NBA player Spencer Dinwiddie has revealed details of his security token offering. The Brooklyn Nets point guard had announced earlier this month that he was converting part of his contract to security tokens for investors.
Dinwiddie plans to raise $13.5 million from the first year of his three-year contract worth $34.5 million with the Brooklyn Nets. He will pay out $2.5 million as interest to investors from the estimated $16 million that he is expected to earn this year. The offering, which is on the DREAM Fan Shares platform – an offering platform for artistes and sports professionals on Ethereum, will begin on October 14 and is only open to accredited investors. The first monthly payouts will be made to investors on December 3 this year.
It has a minimum investment amount of $150,000. SD8 tokens – named after Dinwiddie’s initials and jersey number – will be issued to investors. The tokens are being issued only for the first season and investors have the option to renew them for the second and third seasons.
This is not the first time that an experiment of this sort is being conducted. David Bowie issued Bowie bonds for royalty payments from his albums in 1997. Arian Foster, an NFL running back with the Houston Texans, also attempted a similar offering in public markets back in 2015. Bowie bonds matured without default in 2007. The startup responsible for Foster’s offering cancelled it. Foster was injured at the time his offering cancellation was announced. Dinwiddie told Coindesk that his contract is “fully guaranteed”. This means that investors will receive payouts even if he is injured. But he did not divulge details about the guarantee.
Why is Dinwiddie Using a Token?
The key difference between previous attempts at securitizing an individualizing’s talent through offerings and this one is the use of a token to accomplish the task. Dinwiddie told Coindesk that the token is a “kind of a marker.” “They (the tokens) represent shares in the issuance so it’s not like ownership (of the player) or something like that, it’s contractual value,” he said. To find the most compelling reason for Dinwiddie’s use of a token for this offering, however, one has to look further. Payments for the offering will be made through PAX, a dollar-pegged stablecoin released by Paxos, a crypto financial services company. New investors will increase liquidity and number of transactions for the stablecoin, helping it carve out a niche in a market already flooded with stablecoins of all types. Paxos counts the likes of former FDIC chief Sheila Blair and three-time Democratic Senator (and former basketball player) Jim Bradley among its board members.