For investors, builders, and institutions evaluating the future of tokenized securities

1. The One Market Vision

In 2021, Chia Network articulated a vision that fundamentally reimagines how global markets could operate: what if anyone could trade any asset with everyone, 24/7, across all borders, without intermediaries?

They called this “One Market,” and it addresses core problems that plague both traditional finance and existing digital markets:

• Poor liquidity for certain asset classes that can’t access global capital
• Lack of transparency in pricing, ownership, and transaction history
• Slow and expensive processes through layers of intermediaries
• Dependence on centralized gatekeepers like banks and exchanges that control access

The One Market vision isn’t about replacing traditional finance or forcing everyone onto blockchain infrastructure. It’s about creating a universal, secure, and open-access marketplace where real-world assets can be traded peer-to-peer with the same efficiency and security currently reserved for digital-native cryptocurrencies.

1.1. How It Works: The “Offers” Primitive

One Market is powered by a core Chia blockchain feature called “Offers” that fundamentally changes how trades happen. An Offer is simply a file representing a trade proposal—”I will give you 100 Asset A for 5 Asset B.” You can share this file anywhere: websites, chat messages, forums, email.

What makes Offers revolutionary:

• Peer-to-peer and trustless: Neither party needs to trust the other because the Chia blockchain acts as escrow. The trade either completes exactly as specified for both parties, or it doesn’t happen at all. Counterparty risk disappears entirely.
• No centralized exchange: Trades happen directly on the blockchain without needing central order books or third-party matching services, eliminating fees and removing single points of failure.
• Programmable transactions: Offers can include complex conditions—swap a stablecoin for a tokenized carbon credit plus a dividend-paying equity share in a single atomic transaction, or even have Offers automatically expire after a certain amount of time.

2. Real-World Assets: The Target Market

The One Market vision extends far beyond cryptocurrency trading. The goal is bringing real-world assets onto blockchain infrastructure where they can be traded freely, securely, and globally. Key target markets include carbon credits, where Chia has already partnered with the World Bank’s Climate Action Data Trust to track almost all carbon metadata and has also begun tokenizing carbon credits with various carbon registries, making them transparent, globally tradeable, and retireable on-chain.

Real estate tokenization enables fractional ownership and peer-to-peer sales. Equity tokenization means trading stocks directly without brokers. And luxury goods can have digital twins as NFTs guaranteeing authenticity.

The vision’s audacious simplicity: pay for coffee with a Microsoft share. Not because that’s practical for daily purchases, but because the infrastructure should make any asset tradeable with any other asset as easily as cryptocurrency trades today.

2.1. A Watershed Moment for Finance

Permuto Capital represents a major step toward realizing this vision for one of the world’s largest asset classes: U.S. equities. If the SEC grants approval for Permuto’s trusts under the Investment Company Act of 1940, it would represent a significant watershed moment in the financial landscape. This wouldn’t just validate one company’s approach—it would establish regulatory precedent demonstrating that tokenized real-world assets can achieve institutional-grade oversight and adoption at scale in the world’s largest securities market.

Such approval could ultimately reshape how global equity and bond markets operate, opening pathways for trillions in traditional assets to move onto blockchain infrastructure while maintaining full regulatory compliance. Understanding how Permuto is more than just tokenizing stocks and why their specific approach solves real institutional problems shows how ambitious visions translate into practical infrastructure.

3. What Tokenization Actually Means

Before diving into Permuto’s specific approach, we need to understand what tokenization means when applied to real-world assets like stocks. Chia’s One Market vision encompasses tokenization of many asset types, but equity tokenization presents unique challenges.

3.1. Real-World Assets Meet Blockchain

Real-world assets already exist in established systems with legal frameworks, custody requirements, and regulatory oversight. Tokenization doesn’t replace these systems—it creates blockchain representations that connect to traditional infrastructure while enabling new capabilities.

Why tokenization matters for RWAs:

• Global accessibility: Assets trading only in specific jurisdictions become accessible globally, 24/7
• Fractional ownership: High-value assets can be divided into smaller pieces
• Composability: Assets become programmable, enabling complex financial products
• Transparency: Blockchain provides clear ownership records and transaction history
• Reduced intermediation: Peer-to-peer trading through Offers eliminates traditional gatekeepers

Chia’s work with carbon credits through the World Bank demonstrates tokenized RWAs in practice. Credits issued by various registries get represented on-chain, become globally tradeable through Offers, and can be retired on-chain while maintaining verifiable provenance.

