Licensing as a Service (LaaS) for blockchain enterprise solutions
Residual Token, Inc. dba unFederalReserve is a Fintech SaaS technology company specializing in fintech software development. The software utilizes blockchain and standard programming languages, tools, and databases to unlock efficiencies within financial services companies and lending markets.
The company and its affiliate operate in the Decentralized Finance (DeFi) fintech sub-sector. They empower CeFi (Centralized Finance) entities and democratize finance by allowing companies and individuals to “Be the Bank.” The company operates as a SaaS enterprise and is developing commercial-grade programs for the license to qualified entities.
Where does licensing come into play for unFederalReserve and the eRSDL token?
unFederalReserve technology powers ReserveFunding, a traditional alternative investment marketplace for crypto holders. For this service and software, ReserveFunding pays a licensing fee to unFederalReserve.
ReserveFunding is a liquidity channel for underserved tribal banks and community non-bank lenders. Retail crypto holders like yourself can earn passive income without incurring tax events related to the conversion of USDC to fiat currency. unFederalReserve has provided rails into traditional investments with higher and non-ethereum correlated returns. These traditional investments are the qualified entities licensing unFederalReserve’s software.
We charge a licensing fee to those traditional investment providers.
As with the other investments or vaults that will be made available through ReserveFunding, the investment vehicle pays the licensing fee, since they enjoy the acquisition of new customers that come with unFederalReserve’s bona fide, regulatory compliant rails. This diagram will help illustrate how the licensing fee program works:
In inventing the procedures and technology to track active subscriptions, we can rightfully claim to be inventors of yet another blockchain application: Licensing-as-a-Service.
This service exists using extant service providers and our home grown technology and processes: Fireblock’s, Circle, Paxos and Plaid. We leverage Chainlink oracles to aggregate the proper pricing data. More details on how eRSDL, dedicated customer wallets and Dune Analytics are used in combination to track licensing status are found below.
How Licensing Works Today
The granting of a license consists of three types of information: identity, payment and term.
The license granter (aka. Licensor) needs to know the identity of the person or entity using the good or service. The Licensor also needs to know when the license fee has been paid (payment) and how long for which it is good (term).
What is a licensing fee? The term “licensing fee” can be used in several contexts. It is most commonly used to describe an amount of money paid to an entity for a certain right or ability. A licensing fee can be an amount of money paid by an individual or business for the privilege of performing a certain service or engaging in a specific line of business. Licensing fees can be paid for trademarks, copyright, or patents, among others.
Licensing fees can cover different time spans or terms. Some ‘lifetime licenses’ are one-time payments that provide limitless use of the application. Other licenses allow access for only days or hours of usage; namely, in the form of ski resort lift tickets or parking passes.
Simply diagrammed there are four parties involved in establishing a license:
The Licensee sends a store of value, usually by ACH or wire, to the Licensor, and separately, the Licensor stores identity information on centralized data servers to monitor and govern permissions.
This is a cumbersome system that can be greatly improved using smart contract technology.
In this case, we are using the eRSDL token as a digital marker to track identity, payment and term, in one permission style token! The wallet that token sits in is owned and governed by the Licensor (and not the Licensee). This ensures that the Licensee doesn’t sell their access to the software to a non-compliant third party. However, existence of the token in the public space allows us to develop dashboards, tools and utility that any holder of the licensing token CAN enjoy without risk of corrupting the token’s original use case.
Licensing fees lend themselves to digital markers. The beauty of smart-contract language is its power to store identity and payment information and contractual agreement information, in this case term, all in one location. Two parties commit to what’s in the code, and the cost of the license is reflected in the count and market price of the token at the time of the Licensor’s acquisition of that token.
In essence, our code, which simply asks, “Does this Licensee have any eRSDL in its wallet?” by the Licensor buying the token out of the market and storing it on wallets designated for each Licensee, we track the first two pieces: identity and payment in one place! One could then use the wallet itself to program the term of the license. In our case, if a Licensor or vault or other product fails to provide a return through our pipes, once the eRSDL runs out of the wallet, the customer access to that vault ends, and the Licensor loses that acquisition and onboarding channel.
The work flow is easy also. Rather than forcing our customers into buying a crypto token or wiring money to renew a subscription, our Licensors perform business as usual. It is in their normal everyday business of accepting investments and making distributions that the license is perpetually renewed or canceled through obsolescence.
Open Market Purchases Model
The following table illustrates how the licensing fee would work with respect to the number of tokens outstanding. These are not pro forma estimates of actual expected open market purchases nor an estimate of the value of the token itself. This diagram is meant for illustrative purposes only. No other purpose is intended or implied.
Those boxes in red are cases where the existing supply is not sufficient to purchase tokens out of the market. The buy pressure would likely remedy this, or if the Company extracts all the tokens out of the market, an alternative method (or amount) would need to be considered.
Concluding Remarks
Because the smart contract is a store of value, logic engine, and can carry with it key contractual terms, we can tie the identity information on-chain, place the store of value (payment) and set the term of the license. We cut out three processes and three systems down to one function within one system, using blockchain technology for more modern efficiency. We are taking the digital marker from cobblestone roads and smoothing it into asphalt. In essence, these are the DM’s everyone will be sliding into.
