The ethical constitution of the platform. Consent, protection, and the design constraints behind the market.

The existing system for early-stage capital allocates by access, not by conviction. Access here is pedigree, family wealth, institutional networks. The criticism we hear most often is that we commodify humans. The reality is the existing system already does. It commodifies access. We’re democratizing it. Preflop is for anyone with a trajectory worth backing, on terms that don’t exist anywhere else.

The contract is on a trajectory, not on a human. Identity is never collateral. Backers hold a financial claim, not power over a life.

We don’t claim this is a solved problem. We claim we’re cognizant of the four hard problems a market like this creates: power asymmetry, psychological burden, adverse selection, commodification. We’ve engineered against each one with structural protections we believe are stronger than any existing form of early-stage finance. We also know the parts we haven’t yet solved, and we publish what we’re tracking.

This page is that spec. The structural protections we shipped, the open questions we haven’t, and the standard we hold ourselves to.

Access to capital has always been a commodity. It’s bought and sold through pedigree, family wealth, and institutional networks. The system that allocates it doesn’t reflect conviction. It reflects who you know. We’re democratizing it.

When someone tries to raise pre-seed today without those gates, the alternatives are: borrow at consumer rates from a friend, defer the company by 2–3 years, take a worse job, or, if they can find a VC who will take the meeting, give up 20% of everything they will ever build plus a board seat plus governance over their career.

We propose something different, available to anyone with a trajectory worth backing: a defined slice of one finite thing. Realized earnings, capped at 25% of income, for a defined window, paid to a market of people who actually believed early. No board. No governance. No veto over a life. When the contract ends, what remains is a permanent share in the issuer’s success, held by the people who showed up first.

This is not a perfect product. It is, we believe, the most equitable form of early-stage capital ever invented, because the mechanism is bounded, the terms are public, and the contract is silent on every dimension that isn’t narrowly economic. The rest of this document is how we hold that claim accountable: the structural protections, the open questions, the things we’ll publish, the things that would tell us we were wrong.

Anything that drifts toward the right column is a bug, not a feature. Reports of such drift go to the ombudsman channel (§9.5).

The hard problem —A market that connects capital with future earnings will systematically advantage the side with capital. This is the most predictable failure mode of every market that prices labor or future earnings. We have to engineer against it explicitly, or we will reproduce it.

Why we built against it. Every market that prices labor or future earnings has produced this asymmetry somewhere. ISAs at predatory schools, athletes signing away royalty streams as teenagers, songwriters with perpetual publishing assignments, indentured contracts in every century.

What we built.

1. The 25% income-share ceiling. Phase 1 obligations are capped at a fraction of Total Economic Benefit that empirical research on income-share agreements shows does not chill earning behavior. Above 25%, moral hazard becomes severe and issuers reduce effort. Below 25%, the issuer keeps the dominant share of every dollar they earn. This is not a soft norm. It is a hard parameter in the covenant (Math Foundation §4).
2. Identical, public contract terms. Every backer who buys into a given listing buys the same contract at the same price tier. There is no bilateral renegotiation. There is no side letter. A backer cannot pressure an issuer for better terms because a backer has no terms to negotiate.
3. Anti-collusion position limits.No single backer (or correlated group, defined by KYC linkage) may hold more than a defined fraction of any one issuer’s float. This prevents an individual or coordinated minority from accumulating implicit influence over an issuer.
4. No backer rights over the issuer’s life. Backers hold a financial claim. They do not hold a vote on the issuer’s career, location, relationships, employer, or any other life decision. The contract is silent on everything that is not realized economic benefit, and that silence is intentional.
5. The minimum-effort floor. The covenant has a minimum-effort clause that says, in effect: the issuer is obligated to act in good faith but is not obligated to maximize. Reasonable career changes, sabbaticals, and pivots are explicitly protected. Only deliberate, sustained suppression of TEB to dodge the covenant constitutes breach. The bar is high and is documented in Spec: Covenant §Breach.
6. Right to delisting under hardship. An issuer can initiate delisting under defined hardship conditions (medical, mental health, family, force majeure). Delisting buys the issuer out using the platform fee reserve at a defined formula. This is the closest the platform comes to an insurance product at MVP and is documented at §9.1.
7. Independent ombudsman (Q3 2026 roadmap). A standing channel staffed by someone who is not on the Preflop cap table. Issuers can raise complaints about backer behavior, platform behavior, or contract interpretation without going through Preflop staff first.
8. Public dispute ledger (Q3 2026 roadmap). Every formal dispute, its resolution, and the reasoning are logged publicly (anonymized for issuer privacy). Pattern-matching across disputes is how we find the asymmetries we did not anticipate.