3.2. Equity Tokenization: Unique Challenges

Stocks present particular challenges because they already exist as digital records and operate under rigorous securities regulation. You might think stocks are already digital since buying Microsoft shares through your broker doesn’t involve physical certificates. But those digital records in DTCC databases differ fundamentally from blockchain tokens.

Traditional digital shares work like this: your broker maintains database entries showing you own certain shares, DTCC maintains records showing your broker holds shares on behalf of clients, these separate databases reconcile through batch processes during limited hours, and you can only do what these intermediaries’ systems allow.

Blockchain tokenization creates something different: tokens exist as discrete objects on public blockchain with unique identifiers, ownership is cryptographically provable through private keys you control, the blockchain operates continuously enabling 24/7 transfers, and tokens can be programmed to interact with smart contracts without intermediary permission.

Think of it like this: traditional digital shares are entries in a bank’s database showing your account balance. Blockchain tokens are cash in your wallet. Both represent value, but ownership models and capabilities differ fundamentally.

3.3. The Legal and Custody Requirements

Creating tokens and claiming they represent Microsoft shares doesn’t create legal connection to those shares or Microsoft’s assets and cashflows. Securities require legally enforceable ownership claims, which is why trust structures become essential.

3.3.1. The Problem with Synthetic “Tokenized Stocks”

Understanding the difference between real tokenization and synthetic representations helps clarify what Permuto is building. Several platforms have launched products claiming to offer tokenized stocks, but closer examination reveals they’re actually creating synthetic derivatives with no legal connection to the underlying securities.

What synthetic tokens may lack:

• No voting rights in shareholder meetings
• No direct dividend payments from the company
• No redemption rights for actual shares
• Counterparty risk with the platform issuing tokens

Common synthetic approaches include:

• Crypto exchanges offering “stock tokens” that are really perpetual futures contracts
• Platforms issuing tokens backed by contracts with brokers rather than actual share ownership
• Derivative structures tracking stock prices through contracts-for-difference

These synthetic approaches avoid the regulatory complexity of proper tokenization but eliminate most benefits. You’re not actually a shareholder—you’re holding a derivative contract that might track the stock price but gives you none of the ownership rights.

3.3.2. How Proper Trust Structures Work

Permuto takes a fundamentally different approach because a properly structured trust can hold actual Microsoft shares existing in traditional securities infrastructure. The trust becomes the legal owner according to DTCC records, Microsoft’s transfer agent, and securities law. The trust then issues blockchain tokens representing fractional ownership claims against shares held in trust.

The mechanics work like this:

1. Someone deposits a Microsoft share into the trust through traditional securities channels
2. The trust receives that share and records ownership
3. The trust issues blockchain tokens representing the claim on that share
4. These tokens can be transferred on blockchain or traded through DEXes
5. Token holders can redeem tokens for underlying shares through the trust

This redemption mechanism prevents tokenized securities from diverging in value from underlying securities. Arbitrageurs exploit any price discrepancy by buying the cheaper form, redeeming or depositing as needed, and selling the more expensive form.

3.3.3. Addressing the “But Trusts Are Still Intermediaries” Critique

Some critics observe that Permuto’s trust structure still involves an intermediary and question whether this really advances decentralization goals. This critique misunderstands what’s achievable and what creates value in securities tokenization.

Why the trust intermediary is absolutely necessary:

The trust is required because stocks themselves cannot be directly tokenized. Microsoft shares exist as legal entities defined by corporate law, securities regulation, and registrar records that operate in traditional financial infrastructure. You cannot convert these directly into blockchain tokens any more than you can convert a house deed into cryptocurrency. What you can do is create a legal wrapper that holds the actual security and issues blockchain tokens representing claims on that security.

What gets eliminated versus what remains:

Traditional equity trading requires multiple intermediaries:

• Brokers to execute trades
• Clearinghouses to settle transactions
• Custodians to hold shares
• Transfer agents to track ownership
• Each layer adds costs, delays, and potential points of failure

With Permuto’s structure, once certificates are on-chain:

• Peer-to-peer trading happens through Offers without brokers
• Settlement is instant rather than taking days
• Custody can be self-directed rather than requiring paid custodians
• The trust remains as the legal bridge, but operational intermediation layers disappear

3.3.4. Understanding what actually gets tokenized:

It’s important to understand that this is not 100% pure tokenization in the strictest technical sense. The trust doesn’t tokenize the stocks themselves—that’s not possible given how corporate equity law works. Instead, the trust creates certificates representing separated claims on the stocks, and those certificates are what get tokenized.

