security, it is likely the MiFID regime would apply. The SuperOne token also does not meet the definition of a unit in a collective investment undertaken, as the issuance does not meet the definition of a collective investment undertaking. The analysis of this is set out in the alternative investment fund section below. As the SuperOne tokens do not meet the definition of a financial instrument under MiFID, the MiFID regime would not apply to the SuperOne tokens. However, particular EU jurisdictions may have additional local regulations which are applicable to the SuperOne tokens.
Alternative Investment Fund
In addition to the collective investment scheme, the SuperOne tokens may also be considered under the alternative investment fund (“AIF”) European Directive 2011/61/EU (“AIFMD”), applicable throughout the EU. The definition of an AIF is similar, although not identical, to that of a collective investment scheme. Under the AIFMD, AIFs are defined as “collective investment undertakings, including investment compartments thereof, which: raise capital from a number of investors, with a view of investing it in accordance with a defined investment policy for the benefit of those investors; and do not require authorization pursuant to Article 5 of Directive 2009/65/EC, the “UCITS Directive” (AIFMD Article 4(1)(a)).Guidance from the European Securities and Markets Authorities (“EMSA”) states that a collective investment undertaking must have the following characteristics; the undertaking does not have a general commercial or industrial purpose; the undertaking pools together capital raised from its investors for the purpose of investment with a view to generating a pooled return for those investors; and the unitholders or shareholders of the undertaking – as a collective group – have no day-to-day discretion or control. The fact that one or more but not all of the aforementioned unitholders or shareholders are granted day-to-day discretion or control should not be taken to show that the undertaking is not a collective investment undertaking (European Securities and Markets Authority, Guidelines on key concepts of the AIFMD., ESMA/2013/611, 13 August 2013, Pg 3).As with the collective investment scheme, the issuance of the SuperOne tokens will not be considered an AIF or a collective investment undertaking as the SuperOne token holders will not be investing in or receiving a pooled return. SuperOne token holders may stake their tokens and receive Staking Rewards only for facilitating the SuperOne Blockchain. SuperOne token holders connecting their SuperOne tokens to Validator Nodes will retain complete control over their SuperOne tokens and can disconnect their SuperOne tokens from the Validator Nodes at any time.
EU Prospectus Directive
Where securities are offered to the public or admitted to trading, a prospect meeting the requirements set out in the Prospectus Directive may be required. This prospectus would need to be approved by a regulator in the EU, which would not include the FCA (after the end of the Brexit transitional period on January 1, 2021). Once the prospectus is approved, the prospectus can be used throughout the EU.To the extent the SuperOne token is a security or is marketed as such, a prospectus would be required unless one of the following exemptions applied; the offer is made to or directed at qualified investors only; the offer is made to or directed at fewer than 150 persons, other than qualified investors, per EEA member-state; the minimum consideration which may be paid by any person for transferable securities acquired by him pursuant to the offer is at least €100,000 (or an equivalent amount); the transferable securities being offered are denominated in amounts of at least €100,000 (or equivalent amounts); or the total consideration for the securities does not exceed €1,000,000 throughout the EEA. There is discretion within each EEA jurisdiction to increase the total consideration in (e) above, up to a maximum of €8,000,000.It should be noted that even where an exemption from the Prospectus Directive requirements is available, any financial promotions may still require approval or specific content inclusions. These will be jurisdiction-dependent.The only securities to which the Prospectus Directive applies are transferable securities, as defined in MiFID. As mentioned above, if SuperOne does not intend to market the SuperOne tokens as a Security Token, the SuperOne token would not meet the definition of a transferable security and as such there would be no prospectus requirements.
While it has always been illegal to use any asset, including crypto assets, for illicit activity or money laundering, the anti-money laundering regime has generally excluded crypto assets from the registration, client due diligence and reporting requirements. However, the fifth anti-money laundering directive (“5AMLD”), which required implementation by EU member states by January 10, 2020, brought into scope crypto asset custodian and fiat-crypto exchanges. This requirement was brought into force in the UK by the FCA’s Cryptoasset Regime, which requires registration by crypto asset custodians and fiat-crypto exchanges, the “Cryptoasset Regime” (FCA, Cryptoassets: AML/CTF Regime, first published 25 October 2019, last updated 24 August 2020). The Cryptoasset Regime is not directly applicable to issuers of crypto assets, unless the issuer is also providing custodian services. As SuperOne is not contemplated to provide custodian services and SuperOne token holders can hold SuperOne tokens within their own external wallets, SuperOne would not be considered a crypto asset custodian or a fiat-crypto exchange and would therefore not be subject to the Cryptoasset Regime.
One future development may affect the findings in this memorandum, namely the EU-Wide Cryptoasset Framework published by the European Commission on September 24, 2020 in its Digital finance package (the “EU Cryptoasset Framework”). This Cryptoasset Framework proposes to regulate crypto assets in the EU on a supranational level and focuses on making such a framework more digital-friendly and safe for consumers. From an initial review of the draft, the proposed EU Crypto Asset Framework would seem to treat Utility Tokens the same as current regulation, perhaps in future prescribing more stringent rules on marketing and advertising of Utility Tokens. It may also prescribe certain legal requirements, such as requiring any issuer of crypto assets to be located in the EEA. As the EU Cryptoasset Framework is not expected to be published into law within the next two years and will likely see significant changes before its implementation, this memorandum does not consider the specifics of the proposed law at this time.
SuperOne tokens are not considered to be a security under applicable UK laws, as there are no ownership rights in relation to SuperOne. The SuperOne token holders have no rights to, nor share in any profits, revenues, or distributions by SuperOne. As such, the creation of, promotion of or dealing in SuperOne tokens in the UK is not currently subject to the UK regulatory regime. On the basis that the SuperOne tokens are not security tokens in the UK, the SuperOne tokens would not be transferable securities under the European Directive 2003/71/EC (“Prospectus Directive”) or the EU Directive 2014/65/EU on Markets in Financial Instruments (“MiFID”) and therefore the Prospectus Directive and MiFID requirements are not applicable to the issuance of SuperOne tokens. The SuperOne token sale would also not be considered a collective investment scheme or alternate investment fund (“AIF”) under the UK or EU rules as there is no receipt of pooled funds. Furthermore, utility token crypto assets are not regulated directly by the Financial Conduct Authority.
German Legal Framework
The regulatory requirements to be compliant with in Germany depend on whether the SuperOne tokens are qualified as securities, investments under VermAnIG, investments in collective schemes/AIFs or other financial instruments as defined in Sec. 1 para. 11 KWG as well as on respective steps to be performed with regard to the SuperOne tokens. Therefore, the description of the legal framework is followed by the qualification of the SuperOne tokens. Using the qualification of the SuperOne tokens as the basis, the issuance of the SuperOne tokens, their promotion and potential post issuance trading will need to be treated separately.
Qualification of the SuperOne Tokens
Some regulators in Europe, such as the FCA, have acknowledged three general categories of crypto assets or tokens; Payment Tokens used a means of payment and/or loyalty schemes; Utility Tokens which are a means to use a system or platform; and Security Tokens representing shares, debentures or units in a fund.BaFin, however, is not considering these general categories of crypto assets in its supervisory practice of crypto assets and is also not using the classification to qualify the regulatory treatment of the respective products. Rather, BaFin is analyzing on a case by case basis, whether the offered crypto asset is fulfilling the prerequisites of applicable regulatory laws (BaFin’s Advisory Letter on the Classification of Tokens as Financial Instruments., WA 11-QB 4100-2017/0010, 28 March 2018).Based on this practice, even utility tokens may qualify as financial instruments or securities if rights attached to them fulfill respective regulatory criteria. Taking this as background, in Germany the issuance of the SuperOne tokens as described above would need to be considered against the following categories;
- Issuance of securities as defined under respective laws implementing the Prospectus Directive, i.e. the German Securities Prospectus Act (Wertpapierprospektgesetz or “WpPG”), Sec. 2. No. 1 WpPG;
- Securities under respective laws implementing MiFID II, i.e. the German Securities Trading Act (Wertpapierhandelsgesetz or “WpHG”), Sec. 2. para. 1 WpHG in connection with Art. 4 para. 1 no. 44 MiFID II;
- Issuance of capital investments pursuant to VermAnIG by qualifying as “non securities” capital investments (Vermögensanlang – “VermAnl Assets”);
- Financial instruments under the German Banking Act (Kreditwesengesetz – “KWG”);
In addition, it may also qualify as an AIF, i.e. a collective investment undertaking pursuant to the AIFMD implementing KAGB.