We will not pretend asymmetry is fully soluble. We will pretend nothing. We will publish our parameters, our breach rates, and our delisting outcomes annually so that the asymmetry is visible and contestable.

The failure mode —Being publicly traded is psychologically corrosive. Issuers can feel like assets, optimize for perception rather than substance, and burn out. Watching a price tick on yourself is not a state any human should be put in.

Why this matters.Every public-figure economy (athletes, performers, founders post-IPO) produces measurable mental health damage. We are creating a price for someone’s life arc. If we don’t design against this, we will hurt people.

What we built.

1. No public price ticker on the issuer’s profile during Phase 1. The price exists, the secondary market exists, but the issuer’s own profile defaults to a quarterly reporting cadence. Real-time price exposure for the issuer’s own listing is opt-in and discouraged in onboarding.
2. Issuer-controlled communications cadence. The issuer chooses how often they update backers, what they share, and what they keep private. There is a minimum reporting requirement (TEB attestation), but everything else is discretionary.
3. No metrics beyond TEB. The platform does not score, rank, or surface engagement metrics, social-graph metrics, or any qualitative metric on the issuer. The only number the platform calculates and publishes is realized economic benefit, because that is the only thing the contract is on.
4. Mandatory mental-health resource surface in onboarding. Every issuer onboarding flow links to mental-health resources, with a non-skippable acknowledgment that being publicly listed is a measurable stressor. This is not a checkbox; it is a screen with content the issuer has to read.
5. Right to take a sabbatical without breach.The covenant explicitly protects defined sabbatical periods (up to 18 months over the contract life) where the issuer’s TEB obligations are paused. This is documented in Spec: Covenant §Sabbatical.
6. Issuer wellness fund (Q4 2026 roadmap). A fraction of platform fees funds free annual mental-health check-ins for any active issuer who opts in. Confidential, third-party, never reported to backers or to Preflop.
7. No price-of-self anchoring in marketing. Preflop marketing copy will never compare an issuer’s price to anything personal: relationships, friendships, life events. The price is a market signal on a financial instrument. The issuer is a human. The two are not interchangeable, and our copy will reflect that.

The trap —The best people raise venture capital or get scholarships. Preflop’s pool could end up being the people who could not raise elsewhere: a lemons market, in Akerlof’s sense. Backers would systematically lose. Issuers would be the bottom of the distribution.

Why we built against it. Adverse selection is the technical name for why most income-share-agreement markets have failed. It is the single biggest reason a quant reviewer would short the entire thesis.

What we built.