This distinction matters for accuracy. Permuto tokenizes the certificates, which are novel securities created by the trust structure. Those tokenized certificates carry legally enforceable rights to the underlying shares including redemption rights, voting rights, and dividend rights. This is as close to true tokenization as securities law permits, and it’s fundamentally different from synthetic tokens that lack any legal connection to actual shares.

4. Executive Summary: Permuto’s Implementation

Permuto Capital has filed with the SEC to create investment trusts that tokenize dividend-paying blue-chip stocks on the Chia blockchain with a novel twist: they split each share into 2 separate, tradeable securities. This represents a significant regulated implementation advancing Chia’s One Market vision.

4.1. The Unbundling Mechanism

When you buy Microsoft stock today, you’re buying 2 things bundled together: price appreciation rights (if Microsoft rises from $400 to $500, you capture that $100 gain) and dividend payment rights (when Microsoft pays quarterly dividends, you receive that cash).

Permuto unbundles these into separate tradeable instruments:

• Asset Certificate (AC): Captures all price appreciation with zero dividend payments—pure growth exposure
• Dividend Certificate (DC): Receives all dividend income with zero price appreciation—pure income exposure

The fundamental equation: 1 AC + 1 DC = 1 share held by the trust. This relationship must hold because you can always redeem both certificates together to receive the actual share.

4.2. Connecting to One Market

Permuto’s structure embodies One Market principles by enabling what wasn’t previously possible. Direct trading without intermediaries becomes real because once tokenized as Chia Asset Tokens, certificates can trade peer-to-peer through Offers. An institutional investor in Singapore can trade directly with a hedge fund in New York without brokers, exchanges, or settlement intermediaries.

The 24/7 global access replaces traditional equity markets limited to exchange hours. On-chain certificates trade continuously, allowing a pension fund to rebalance exposure at midnight or a market maker to arbitrage pricing discrepancies on Sunday. Composability with other assets through Offers enables investors to create complex trades—swap Microsoft ACs for Apple DCs plus XCH in a single atomic transaction.

Traditional access remains available since certificates also trade on stock exchanges through brokers during market hours. Institutions can access them through existing relationships without learning blockchain technology. This dual-venue structure means the same security exists in both traditional and blockchain systems simultaneously.

4.2.1. The Team Behind Permuto

Understanding who’s building this infrastructure provides context about execution capability and regulatory credibility.

Founding team composition: Permuto Capital was founded by financial industry veterans with deep expertise in both traditional finance and blockchain technology. The founding team combines decades of experience in asset management, securities law, financial product structuring, and blockchain infrastructure development.

Why this expertise matters: The company brings together professionals who have previously worked at major financial institutions, regulatory bodies, and technology companies. This combination proved essential for navigating the complex regulatory pathway required for SEC approval under the Investment Company Act. The team understood from the outset that this wouldn’t be a quick token launch but rather a multi-year infrastructure project requiring patient capital, regulatory sophistication, and operational excellence.

The Chia Network partnership: Chia Network serves as the technology partner providing the blockchain infrastructure, technical guidance on implementation, and support for advancing the broader One Market vision. The collaboration between Permuto’s financial expertise and Chia’s purpose-built blockchain architecture creates the foundation for bringing this regulated tokenization structure to market.

4.3. The Regulatory Pathway

The SEC moved Permuto from the Securities Act of 1933 to the Investment Company Act of 1940 with case-by-case exemptive relief during September 2025. This shift has 3 major implications:

• Institutional-grade oversight placing trusts in the same regulatory category as ETFs and mutual funds
• Regulatory moat through selective approval that competitors must independently navigate
• Expanded capabilities enabling cash creation, ETF integration, and potential extension to bonds

The trade-off is time—the approval process takes longer. But Permuto gains regulatory credibility, competitive defensibility, and feature scope that justify the extended timeline. Permuto is currently navigating this SEC review process under the 40 Act framework, working toward approvals that would establish regulatory precedent for tokenized equity structures.

5. Understanding the Scale: Why This Matters

To understand why Permuto advances the One Market vision meaningfully, you need to grasp the market size and compare it to current blockchain adoption.

