Campaign Types

The functionality of the Fraction Protocol allows covering large number of use cases where an asset needs to be fractionalized, and sold to potential buyers. These use cases can be categorized under the two campaign types outlined below.

Campaign

A campaign is the process of dividing an asset into fractions, which individuals can purchase. These fractions serve purposes defined by the issuing project or other potential applications. A typical example is TGE tokens, whose use cases vary by project.

Campaign with Buyback option

Campaign with Buyback Option operates like collateralized lending. A tokenized real-world asset (e.g., real estate, factory, and etc.) is fractionalized and sold to buyers, who receive partial ownership through tokens and participate in a buyback agreement.

The seller, acting as a borrower, raises funds by selling fractions of the asset and agrees to repay buyers with interest. If the buyback occurs, buyers redeem their tokens for the principal plus interest. If the seller defaults, the asset is liquidated and proceeds are used to repay buyers, typically via a designated liquidator.

Softcap and Hardcap

Each campaign can be configured with a specific softcap and hardcap that define the minimum and maximum fundraising thresholds for the asset sale.

• Softcap refers to the minimum amount of funds that must be raised for the campaign to be considered successful. If the softcap is not reached, the campaign may be canceled, and the funds raised could be refunded to the buyers. This ensures that the project can move forward only if sufficient support is received from the market.

• Hardcap represents the maximum amount of funds that can be raised during the campaign. Once the hardcap is reached, no further tokens can be sold. This helps to limit the total amount of fractionalized ownership in the asset, ensuring that the project's creators do not dilute ownership excessively or over-issue tokens beyond a predefined limit.

Together, softcaps and hardcaps provide a clear framework for investors and project creators, helping to manage expectations and maintain a balanced campaign process.