Direct Listing · Specs

What a Direct Listing is

A Direct Listing is, mechanically, a Covenant Phase 2 without the Phase 1 that usually precedes it. Ten thousand ERC-20 tokens mint at listing; each carries a $(e/N)$ -fraction of the issuer’s future TEB, where $e$ is a committed share rate between 1% and 5% and $N = 10{,}000$ . Distributions flow quarterly. The token never expires.

The instrument suits people who aren’t raising capital but want price discovery, backer alignment, or eventually a liquidity event (established creators, post-exit founders, executive-track professionals, athletes) without giving up equity in any company.

Eligibility · the baseline gate

The review panel looks for four things:

Criterion	Minimum	Why
Documented trajectory	5+ years of attestable TEB (tax returns, W-2s, 1099s, K-1s)	Backward signals in the conviction model need 3+ years to be meaningful; 5 is comfortable margin
Conviction score	≥ 65	Higher threshold than covenants (60) because Direct Listings skip the covenant-period observation window
Income diversification	HHI ≤ 0.60	Single-stream income earners are re-routed to covenants. Power-law concentration requires runway to evaluate.
Regulatory clearability	No active SEC / FINRA sanctions, no pending material litigation	Counsel-reviewed above $1M implied market cap

Review process · 4 – 12 weeks

1.Application. Issuer submits attestable history, proposed $e$ , and narrative.
2.TEB reconstruction. Preflop reconstructs 5-year TEB from the issuer’s tax filings. Issuer attests.
3.Conviction scoring. Full 11-signal model with backward block weighted to 60%.
4.Cap-check. Against any existing covenants on the same issuer (see cross-listing math).
5.Counsel review. If implied market cap exceeds $1M, outside counsel sign-off on securities treatment under Reg D.
6.Decision. Accept, counter-offer (lower $e$ or adjusted terms), or reject with named deficiencies.

Lockup · 2 – 8 weeks

Accepted listings enter lockup before tokens transfer. Lockup length scales with implied market cap: 2 weeks for listings under $500K, up to 8 weeks at $5M+. The lockup serves two purposes: orderly price discovery when the book opens, and a final window for material-event disclosure before trading begins.

Pricing · Gordon anchor, same as Phase 2

Direct Listings price via the pure-perpetuity collapse of the general pricing integral, identical in form to a post-T Covenant Phase 2 token:

P_{\text{ref}} \;=\; \frac{1}{N} \cdot \frac{e \cdot \text{TEB}_0}{r - g}

Worked reference

Direct Listing with $e = 2\%$ , $\text{TEB}_0 = \$500{,}000$ , $r = 12\%$ , $g = 5\%$ . $P_{\text{ref}} = \$14.29$ at CI ±30%.

See the pricing spec for the four-stage lifecycle.

Why the DL is the canonical fractional-equity instrument

For a Direct Listing parameterized as $(e, [0, \infty))$ , a single share rate $e$ over a window matching the $V_{\text{HC}}$ integration window. The effective equity rate collapses exactly:

e_{\text{eff}} \;=\; \frac{V_{\text{claim}}}{V_{\text{HC}}} \;=\; \frac{e \cdot V_{\text{HC}}}{V_{\text{HC}}} \;=\; e \;\;\text{exact}

No approximation, no piecewise integration, no forecast-dependence in the ratio. A 2% Direct Listing is a 2% fractional claim on the issuer’s lifetime human capital, full stop.

This makes the DL the canonical fractional-equity instrument on Preflop. The cleanest mapping from share rate to ownership fraction. Covenants approximate this with their two-phase structure; DLs nail it directly.

Dr. Amara Okafor at listing · Gordon idealization

Constant-growth Gordon forecast: TEB(0) = $2M, $g = 3\%$ through year 10, $g_{\text{term}} = 2\%$ .

$V_{\text{HC}}^{\text{mid}} = \$21.32\text{M}$ . DL at $e = 2\%$ , so $e_{\text{eff}} = 2.00\%$ exact.

$\text{MCap} = 0.02 \times \$21.32\text{M} = \$426{,}400$ . Per token: $\$42.64$ . Reserve at the 80% / low-band convention: $P_{\text{reserve}} \approx \$28.50$ (using $V_{\text{HC}}^{\text{low}}$ ≈ $17.85M).

Engine cross-reference (v2.1.0) —The Gordon idealization above (constant 3% growth then 2% terminal, single-stage closed form) illustrates the e_eff = e collapse identity. The production Forecast Engine v2.1.0 runs the same Amara inputs through the medicine-surgical-private cohort (gaussian shape, $\tau = 16$ quarters) with 5 years of personal historicalTEB → $w_{\text{personal}} = 0.50$ , 6 of 15 adjustments fire (β ≈ 0.25), and produces a 5-segment piecewise growth schedule. Engine output: $V_{\text{HC}}^{\text{mid}} \approx \$21.49\text{M}$ , per-token mid $\$42.99$ (low $\$22.73$ , high $\$74.50$ , CI 120%). The ~0.8% drift between the closed-form $21.32M and the engine’s $21.49M is intentional: established issuers with substantial personal data converge across forecast paths. See forecast-engine §Amara for the full piecewise walkthrough.

See the human-capital spec for the V_HC and e_eff identity, and the raise-mechanism spec for how the auction clears around the published reserve.

Cross-listing with existing covenants

A Direct Listing on an issuer who already has a Covenant must satisfy the 25% TEB cap invariant at every point in time. The cap-check runs both algorithms from the cross-listing math spec before the listing is approved.

Worked cross-listing

Issuer has a s=5%, T=7, e_cov=2% covenant at year 3. New Direct Listing at e_dir=3%.

Years 3–7 total utilization: 5% + 3% = 8%. Years 7+: 2% + 3% = 5%. Under 25% at every point → accepted. The two listings trade independently; at year 7, covenant tokens transition to Phase 2 and become economically equivalent to the Direct Listing class.

Direct Listing vs. Covenant · which is which

Dimension	Covenant	Direct Listing
Capital at listing	Yes (principal R)	No (Flow A default). Flow C = deferred liquidity on reserved block.
Best for	Pre-seed founders; early-career creators	5+ year documented trajectory; post-exit founders, established creators
Phase 1 dividend stream?	Yes (years 1 – T)	No
Phase 2 perpetuity?	Yes (year T+)	Yes (day 1)
Review length	2 – 4 weeks	4 – 12 weeks
Lockup	Multiple triggers (data + conviction + funding)	Fixed 2 – 8 weeks
Conviction gate	≥ 60	≥ 65

Perpetual claim from day one