5.1. The Market Size Context

Microsoft alone equals all of crypto. At approximately $3 trillion market capitalization, Microsoft by itself matches the entire cryptocurrency market—Bitcoin, Ethereum, stablecoins, and thousands of other tokens combined.

Why this comparison matters: bringing even small percentages of traditional equity onto blockchain infrastructure represents enormous growth for One Market adoption. Tokenizing 5% of Microsoft’s float means moving $150 billion in underlying value onto blockchain rails—representing existing market value being restructured for dual-venue access rather than creating new market value.

5.2. Comparing On-Chain Value Creation

Current on-chain real-world assets—tokenized securities, real estate, carbon credits, and other RWAs across all blockchains—currently total roughly $30 billion to $40 billion. This represents the actual pioneering edge of RWA tokenization today.

Permuto’s potential on-chain impact: if Permuto launches 20 trusts (80 are already planned) for dividend-paying large-cap stocks averaging $1 trillion market capitalization, and captures 5% of each stock’s float (representing existing shares being restructured, not new value created), with 40% of that held on-chain:

20 trusts × $1 trillion × 5% × 40% = $400 billion in on-chain certificate holdings

That represents 13x the entire current RWA tokenization market across all blockchains combined. From a single well-executed equity tokenization structure focused on dividend-paying stocks.

For perspective on what 5% means: the historical Americus Trusts captured 5% of underlying stocks’ float and drove 10% of trading volume. This isn’t speculative—it’s proven historical demand from the 1980s.

5.3. The Phased Rollout Reality

Permuto isn’t launching the planned 80 trusts simultaneously. The gradual build strategy means initial trusts for high-profile, liquid dividend-paying stocks teach operational lessons. Each filing improves trust documents, operational procedures, and regulatory dialogue.

Timeline expectations:

• Early trusts: 12 to 18 months from filing to launch as regulators learn
• Later trusts: Accelerate as patterns emerge and familiarity increases
• Target pace: 1 new trust per week once regulatory pathway is streamlined
• Reaching 80 trusts: Roughly 18 months of launches—methodical infrastructure building

Why gradual pacing benefits adoption: market makers build operational capabilities incrementally, institutions understand each instrument before adding complexity, liquidity develops before fragmenting across too many securities, and quality doesn’t suffer from rushing.

5.4. Focusing on Dividend-Paying Stocks

The trust structures target primarily dividend-paying stocks because that’s where the AC/DC separation creates most value. Companies like Microsoft, Apple, Johnson & Johnson, Coca-Cola, and Procter & Gamble that pay steady, growing dividends are ideal candidates.

Why dividend-payers make sense:

• Clear income stream to separate into DCs
• Institutional demand for pure dividend exposure
• Proven demand from Americus Trust history with similar stocks
• Large market caps providing deep liquidity

This focus sharpens the value proposition—Permuto isn’t trying to tokenize everything. They’re targeting dividend-aristocrat stocks where separated components solve real institutional problems.

5.5. The Cost Advantage of On-Chain Trading

Understanding the potential cost savings from on-chain certificate trading helps explain why institutions might adopt this structure beyond just the separated exposure benefits. When 40% of certificates trade on-chain rather than through traditional brokerages and exchanges, the cost reduction becomes substantial and measurable.

Traditional equity trading costs accumulate across multiple layers:

• Brokerage commissions (still apply for institutional trades on large volumes)
• Exchange fees (charged for accessing liquidity and executing trades)
• Settlement and custody fees (as shares move through clearinghouses)
• Transfer agent fees (for recording ownership changes)

These costs seem small on individual trades but compound significantly when institutions trade billions in notional value.

On-chain certificate trading eliminates most fee layers:

• Peer-to-peer trades through Offers require only blockchain transaction fees (fractions of a cent)
• No brokerage commissions for direct wallet-to-wallet transfers
• No exchange fees when trading through decentralized protocols
• Settlement is instant and included in transaction fee (no separate custody costs)

For institutions trading hundreds of millions or billions in certificates, these savings compound into multi-million dollar annual cost reductions.

5.5.1. Quantifying the Savings

Consider the mathematics using our earlier assumptions. If 20 trusts each capture 5% of $1 trillion stocks, that’s $100 billion total in trust assets. If 40% trades on-chain, that’s $40 billion in on-chain certificate holdings.

