So really big session yesterday. Markets is a big subject. The objective is to get your head space reorganized so you can start thinking about marketplaces differently. UF gives you the tech team to build what you want but you still have to build the business. Tech is not the business. Technology alone isn’t the solution. Technology is the tool to implement the solution. The solution is what you are selling. The solution is what the customer is buying.
By now you have your value proposition. Ideas are worth nothing. Anyone can have an idea. customers don’t buy ideas. They buy the execution of an idea. The execution is the meat on the bone and the bone is the value chain.
Now we are going to put what we learned to use with an example,, which we have permission to use, and we used Onli Ai and ChatGPT to develop a playbook. Here is what it looks like.
Let's start with the four U's in the problem statement.
We need to offer a unique and innovative solution for foreign nationals who have invested in EB-5 Investment Funds. Need to address several key issues that these investors face, including the long lock-in periods, the need for immediate liquidity, and the lack of adequate solutions in the market. The problem is:
Unworkable: foreign nationals who invest in EB-5 Investment Funds are locked in sometimes for five to eight years. GCO Exchange eliminates the need for waiting by those seeking immediate liquidity by leveraging their fund shares as collateral, to a forward contract, which they can sell on the exchange.
Unavoidable: The need for liquidity is unavoidable, especially when unforeseen financial opportunities or urgent personal or business requirements arise. GCO Exchange recognizes this inevitability and offers a reliable and efficient solution to unlock the value of EB-5 investments promptly.
Urgent: Time-sensitive situations demand urgent access to funds. GCO Exchange understands the urgency faced by foreign nationals and ensures a streamlined process that allows them to sell forward contracts and access the liquidity they need without delay.
Underserved: The existing solutions in the market often fail to adequately serve the unique needs of foreign nationals seeking liquidity from their EB-5 investments.
We can fill this gap by providing a specialized platform and marketplace that sells Collateralized Obligations and facilitates the selling of forward contracts by foreign nationals and buying of these contracts by qualified investors. Thus enabling foreign nationals to leverage their investments for immediate liquidity.
Ok now lets work out a lean canvas for that and take a look at the assumptions.
Problem Assumptions:
Foreign nationals who invest in EB-5 Investment Funds are dissatisfied with the long lock-in periods and lack of immediate liquidity.
Existing solutions in the market do not adequately address these needs.
Customer Segment Assumptions:
There is a significant number of foreign nationals who invest in EB-5 Investment Funds and are seeking liquidity solutions.
There are investors who are interested in stable and lucrative debt market opportunities.
Unique Value Proposition Assumptions:
The GCO Exchange platform can provide immediate liquidity and efficient solutions for EB-5 fund shares holders.
The platform can offer investors access to a lucrative debt market that isn't interest rate sensitive.
Solution Assumptions:
The GCO Exchange platform can facilitate the selling of forward contracts by foreign nationals and buying of GCS by qualified investors.
The platform can successfully sell Golden Passport Collateralized Obligations (GCOs).
Channel Assumptions:
The GCO Exchange platform can reach its target customers effectively.
Partnerships with law firms specializing in EB-5 applications and EB-5 Investment Funds can be established.
Revenue Stream Assumptions:
The platform can generate significant revenue from transaction fees.
The platform can manage the collateral effectively to generate interest.
Cost Structure Assumptions:
The costs of developing and maintaining the GCO Exchange platform can be covered by the revenue streams.
Partnerships with channel partners can be established at a reasonable cost.
Key Metrics Assumptions:
The platform can attract a significant number of active users.
The platform can facilitate a high number of transactions and sell a high value of GCOs.
Unfair Advantage Assumptions:
The partnership with Onli Technology can provide a unique, secure, and efficient method of managing and transferring digital assets.
The platform's specific design to address the unmet needs of foreign nationals who have invested in EB-5 Investment Funds can give it a competitive edge in the market.
Now using this information lets formulate a value proposition.
For (target customer segment )
dissatisfied with (existing solution)
due to (key unmet needs)
(venture name) offers a (product category)
that provides (key benefits)
For foreign nationals invested in EB-5 funds and investors seeking stable debt market opportunities, who are dissatisfied with the long lock-in periods, lack of immediate liquidity, and interest rate sensitivity of existing solutions, GCO Exchange offers a financial services platform. This platform provides a marketplace for Golden Passport Collateralized Obligations (GCOs), a unique type of MicroCommodity. This enables immediate liquidity, efficient solutions, and access to a lucrative debt market that isn't sensitive to interest rate fluctuations.
