Page 23 - Project Khoka 2

The debenture token life cycle
Figure 6 below provides an overview of the debenture token life cycle – mainly focusing on the primary market.
Figure 6: Debenture token lifecycle
THE PROOF-OF-CONCEPT
2
SAMOS/
Bid
Member Rand reserve account
Allocate
3Allocate debentures to wining bids
Collateral service
Cleared
effected Settled owner
6 Security transferred
Matured
8 Notional & Interest
value paid in wCBDC
Custodian
5 wCBDC 7 Held on payment behalf of
Advertise
1 Announce debenture
auction for the week
Issue
4ISIN requested and debenture created
Process simulted “off-chain” Process implemented “on-chain”
The steps in the debenture token life cycle are:
1. FMD may decide to hold a debenture auction and, if so, it is announced on a Wednesday.
2. Participants bid in the auction.
3. The FMD accepts bids and allocates debentures.
4. The FMD issues the debenture tokens on the Khokha Hub utilising a debenture token module. The ISIN is obtained from the ISIN simulator for registration along with other pertinent data such as the
5
value of a contract, in the non-fungible token
(NFT) embodying the debenture token.
5. The terms of exchange are recorded on the Khokha Hub’s DLT through the creation of a DvP smart contract address specific to the transaction to which the buyer must send wCBDC. The DvP smart contract, as part of the debenture token module, holds the debenture token in escrow.
6. The buyer sends wCBDC to the DvP smart contract, which verifies the token data against ISIN data, and if it matches and sufficient wCBDC was paid, the ownership of the debenture token passes to the buyer and the wCBDC is passed to the FMD. If any of the steps fail, funds are returned to the buyer and the debenture is returned to the FMD.
7. The buyer holds the debenture token in a custodial wallet provided by its CSDP, that is, commercial bank, on the TTP (i.e. the Khokha Hub). The debenture tokens are also locked in these wallets to enable the issuance of the FDM Tokens, as a synthetic instrument for trade in the secondary market against Khokha Tokens.
8. When a debenture token matures, the FMD makes payment on the principal and interest owed to
a settlement contract per ISIN – it is also possible to aggregate liability across multiple debenture tokens. The DvP smart contract distributes wCBDC owed to relevant beneficiaries. A secondary smart contract is used to help settle third-party liabilities incurred against the debenture using FDM Tokens in the secondary market (like MaFISI in the current market).
5 Non-fungible tokens represent assets which are unique, such as artwork, and therefore not interchangeable with another asset, and can be contrasted with fungible assets like money, where one R10 note can be swapped with another without affecting the underlying value.
PROJECT KHOKHA 2 23