Annual cost comparison:

Assuming modest turnover of 50% of holdings annually:

• Annual on-chain trading volume: $20 billion
• Traditional trading costs (conservative 0.10% or 10 basis points): $20 million annually
• On-chain trading costs (approximately 0.01% or 1 basis point): $2 million annually
• Net annual savings: Approximately $18 million

This represents pure cost savings flowing directly to institutional investors and their beneficiaries.

Who benefits from these savings:

• Pension funds managing billions could reduce trading costs by millions annually, directly improving returns for retirees
• RIAs managing client portfolios could reduce transaction drag, enhancing net returns that compound over decades
• Insurance companies could improve portfolio efficiency, benefiting policyholders

The economic case for adoption strengthens substantially when you account for these operational cost advantages rather than focusing solely on the novel AC/DC structure.

5.5.2. The Virtuous Cycle Effect

This cost reduction dynamic creates virtuous cycles for ecosystem development:

1. Lower costs attract volume: More trading moves to on-chain venues seeking cost advantages
2. Volume creates liquidity: Higher volumes mean deeper order books and tighter spreads
3. Liquidity attracts participants: Better liquidity draws more institutional participation
4. Participation creates network effects: More participants drive competition and technological improvements
5. Improvements reduce costs further: Enhanced infrastructure and competition push costs even lower

What starts as modest cost savings in early markets compounds into transformational cost reduction as adoption scales and infrastructure matures. This economic flywheel effect means the cost advantages grow over time rather than remaining static.

6. Why Unbundling Equities Matters

The One Market vision becomes tangible when it solves real problems. Permuto’s AC/DC structure addresses fundamental inefficiency in how investment mandates interact with bundled securities.

6.1. The Mandate Mismatch Problem

Investment mandates create structural mismatches when securities bundle multiple return streams. Consider two institutional investors with opposite needs.

The pension fund’s dilemma:

• Mandate: Generate stable income for retirees
• Needs: Predictable dividend payments
• Doesn’t need: Stock price volatility
• Problem: Buying dividend stocks gives them both, creating unwanted volatility exposure

The growth fund’s dilemma:

• Mandate: Maximize capital appreciation
• Needs: Equity upside without dilution
• Doesn’t need: Dividend income creating tax complications
• Problem: Buying stocks gives them both, complicating tax structure

Both investors hold components working against their mandates. The pension fund accepts volatility risk it doesn’t want. The growth fund takes on income complexity it doesn’t need.

6.2. How AC/DC Solves It

Permuto’s structure eliminates bundling friction. Income mandates purchase pure dividend exposure through DCs—predictable cash flows without volatility. Growth mandates purchase pure price exposure through ACs—equity appreciation without dividend tax complications. Both achieve exact mandate alignment without compromise.

Broader implications include income funds building diversified DC portfolios without equity volatility, growth funds constructing pure appreciation strategies without dividend drag, and balanced funds dynamically adjusting AC/DC ratios as investor needs evolve without liquidating positions.

6.3. Historical Precedent: Americus Trusts

Wall Street proved demand for unbundled equities in the 1980s with Americus Trusts operating on similar principles.

Performance metrics:

• Captured 5% of underlying stocks’ total float
• Drove 10% of exchange trading volume
• Demonstrated real institutional and retail demand at scale

Why it disappeared: tax rule changes in 1992 killed the structure—not market failure, but regulatory change.

What’s different now: full SEC registration under Investment Company Act, exchange listing providing institutional access, blockchain settlement enabling 24/7 trading, clear tax treatment compliant with current rules, and One Market infrastructure enabling peer-to-peer trading through Offers.

The market validated this concept decades ago. Permuto revives proven demand with modern infrastructure and regulatory compliance.

7. The 40 Act Shift: What It Means

The SEC’s decision to move Permuto to the Investment Company Act of 1940 (S-6 filing) represents a pivotal development affecting competitive positioning and future capabilities.

7.1. Understanding the Frameworks

The Securities Act of 1933 (S-1 filing) operates as a “register and disclose” regime where anyone can file with proper disclosure and faces limited ongoing oversight. The Investment Company Act of 1940 governs mutual funds, ETFs, and pooled vehicles—requiring active SEC approval, rigorous ongoing oversight, and regulator evaluation of structure’s merits.

