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The Genesis of SegMint: Lock & Key Model

SegMint has developed a “Lock and Key Model” that allows users to have shared access to their digital assets without having to sacrifice any of the benefits of full ownership. This model is a great utility for users who are looking for a way to provide access to their digital assets without sacrificing ownership or airdrops. The content below provides a deeper look into this innovative utility by covering the genesis of SegMint platform.

Start with the problems:

Disruptive technology and solutions often come from the search for something better or more simply put, the resolution of problems. With the development of SegMint, the team began with the right entrepreneurial mindset of, “what are the problems?”

Collectors of digital collectibles encountered numerous issues:

  • How to share an asset in a trustless way?

  • Who would receive airdrops to the asset?

  • Who has actual custody of the asset?

  • How can a decentralized autonomous organization provide members with access to a token while still maintaining custody of the asset?

  • How to unlock liquidity in illiquid investments?

  • How to own “shared access” of a high-value asset?

The current model for “shared access” has been closely associated with Fractionalizing NFTs:

  • The most common standard for non-fungible tokens (NFTs) is Ethereum’s ERC-721 standard, backed by a token ID, making the token unique, scarce, and capable of proving ownership on the blockchain.

  • The current method for fractionalizing one of these assets is to lock the NFT inside a smart contract, which then splits the ERC-721 token into any number of fractions usually in the form of ERC-20 tokens. These tokens have metadata outlining their properties and can be put up for sale in numerous marketplaces.

What are the drawbacks?

  • If the asset is fractionalized, any future airdrops tied to that asset would not be received by the owners of the fractionalized asset.

  • Additionally, ERC-20 tokens, while versatile and fungible, are not the ideal vehicle for shared ownership of a unique asset, as they require additional liquidity to be added in order to be able to be traded on exchanges like UniSwap. Furthermore, if an asset is fractionalized, part of the intrigue of owning a fraction of a high-value asset (such as the visual of the asset) is lost.

  • All of the current platforms available to NFT collectors suffer from at least one of the aforementioned problems. Users must compromise on utility, and even their options can be limited by jurisdiction.

Simplified view of current models:

  • Centralized models allow users to buy fractions of high value collectibles at low entry prices in the form of ERC-20 tokens, but they don’t provide the opportunity to earn airdrops.

  • Decentralized models offer ERC-20 and ERC-1155 tokens, but users run into issues of liquidity and loss of airdrops.

SegMint Offers Real Utility: The “Lock and Key Model”

In order to address these issues, SegMint has developed a series of innovative smart contracts that we have termed the “Lock and Key Model”.

The Lock:

  • This smart contract allows a user to interact with the SegMint Application, which moves the NFT into a smart contract held within the user’s own wallet. The owner of the asset retains custody of the asset, can access the asset and prove ownership. The user can then allow the SegMint Application to lock the asset within their wallet, meaning that the asset cannot be transferred without the permission of SegMint.

The Keys:

  • The user can then mint any number of keys, in the form of ERC-1155 tokens, which are distributed back to the user. When the user wishes to unlock their asset, they must have full ownership of all keys and interact with the SegMint Application, which will burn the keys and unlock the asset from the smart contract.

  • This “Lock and Key Model” allows users to have shared access to their digital assets without having to sacrifice any of the benefits of full ownership, such as airdrops. This is a great solution for users who are looking for a way to provide access to their digital assets without sacrificing ownership or future rewards.

Ownership or Access:

Is this shared ownership?

This is an important question that SegMint will need to address in order to be compliant with various jurisdictions, legal and regulatory agencies. Here is our current thinking:

Consider the following scenarios:

  • If in the above example, the user decides the distribute keys to friends is this shared ownership?

  • Put another way, if you own a house and the local government has you as the owner of the property but your best friend has a key to the house, does that friend have shared ownership?

Most readers would say the answer is no!

Is this shared access?

This is the argument that the SegMint team may take as we navigate the legal and regulatory landscape going forward.