Qualification as Securities
Where securities are offered to the public or admitted to trading, a prospectus meeting the requirements set out in the Prospectus Directive and WpPG may be required. This prospectus would need to be approved by a regulator in the EU, e.g. by BaFin in Germany. Once the prospectus is approved, the prospectus can be used throughout the EU. For the purposes of the WpPG, the shares of common or preferred stock of a stock corporation or bonds, but also all other transferable securities, are regarded as securities. To this regard instruments which are securitized in a certificate are regarded as transferable securities whether they are listed or traded or not, but also electronic depository interests may qualify as transferable securities. Even transfer restrictions do not hinder this categorization. Upon reviewing the information provided on the SuperOne tokens, it appears that the SuperOne tokens would not be considered as securities under the WpPG for the following reasons, despite being principally transferable;
- The SuperOne tokens represent no ownership rights in SuperOne and in the event of a sale of SuperOne, SuperOne token holders will have no involvement or rights in the sale of SuperOne;
- SuperOne token holders have no right to regular payments that would qualify the SuperOne tokens as a “specified investment” or indicate any type of security, such as dividend payments or profit-sharing payments;
- There will be no rights for SuperOne token holders to a proportion of the proceeds on the winding up of SuperOne;
- The value of the SuperOne tokens will be determined by their use of the SuperOne platform and their staking activities. SuperOne tokens may be traded on a secondary market, but any value derived from such activities would be ancillary to actual use of SuperOne tokens within the SuperOne Platform;
- The purpose for the SuperOne token is for affiliate access and use on the SuperOne Platform, rather than for investment;
- SuperOne does not owe a debt or repayment obligation to the SuperOne token holders and SuperOne has no obligation to pay any dividends, distributions, or interest;
- The SuperOne token holders would have no rights or involvement in a listing of SuperOne shares on a recognized exchange, nor be able to trade the SuperOne tokens on a recognized exchange (unless the SuperOne tokens are separately listed, which they are);
- There are no voting rights given to SuperOne token holders in relation to future issuances of SuperOne tokens, SuperOne operations, or the SuperOne Platform; and;
- The SuperOne tokens do not grant the SuperOne token holders any rights in relation to future issuance of shares or debentures by SuperOne, nor do they provide the SuperOne token holders with an option to acquire securities;
Despite the fact that the definition of securities under MiFID II/WpHG varies from the definition in the WpPG in some nuances, based on the above arguments, the SuperOne tokens shall not qualify as securities under the MiFID II/WpHG as well. Finally, the following rather minor risk shall be highlighted: some authors in German legal literature following the usage of the Howey test by the SEC are of the opinion that to qualify a Utility Token as a security is possible if the token is used by an average investor to generate profits on a secondary market, despite the fact that the prerequisites of being a security under EU/German law are not fulfilled. For example, the redemption/buy-back mechanism may be viewed as an indication that the SuperOne tokens are to be traded on a secondary market, as well as used on the SuperOne Platform. As indicated, however, the redemption/buy-back mechanism is meant to facilitate the SuperOne Blockchain and proof-of-stake mechanism as a means of control when not enough SuperOne Tokens are being staked to facilitate the validation process. In addition, the initial interpretation has no basis in the underlying laws and, hence, is rather contra legem. For example, commodities are also traded on secondary markets and also may be used for speculative investments, but obviously do not qualify as securities under European and German law. In addition, there are no indications that BaFin may follow such a minority opinion.
Qualification as VermAnl Assets
Since July 1, 2005, based on VermAnIG a prospectus must be prepared for non-securities investment assets, such as;
- Shares that grant the investor participation in a company’s profits;
- Shares in assets held or managed by the issuer or a third party on its own behalf for the account of a third party (trust assets);
- Participation and subordinated loans;
- Registered (non-transferable) bonds; and;
- All other investment assets with an interest and/or repayment claim or any other cash-settled mechanism for the timely provision of funds, that are offered to the public in Germany and are not represented by securities within the meaning of the WpPG (cf. above), not being deposits (Einlagen) within the meaning of KWG.
The prospectus requirement is not applicable if the party offering these securities is already subject to a prospectus requirement under other regulations, an exemption is applicable, or a prospectus has not already been published pursuant to VermAnIG.As described above, the SuperOne tokens are not shares or shares of similar instruments since they do not bear any rights for the SuperOne token holders which may be similar to rights shareholders normally receive. The SuperOne token holders can also not be qualified as participants, either via subordinated loan or registered bond, since they do not provide the SuperOne token holders with respective repayment claims for the invested capital, which is an essential part of a loan/loan-similar instrument such as a registered bond. Additionally, due to the same reasons, the SuperOne tokens are also not deposits within the meaning of KWG, which would require an unconditioned repayment claim of the SuperOne token holders against the issuer, which is not implemented. Finally, there are sound and reasonable arguments to support the catch-all provision of Sec. 2 para. 1 no. 7 VermAnIg will not be applicable to the x SuperOne tokens. The SuperOne tokens are not intended to provide the SuperOne token holder with any interest/repayment claims and also the payments for the SuperOne tokens are not repayable after a period of time. And even though the SuperOne token holders may receive some economically valuable benefits – which could be qualified as a respective cash settled mechanism – the SuperOne tokens will be used to receive services and not cash interest/profit participation payments like in classical equity/debt investments. Nonetheless, because such benefits shall be provided to the SuperOne token holder, some minor risk remains that BaFin may qualify the SuperOne tokens as VermAnl Assets.
Qualification as AIF/Collective Scheme
The AIFMD implementing KAGB defines an AIF rather broadly as any pooling of investments or undertakings for collective investments under a common strategy. It distinguishes between public funds and so-called special AIFs, available as open-ended or closed-ended funds. Public funds are open to all kinds of investors, whereas only professional investors (within the meaning of the MiFID II) as well as semi-professional investors can invest in special AIFs. The central aspect of KAGB is BaFin’s license requirement for all external or internal domestic investment managers (Kapitalverwaltungsgesselschaften – “KVGs”) (Sec. 20 KAGB). Domestically, external KVGs may only be set up in the legal form of a GmbH, an AG, or a GmbH & Co. KG. The use of an EU passport by foreign-based EU investment managers for activities in Germany is possible. Investment managers outside the EU need to be registered. In addition to the license requirement, investment managers will be subject to extensive duties and obligations, e.g. regarding internal procedures, conflicts of interests, transparency and observation of investment and debt limits. Outsourcing to third parties is permitted within certain boundaries; the outsourcing to non-licensed companies requires BaFin approval. In this case, SuperOne token holders will not pool their funds. SuperOne token holders may connect their SuperOne tokens to Validator Nodes to participate in staking and enjoy the Staking Rewards, which is a service to contribute to the operation of the SuperOne Blockchain network. There is no defined common “investment” strategy to generate profits from any pooled funds. As mentioned above, SuperOne token holders will not receive any payments from SuperOne’s profits or income, but rather may only receive Staking Rewards for facilitating the SuperOne Blockchain network. Based on this, SuperOne tokens or the entity issuing SuperOne tokens shall not qualify as KVG and also not as AIF or a collective scheme under KAGB.
Qualification under KWG
KWG forms the legal basis for the operations and monitoring of credit institutions and financial services institutions in Germany. In this context the definition of financial instruments is broader than in other EU jurisdictions and as such in MIFID II/ WpHG. In addition to all transferable securities, such as shares and bonds (Sec. 1 para. 11 sentence 1 no. 1 and 3 KWG), all fund units (Sec. 1. para. 11 sentence 1 no. 5) and all other investment products, such as loans, non-transferable shares, etc. (Sec. 1 para. 11 sentence 1 no. 2 and 4 KWG) also so-called calculation units (Sec. 1 para. 11 sentence 1 no. 7, 2. Alt. KWG) are regarded as financial instruments under KWG. As examples for calculation units, often the drawing rights from the IMF or the former ECU-units are named. However, BaFin in its administrative practice qualify as calculation units every instrument which is able to substitute official currencies even issued by private parties, especially payment tokens like BTC and ETH (Id at Section 4; BaFin’s circular regarding financial instruments pursuant to Sec. 1 para. 11 sentences 1 to 3 KWG., 20 December 2011, as amended on 26 July 2018, Section 2 b) gg)). Despite this treatment, in recent case law a Higher Regional Court of Berlin (Kammergericht Berlin) disputed this view of BaFin with regard to BTC, arguing that with regard to BTC there is no issuer (Higher Regional Court of Berlin (Kammergericht Berlin), (4) 161 Ss 28/18 (35/18), NJW 2018, 3734 et seqq. 25 September 2018). The recent case law does not seem to be applicable to the SuperOne tokens, since with SuperOne tokens there will be an issuer. Apart from that, the SuperOne tokens will not be used for payment of services and by this will not substitute traditional currencies. BaFin in its circulars explicitly and repetitively states that the “alternative currencies” are calculation units within the meaning of KWG 8 Id at Footnote 23). Nonetheless, a risk that BaFin will qualify SuperOne tokens as calculation units exists.