1. The cohort-priors engine corrects for selection bias mathematically. Spec: Cohort Priors v2 re-anchors every cohort baseline to entry-pool data (Census ABS, Kauffman, AAMC, NCAA, IRS Schedule SE) rather than funded-survivor data (Crunchbase, NALP top-200). This means the priors used to price every listing already assume the issuer is a randomly drawn cohort member, not a survivor. Adverse selection is partially priced into the discount rate and the survival mixture before any backer sees a listing.
2. The discount rate prices the residual. Spec: Discount Rate v1 carries an illiquidity premium and an explicit equity risk premium that compensate backers for the residual selection risk that priors cannot fully absorb. This is documented and parameterized, not hidden.
3. Curated listing at launch.While the cohort engine handles the long-run case, the launch cohort is a narrow, vetted set of early-career issuers (founders, researchers, creators), starting with the Preflop founder himself (RMUN). The first listing being the platform’s own founder is a conviction signal: the product is signed before it is sold. See Strategy: Self-Listing.
4. Public success-and-failure ledger.Every concluded listing publishes its outcome (anonymized at the issuer’s option) so that the cohort statistics improve over time and the lemons-market argument becomes empirically testable.
5. Backer education at the point of conviction. Every listing page surfaces the cohort variance, the failure rates of the cohort entry-pool, and the mathematical decomposition of the price. A backer cannot click through to invest without seeing the variance band. Conviction without informed risk is not what we are building.
6. Issuer-aligned grants for high-leverage trajectories the market won’t price (long-term). Independent of the for-profit market, a defined fraction of platform fees will fund a grant program for trajectories the market systematically underprices: open-source maintainers, public-health researchers, early-career educators in low-income contexts. This is the effective-altruism arm of the platform, documented at §10.

The failure mode —Tokenizing a person’s economic trajectory can drift into treating people as financial products. The framing is dehumanizing. Even if the contract is fine, the language matters. Even if the language is fine, the cultural normalization of “buying people” is corrosive.

Why this matters. Language shapes culture. If Preflop is described as a market in people, it becomes a market in people, regardless of what the contract says. The right framing is on the contract: a defined slice of realized economic benefit. We hold that line in product copy, marketing, and the chat.

What we built.

1. The contract is on a trajectory, not a human. This is repeated through this entire document because it is constitutional. The token represents a defined fraction of realized economic benefit over a defined window. Identity is not collateral. The issuer keeps every right of personhood: career choice, location, relationships, religion, politics, friendships, all of it. The contract is silent on every dimension that is not narrowly economic.
2. Language audit.Preflop’s product copy, marketing, and internal documents are audited for commodifying language. Phrases like “own the person”, “buy a life”, or “fractional ownership of people” are bugs and will be rewritten. The audit is run quarterly. The deltas are published at the bottom of this page.
3. Comparable financial instruments are precedents. What we are doing has direct analogs: equity in a founder-led startup is a claim on the future cash flows the founder generates; an income-share agreement is a claim on a fraction of future income; a music publishing deal is a claim on royalty streams from a creator’s future work. None of these are described as “buying the person.” Ours, which is narrower than equity (no voting rights) and bounded by time (covenant has a defined end), should not be either.
4. Severability is built-in.The contract has a defined end (Phase 1 expiry, Phase 2 conversion, or delisting). The issuer is not bound for life. The token is severable from identity at the contract’s expiry. The trajectory continues. The contract does not.
5. No claim on the non-economic.No clause of any Preflop contract gives any party a claim on the issuer’s labor, time, attention, body, image, name, social presence, or any non-economic aspect of life. The contract is on a defined cash-flow stream and nothing else. This is enforced in the contract template, the smart contract, and the platform terms.
6. Effective-altruism framing as the public counter-narrative. A market in early human capital is good (not just neutral) because the alternative is a world where capital concentrates in already-funded paths. Markets that price human potential late mean only people with existing access (institutional pedigree, family wealth, geographic luck) get funded. A market that prices it earlier and to more people is, on the EA criterion of expanding access and counterfactual impact, the more ethical structure. This is the case we make publicly and is documented at §10.