7.2. Three Major Implications

Institutional-grade oversight places trusts in the same regulatory category as established ETFs. This matters enormously because pension funds and insurance companies have compliance frameworks built around 40 Act vehicles. Due diligence processes are standardized for this structure. Risk committees understand 40 Act oversight mechanisms. Regulatory familiarity dramatically reduces adoption friction.

Selective approval creates regulatory moat because unlike disclosure-based 33 Act approach, the 40 Act grants SEC power to approve or decline based on merit. The SEC can approve Permuto’s design while declining weaker competitor structures. Case-by-case exemptive relief means individual evaluation. Copying doesn’t guarantee approval—competitors must independently convince SEC. That’s a huge competitive advantage for Chia and Permuto.

Expanded capabilities mean the framework unlocks features unavailable under simpler registration:

• Cash creation: Investors wire dollars; trust purchases shares and issues certificates
• ETF integration: Place approved ETFs inside trusts for diversified exposure faster
• Low-dividend stocks: Even stocks with modest dividends can support viable trusts
• Bond extension: Apply AC/DC model to corporate and municipal bonds
  3. Beyond Equities: Bond Markets

The 40 Act framework could enable bond tokenization using similar principles. Bonds naturally separate into 2 components: Principal Certificates (exposure to face value at maturity, no coupon payments) and Coupon Certificates (stream of interest payments, no principal repayment).

Market scale: global bond markets exceed $130 trillion—larger than equities. This positions Chia not just as equity tokenization infrastructure, but as potential settlement layer for broad capital markets advancing One Market vision across multiple asset classes.

7.3. Blockchain-Native Products

The 40 Act framework opens pathways for products existing exclusively on-chain. Once base certificates have full regulatory approval, derivatives built on them could operate entirely on-chain through One Market infrastructure without requiring separate exchange listings.

Potential blockchain-native instruments:

• Dividend futures contracts traded via Offers
• Synthetic dividend indices from multiple DC baskets
• Tranched AC/DC structures with varying risk-return profiles
• Cross-asset yield strategies combining DCs and bond coupons

8. How It Works: Mechanics and User Experience

Understanding One Market implementation requires understanding practical AC/DC trust operation.

8.1. Trust Structure and Certificate Issuance

The process follows clear steps:

1. Permuto creates trust for specific dividend-paying stock (like Microsoft)
2. One Microsoft share enters trust via authorized participant or cash creation
3. Trust issues 1 MSFT-AC and 1 MSFT-DC
4. Fundamental relationship maintained: 1 Share = 1 AC + 1 DC always
5. Dividend handling: Microsoft pays dividends to trust → trust passes 100% to DC holders → AC holders receive zero

The trust bridges traditional securities infrastructure to blockchain, holding actual shares while issuing on-chain tokens representing claims.

8.2. Dual-Venue Trading Mechanics

Each certificate trades in 2 venues simultaneously—core to One Market principles.

Traditional securities rails:

• Ticker symbols (MSFT-AC, MSFT-DC) trading on exchanges
• Access through brokerage accounts
• Trading during market hours (9:30 AM to 4 PM Eastern)
• Settlement through DTCC (T+1)
• Custody through traditional brokers

Chia blockchain rails:

• Same certificates as Chia Asset Tokens
• Self-custody in personal wallets
• 24/7 trading through DEXes or peer-to-peer Offers
• No intermediaries required
• Integration into DeFi protocols

The critical insight: these aren’t different products requiring bridges. Same certificate, different interfaces. Move between venues as needs evolve.

8.3. Cross-Venue Arbitrage

Market makers maintain price parity through arbitrage. If MSFT-AC trades at $300 on exchanges but $310 on-chain, arbitrageurs buy exchange, transfer to blockchain, and sell on-chain. The process continues until prices align. The fundamental constraint: AC + DC ≈ Microsoft share value. Arbitrage ensures pricing stays efficient across both settlement systems.

8.4. Voting Rights Implementation

Shareholder voting preserves rights through dual-path architecture.

For broker-held certificates: Trust sends proxy materials through standard channels. Vote through existing broker systems. No blockchain interaction required.

For self-custodied on-chain certificates: Trust exposes on-chain voting mechanism. Submit votes directly from Chia address with cryptographic signatures. Automated collection and verification.

Vote aggregation: Trust combines votes from both channels, exercising rights with company based on total shareholder instructions.