Qualification as Derivative Instruments
SuperOne tokens are not a derivative of another basis values (e.g. fiat currencies, securities or crypto assets as securities), but it’s shall be mentioned that if the SuperOne tokens become a derivative of a basis of value, it also may be a derivative pursuant to Sec 2. para. 3 WpHF and by this a financial instrument pursuant to Sec. 2. Para. 4 no. 4 WpHG. Additionally, SuperOne tokens will qualify as respective financial instruments also pursuant to Sec. 1 para. 11 sentence 1 no. 9 in connection with Sec. 1 para. 11 sentence 3 KWG. This may lead to additional regulatory compliance requirements in dealing with respective financial instruments. However, as the SuperOne tokens are not presently a derivative, those requirements would not apply.
Issuance/Distribution of the SuperOne tokens in or into the German Market
As calculation units within the meaning of the KWG, neither the SuperOne tokens, nor SuperOne, will be subject to any regulatory requirements relating to the issuance of the SuperOne tokens. However, to the extent they were to be securities, or if SuperOne wished to offer separate securities, VermAnl Assets of AIF/ collective scheme units, the following would apply; Prospectus Requirements, Exemptions, and LiabilityPublic OfferIf the SuperOne tokens are – against the arguments above – to be considered as securities or VermAnl Assets by the regulator, they will be subject to prospectus requirements if being offered to the public. The term “offer” is not defined precisely and is understood differently with regard to the different types of financial instruments. Generally, the term is construed very broadly under German law. The WpPG defines the term “offer to the public” (Sec. 2 no. 4 WpPG). According to the understanding of BaFin, public marketing activities, in principle, constitute public offers of securities/instruments. Even a combination of company information with a trading possibility (i.e. a securities number) may qualify as a public offer. Such an offer needs to address an unlimited circle of persons to be regarded as “public”. This is regularly the case with online platforms or access. Even an offer to existing shareholders of transferable securities (with pre-emptive rights) is regarded as a public offer. Also, the rendering of platform services may be regarded as support of an offer of third parties and, hence, be restricted. This is because it is not only the public offer itself that is subject to the relevant legal restrictions, but also the supporting of a public offer. If the SuperOne tokens are regarded as VermAnIG Assets, the VermAnIG does not define the term “offer to the public”. However, the existence of the exemption in sec. 2 (1) no. 6 VermAnIG shows that even offers to a limited group of persons or employees by their employer/related companies would be (without this exemption) considered to be a public offer under the VermAnIG. BaFin considers the issuance of VermAnIG Assets to employees in principle to be a public offering of VermAnIG Assets. The offer may be done from abroad, if and to the extent the German market is targeted. Targeting German Token BuyersNotwithstanding that the issuance of SuperOne token shall target the German market, which is not subject to regulation, subsequent activities may fall within the regulatory regime and therefore consideration will need to be given as to whether these activities target the German market. As mentioned, cross-border and/or online activities addressing the German market are understood as potential public offers of securities or VermAnl Assets in Germany. This is generally deemed to be the case if a foreign entity intentionally targets customers in Germany. According to the notes which BaFin has issued regarding the licensing requirements for conducting cross-border banking business and/or providing cross-border financial services dated 5 April 2005, the “BaFin Notes” (BaFin, Notes Regarding the Licensing for Conducting Cross-Border Banking Business and/or Providing Cross-Border Financial Services., 5 April 2005), regulatory law is triggered if a foreign company/offeror intends to target the market in Germany for the purpose of repeatedly offering the transactions and/or the services on a commercial basis to companies and/or person that have their registered offices or ordinary residence in Germany. The BaFin Notes describe various examples of such “targeting” of the German market. For example;
- Targeted visits through employees or agents to potential clients in Germany (note there is no triggering point such as a certain number of days spent in Germany);
- Potential clients in Germany are directly approached by the foreign entity by direct mail, fax or email for the purpose of offering banking and/or financial services;
- Offers of banking and/or financial services products via a website if it is clear from the content of the website that these products target the German market (e.g. by use of German language, and/or specific Germany-related information).
If the online marketing of the offer did not contain German language or German language documents and the material was not sent to German recipients, it can be argued that an offer to the public was not performed in Germany. However, a respective disclaimer will be helpful and market standard. Exemptions from Prospectus RequirementsAccording to the analysis above, the SuperOne tokens will not qualify as securities and therefore not be subject to the prospectus requirements. However, for completeness, the following exemptions from the prospectus obligations would be applicable if the SuperOne tokens would qualify as securities;
- The offer is made to or directed at qualified investors only; The offer is made to or directed at fewer than 150 persons, other than qualified investors, per EAA member-state;
- The minimum consideration which may be paid for any person for transferable securities acquired by him pursuant to the offer is at least EUR 100,000 (or an equivalent amount); or;
- The transferable securities being offered are denominated in an amount of at least €100,000 (or equivalent amounts).
For offers with a total consideration which exceed €100,000 up to €8,000,000 within the EEA a simplified securities information document (Wertpaperinformationsblatt) of three DIN A4 pages is sufficient but must be filed with and approved by BaFin. Additionally, for offers equal or exceeding €1,000,000 respective securities can be distributed to retail investors only if distributed through KWG licensed investment advisors or brokers which shall control the following investment thresholds for private investors;
- €1,000 without further requirements;
- Up to max €10,000 if the retail investor has provided evidence that they hold net assets exceeding €100,000; or;
- The average double net income of the retail investor is up to a maximum of €10,000.
Simplified exemptions would apply if the SuperOne tokens are regarded as VermAnIG Assets, especially if the total consideration is at least the equivalent of €200,000 per investor which is fulfilled with a €200,000 minimum investment requirement per investment, or a maximum of 20 units per investment for each separate offer. An exemption for qualified investors does not exist for VermAnIG Assets. Therefore, the minimum investment of €200,000 is necessary for non-tradable securities. Additionally, also within VermAnIG a simplified investment information document (Vermögensinformationblatt) is sufficient for financings below €2,500,000. However, if the offer is aimed at retail investors, distribution through KWG licensing investment advisors or brokers with the control of the thresholds above is a mandatory prerequisite.Documentation Liability in General Although an offer or granting of securities or VermAnIG Assets may fall under a prospectus exception, a person who has obtained documents in connection with the granting of securities or VermAnIG Assets may, in a strict sense, claim against the offeror or its affiliate(s) due to the general civil law prospectus liability (allgemeine zivilrechtliche Prospekthaftung im engeren Sinne) if a documentation similar to a prospectus is incorrect (unrichtig) or incomplete (unvollständig). For example, an information document explaining the mechanisms of the SuperOne tokens, such as a whitepaper, could be regarded as documentation similar to a prospectus and would constitute the basis for determining liability in potential disputes if it does not contain all material information required for an investment decision or if the information provided does not correspond to the facts. With respect to investment advisors, the general civil law prospectus liability, in a broad sense, (allgemeine zivilrechtliche Prospkethaftlung im weiteren Sinne) applies if incorrect or incomplete advice or information has been provided by a distributor. Distribution under KAGBShould, despite the arguments above, the SuperOne tokens be qualified as fund units pursuant to KAGG, a license from or notification to BaFin will be required. Different from other financial instruments, such as securities or VermAnl Assets, all kinds of offers or placements of fund units, all advertising or other sales activities, regardless of the type of number of investors, and including the private placement of special funds, are included in the definition of distribution pursuant to Sec. 293 KAGB, which requires a notification to BaFin with a waiting period of 20 business days. This means that any placement activity, even to professional investors or, after a sustainability test, semi-professional investors, requires the respective funds to be permitted for distribution in Germany. If permitted for distribution, the placement may be restricted to professional or semi-professional investors. Semi-professional investors are such investors that have a certain investment experience, documented by a sustainability test, and invest at least €200,000 in the fund or which invest at least €10,000,000. All AIFs are considered financial instruments, both under WpHB and KWG. Promotion of the SuperOne Tokens by IntermediariesIf SuperOne will use intermediaries to promote the SuperOne tokens, and the SuperOne tokens in any capacity qualify as calculation units, respective services by such intermediaries may be seen as investment advice (Anlageberatung) regarding financial instruments and the placing of financial instruments without a firm commitment basis (Platzierungsgeschäft) under KWG. Apart from that, the investment brokerage (Anlagevermittlung) will constitute a regulated activity if rendered in or into Germany. This leads to a license requirement under Sec. 32 KWG for such intermediaries only to the extent that fund units or VermAnl Assets are distributed to limited license requirements under the German Code of Trade and Commerce (Gewerbeordnung). As SuperOne tokens do not presently qualify as fund units or VermAnl Assets, these restrictions upon intermediaries do not apply. Trading of the SuperOne TokensThe organization of exchange/trading of the SuperOne tokens can be regarded as trading of financial instruments (as mentioned above the SuperOne tokens could be regarded as calculation units by BaFin as there is an issuer of such tokens) on a trading facility such as a MTF or OTF, depending on the facility organization. Hence, respective exchanges where the SuperOne tokens shall be traded, if they are traded, must have the required regulatory status and fulfill respective license requirements for OTF/MTF providers in Germany if the German market is targeted, even if such exchanges are located outside of Germany. Regulatory Consequences In case of non-compliance with any applicable requirements set out above;
- BaFin may order the revision of the transactions performed;
- Criminal/administrative proceedings may be initiated by the public prosecutor;
- SuperOne token holders may claim for damages/losses based on regulatory violations;
- Contravention with applicable regulatory requirements can also lead to the SuperOne token contract/terms and conditions being unenforceable against the SuperOne token holder.
