ERC-S is an on-chain and legal standard for routing discretionary economic flows from a shareholder-of-record vehicle (SPV or Foundation) to tokenholders under DAO governance, with transparent operations and guardrails. The real equity sits with the SPV/Foundation as a normal shareholder; tokenholders never receive equity rights, and distributions are discretionary only, governed by clear pause and disclosure rules. ERC-S also includes a 20-module scenario library (S#01–S#20) that standardizes how the pattern is applied across launch, operations, and exit.
ERC-S allows for potential exposure to the economic upside of startups, without it becoming a security, and without startups losing control rights over their company.
| Document | Examined Potential Problem | Document Link | One-Pager summary Link |
|---|---|---|---|
| S#01 | Founder tries to withdraw or rescind SPV-held shares, breaking the equity link to tokens. | ‣ | ‣ |
| S#02 | Founder’s personal bankruptcy lets creditors or a trustee attempt to seize or unwind equity transferred to the SPV. | ‣ | ‣ |
| S#03 | Company issues new securities or expands the option pool, diluting the SPV’s stake and priority. | ‣ | ‣ |
| S#04 | Buyer demands a clean cap table and pressures the founder to unwind or bypass the SPV/DAO. | ‣ | ‣ |
| S#05 | Exit value is hidden or shifted via side payments, earn-outs, stock-for-stock terms, or IP splits that shortchange the SPV. | ‣ | ‣ |
| S#06 | Regulator signals the token is a security, triggering venue halts and forcing a compliant response. | ‣ | ‣ |
| S#07 | Exit economics are disputed due to escrows, working-capital math, earn-out KPIs, or consideration mix, delaying SPV payout. | ‣ | ‣ |
| S#08 | Founder captures SPV governance to move shares, waive protections, or amend bylaws without an independent check. | ‣ | ‣ |
| S#09 | Founder cuts private side-deals with the buyer that divert consideration outside the SPV waterfall. | ‣ | ‣ |
| S#10 | Buyer refuses to recognize the SPV/DAO as a normal shareholder and conditions the deal on excluding or unwinding it. | ‣ | ‣ |
| S#11 | Buyer demands 100 percent control at close and pressures a cheap SPV buy-out or waivers of protections. | ‣ | ‣ |
| S#12 | Buyer withholds SPV proceeds or reroutes payment using inflated escrows, set-offs, or KYC pretexts. | ‣ | ‣ |
| S#13 | A regulatory inquiry hits during exit, freezing venues and complicating buyer conditions, comms, and payout timing. | ‣ | ‣ |
| S#14 | Acquirer imposes founder lockups and tries to extend them to the SPV or DAO, trapping value or delaying distributions. | ‣ | ‣ |
| S#15 | Tokenholders or plaintiff firms allege equity-like promises or undisclosed terms at exit and pursue class actions. | ‣ | ‣ |
| S#16 | Founder starts a competing entity and shifts IP, people, customers, or contracts away from the OpCo where the SPV holds equity. | ‣ | ‣ |
| S#17 | Cross-border enforcement delays enable forum shopping that can stall share or cash movement. | ‣ | ‣ |
| S#18 | Tax authority recharacterizes SPV or DAO flows, triggering withholding and freezing distributions. | ‣ | ‣ |
| S#19 | Conflicting court orders paralyze the transfer agent or custodian and freeze the value path. | ‣ | ‣ |
| S#20 | Tokenholder litigation over equity-like promises or hidden value halts SPV or DAO distributions. | ‣ | ‣ |
Not a share or security token. Not a wrapper or IOU with redemption rights. Not a stablecoin or custodial deposit. Not an exchange-traded product. No guaranteed redemptions or profit rights.
→ Not equity, not a dividend claim, no redemption
→ Not a wrapper that promises 1:1 backing or conversion
→ Not an exchange-traded security or deposit product
→ Not a profit-rights instrument
Venture-scale startups first, then mid-cap and large-cap issuers.
OpCo → contractual flows → SPV/Foundation → DAO vote → on-chain distributor → tokenholder claims.
ERC-S makes one enforceable pattern the same for everyone: OpCo → SPV → DAO, centered on a New York seat, with pre-made mirror-order paths so relief can move quickly between Delaware, Cayman, and buyer venues. It locks in choke points with TA and custodian dual-key controls and a “final or mirror order = sufficient” instruction, and it enables escrow releases on New York awards so counterparties cannot move value or delay closings.
For investors and users, ERC-S lays out rules for non-security behavior and disciplined operations: “tokens ≠ equity,” discretionary distributions, automatic pause triggers during disputes or inquiries, and a public status page backed by an evidence binder to manage class-action and regulatory optics. The SPV is one of the buyer’s shareholders, and acknowledgments keep tokenholders outside the transaction perimeter, lowering execution risk at exit.