8.5. Permuto’s Fee Structure

Fee categories support sustainable operations:

• Deposit/creation fees: Charged when shares enter trust and certificates are issued
• Redemption fees: Charged when burning AC + DC to withdraw underlying share
• Ongoing administration fees: Annual percentage on trust assets (comparable to ETF expense ratios of 0.03% to 0.50%+)

Why fees matter: they must cover costs while remaining competitive with alternatives. Too high creates adoption friction. Too low raises sustainability questions. Fee levels directly impact market maker economics and spread tightness. Once trusts launch, fee disclosure will be required in offering documents.

8.6. Early Market Expectations

Typical initial conditions during first 30 to 90 days:

• Wider bid-ask spreads (0.5% to 1% versus 0.01% to 0.05% for mature markets)
• Limited depth of book
• Greater intraday volatility
• Wider cross-venue arbitrage spreads

Development timeline:

• Months 0 to 6: Active price discovery, wider spreads, infrastructure maturing
• Months 6 to 18: Market makers operational, spreads tightening, institutional adoption scaling
• Months 18+: Tight spreads, deep liquidity, efficient pricing

This maturation is normal for new instruments spanning 2 settlement infrastructures.

9. Valuing ACs and DCs: A Practical Guide

Community members raised concerns about valuing certificates appropriately. This section provides frameworks for thinking about fair value.

9.1. The Fundamental Constraint

AC price + DC price must approximately equal underlying share price. This relationship must hold because you can always redeem 1 AC + 1 DC for 1 share. Arbitrageurs exploit any significant deviation, keeping total certificate value anchored to share value.

What this doesn’t tell you: how value splits between AC and DC. That’s where valuation thinking becomes essential.

9.2. Variables Affecting the Split

Key factors determining value distribution:

• Current dividend yield: Higher yields allocate more value to DCs
• Expected dividend growth: Faster growth makes DCs more valuable over time
• Time horizon: Longer horizons increase DC value through compounding
• Tax treatment: Preferential capital gains treatment can favor ACs for taxable investors
• Risk preferences: Market conditions affect whether steady income or growth commands premium

9.3. Worked Example: Microsoft

Using illustrative assumptions: Microsoft trades at $400, annual dividend is $8 (2% yield), expected dividend growth is 6% annually, investment horizon is 10 years.

A simplified present value approach projecting 10 years of dividends growing at 6%, discounted at 8%, gives approximately $75 to $80 present value. This suggests DC value around $75 to $80 (18% to 20% of total) and AC value around $320 to $325 (80% to 82% of total).

This is oversimplified but provides directional intuition. Reality is messier—markets incorporate supply/demand, sentiment, positioning, and liquidity conditions beyond spreadsheet calculations.

9.4. Practical Investor Guidelines

For DC investors (income-focused):

• Compare DC yield to alternative income investments (bonds, preferreds)
• Assess dividend sustainability and growth prospects
• Remember: zero benefit from price appreciation
• Consider implied terminal value of perpetual income stream

For AC investors (growth-focused):

• Compare AC price to (share price minus estimated DC value)
• Consider foregone dividend income and yield cushion
• Evaluate tax efficiency benefits
• Think about how dividend policy changes affect you

For arbitrageurs:

• Monitor AC + DC versus underlying share constantly
• Watch cross-venue pricing discrepancies
• Track market maker inventory for dislocation signals
• Account for transaction costs eating apparent mispricings

9.5. Most Important: Markets Will Teach Us

Nobody knows exactly how these will be valued until real trading begins. Approach with intellectual humility—understand fundamental constraints, watch for obvious mispricings creating opportunity, and learn as market pricing reveals participant preferences. Early adopters watching markets closely will have advantages during price discovery, but expect surprises as actual behavior reveals dynamics difficult to predict in advance.

10. Why Chia: The Technical Architecture Choice

Permuto could have built on any blockchain. The choice of Chia is deliberate and technically significant for advancing One Market infrastructure.

10.1. The UTXO Architecture Advantage

Chia uses UTXO (Unspent Transaction Output) architecture—same model as Bitcoin. Every coin is a discrete object with its own rules, like physical cash where each bill is individually trackable.

Why UTXO matters for regulated securities: coin-level compliance means each AC or DC can have embedded restrictions. Example: “This certificate requires KYC credentials.” Rules travel with the asset, not in separate contracts. Protocol-level enforcement during transaction validation provides granular control allowing different compliance requirements for different certificate batches. Institutional versus retail certificates can have distinct rulesets. Time-based restrictions automatically expire. Geographic restrictions can be embedded in specific coins.