SuperOne tokens are not considered to be a security and other capital investments within the meaning of the German Act on Capital Investments (Vermögen-sanlagengesetz – “VermAnIG”) or collective investment scheme or an alternative investment fund units, since (i) SuperOne tokens embody no ownership rights in relation to SuperOne and (ii) SuperOne token holders also have no rights to, nor share in any profits, revenues, or distributions by SuperOne. Based on its current regulator practice the Bundesanstalt für Finanzdienstleistungsaufsicht (“BaFin”) could potentially qualify the SuperOne tokens as calculations units (Rechnungseinheiten) under Sec. 1 para. 11 sentence 1 no. 7 KWG. Even though SuperOne tokens are to be qualified as calculation units under KWG, their issuance shall not be subject to further regulatory requirements (i.e. prospectus requirements or distribution allowances).
Indian Legal Framework
Legal Status of Virtual Currencies
In respect of virtual currencies, the Reserve Bank of India (“RBI”) had, through several press releases issued in the past (dated December 24, 2013 and February 1, 2017, amongst others) repeatedly highlighted the potential financial, operational, legal, customer protection and security related risks with such virtual currencies. However, these press releases were only advisory in nature and did not impose any specific regulatory restriction on transactions involving virtual currencies.Subsequently, the RBI had, through its Statement on Developmental and Regulatory Policies released on April 5, 2018, issued policy measures with respect to ring-fencing regulated entities from the risks and concerns attached to virtual currencies. Pursuant to the policy announcement, the RBI issued a circular dated April 6, 2018 wherein it had mandated entities regulated by the RBI (such as, banks, financial intermediaries, etc.) to not deal with or provide services for facilitating any individual or business entities dealing with or settling virtual currencies, including Bitcoins (“Directive”). In this regard, the RBI even clarified that such services would include maintaining accounts, registering, trading, settling, clearing, opening accounts of exchanges dealing with them and transfer/receipt of money in accounts relating to purchase/sale of cryptocurrencies, amongst others. As such, this Directive severely restricted the conversion of virtual currency into fiat currencies and impaired the ability of businesses which dealt with virtual currencies to access financial services in India.The Directive was challenged before the Supreme Court in the matter of Internet and Mobile Association of India vs. Reserve Bank of India (Writ Petition (Civil) No.528 of 2018) on various grounds, including the following;
- It was contended that the RBI has no power to prohibit the activity of trading in virtual currencies since, inter alia;
- Virtual currencies are not money or any legal tender (and rather goods/commodities) and accordingly, not within the purview of regulation by the RBI; and
- The services rendered by virtual currency exchanges do not qualify as ‘payment system’ under the Payment Settlement and Systems Act, 2007, and as such, are not regulated by the RBI.
The manner in which the RBI exercised its power with respect to the ban (through the Directive) did not satisfy certain settled principles of law, wherein it was submitted that there was no satisfaction or application of mind by the RBI while issuing the Directive;
- The Directive was tainted by malice under law as it was issued in bad faith to achieve an object completely different from the one for which the power was entrusted; and
- The Directive was extreme, failed the test of reasonable proportionality and violated the fundamental right to practice any profession, carry on any occupation, trade or business.
With respect to the above arguments raised before the Supreme Court, the RBI had made the following submissions;
- Virtual currencies do not satisfy the criteria of storage of value, medium of payment and unit of account, required for being acknowledged as currency, and are capable of being used for illegal activities due to their anonymity;
- The Directive is legislative in character and within the wide powers conferred upon the RBI under the various legislations which, inter alia, empower the RBI to operate the credit and currency system of India, regulate the financial system of the country, including the payment systems and issue directions in this regard;
- RBI applied its mind while issuing the Directive, which is established through the various advisories issued by the RBI previously (as mentioned above) and the reports contributed by the RBI over the years;
- There cannot be an unfettered fundamental right to do business on the network of entities regulated by the RBI, and as a result, the Directive is not violative of any fundamental right;
- The Directive is not excessive, confiscatory or disproportionate since RBI had provided a three-month time period to affected parties to sever their relationship with banks; and
- The Directive was necessary in the interests of the consumers, the payment and settlement system of India as well as for the protection of regulated entities against exposure to high volatility of the virtual currencies. Given its regulatory powers, RBI is entitled to take pre-emptive measures in public interest where the power to regulate includes the power to prohibit.
Based on the above contentions, the Supreme Court, through its order dated March 4, 2020 (“SC Order”), held that the RBI has the requisite power to regulate or prohibit an activity involving virtual currencies, and had, in fact, applied its mind in this case without being vitiated by malice in law. However, the SC Order set aside the Directive primarily on the ground that it was a disproportionate restriction on the constitutional right of freedom of trade and commerce since, amongst other reasons: (i) RBI was unable to establish any adverse impact of the activities carried on by virtual currency exchanges on entities regulated by the RBI (viz. banks); and (ii) virtual currencies have not been prohibited in India as acknowledged by the RBI in its submissions. Supporting the contention raised by the petitioners that access to banking is critical, the Supreme Court found that denial of such access tantamount to disconnecting their lifeline (i.e. interface with the banking sector)) and is not reasonable and a disproportionate restriction. Thus, while the SC Order set aside the Directive, it is pertinent to note that the Supreme Court does not remark or opine on the legality of cryptocurrencies in India. Subsequent to the SC Order, the RBI has not issued any regulatory guidelines on the manner in which cryptocurrencies may be operated in India. Given this present ambiguity on regulation of cryptocurrencies, we understand that certain cryptocurrency platforms have recently approached the RBI seeking clarity regarding their legal and taxable status in India. Separately, it may also be noted that on February 28, 2019, the Department of Economic Affairs under the aegis of Ministry of Finance, India released the “Report of the Committee to propose specific actions to be taken in relation to Virtual Currencies” which annexed a draft bill entitled “Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019” (the “Digital Currency Bill”). This Bill proposes to prohibit any person from mining, generating, holding, selling, dealing in, issuing or transferring cryptocurrency in the territory of India. Further, it also proposes that cryptocurrency will not be used as a legal tender in the territory of India and cannot be used for activities such as payment systems, investment, trading in securities, credit, exchange of currency etc. The Bill has not been passed by the legislature and is not enforceable law as yet.
SuperOne tokens are not subject to any regulations in India as the country does not have any legislation applicable to cryptocurrency. However, further guidance by the Indian regulatory bodies may be forthcoming concerning the legality of cryptocurrencies. Following a period of time during which Indian banks were not taking favorable actions against persons or companies associated with cryptocurrency, including closing bank accounts of those involved, the environment in India has, since then, appeared to become more welcoming of cryptocurrency activity in India.
Philippines Legal Framework
In an advisory issued by the SEC in January 2018, the SEC expressed its position that when “a virtual currency (was) likewise analogous to any of the types of securities under section 3.1 of the SRC, there (would be) a strong possibility that the said virtual currency is a security”. Section 3.1 of the SEC Rules states; “Securities” are “shares participation” (generally, the SuperOne tTokens do not represent any “shares participation” in SuperOne. Based on the Information Reviewed, holders of SuperOne tokens do not have any ownership or voting rights or interests in SuperOne, and in the event of a sale, listing or winding up of SuperOne, SuperOne token holders do have any interests or rights in any of such processes) or interests in a corporation or in a commercial enterprise or profit-making venture and evidence by a certificate, contract, instrument, whether written or electronic in character. It includes a.o.;
- Investment contracts, certificates of interest or participation in a profit-sharing agreement, certificates of deposit for future subscription;
- Other instruments as may in the future be determined by the Commission.
Section 26.3.5 of the 2015 Rules defines an “investment contract” to mean;
- A contract, transaction or scheme (collectively, “contract”) whereby a person invests his money in a common enterprise (Under 26.3.5 of the 2015 Rules, “common enterprise” is deemed created when two (2) or more investors “pool” their resources, creating a common enterprise, even if the promoter receives nothing more than a broker’s commission) and is led to expect profits primarily from the efforts of others. An investment contract is presumed to exist whenever a person seeks to use the money or property of others on the promise of profits.
