Overview

CapSign tokens are ERC-7752 securities tokens with built-in lot-based accounting for precise capital gains tracking.

What is a CapSign Token?

A CapSign token is a digital security that represents:

  • Shares - Common stock, preferred stock

  • Units - LLC membership units, partnership interests

  • Other securities - Convertible notes, warrants, etc.

Unlike traditional ERC-20 tokens, CapSign tokens track lots - instances of tokens with the a unique acquisition date and cost basis.

Key Features

Lot-Based Accounting (ERC-7752)

Every token has a lot that tracks:

  • Acquisition date - When you acquired the tokens

  • Cost basis - What you paid per token

  • Payment currency - What currency you used (USDC, ETH, etc.)

  • Quantity - How many tokens in this lot

  • Transfer type - How you acquired them (purchase, gift, etc.)

This enables:

  • Precise capital gains - Calculate gains on a per-lot basis

  • Tax optimization - Choose which lots to sell (FIFO, LIFO, specific ID)

  • Audit trails - Complete transaction history for compliance

  • Regulatory compliance - Meet securities reporting requirements

Transfer Restrictions

Tokens can have compliance conditions:

  • Lockup periods - Tokens can't be transferred until a date

  • Vesting schedules - Tokens unlock over time

  • Rule 144 - SEC holding period requirements

  • ROFR - Right of first refusal for transfers

  • Custom rules - Issuers can define custom restrictions

On-Chain Metadata

Token metadata includes:

  • Token name - e.g., "Class A Common Stock"

  • Token symbol - e.g., "CSA"

  • Issuer - The entity that issued the token

  • Legal documents - Links to operating agreements, etc.

  • Asset type - Share, unit, etc.

For Investors

Receiving Tokens

When you invest in an offering or receive tokens:

  1. New lot created automatically with:

    • Acquisition date = transaction date

    • Cost basis = price you paid

    • Payment currency = what you used (USDC, etc.)

    • Quantity = number of tokens received

  2. Tokens appear in your wallet

  3. View lot details in the Tokens section

Viewing Your Tokens

Navigate to Tokens to see:

  • All tokens you hold

  • Balance per token

  • All lots for each token

  • Cost basis and acquisition date per lot

  • Current value (if available)

Transferring Tokens

To transfer tokens (if allowed by compliance rules):

  1. Navigate to the token

  2. Click Transfer

  3. Choose which lot to transfer from

  4. Enter recipient address and quantity

  5. Authenticate with Face ID / Touch ID

  6. Transaction submitted

Note: Transfers may be restricted by compliance conditions (lockups, vesting, etc.).

For Issuers

Creating Tokens

Only entity accounts can create tokens.

Steps:

  1. Switch to entity context if not already

  2. Navigate to Tokens → Create Token

  3. Select token type (Share, Unit, etc.)

  4. Configure details (name, symbol, decimals)

  5. Choose compliance preset (lockups, vesting, etc.)

  6. Review and deploy

Time required: 2-3 minutes

Learn more: Creating a Token

Issuing Tokens

After creating a token, issue (mint) tokens to investors:

  1. Navigate to your token

  2. Click Issue Tokens

  3. Enter recipient address, quantity, cost basis, payment currency

  4. Authenticate and submit

Learn more: Issuing Tokens

Managing Your Tokens

As an issuer, you can:

  • Issue new tokens - Mint tokens to investors

  • View all holders - See who holds your tokens

  • View all lots - See all lots across all holders

  • Pause transfers - Temporarily disable transfers

  • Freeze accounts - Prevent specific accounts from transferring

  • Update compliance - Add or modify transfer restrictions

Token Types

Shares

Represents equity ownership in a corporation:

  • Common Stock - Standard equity with voting rights

  • Preferred Stock - Priority liquidation preference

  • Stock Options - Right to purchase shares

Units

Represents membership interest in an LLC or partnership:

  • Membership Units - LLC membership interest

  • Partnership Interest - Limited partnership interest

  • Profits Interest - Equity compensation in partnerships

Other Securities

  • Convertible Notes - Debt that converts to equity

  • Warrants - Right to purchase shares

  • SAFEs - Simple Agreement for Future Equity

Compliance Presets

When creating a token, choose a compliance preset:

No Restrictions

Tokens are freely transferable with no lockups or restrictions.

Use for:

  • Internal bookkeeping

  • Non-securities

  • Fully vested, unrestricted shares

Lockup Period

Tokens cannot be transferred until a specific date.

Use for:

  • IPO lockups

  • Founder shares

  • Employee grants with cliff

Vesting Schedule

Tokens unlock gradually over time.

Use for:

  • Employee compensation

  • Advisor grants

  • Founder vesting

Rule 144

SEC Rule 144 holding period requirements.

Use for:

  • Restricted securities

  • Unregistered shares

  • Reg D offerings

Right of First Refusal (ROFR)

Company or other shareholders get first right to purchase before external transfer.

Use for:

  • Private company shares

  • Closely held corporations

  • Partnership interests

Technical Details

ERC-7752 Standard

CapSign implements ERC-7752 with extensions:

interface IToken {
  // Create a new lot (issuing/minting)
  function createLot(
    address owner,
    uint256 quantity,
    address paymentCurrency,
    uint256 costBasis,
    uint256 acquisitionDate,
    string memory uri,
    bytes memory data,
    uint256 customId
  ) external returns (bytes32 lotId, uint256 assignedCustomId);

  // Transfer a lot (selling/gifting)
  function transfer(
    bytes32 lotId,
    address to,
    uint256 quantity,
    TransferType tType,
    uint256 newCostBasis,
    string memory uri,
    bytes memory data
  ) external returns (bytes32 newLotId);

  // Get lot information
  function getLot(bytes32 lotId) external view returns (...);
}

Learn more: Token Architecture

Diamond Architecture

Tokens use the Diamond Pattern (EIP-2535):

  • TokenBalancesFacet - ERC-20 compatibility

  • TokenLotsFacet - Lot management (ERC-7752)

  • TokenTransferFacet - Transfer logic

  • TokenComplianceFacet - Compliance checks

  • TokenMetadataFacet - Token information

  • TokenAdminFacet - Administrative functions

This allows for:

  • Modularity - Add/remove features without redeploying

  • Upgradeability - Fix bugs and add features

  • Gas efficiency - Singleton pattern reduces costs

Deployed Contracts

See Contract Addresses for token factory and facet addresses.

FAQs

Q: What's the difference between lots and tokens? A: Tokens are the asset (like "Class A shares"). Lots are groups of those tokens with the same acquisition date and cost basis.

Q: Can I merge lots? A: No. Lots must remain separate for tax compliance. If you buy tokens at different times/prices, they stay in separate lots.

Q: What if I want to sell tokens from a specific lot? A: When transferring, you choose which lot to transfer from. This allows tax optimization (FIFO, LIFO, or specific ID).

Q: Are CapSign tokens ERC-20 compatible? A: Yes! Tokens implement ERC-20 for compatibility with wallets and exchanges. The lot data is an extension on top of ERC-20.

Q: Can I create tokens without compliance restrictions? A: Yes, choose the "No Restrictions" preset. However, make sure you're complying with securities laws.

Q: What happens to cost basis when I transfer tokens? A: The recipient's new lot can have a different cost basis (e.g., $0 for a gift, or sale price for a purchase).

Guides

Need Help?

PreviousMulti-Entity AccountsNextCreating a Token

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