Now lets get an idea of what our core product that's traded on the GCO Exchange looks like.
GCO Exchange operates by using a digital forward contract. In this contract, the seller agrees to deliver a specific digital microcommodity, which we'll call Species (rebranded from Onli), at a predetermined contract price. The Species has a face value, which is the expected selling price at the maturity date.
The buyer of this contract can choose to hold onto the contract until the maturity date or sell the Species on a marketplace, called the GCO Market, for its face value. The contract itself can also be traded on a separate marketplace, the GCO Exchange.
This mechanism allows for immediate liquidity and access to a lucrative debt market, fulfilling the needs of both foreign nationals invested in EB-5 funds and investors seeking stable debt market opportunities. The Species microcommodity is fixed in price ($1), ensuring stability and predictability for all parties involved.
Now lets identify the components of the contract.
The components of the digital forward contract in the GCO Exchange platform are as follows:
Digital MicroCommodity (Species): This is the asset that the seller agrees to deliver. It's a digital asset from Onli that will be rebranded as Species.
Contract Price: This is the price at which the seller agrees to sell the Species. The buyer of the contract pays this price to purchase the Species.
Face Value: This is the expected selling price of each Species at the maturity date. It's the price at which the buyer can sell the Species on the GCO Market.
Delivery Date: This is the date when the seller is obligated to deliver the Species to the buyer.
Maturity Date: This is the date when the buyer can sell the Species on the GCO Market for its face value.
Marketplace (GCO Market): This is the platform where the Species can be sold for its face value at the maturity date.
Exchange (GCO Exchange): This is the platform where the contract itself can be traded.
These components define the terms of the contract and the obligations of the parties involved. They provide the framework for the operation of the GCO Exchange platform and the delivery of its value proposition.
Now we want to think about economic advantages for buyers and sellers to do that we want to walk through a transaction. Lets start with a GCO listed for sale with the following terms and conditions.
Contract Price: $680,583
Face Value: 1,000,000 ($1 each)
Commodity Price: $1 (meaning the price you can be expected to sell it on the Species market)
Maturity Date: 60 Months -(meaning on or after that time you can sell Species on the Species Marketplace)
Collateral: $1.1 million - The security for the contract ( shares of the EB-5 Fund)
Interest Rate: 8%
Seller Obligation: $1,000,000. (The collateral less the value of the amount of species the seller must deliver at maturity )
As an investor, you purchase a GCO contract at a contract price of $680,583. This contract promises the delivery of 1,000,000 Species (each with a face value of $1) at the end of a 5-year period (maturity date). The seller of the GCO, who issued the contract, receives these initial proceeds from the sale.
The contract is secured with collateral of $1.1 million, which consists of shares from the EB-5 Fund. The seller's obligation is to deliver Species worth $1,000,000 at maturity. This obligation is deducted from the collateral, leaving the seller with a balance of $100,000.
The interest rate of 8% is the effective rate at which the seller is borrowing from the investor. This rate is factored into the contract price, which is why the contract price is less than the face value of the Species to be delivered.
So, in essence, the GCO contract allows the seller to gain immediate liquidity from their EB-5 Fund shares, while the investor gets the opportunity to invest in a stable and potentially lucrative debt market.
Since the secondary market is a two-sided market what would be economic advantage of such a market. Lets say I sell the contract at an interest of 6%.
The formula for compound interest is:
FV = PV * (1 + r/n)^(nt)
Where:
FV is the future value of the money ($1,000,000 in this case)
PV is the present value of the money (which we are trying to find)
r is the annual interest rate (6% in this case)
n is the number of times that interest is compounded per year (assuming it's compounded annually, n = 1)
t is the time the money is invested for in years (5 years in this case)
Rearranging the formula to solve for PV gives us:
PV = FV / (1 + r/n)^(nt)
Let's calculate the present value using these values.
After performing the calculation, the present value (PV), which is the selling price for the GCO at a 6% interest rate, comes out to be approximately $747,258.
This means that if you sell the GCO contract (which you initially bought at an 8% interest rate for $680,583) at a 6% interest rate, the selling price would be approximately $747,258. This would result in a profit from the sale of the contract.
Let's calculate the ROI using these values. Final Value is the selling price of the GCO ($747,258 in this case). Initial Investment is the contract price for the GCO ($680,583 in this case). The Return on Investment (ROI) comes out to be approximately 9.8%.