The sale of SuperOne tokens would not be considered to be an “investment contract” as defined in s.26.3.5 of the 2015 Rules because the purchasers of the SuperOne tokens are not “led to expect profits (to be generated) primarily from the efforts of others” through their purchases of the SuperOne tokens. In particular;
- It has been made clear to potential purchasers that ownership of the SuperOne tokens will not give rise to any entitlements to regular payments such as dividends or profit sharing, and SuperOne does not owe any debt or repayment obligation to SuperOne token holders;
- On a substantive level, the value of the SuperOne tokens is determined primarily through a SuperOne token holder’s own use of the SuperOne Platform. In other words, in relation to each SuperOne token holder, the value of the SuperOne token is driven primarily through the actions of the SuperOne token holder in question, and any value that may be derived from the trading of the SuperOne tokens on the secondary market will be ancillary; and
- SuperOne has made clear to potential purchasers of the SuperOne tokens that they may have no value outside of the SuperOne Platform, and that the SuperOne tokens are not an investment tool.
Reserved Power of the SEC
Section 3.1(g) of the SRC grants reserved power to the SEC to determine whether certain instruments should be deemed as “securities”. Since issuing the above-mentioned advisory in January 2018, the SEC has issued a number of cease and desist orders (“CDOs”) to various companies in which the question of whether certain virtual currencies are “securities” was considered. In particular, in the KropCoins (SEC CDO Case No. 01-18-046) case, the SEC exercised its power under s.3.1(g) of the SRC and determined that KropCoins were “interests in a profit-making venture”, and thus the registration and disclosure requirements under s.8 of the SRC applied. While the facts pattern of the KropCoins case may not be applicable to SuperOne, it is noteworthy that when considering if an “instrument” is a “security” pursuant to s.3.1(g) of the SRC, the SEC chose to adopt the Howey Test (In the KropCoins case, the SEC noted that the Supreme Court of the PH has stated that in cases where the PH laws are “patterned after or adopted from those of the United States, decisions of the United States courts construing similar laws are entitled to great weight” and applied the Howey Test in the KropCoins case) in making its determination. The Supreme Court of the Philippines laid down the four elements of the Howey Test as follows (Power Homes Unlimited Corporation vs. Securities and Exchange Commission and Noel Maneror, G.R. No. 164182, February 26, 2008) “…a person (a) makes an investment of money, (b) in a common enterprise, (c) with the expectation of profits, (d) to be derived solely from the efforts of others.” The four elements of the Howey Test are similar to the definition of “investment contract” described in Section 3(a) above. Based on the Information Review, there is a strong argument that even though the purchase of the SuperOne tokens may be seen as an investment of money in a common enterprise, it cannot be said that the purchasers would expect profits to derive solely from the efforts of others. This is because in relation to each SuperOne token holder, the value of the SuperOne token is driven primarily through the actions of the SuperOne token holder in question, and any value that may be derived from the trading of SuperOne tokens in the secondary market will be ancillary.
Sold or Distributed within the Philippines and Distribution
The SRC is territorially-oriented, and the registration requirements only apply if the “securities” are sold or offered for sale or distribution “within the Philippines”. SuperOne therefore could take the position that the SuperOne token (on its own) is not sold or offered for sale or distribution “within the Philippines”. That said, there are certain potential weaknesses in such a position outlined below.
Not Within the Philippines
Based on the Information Reviewed, it is justifiable for SuperOne to take the position that the SuperOne token (on its own) is not sold or offered for sale or distribution “within the Philippines”;
- The issuer of the SuperOne tokens is not a Philippines company and the operation of the SuperOne tokens is done completely outside the Philippines with no servers, offices, equipment, or personnel in the Philippines;
- SuperOne does not actively market to potential purchasers in the Philippines. While there are generic advertisements for worldwide or regional audiences, no advertisements specifically target Philippine citizens and residents; and
- SuperOne does not actively acquire potential purchasers of the SuperOne tokens, i.e. all sales of the SuperOne tokens are carried out via reverse solicitation.
“Solicitation” is broadly defined under the 2015 Rule. Rule 3.1.17 of the 2015 Rule defines “public offering” as “any offering of securities to the public or anyone, whether solicited or unsolicited. Any solicitation or presentation of securities for sale through any of the following modes shall be presumed to be a public offering: electronic communications, information communication technology or other forms of communication”. In the KropCoins case, the SEC noted, amongst other factors that, because KropCoin could be made available through its website, and because the website was accessible in the PH, there was a “public offering” of KropCoins as defined under Rule 3.1.17 (The facts of KropCoins can be distinguished from the SuperOne tokens in that the domain name of KropCoins’ website was domiciled in the Philippines, and that the directors/officers of KropCoins were Filipinos, with office/contact addresses located in the Philippines).
Draft ICO Rules
In August 2018, the SEC issued a first consultation Draft ICO Rules with the intention of finalizing the rules by the end of 2018. However, given the level of interest and responses received, the SEC extended the deadline and issued a second Draft ICO Rules in December 2018. In a recent press interview (Ibid note 2), the Chairperson of the SEC indicated that the SEC would be finalizing the Draft ICO Rules soon, although no specific dates were given. A plain reading of the Draft ICO Rules suggests that the SuperOne tokens would likely fall within the definition of a “token” and thus, the sale of SuperOne tokens would likely be seen as an “ICO/token sale” under the Draft ICO Rules. Any person (an issuer) that conducts or proposes to conduct an “ICO/token sale” “targeting Filipinos” would be required to undergo a two-pronged review process with the SEC under the Draft ICO Rules;
- Initial Assessment – the issuer must submit an initial assessment request to the SEC for its review to determine whether the token offered is a “security” under s.3.1 of the SRC. The submission must be made at least 90 days ahead of the issuance, and includes details of the project team, a review of the ICO project and its credibility as well as an external legal opinion explaining whether the token offered is a “security”;
- The SEC will have 20 to 40 days to review and provide its determination in writing. If the SEC determines that the token offered is a “security” under s.3.1 of the SRC, the issuer must register the tokens in accordance with the Draft ICO Rules. The registration must be done at least 45 days before the issuance.
Since the Draft ICO Rules have yet to be implemented, it is unclear how the SEC would interpret what is meant by “targeting Filipinos”. SuperOne could take the position that the sale or offer for sale or distribution of the SuperOne tokens does not “target Filipinos” for reasons cited in Section 4 above. However, if the sale or offer for sale or distribution of the SuperOne tokens were deemed to be “targeting Filipinos”, the analysis in relation to whether the SuperOne token is a “security” as set out in Section 3 above would similarly apply.
Regulatory Consequences – Security Tokens under Draft ICO Rules
In addition to the registration and disclosure requirements, the Draft ICO Rules also provide for a number of substantive requirements in relation to ICO of “security tokens”; Qualification Requirements of Issuers – existing Philippines corporations may file an application for registration. Non-residents may only file for registration if the security tokens have been registered in another jurisdiction that has signed an information sharing arrangement with the SEC and that the issuer provides sufficient proof of such registration and regulatory framework. In absence of any of these conditions, the foreign issuer must establish a branch in the Philippines. Advertising – the issuer is only allowed to use certain types of media to advertise its tokens, including the issuer’s website, social media and blogs, direct mailing, etc. Contents of the advertisements must not be deceptive, false or misleading. Escrow Arrangement – unless the SEC specifically approves otherwise, the issuer is required to engage an independent and reputable escrow agent to safekeep the sale proceeds and the private key of the issuer’s wallet. The proceeds will be released in accordance with the escrow agreement, which will expire upon full usage of the proceeds. Refunds – under the following two scenarios, the issuer shall return the funds to the investors: (i) the ICO/token sale does not reach the soft cap (soft cap refers to the minimum amount of funds needed and aimed for by the ICO project) set out in the registration statement; or (ii) the ICO project is abandoned before completion.