Consent is not a checkbox. It is a stack:

1. Pre-listing education (mandatory). Before an issuer can list, they complete an onboarding flow that explains the covenant in plain language, the math (with worked examples), the obligations, the risks, the protections, and a list of cases where listing is not the right choice. The flow is not skippable. Comprehension is checked with non-trivial questions.
2. Counsel review (mandatory above a threshold). For raises above a defined size, the issuer must confirm independent legal counsel review. Preflop maintains a list of low-cost counsel for issuers without resources. The platform fee reserve subsidizes this for issuers below an income threshold.
3. Cooling-off period (mandatory). After contract signature and before primary auction settles, there is a defined cooling-off window during which the issuer can rescind without penalty.
4. Per-action consent.Every consequential action (list, accept fill, attest, distribute, delist) is gated by an explicit consent action by the issuer. Nothing is done on the issuer’s behalf without their direct authorization.
5. Revocable consent.The issuer’s right to delist, governed by §9.1, is the ultimate revocation. It is not punitive; it is a right.
6. Consent for data. Every category of data collected is gated by a specific consent. The issuer can revoke any non-mandatory data consent at any time without affecting their listing.

We treat privacy as infrastructure, not policy. The defaults protect the issuer. Expansions require explicit opt-in.

1. Minimum data collection. The platform collects only what the contract and applicable regulation require. Discretionary data collection is opt-in by default and labelled clearly.
2. Encryption at rest and in transit. Standard industry practice on every layer: KMS, TLS, encrypted backups, key rotation. Documented at the engineering level in our security spec.
3. No sale of issuer data, ever. This is a hard commitment. Anonymized cohort statistics may be published in aggregate (this is what the cohort-priors engine consumes). Individual data never leaves the platform.
4. Issuer-controlled disclosure. The issuer chooses what to publish on their listing page beyond the mandatory minimums (TEB, attestations, contract status). All optional disclosures are explicit opt-in.
5. Right to correct, right to redact. Issuers can correct any factual error in their public profile and can request redaction of any non-mandatory disclosure at any time.
6. Right to be forgotten on contract close. When a contract concludes (expiry, conversion, delisting), the issuer can request that their public profile be archived or removed. Anonymized financial outcomes remain in the cohort statistics; identifying information is removed at request.
7. Backer privacy too. Backer identities are not public on the platform. KYC data is held to the same standard as issuer data.
8. Subprocessor list, public. Every third party that touches platform data is listed publicly with the data category they handle.
9. Annual privacy audit (Q4 2026 roadmap). Independent third party reviews data handling against this spec. Results are published.

The product layer that operationalizes this spec. Some of it is shipped today; the rest is roadmapped with owners and dates.

9.1 Today (shipped at MVP)

• Fee-reserve buyback for delisting. A portion of platform fees is held in reserve specifically to fund issuer-initiated delisting under hardship conditions. This is the closest the MVP comes to an insurance mechanism: a self-funded backstop. Details in Spec: Direct Listing §Delisting.
• The 25% income cap and minimum-effort floor. Hardcoded into the covenant.
• Identical-terms contract for every backer. No side letters.
• Anti-collusion position limits. Hardcoded.
• Issuer-controlled disclosure. Defaults are protective.
• Mental-health resource link in onboarding. Mandatory.
• Sabbatical clause. Defined in the covenant.
• Smart-contract emergency controls with revocability. If admin abuses emergency powers, token holders can vote to revoke admin rights (simple majority, 14-day notice).

9.2 Q3 2026 roadmap

• Independent ombudsman channel. External-staffed, not on Preflop’s cap table.
• Public dispute ledger. Anonymized, all formal disputes and resolutions.
• Wellness fund onboarding. Annual confidential mental-health check-in, opt-in.

9.3 Q4 2026 roadmap

• Annual independent privacy audit.
• Annual ethics report. Quantitative: breach rates, delisting rates, dispute counts and outcomes, demographic breakdown of issuers and backers, fee-reserve health.

9.4 2027 roadmap (insurance and fiduciary layer)

• Third-party fraud insurance. Underwritten against fraud risk on large listings, sized to the cohort data we will then have.
• Backer protection product. Optional, separately priced layer that backstops a defined fraction of loss in named scenarios (issuer death without succession, fraud, regulatory shutdown). Available because by then we will have enough cohort data to price it.
• Fiduciary tier. A category of backer accounts (institutional, family-office) that accept additional fiduciary obligations in exchange for additional position-size capacity. The asymmetry is opt-in, transparent, and limited.