This means that if you bought the GCO contract at an 8% interest rate for $680,583 and then sold it at a 6% interest rate for $747,258, your return on investment would be approximately 9.8%. This represents the profit you made from the sale of the contract as a percentage of your initial investment.
That's a great economic advantage for both sides of the marketplace.
OK now lets go to the Build step. We will go over to Onli AI, put in all our data and ask what advantages does Onli technology give me.
Onli Technology provides several key advantages for building the GCO Exchange and GCO Market:
Unique Digital Assets: Onli's technology allows for the creation of unique digital assets, known as "Species", which can be used in the GCO contracts. This ensures that each contract is unique and cannot be duplicated, providing security and trust in the system.
Efficient Data Storage and Transfer: Onli uses hyperdimensional vector storage systems, known as 'Genomes'. These Genomes serve as containers for data, facilitating secure transfer without relinquishing control. This makes data retrieval faster and more efficient, which is crucial for a marketplace that needs to handle numerous transactions quickly.
Secure Transactions: Onli's technology includes a process called Genome Editing, which ensures that each transfer of a Genome (or Species) results in the creation of a new, unique Genome. This process is secure and ensures that there is ever only one of each Genome, preventing fraud and duplication.
Decentralized System: Onli's technology does not require a central ledger or consensus mechanism, which are common points of failure in traditional blockchain systems. This enhances the security and reliability of the system.
Privacy and Control: Onli's technology ensures that each Genome is strongly coupled with an owner, termed a 'Gene', making it particularly suited for digital asset management. Genomes are stored within a 'Vault', a secure, self-contained environment in the owner's possession, ensuring privacy and control for the owner.
Flexibility: Onli's technology can be used to create a wide range of digital assets and applications, providing flexibility for the development of the GCO Exchange and GCO Market.
Compliance: Onli's technology fits within the definitions of a financial asset. There is one owner who maintains the right of exclusion, thus it can be accounted for as a tangible asset. This ensures that the GCO Exchange and GCO Market align with financial regulations and standards.
Transparency: Onli-Paper allows for the storage of origination documents in an immutable manner. Buyers can view these documents with the assurance that they are unchanged, providing transparency and trust in the system.
Speed: Onli's technology boasts a transaction speed of 32,000 transactions per second. Since there are no miners and no ledger, transactions are fast, which is crucial for a marketplace that needs to handle numerous transactions quickly.
Finality: Onli operates as an actual possession system, therefore there is no risk of forking and settlement is final in less than 3 seconds. This ensures that once a transaction is made, it is final and cannot be reversed, providing security and certainty for users.
Cost Efficiency: Onli operates on a 'once and done' pricing model, which significantly lowers operating costs. This means that once a transaction is made, there are no additional costs associated with it. Furthermore, since there are no miners or intermediaries involved, all transaction fees go directly to the GCO Exchange, substantially increasing revenue.
In summary, Onli Technology provides a secure, efficient, transparent, and compliant foundation for the creation of the GCO Exchange and GCO Market, addressing key challenges in the digital asset marketplace.
Now we have worked out a good playbook. We have a value proposition, a good break down of the problem space, there are good fundamentals like economic advantages for both sides of the marketplace. We need to be able to develop a ELI% -explain it like I am 5 years old. This is a really good exercise because it will help you to be able to explain it to nearly everyone.
Sure, let's imagine you have a big box of toys that you can't play with until your next birthday, which is a year away. But you really want to buy a new video game now, and you don't have enough money.
Now, imagine if there was a way you could promise to give some of your toys to a friend on your next birthday, and in return, your friend gives you some money now to buy your video game. That's kind of what GCO Exchange does!
GCO Exchange is like a special shop where people who have money (investors) can help people who have something valuable but can't use it right away (like your toys). These people promise to give the investors something valuable in the future (like EB-5 fund shares), and in return, the investors give them some money now. This is done through something called a GCO contract.
So, with GCO Exchange, people, who are foreign investors so they don't have things like credit reports and the things banks need to give you a loan, but they come here and sell an obligation and use their investment as collateral, this way they don't have to wait for a long time to get the money they need, and investors get something valuable in return later. It's a win-win!
So that's your playbook. You are going to do the same thing for your use case. It's called a play book because you are going to go down the canvas and develop a play by play plan on how to execute on each one, with the right frame of mind. Now you know what you are going to build.