SuperOne tokens are not subject to any regulations in Philippines, and thus are not subject to the registration and disclosure requirements under the Securities Regulation Code (Republic Act No. 8799) (“SRC”) and related implementation rules issued by the Securities and Exchange Commission (“SEC”) (collectively, “SEC Rules”), including the 2015 Implementing Rules and Regulation of the SRC (“2015 Rules”). Examined regulations, amongst others, during the review included the SEC Rules, the 2015 Rules and the second consultation draft of the Rules on Initial Coin Offering (“Draft ICO Rules”) issued by the SEC on 27th December 2018. Based on the information review, there is a strong argument that the registration requirements under s.8 of the SRC does not apply to the SuperOne tokens because (a) The SuperOne token is not a “security” as defined under s.3 of the SRC; and (b) even if the SuperOne token were to be considered a “security” under s.3 of the SRC, the SuperOne token is “not sold or offered for sale or distribution within the Philippines”. However, once the Draft ICO Rules (as currently drafted) become effective, it is likely that the SuperOne tokens would be seen as a “token” as defined under the Draft ICO Rules. If the sale of SuperOne tokens will not be “targeting Filipinos”, then SuperOne will not be required to comply with the registration requirements under the Draft ICO Rules. If the sale of SuperOne tokens will be “targeting Filipinos”, then SuperOne will be required to submit an initial assessment request to the SEC to determine whether the SuperOne tokens are a “security” as defined under the SRC. If the SEC determines that the SuperOne tokens are a “security”, then the registration requirements would apply. Given that the Draft ICO Rules have yet to be implemented, it is unclear how the SEC would interpret what is meant by “targeting Filipinos”. In a recent press interview, the Chairperson of the SEC indicated that the Draft ICO Rules would be finalized soon, although no specific dates were given. In addition, the SEC had earlier indicated that they would issue guidelines for virtual currency exchanges (VCE), but draft rules for VCEs are yet to be released by the SEC to date. SuperOne may wish to engage with the SEC to discuss the potential implications of the Draft ICO Rules and VCE rules (if any).
SuperOne takes a measured, and prudent approach to regulatory compliance and this strategy will become increasingly sophisticated and rigorous, as its international user base grows. In this work SuperOne seeks to ensure that its awareness of the regulatory background, including any relevant changes, in each of its key regulatory jurisdictions is as current and accurate as possible.SuperOne also seeks to establish and maintain good working relationships with regulatory authorities, which have, or may in the future have, influence or relevance to its business.SuperOne determines whether or not to permit players or members in a given jurisdiction, based on some factors, including; terms of service level agreements, the specific laws and regulations of a jurisdiction combined with supranational law, as well as enforcement policies and history. In jurisdictions where SuperOne has physical operations and incorporations; SuperOne takes great care to ensure that its operations are in compliance with the terms of those jurisdictions.In general, we could say that most jurisdictions allow SuperOne to offer its games and tokens without a permit. However, there will be jurisdictions where SuperOne definitely cannot offer its games or tokens, and there will also be jurisdictions where this is somewhat an uncharted area or where supranational laws could be claimed.SuperOne uses leading law resources to carry out legal briefs and opinions for its products and operations, and SuperOne works actively to continuously assess the legal aspects of its operations.
Our success depends in part upon our ability to use and protect our core intellectual property. We rely on the EU, international and common law rights, as well as contractual restrictions. We control access to our intellectual property through license agreements, confidentiality procedures, non-disclosure agreements with third parties, employment agreements, and other contractual rights to protect our intellectual property.In addition to contractual arrangements, we protect our intellectual property rights by relying on a combination of copyright, trademarks, patents, domain names, trade secrets, and trade dress. Where appropriate, we pursue the registration of designs, copyright, domain names, trademarks, and service marks, in the EU and in other jurisdictions. Our trademarks in the EU and elsewhere relate to the SuperOne brand, our game names, app icons and game elements where appropriate. While most of the intellectual property we use is created by us, we have, in some cases, acquired certain rights to proprietary intellectual property from others.We also generally control access to and use of our intellectual property and other confidential information using internal and external controls, including contractual protections with employees, contractors, and partners, and the protection of EU and international copyright laws. Despite our efforts to protect our trade secrets and proprietary rights through these efforts, unauthorized parties may still copy or otherwise obtain and misuse our intellectual property. Protecting our intellectual property rights is costly and time-consuming. Any unauthorized disclosure or use of our intellectual property could affect the reputation of our games or brand and make it more expensive to do business thus harming our operating results. Despite our efforts to protect our intellectual property rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology and games. To the extent that these tactics are employed with respect to any of our games, it could reduce our revenue that we generate from these games.In addition, we cannot be certain that our intellectual property does not or will not infringe valid patents, copyrights or other intellectual property rights held by third parties. We may be subject to legal proceedings and claims from time to time relating to the intellectual property of others, as discussed in the risk section of this whitepaper. Failure to protect or enforce our intellectual property rights or the costs involved in such enforcement could harm our business and operating results. As we face increasing competition and as our business grows, it is very possible that we will face in the future, allegations by third parties, including our competitors and non-practicing entities, that we have infringed their trademarks, copyrights, patents and other intellectual property rights.
A Review of Risks
Any participation in SuperOne is subject to elements of risks. Prospective stakeholders in SuperOne should carefully consider the risks reviewed in this section and also take into account how SuperOne is responding to these risks.SuperOne operates with innovative new products at the forefront and intersection of several fast growing, developing and unregulated global markets where there are little or no adequate and proven frameworks.We believe we have a good overview of the inherent risks related to our operations, and we do not believe that we face substantial unknown risks. However, this section should not be treated as a set of complete descriptions of the risk factors. We cannot exclude the possibility that there will be adverse effects from risks and uncertainties currently unknown to SuperOne.
In certain jurisdictions there is no directly applicable legislation. In these jurisdictions, SuperOne does not operate within a regulatory framework. In other jurisdictions where SuperOne does operate within a regulatory framework, there might be conflicting laws and/or regulations, conflicting interpretations, divergent approaches by enforcement agencies and/or inconsistent enforcement policies.Moreover, the regulations of skill games and cryptocurrencies are subject to uncertainties. These may arise from differing approaches by jurisdictions to the question of determining where the gaming or cryptocurrency activities are taking place and to the question of determining which authorities have jurisdiction over the activities and those who participate in them and facilitate them.SuperOne operates a measured and prudent approach to regulatory compliance in all jurisdictions. This informs our decision-making when it comes to whether or not we permit users in a given jurisdiction to access any one or more of SuperOne’s products.This measured and prudent approach also informs SuperOne’s decision-making on whether or not to engage in different types of marketing activity and user contact.Despite our best efforts, there is a risk that SuperOne’s assessment of these factors may not always accurately predict the likelihood of one or more jurisdictions taking enforcement or adverse action against SuperOne, its users or its suppliers. This in turn may result in the activity undertaken by SuperOne, its users or its third party suppliers, being established as illegal.If SuperOne is found by a court to be acting unlawfully in carrying out marketing activities, providing gameplay and/or other services to users located in certain jurisdictions it may have to desist from doing so. This would have an adverse effect on SuperOne operations and financial performance. In addition, civil, criminal or regulatory proceedings may be brought against SuperOne as a result. Any such proceedings would potentially have resource and reputational implications, and could potentially have a material adverse effect on the operations, financial performance and prospects of SuperOne.SuperOne depends on third party suppliers such as app stores, payment processing, exchanges, technology, banking, advertising and other service providers. The ability of suppliers to provide their services in full to SuperOne may be affected by their assessment of the legality of their provision of services to SuperOne, of SuperOne’s business or the gaming and cryptocurrency sectors, and by political or other pressure that they might be subjected to. Adverse changes in law or regulation in any jurisdiction may make the provision of vital services to SuperOne unlawful in such jurisdictions. To the extent that third party suppliers are unable to provide services to SuperOne in full, this may have an adverse impact on the operations, financial performance and prospects of SuperOne.The introduction of legislation or regulations restricting financial transactions for skill gaming and cryptocurrency operators and/or other prohibitions or restrictions on the use of credit cards and other banking instruments for skill gaming and cryptocurrency transactions, may limit SuperOne’s ability to accept payment from its users. These restrictions may be imposed as a result of concerns related to fraud, payment processing, anti-money laundering or other issues regarding the provision of gaming and cryptocurrency services.Some issuing banks or credit card companies may from time to time reject attempts to make payments to SuperOne by their users. Should restrictions and rejections of payment processing become significant, gaming and cryptocurrency activities by SuperOne’s users could be adversely affected. This would in turn have a material adverse effect on the operations, financial performance and prospects of SuperOne.The introduction of legislation or regulations requiring Internet Service Providers in any jurisdiction to block access to SuperOne’s websites and products may restrict the ability of SuperOne’s users to access products offered by SuperOne. Such restrictions, should they be imposed, could have a material adverse effect on the operations, financial performance and prospects of SuperOne.If regulated, the provision of skill gaming and cryptocurrency services is subject to extensive laws, regulations, and – where relevant – licensing requirements. These laws, regulations and licensing requirements vary from jurisdiction to jurisdiction but typically address the responsibility, financial standing and probity of the owners, directors, and operators. Many of the laws, regulations and licensing requirements have been recently introduced and are subject to change at any time. Relevant regulatory authorities may change their interpretation or the laws, regulations and licensing requirements at any time. The compliance costs associated with these laws, regulations, and licensing requirements are significant.Failure to comply with applicable laws, regulations, and licensing requirements may lead to penalties, sanctions or ultimately the revocation of operating licenses in a certain jurisdiction.In general terms, any adverse changes to the regulation of gaming and cryptocurrencies, the interpretation of these laws, regulations and licensing requirements by relevant regulators or the revocation of any future operating licenses could materially adversely affect the operations, financial performance and prospects of SuperOne.At the same time, certain jurisdictions whose laws currently prohibit or restrict gaming or cryptocurrencies or the marketing of those services, may implement changes to open their markets through the adoption of competitive licensing and regulatory frameworks. Such changes will provide potential growth opportunities for SuperOne but the profitability of the opportunity will depend on the specifics of the new regulatory regime. The new regime may for example impose onerous conditions, such as particular licensing requirements together with enforcement sanctions for breaching it, it may impose taxation liabilities that make the market unattractive to SuperOne, or impose restrictions that limit SuperOne’s ability to offer certain of its key products or to sell its products in the way it would prefer. Moreover, the opening of new markets and the clarification of restrictions surrounding skill gaming and cryptocurrencies in other markets where the legal position is currently unclear may encourage new entrants to the gaming and cryptocurrency sectors or strengthen the position of existing gaming and cryptocurrency operators. If the new regulatory regime deliberately encourages new entrants or strengthens existing gaming and cryptocurrency operators, this may have a material adverse effect on SuperOne’s operations, financial performance, and prospects.SuperOne’s unique gaming model is based on skill and knowledge, as opposed to chance, which significantly reduces the regulatory risk in many jurisdictions. We have significant in-house expertise and advisors that allow us to accurately monitor and assess regulatory environments.As is well understood by our in-house expertise and by the gaming and cryptocurrency industries more generally, the regulation and legality of skill games and cryptocurrencies varies from jurisdiction to jurisdiction. Naturally, SuperOne closely monitors developments and always adapts to changing conditions. We have the technology to restrict our offerings and the expertise to determine what we can and can’t do. However, regulatory environments are by their very nature unpredictable and therefore represent an inherent potential risk to our business.
