Asset Durations



  • Hi all

    I am in the process of creating my first asset, and I am trying to figure something out but would like some assistance so we achieve consensus.

    What happens when it is time for an asset to die? Surely we can't expect all assets to continue operations forever. So when someone wants to close an asset, how does that gone completed effectively so it doesn't burn bridges and ruin future trust for that person?

    I thought that it may be good to define an end date, but other parts of me say no that's not right. Is the solution to rebuy everyone's shares back?

    Does anyone else have thoughts on this?

    Cheers!



  • @jakev I think rebuy everyone shares at a fair price is the way to go if an asset has to close doors yes...



  • @gpedro I agree in some sense. Perhaps defining what "fair" means at the inception of the asset would be a wise move for all creators.



  • depends on the asset and what it does,, imo best trust would be set a defined goal that results in buy back of asset's or some option for the asset holder.



  • @jakev Excellent question and one I have had at the back of my mind in thinking about offering an asset, and is one of my major hesitations in doing so.

    I think that asset issuers should make some effort on the point when they release an asset. I think a lot will depend on what the asset is, some being easier to handle than others.

    Let's as single example take a simple mining asset. Typing as I think so who knows where this will end???

    The mining farm has grown using shareholder investments and is paying increasing dividends. However time passes and after a year or two the Block reward reduction, electricity costs, hardware failures and growth of mining competition etc take their toll. Dividends reduce and Asset Holders begin to bale out, the Asset price drops.

    The Farm is no longer economic as a business and the Asset holder wants to shut it down. So I guess at this point a couple of options.

    1)He shuts it down, share price drops to zero, walks away with his reputation tarnished.
    2)He shuts it down, sells the asset and distributes the funds to the shareholders, some degree of satisfaction but probably still some unhappy asset holders..

    3)He looks at what he put in the Asset Prospectus and carries that out.

    Prospectus might say 1 or 2 above or might say.

    If at any point the mining farm is no longer viable then if this is after the asset has returned 2 x the investment then the farm can be closed, otherwise the asset will be sold and the proceeds distributed to the Asset holders.

    However the key point is not what is done, but that the Asset holders when buying know what will be done in the event of winding up the asset.

    Rich



  • This is one point that is letting me wait to actually issue my first asset.
    If this point will be not clarified in advance it will be all against the asset issuer, that risks to spoil his reputation or to be in debt forever.



  • @jakev I don't think you should try to predict what will be fair in some months or years... I guess what will be fair is that the issuer buy back the assets on the market at the current avaluation of the free market at the time of the closing...

    @RichBC In the case of Mining Assets i would say that the ROI of a mining investment for new hardware, if the asset payed 100% of the mining coins, is placed now between 9 months and 15 months depending on the size of the investment and on the deals that the issuer gets for the HW, so basically if the issuer wants to close the asset before hit ROI, imo he has 2 options:

    1 - Sell the Hdds at the best price he can get and distribute the current value throught the shareholders;
    2 - He can organize a way of buyback the shares with the hdds for the most part of the HW and buyback the small shareholders with Burst.

    Either way there is always a way of buy back the shares because the asset continues to have assets of itself.
    If he will close the asset after the ROI being hitted he should have a fund already made so he could cover part of the lost and that way he can keep part of the mining HW...

    IMO the most trouble type of assets to close are for example trading assets because i guess the only thing that would make the issuer to close the asset is if he lost a big chunk of the capital and if he think that will be real hard to recover, but in this case i think the best option is that the issuer keeps building a safety net fund during the time all things go well, maybe even with a escrow, like for instance @nameless did with the 402 Asset securing the initial investment and adding funds to that fund as the asset goes...

    Basically there is no correct answer for this imo... Each Asset Issuer must build their plan B in their head and if he thinks that the plan B will work in all circunstances he turn it public since day one ofc... If he builds a plan B that will only work after a certain point of time (like he start building a safety net since day one but it will only be able to cover the initial price after some months) that should be said in the beggining too because in here the trust and reputation depends directally on transparency, right?

    Those are my 2cents! xP



  • @gpedro I agree that all assets are different and all carry different degrees of risk and that some such as mining will always have some retained value, others such as trading run a risk of a total loss.

    I guess it's up to the Asset Issuer to put or not put in the Prospectus any words covering wind up and for the Asset buyers to read and ask questions and then buy or not buy the Asset.

    However I think it would be good if Asset issuers and buyers at least put it on their list of things to think about. :-)

    Rich



  • @RichBC said in Asset Durations:

    @gpedro I agree that all assets are different and all carry different degrees of risk and that some such as mining will always have some retained value, others such as trading run a risk of a total loss.

    I guess it's up to the Asset Issuer to put or not put in the Prospectus any words covering wind up and for the Asset buyers to read and ask questions and then buy or not buy the Asset.

    However I think it would be good if Asset issuers and buyers at least put it on their list of things to think about. :-)

    Rich

    Absolutely agreed... All business needs a plan B always, so this is one of the things that have to be thinked out before putting an asset on the market ofc...



  • Well in my view, any closure should be handled like any company. With updates from the issuer, asset holders should know what the state of the asset it and the exchange will probably reflect the price.

    Now, if in any case the issuer decides to stop operations, it's only fair to liquidate all of the assets, then adjust the asset value to match the liquidation price and then distribute the proceeds as such (percentage-wise) or if the bigger asset holders would want to exchange their assets for any of the hardware then that would work too.

    For assets that are purely trading or doing "cloud" "investments" well, tough luck, because zero is zero. Reputation kaput. Unless of course the asset issuer allows the members to inspect trading history and whatnot.



  • @jakev said in Asset Durations:

    Is the solution to rebuy everyone's shares back?

    That's what i will do when i will liquidate my assets. But that's years from now :)



  • My personal plan is after some asset life to start putting buy orders. This way i will be both stimulating assets price and making a safety net in case something happens to me or asset (afcourse that means i have to be trustworthy not to cancel those buy orders).



  • How to announce the buyback process as not everyone always get access to forum or what if the asset issuer already forgot about Burst at all?

    I think buyback is the best idea, but the process not easy I think.