Join the waitlist today at SegMint.io

Disclosures:

NOT INVESTMENT ADVICE
Please note the author has invested in all NFT projects mentioned within this article.
Please note that SegMint may offer investments products that invest in the asset class(es) or industries included herein.
The information herein represents the opinion of the author(s), but not necessarily those of SegMint, and these opinions may change at any time and from time to time. Non-**SegMint**proprietary information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Not intended to be a forecast of future events, a guarantee of future results or investment advice. Historical performance is not indicative of future results. Current data may differ from data quoted. Any graphs shown herein are for illustrative purposes only.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. The information herein represents the opinion of the author(s), but not necessarily those of SegMintt, and these opinions may change at any time. Non-**SegMint **proprietary information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Not intended to be a forecast of future events, a guarantee of future results or investment advice. Historical performance is not indicative of future results. Current data may differ from data quoted. Any graphs shown herein are for illustrative purposes only.
In consideration of the receipt of non-fungible tokens (“NFTs”) from SegMint, you represent, acknowledge, accept and agree that: you received the NFTs as a gift from SegMint. You did not pay any consideration, monetary or otherwise, for the NFTs.
The NFTs are not an investment. Rather, the NFTs are digital memorabilia intended solely for entertainment purposes. As entertainment memorabilia given to you as a gift, the NFTs have no value and are not intended by SegMint to ever have any value. Neither SegMint nor anyone else will take or not take any current or future action that is designed in any way to maintain the value of the NFTs, or to cause their value to grow or increase. You must not attempt to obtain an NFT from SegMint if you view it as an investment.
As a condition of receiving the NFTs, you shall hold the NFTs for your own personal benefit, and you shall not act, and are not acting, on behalf of any other person or entity; except that, if you are an affiliate of an entity or person whose relationship or affiliation you have made SegMint aware of prior to your receiving the NFT, and SegMint consents to your receiving an NFT, you may receive an NFT. You shall not sell, assign, alienate, lease, lend, fractionalize, re-gift, convey or transfer in any way the NFTs (or any interest therein) to any other person or entity, even an affiliate. Any sale, transfer, assignment, or other action covered in the preceding sentence shall be void. You must not attempt to obtain an NFT from SegMint if you plan to sell or transfer it. The above content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this email constitutes a solicitation, recommendation, endorsement, or offer by the Author or any third-party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.
Cryptocurrency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Cryptocurrencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not generally backed or supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies. The value of cryptocurrency may be derived from the continued willingness of market participants to exchange fiat currency for cryptocurrency, which may result in the potential for permanent and total loss of value of a particular cryptocurrency should the market for that cryptocurrency disappear. Cryptocurrencies are not covered by either FDIC or SIPC insurance. Legislative and regulatory changes or actions at the state, federal, or international level may adversely affect the use, transfer, exchange, and value of cryptocurrency.
Investing in cryptocurrencies comes with a number of risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks.  In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing.  There is no assurance that a person who accepts a cryptocurrency as payment today will continue to do so in the future.
Investors should conduct extensive research into the legitimacy of each individual cryptocurrency, including its platform, before investing. The features, functions, characteristics, operation, use and other properties of the specific cryptocurrency may be complex, technical, or difficult to understand or evaluate. The cryptocurrency may be vulnerable to attacks on the security, integrity or operation, including attacks using computing power sufficient to overwhelm the normal operation of the cryptocurrency’s blockchain or other underlying technology. Some cryptocurrency transactions will be deemed to be made when recorded on a public ledger, which is not necessarily the date or time that a transaction may have been initiated.
·         Investors must have the financial ability, sophistication and willingness to bear the risks of an investment and a potential total loss of their entire investment in cryptocurrency.
·         An investment in cryptocurrency is not suitable or desirable for all investors.
·         Cryptocurrency has limited operating history or performance.
·         Fees and expenses associated with a cryptocurrency investment may be substantial.
There may be risks posed by the lack of regulation for cryptocurrencies and any future regulatory developments could affect the viability and expansion of the use of cryptocurrencies. Investors should conduct extensive research before investing in cryptocurrencies.
Information provided by SegMint is not intended to be, nor should it be construed as financial, tax or legal advice. It is not a recommendation to buy or sell an interest in cryptocurrencies.
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