As the regulatory landscape of crypto assets is currently in a maturing phase, SuperOne must continuously update itself and monitor any developments in, and the adoptions of new regulations.In particular, SuperOne monitors whether the crypto assets currently used on SuperOne’s platform will change its categorisation and be regarded as “financial instruments”. Whether or not a crypto asset is to be regarded as a “financial instrument”, depends on the functions of the relevant type of crypto asset. The kind of functions a crypto asset has, will in turn impact the type of risks associated with that relevant type of crypto asset. If the risks associated with a crypto asset is similar to those risks associated with “financial instruments” it should be regulated as a “financial instrument” and the other way aroundThere is a risk that one or several of the crypto assets currently used on SuperOne’s platform will be regarded as a “financial instrument” as further defined in Directive 2014/65/EU on Markets in Financial Instruments and amended Directive 2002/92/EC and Directive 2011/61/EU (“MiFID II”). If so, SuperOne may need to obtain permission to operate a multilateral trading facility or an organized trading facility in order to maintain services related to offering and trading such crypto assets. Should SuperOne choose to maintain its services related to offering and trading in such crypto assets and obtain such permission, this will potentially increase the costs of SuperOne substantially, and may have a material adverse effect on SuperOne’s operations, financial performance, and prospects.Alternatively, SuperOne may choose to discontinue its services and not to offer or provide trading in crypto assets that are regarded as financial instruments. The agreements entered into with users generally allow for discontinued offering and trading in crypto assets that are regarded as financial instruments. Should SuperOne choose to discontinue any offering or trading services this must be expected to have a negative effect on the revenues and results of operations for SuperOne, and, subject to the extent of new regulations and what crypto assets that in the future are regarded as financial instruments the negative effects for SuperOne may be material.Stakeholders should carefully consider that regulation of crypto assets are subject to ongoing consideration for new regulations in many jurisdictions that may impact SuperOne, its operations and financial performance. There can be no guarantees that SuperOne will be able to maintain its offering and trading services for any specific crypto asset.
SuperOne relies on its users having sufficient disposable income or capital to spend on gaming and cryptocurrencies. In those jurisdictions most severely affected by it, an economic downturn may adversely impact user activity levels and the size of user deposits.A worsening of general economic conditions could significantly affect SuperOne’s user activity levels and could therefore materially adversely affect the operations, financial performance and prospects of SuperOne.While macroeconomic conditions are out of SuperOne’s control, SuperOne’s technological platform and business concept and model puts us in a position where we can adapt its offering to lower disposable incomes.
If SuperOne is unable to compete effectively, it may lose users and may not be able to attract new customers. The gaming and cryptocurrency industries are increasingly competitive, and SuperOne may be unable to predict, or adequately plan for, the strategies of its competitors. SuperOne may be unable to respond quickly or appropriately to the changes in the industry brought on by new products and technologies, the availability of products on other technology platforms and marketing channels, the introduction of new features and functionality or new marketing and promotional efforts by SuperOne’s competitors or new competitors and new technology.SuperOne also expects to be subject to continual challenges from new and existing competitors who may have larger user bases and greater brand recognition. Also, SuperOne is at risk from consolidation in the industry, which might lead to the appearance of a very significant competitor to whom SuperOne might lose market share. Other competitors may have significantly greater financial, technical, marketing and other resources than SuperOne and may be able to secure greater liquidity than SuperOne. A loss of market share and, in particular, a loss of liquidity in the number of users could have a considerable adverse effect on SuperOne’s business.At the same time, as the gaming and cryptocurrency industries become increasingly competitive, the success of SuperOne depends on the maintenance, development and enhancement of the SuperOne brand.If SuperOne is unable to maintain, develop and enhance its brand, its ability to implement its strategic goals may be adversely affected and in turn SuperOne’s operating results may be adversely affected. Also, increased competition may require more management time and resource and greater levels of expenditure to maintain, develop and enhance the SuperOne brand, which may have a material adverse effect on SuperOne’s operations, financial performance, and prospects.While SuperOne may experience competition when the market is defined broadly, the risk of competitors offering a product which is equivalent or closely resembles SuperOne’s offering has been minimized. This is partly because SuperOne vigorously protects its intellectual property. More importantly, it is also because SuperOne has built its own technological platform from scratch. This means the barriers to entry for copycat operations are very high both in terms of cost and risk of failure.
The jurisdictions in which SuperOne operates may impose taxes and duties on skill gaming and cryptocurrency activities. Adverse changes in the taxation of skill gaming or cryptocurrency, or the imposition of new such taxes, or adverse changes to statutory levies or other duties or charges in the jurisdictions where SuperOne operates could materially and adversely affect the operations, financial performance and prospects of SuperOne.SuperOne operates a streamlined corporate structure that is optimized for tax purposes. However, future taxation environments are by their very nature unpredictable and therefore represent an inherent potential risk to our business.
SuperOne has fundamental contractual relationships with a number of third parties including suppliers, partners, banks, exchanges and payment processors. In particular, SuperOne relies on the primary suppliers to carry on its operations. The failure of one or more of these third parties may have an adverse impact on the financial and operational performance of SuperOne. Similarly, the failure of one or more of these third parties to fulfil its obligations to SuperOne for any other reason may also cause significant disruption and have a material adverse effect on its operations, financial performance, and prospects.SuperOne takes a cautious risk-minimizing approach to selecting partners. We only work with world-leading brands with strong reputations. However, SuperOne cannot rule out the risk that any of the service providers will at times fail to deliver.
The provision of convenient, trusted, fast and efficient payment processing services to SuperOne’s users is a critical aspect of SuperOne’s business. If there is any deterioration in the quality of the payment processing services provided to SuperOne’s users or any interruption to those services, or if such services are only available at an increased cost to SuperOne or its users, or are terminated and no timely and comparable replacement services are found, SuperOne’s users may be deterred from using SuperOne’s products. Any such occurrences may have a material adverse effect on SuperOne’s operations, financial performance, and prospects.SuperOne has put in place systems and controls to block payments from users in jurisdictions where SuperOne has decided not to offer some or all of its services. These systems and controls could fail or otherwise be found to be inadequate, either currently or as a result of future technological developments. That may result in violations of applicable laws or regulations. Any claims in respect of any such violations could have cost, resource, and reputational implications, as well as effects on the ability of SuperOne to retain or expand its operations. This may have a material adverse effect on the operations, financial performance and prospects of SuperOne.To mitigate this risk, SuperOne has put in place secure, customized technological systems and controls to block payments from customers from those jurisdictions. We take our responsibility in this area very seriously and closely monitor all payments and we will continue utilizing the latest technological systems. However, because of rapidly changing technological environments and reliance on third parties, this aspect of our business carries an inherent risk.
