1/ Spencer Dinwiddie (@SDinwiddie_25), NBA player for the Brooklyn Nets, is launching his tokenized bond on Ethereum today after months of negotiations with the NBA. Even though it's not as compelling as the first version, this is still a huge deal.
2/ Spencer’s original design, which was quite brilliant IMO, was to tokenize roughly 40% of his $34.4 million 3-year contract, which included potential bonuses (for example for making playoffs) as well as a player option for his third year.
3/ Most of the upside came from the player option. If Dinwiddie opted out of his third year in 2021 and negotiated a more lucrative contract with his or another team, investors would collect the difference between the original contract and the new one.
4/ This could have effectively led to the creation of real fantasy sports. Investors could bet based on the upside of the last year and player’s value could freely trade on the open market based on how the player performed. It would tie the price to performance.
5/ This could have been a massive asset class but it could have also introduced some complexities. Could players trade their own token? Could it even be stopped? Could they buy back their token if they thought it was undervalued?
6/ NBA didn’t like this idea though, specifically the involvement of the player option. They said it would have been gambling. The NBA hired a big time law firm and threatened that Dinwiddie’s contract would be terminated if he continued without approval.
7/ Dinwiddie was forced to remove the player option and was allowed to advance with the launch. He is now selling a $13.5 million tokenized bond issued under Reg D 506(c), which only allows accredited investors. There are 90 tokens in total with each one being sold for $150,000.
8/ The launch is today and ends on February 10. The tokens won’t be tradable for the first year. Investors will earn a 4.95% interest paid out on a monthly basis while the full principal will be paid off at maturity.
9/ On top of the bond aspect, if Dinwiddie makes it to the All-Star game and his tokenized bond if fulfilled, he promised to take eight of the investors with him as part of the token holder experience. He also vouched to give bitcoin to all of his teammates.
10/ Dinwiddie has been a bitcoin investor for quite some time. He bought his first bitcoin in the summer of 2017 when the price was less than $4,000. He also bought some TRON in early December 2017 and flipped it for about 6x return. He is also passionate about DeFi.
11/ But he keeps his eyes on a much bigger prize than a Reg D tokenized bond. His vision continues to be to create a new asset class and this is just a proof of concept. The first step will be to have a Reg A offering as well in order to allow non-accredited investors.
12/ I personally find this really cool. And as soon as opportunities like this are available to non-accredited investors, I will be getting involved.
