Author: Floki
Floki noticed that the Securities and Futures Commission (SFC) of Hong Kong listed Floki and the TokenFi project as "suspicious" on January 26, 2024 due to their high annualized returns.
This situation arose from misunderstandings about how Floki calculates its staking APY and how it can sustain high returns. Floki is committed to maintaining compliance and values its relationship with regulatory authorities.
To meet regulatory expectations, Floki outlined several steps it has taken and explained the operation of its high APY.
Floki has issued a disclaimer on its website, advising Hong Kong citizens not to participate in the staking program until regulatory issues are resolved. It has also taken technical measures to block access to staking services from Hong Kong IP addresses. Additionally, offline promotional activities within the jurisdiction were suspended in mid-December 2023.
What Drives the High APY?
The Securities and Futures Commission of Hong Kong is most concerned about the extremely high annual percentage yield (APY) offered by Floki and TokenFi's staking programs.
Floki operates under a unique premise where, contrary to traditional models that increase supply or provide marginal rewards from a limited token pool, it rewards participants with $TOKEN, the native token of TokenFi, a highly promising tokenization project.
TokenFi is not just a platform, but a pioneering project in the thriving tokenization industry, which is expected to grow to a staggering $16 trillion by 2030. Larry Fink, the CEO of BlackRock, the world's largest asset management company, has referred to tokenization as the future of the market and believes it is even bigger than a Bitcoin ETF.
The high APY of Floki's staking program is due to the majority of TokenFi supply being allocated to Floki stakers. While Floki could have raised tens of millions of dollars from venture capital and presales, they chose not to do so. Instead, they allocated the majority of TokenFi supply to Floki stakers. This ensures a sustained high APY and ensures that the project's true supporters receive the majority of the tokens, not just venture capitalists or early buyers.
Sustainability and Decentralization
High returns naturally raise sustainability concerns. While APY is indeed influenced by market conditions and the potential demand for $TOKEN, it is designed with self-adjusting properties.
Rewards are determined based on market value, and for TokenFi, its market value has appreciated significantly since its inception due to market perception of it being a high-potential project.
The staking systems of Floki and TokenFi operate autonomously on the blockchain, meaning that even if team members are not involved, users can still maintain control, and the system will continue to operate. The same rules apply to everyone, demonstrating a strong emphasis on fairness and decentralization.
It is important to understand that the value of $TOKEN comes from the growth of TokenFi and people's trust in it. Therefore, the APY will fluctuate with the token's market value. In short, the staking rewards demonstrate the community's enthusiasm for TokenFi, rather than an unstable approach to the token. The high APY so far is due to many people purchasing TokenFi because they believe in its long-term potential in the expected $16 trillion tokenization industry.
Embracing Regulation
Despite facing regulatory challenges, the Floki team emphasizes its commitment to collaborating with authorities to alleviate concerns.
Floki believes that regulatory involvement is not adversarial, but collaborative in both spirit and practice. The approach is to strike a balance between responsible, regulated participation in innovative financial products and digital assets.
About TokenFi
TokenFi is Floki's sister token and an integrated tokenization platform that enables users to easily issue tokens or tokenize real-world assets (RWA). TokenFi is dedicated to fundamentally changing the trillion-dollar tokenization industry by providing a user-friendly interface that does not require coding expertise.
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