SuperOne is subject to and exposed to the risk of breaching governing Anti-Money Laundering and Terrorist Financing Acts, by which SuperOne is obligated to continually assess and uphold internal procedures to ensure a satisfactory level of compliance. SuperOne’s obligations pursuant to these laws include, for example, user due diligence measures, monitoring of user relationships, duties to conduct further examinations on the basis of suspicious findings, and duties to report and disclose such findings to the relevant authorities. The failure to uphold these obligations may subject SuperOne or its employees to fines, injunctions and penalties. Further, any such development may expose SuperOne to additional costs and liabilities and require it to change the manner in which it conducts its business or otherwise have a material adverse effect on SuperOne’s operations, financial performance, and prospects.Furthermore, the risk that cryptocurrency service providers and electronic money institutions will be subjected to or used for money laundering has increased worldwide. The turnover of employees can create challenges in consistently implementing related policies and technology systems. The risk of future incidents in relation to money laundering always exists for financially oriented enterprises. Any violation of anti-money laundering rules, or even the suggestion of violations, may have severe legal and reputational consequences for SuperOne and may, as a result, adversely affect SuperOne’s business and/or prospects.
Customer acquisition and retention, and therefore SuperOne’s business, financial condition and results of operations, depend significantly upon the effectiveness of its marketing activities. There are limitations to and, in some cases, prohibitions on the online and offline marketing channels available to SuperOne as a result of applicable law and regulation. Further restrictions, or the loss of marketing channels that are currently available, may have a material adverse effect on SuperOne’s operations, financial performance, and prospects. Also, any ineffective marketing activity undertaken by SuperOne may also have a material adverse effect on the operations, financial performance and prospects of SuperOne.SuperOne’s dependence on marketing has informed our decision to put referral marketing and an active business community at the heart of our strategy. Our bonus models are initially proven at scale, performance based and designed as low-risk and high-return, but as relatively new and innovative features these should still be considered to be in an early phase and might require changes.
SuperOne’s success will, to a large extent, be driven by its ability to consistently develop and launch new user products and new and innovative technologies. There can be no certainty that SuperOne will continue to be able to develop its technology to stay up to date with developments across the gaming and cryptocurrency sectors and, in particular, to launch such products or new technologies promptly or at all. Also, there can be no certainty that such products will be popular with users or that such products or new technologies will be reliable, robust and not susceptible to viruses or failure. Any of these factors could have a material adverse effect on SuperOne’s operations, financial performance, and prospects.SuperOne has the right in-house expertise and technological platform to launch new products. Our native business community model allows us to market these at little additional cost. However, because the products are new and innovative, they should be regarded as relatively untested and therefore inherently carry an element of risk.
The integrity, reliability and operational performance of SuperOne’s systems are critical to SuperOne’s operations. SuperOne’s systems may be damaged or interrupted by increases in usage, human error, unauthorized access, natural hazards or disasters, and/or other disruptive events. Furthermore, SuperOne’s current systems may be unable to support an unexpectedly large increase in traffic or increased user numbers. Any failure of SuperOne’s infrastructure or the telecommunications and other third party infrastructure on which SuperOne relies could lead to significant costs, disruption, reduced revenue and or reputational harm and in turn have a material adverse effect on the operations, financial performance and prospects of SuperOne.Also, SuperOne’s controls may not be effective in detecting any intrusion or other security breaches, or safeguarding against sabotage, hackers, viruses and cyber-crime. Any failure in these protections could harm SuperOne’s business reputation and have a material adverse effect on SuperOne’s operations, financial performance and prospects.SuperOne may at any time be required to expend significant capital or other resources (including staff and management time and resources) to protect SuperOne against network or technology failure or disruption or unauthorized access, including the replacement or upgrading of its existing business continuity systems, procedures and security measures. If replacements, expansions, upgrades and other maintenance are not implemented successfully or completed efficiently, or if there are operational failures, the quality of SuperOne’s products and services experienced by its users will be adversely impacted. If, as a result, users were to reduce or stop their use of SuperOne’s products and services, this could have a material adverse effect on SuperOne’s operations, financial performance, and prospects.SuperOne has invested in the best in-house technology and uses the best available partners to reduce this risk. However, because the technology evolves at a rapid pace, there is an inherent risk that SuperOne’s protection in the future may become weaker. There is also an inherent risk that the technological landscape of the future will mean that SuperOne needs to increase the investment in protecting SuperOne against network failure and other disruption.
SuperOne may not be able to sufficiently protect its intellectual property rights and third parties may claim that SuperOne’s use of intellectual property rights is a violation of their intellectual property rights.SuperOne relies heavily on unregistered intellectual property, and SuperOne’s business and business strategy are tied to its intellectual property rights. No assurances can be given as to the adequacy of the protection of SuperOne’s intellectual property rights. SuperOne operates in business segments that makes it dependable on software, hardware, copyright, trademark, industrial design, trade secret and other related laws and confidentiality procedures and contractual provisions to protect, maintain and enforce its proprietary technology and intellectual property rights and will rely on such in all jurisdictions where it will operate in the future. SuperOne’s failure to process, obtain or maintain adequate protection of its intellectual property rights for any reason in any jurisdictions, may have a material adverse effect on SuperOne’s operations, financial performance, and prospects.Further, SuperOne may be exposed to claims that its technology infringes the intellectual property rights of third parties. Although SuperOne is not aware of any allegation that its products infringes the intellectual property rights of any third party, there can be no assurance that such allegations will not be made or that such claims will not be successfully pursued against SuperOne.
SuperOne’s business requires the processing and storage of personal data relating to its customers, employees and others and is therefore subject to complex data protection laws and regulations. For example, SuperOne is subject to the General Data Protection Regulation (EU) 2016/679 (the “GDPR”) as well as relevant national implementing legislation. Currently, SuperOne has certain privacy policies and documentation regarding its personal data processing activities which satisfies statutory requirements.Ensuring compliance with data protection laws and regulations is an ongoing process which involves substantial costs, and SuperOne may be required to implement additional measures in the future to facilitate compliance, in addition to measures which are already subject to ongoing work and implementation.Despite SuperOne’s ongoing efforts, it is possible that governmental authorities or third parties will assert that SuperOne’s business practices fail to comply with data protection laws and regulations, now or in the future. If its operations are found to be in violation of any of such laws and regulations, SuperOne may be subject to civil, criminal and administrative liabilities, as well as reputational harm, which could have a material adverse effect on SuperOne’s operations, financial performance, and prospects.
SuperOne is dependent upon having a highly qualified team and is therefore reliant on key personnel and the ability to retain and attract new, qualified personnel. There is no assurance that SuperOne will be able to recruit the required new key personnel in the future. Any failure to retain or attract such personnel could result in SuperOne not being able to successfully implement its plans which could have a material adverse effect on SuperOne’s operations, financial performance and prospects.The shortage of and competition for relevant management personnel and highly qualified technology professionals with experience and relevant skill sets within the gaming and blockchain technologies is expected to continue to increase, particularly due to the increasing trend of cryptocurrency and blockchain technology the last years. The loss of one or more key persons, or the inability to recruit relevant personnel, might impede the achievement of SuperOne’s development and commercial objectives. SuperOne has a lean organization and is therefore sensitive to losing key employees and management. Any loss of key employees and members of the management team could have a material adverse effect on SuperOne’s operations, financial performance and prospects.SuperOne’s key personnel are also likely to be subject to competing employment offers that are attractive for SuperOne’s competitors and may also establish competing business. SuperOne’s employees are to a best possible degree subject to restrictive covenants such as non-compete or non-solicitation undertakings in their employment agreements, and SuperOne’s competitors may therefore – to a certain extent – be hindered in recruiting and hiring one or more key persons, including members of SuperOne’s management personnel.SuperOne’s founder and principal owner Andreas Christensen, including related entities, owns, controls and beneficially represents a supermajority of the issued share capital of SuperOne. As a result, he possesses sufficient voting power to have a significant influence over SuperOne, including the election of directors, appointment of management and approval of corporate transactions.All team members, including the founder and principal owner Andreas Christensen, have strong long-term incentives to do everything they can to make SuperOne a success. None of the directors or key personnel are entitled to any benefits arising from the cessation of their appointments.
The current outbreak of COVID-19 has severely impacted companies and markets globally. It is not possible to predict all the consequences for SuperOne, its business partners, and the countries in which SuperOne operates, or global business and markets – other than the expectations of material adverse negative effects that may be long-term. The additional risks stemming from COVID-19 may cause SuperOne to implement a stricter assessment protocol and thereby potentially reduce the extent of SuperOne operations. In addition, given the uncertainty related to COVID-19, SuperOne’s users may seek to reduce their spendings, and thereby reduce the revenue for SuperOne’s services. As a result, the COVID-19 may have a material adverse effect on SuperOne’s operations, financial performance, and prospects.