9.5 The ombudsman, in detail

• Independent of Preflop staff, external counsel by default.
• Reachable by issuers and backers directly.
• Quarterly report to the platform, published.
• Authority to recommend remediation, including fee waivers, contract modifications under defined narrow conditions, and (in extreme cases) referral to legal counsel for the issuer at platform expense.
• The ombudsman is named publicly. Contact channel is on this page.

9.6 Public ethics review board (2027 roadmap)

• Three to five external members. At least one ethicist, one clinician, one legal scholar.
• Reviews the annual ethics report.
• Reviews any policy change to this spec before publication.
• Has a public seat on the platform’s quarterly review.

We frame Preflop in effective-altruism terms not because we want to claim a halo but because the EA framework is the strongest argument against the commodification critique, and we should make it explicitly.

The standard EA criteria are: scale, neglectedness, tractability. Apply them to early human capital:

• Scale. The number of humans whose potential is currently underpriced because they cannot access institutional capital is in the hundreds of millions globally. The expected counterfactual impact of giving even a small fraction of them access to capital at the right moment is enormous.
• Neglectedness.Capital markets price corporate equity to within basis points; they do not price individual trajectories at all. The set of humans who are “investable” today is a tiny minority, gated by accident of birth, geography, institutional pedigree. This is the textbook definition of a neglected market.
• Tractability. The infrastructure is buildable. Tokenization, on-chain settlement, cohort-based pricing, attestation stacks. These are technologies that exist now. The tractability is engineering, not invention.

On those three criteria, building a market in early human capital is on the same scoreboard as the EA-orthodox interventions. The objection is not that the goal is wrong. It is that the method is dehumanizing. The rest of this spec is the engineering against the method risk.

What we will commit to publicly:

1. A defined fraction of platform fees (initial target 5% of net platform fee revenue) flows to a grant program for high-leverage human capital paths the market systematically underprices: open-source maintainers, public-health researchers, early-career educators in low-income contexts, climate engineers in early-stage labs. The fraction, the recipients, and the outcomes are published annually.
2. Anonymized cohort data is published to the academic and public commons, so that researchers studying career outcomes, mobility, and human-capital pricing have a public dataset to work from.
3. The forecast engine and the math foundation are public, not proprietary. We do not gatekeep the model that prices a person.
4. Founder commitment. The Preflop founder lists himself first and accepts the same contract terms as every other issuer. No founder side letters, no warrant on his own listing. The product is signed before it is sold.

In a single page, plainly:

Issuer rights. Informed, revocable consent. Hardship delisting. Sabbatical. Identical terms. No backer veto over your life. Privacy by default. Counsel access. Mental-health resources. Right to correct, redact, be forgotten. Direct line to the ombudsman.

Backer rights. Identical terms with every other backer in the same listing. Public, audited contract. Public price formation. Public success-and-failure ledger. Cohort statistics to inform conviction. Position-limit protection from collusion. Smart-contract emergency controls with revocability. Eventually: optional insurance product.

Platform obligations. Run the market with integrity. Publish the math. Audit the language. Hold the fee reserve. Fund the wellness program. Fund the EA grant. Stand up the ombudsman. Stand up the ethics board. Publish the annual ethics report. Take losses to protect issuers in hardship cases. Take losses to protect backers in fraud cases. Lose money on principle when principle requires it. Tell the truth, in public, when we make mistakes.

Society’s stake. A platform that prices early human capital well is social proof that conviction in people can be a load-bearing economic structure. We expect society to read it as a signal that there are more equitable ways to allocate capital than the current gatekept ones. We actively invite researchers, ethicists, journalists, and regulators to test that claim against our published data.

The honest version of this document includes the parts we haven’t solved.

If we claimed every risk was engineered out, you should not trust this page. The structural protections above are the things we believe will hold. There are three categories of uncertainty we explicitly track, will publish, and will be measured against.

12.1 · Cohort outcomes vs. priors

Our cohort-prior models predict expected backer returns. If realized returns systematically disappoint over the first 5 years across diversified backer portfolios, the models are wrong. The cause is likely a selection bias we couldn’t fully correct for, or a structural feature of the cohort that the entry-pool data didn’t capture.

What we’ll publish:

• Annual cohort-outcomes report comparing realized returns to engine forecast, broken out by cohort and by listing year
• The full revision history of cohort priors over time, so the math is replicable

If the data tells us we were wrong, we revise the priors. We don’t argue with the data.

12.2 · Issuer psychological burden

The wellness fund (Q4 2026 roadmap) underwrites confidential third-party mental-health check-ins for active issuers. We don’t yet have data. If a meaningful fraction of issuers report sustained harm we couldn’t engineer against, the public-pricing design needs revision. That could mean longer dampening windows on price visibility, restricted real-time access during the issuer’s first year, or different reporting cadence.

What we’ll publish:

• Aggregate (anonymized) wellness data annually, starting Q4 2027
• Any structural changes to the public-pricing design, with the data that triggered them

12.3 · Regulatory novelty

We register every covenant under Reg D / CF / ATS from day one and engage proactively with the SEC, CFPB, state AGs, and FINRA. But we are creating a new asset class, and a regulator will eventually issue novel guidance that doesn’t fit our wrapper. We don’t know which regulator or when.

What we commit to:

• We absorb regulatory cost rather than evade it
• We do not operate offshore if the US framework requires changes. We change instead.
• The first novel guidance that materially affects the structure gets a public response with the change we’re making, not a quiet adjustment

12.4 · The things we haven’t named

There will be problems with this market that we cannot anticipate. Markets create their own failure modes. The single most important commitment we make on this page is the procedural one: the public ethics review board (§9.6), the quarterly review (§13), the public dispute ledger, and the bug bounty for ethical violations are how we surface problems we didn’t predict.

If after building we discover something we didn’t see, this page is where we write it down. We do not retroactively edit. We add.

What would change our minds

The strongest version of intellectual honesty is naming the evidence that would tell us we were wrong:

• Cohort outcomes: realized backer returns 30%+ below cohort-prior median over a 5-year window across diversified portfolios → priors are wrong, possibly the model framework
• Wellness data: 10%+ of active issuers reporting sustained psychological harm in confidential check-ins → public-pricing design needs structural revision
• Regulatory: a state AG action survives federal-preemption defense on a Reg D 506(c) offering → wrapper has a flaw we missed
• Adverse selection: cohort-mean returns trend downward over time as the platform matures → reverse selection (best issuers self-selecting out), suggesting our brand on the issuer side is wrong

If any of these triggers fires, this page changes, the protections change, and the public ethics report says so.

This document is a spec, not a manifesto. It will be wrong in places. The places it is wrong will be discovered by the issuers and backers who use the platform.

How we keep it honest:

• Quarterly review.Every quarter, this page is reviewed against the issuer reports, the dispute ledger, the ombudsman’s quarterly report, and any external feedback. Changes are logged.
• Public ethics review board (§9.6) reviews any non-trivial revision before it ships.
• Bug bounty for ethical violations.A standing bounty for any reported case where the platform’s behavior diverges from this spec, paid whether or not the report leads to a contract change. Details forthcoming.
• Right of reply.Any issuer or backer who believes they have been treated in a way that violates this spec can publish a response on the dispute ledger. The platform’s response is published alongside.

If you have read this far and you believe we are getting something wrong, the ombudsman channel is the right place. Below threshold of an ombudsman case, contact the founder directly at founder@preflop.co.