This contrasts with Ethereum’s account-based model where balances are tracked in accounts and rules live in separate smart contracts requiring external calls.

10.2. Security Properties: No Re-Entrancy

UTXO eliminates an exploit class that has cost Ethereum protocols billions in losses. The re-entrancy problem on account-based chains works like this: smart contracts can call other contracts mid-execution, malicious contracts recursively call back before first call completes, repeatedly withdrawing funds before balance updates. The famous DAO hack cost $60 million.

Why UTXO prevents this: transactions spend coins atomically—all or nothing. No callback mechanism exists in architecture. Once spent, coins are immediately invalid. No way to recursively call incomplete transactions.

For institutions evaluating blockchain platforms, security architecture eliminating this vulnerability class materially reduces operational risk.

10.3. Chialisp: Purpose-Built for Finance

Chia’s programming language was designed for UTXO architecture with financial applications in mind.

Core capabilities:

• Time-locked vaults: Custody with time delays, recovery mechanisms, multi-signature controls
• Embedded compliance: Token-level verification without external oracle dependency
• Atomic swaps: Exchange certificates without counterparty risk

Chialisp treats financial primitives as first-class features rather than complex contracts on general-purpose platforms.

10.4. Institutional-Grade Features

Protocol-level features mapping to institutional requirements:

Verifiable Credentials: Prove KYC status without revealing personal information. Share specific attributes without full identity disclosure. Achieve regulatory compliance without excessive privacy sacrifice.

Vault Architecture: Multi-signature custody with flexible thresholds. Time-delayed recovery for lost keys. Addresses “lost key equals lost assets” institutional fear.

Clawback Primitives: Protocol-level transaction reversal within time windows. Critical for recovering mistaken 7-figure transactions. Safety net without compromising finality after window expires.

Proof of Space and Time Consensus: Uses storage instead of energy-intensive computation. Anyone with spare storage can participate. Addresses ESG concerns constraining institutional capital. Many pension funds and endowments have board-level ESG commitments making energy-intensive blockchains disqualifying.

10.5. Why This Stack Advances One Market

The combination creates infrastructure specifically architected for regulated RWAs:

• Security through UTXO eliminating major exploit vectors
• Compliance through coin-level rule enforcement
• Recoverability through vaults and clawback features
• Privacy through Verifiable Credentials
• Sustainability through energy-efficient consensus
• Offers primitive enabling peer-to-peer trustless trading

This isn’t infrastructure adapted from other purposes—it’s purpose-built for tokenized real-world assets, advancing Chia’s One Market vision through proper technical foundation.

11. The Competitive Reality

Understanding Permuto’s competitive position requires examining both regulatory and technical moats creating defensibility different from typical crypto dynamics.

11.1. The Regulatory Moat

One-structure-per-stock tendency: under current SEC practice, each stock effectively gets 1 approved trust structure. If Permuto files for Microsoft and receives approval, competitors can’t simply copy the structure for Microsoft on different blockchains.

Why SEC resists duplication:

• Fragments liquidity across competing structures
• Complicates market surveillance
• Creates investor confusion
• Reduces price discovery efficiency

First-to-file with solid 40 Act approval creates positioning power. Competitors must work around these positions, not through them.

11.2. Relationship Capital Advantage

Permuto has invested months educating SEC staff about how AC/DC mechanics work, what risks need addressing, how dual-venue trading affects oversight, and how to think about novel structures.

Why this compounds: Permuto’s S-1 becomes the reference template. Compliance framework becomes expected baseline. Trust structure terms become standard language. Operational precedent gets established. Competitors starting from scratch must replicate this entire educational investment independently.

11.3. Technical Network Effects

Once AC/DCs from multiple trusts trade on Chia, network effects emerge.

Ecosystem integration that compounds:

• Wallets: Native AC/DC support becomes standard
• DEXes: Liquidity pools form around certificates
• Custody solutions: Institutional providers build Chia infrastructure
• Structured products: Derivatives built on AC/DC primitives

Each new trust reinforces the ecosystem. By 15 to 20 trusts, Chia becomes the established platform for this asset class.

Switching costs for moving to alternatives include rebuilding all infrastructure from scratch, retraining market makers on different mechanics, re-educating institutional users, and fragmenting liquidity across blockchains.

11.4. How This Differs from Crypto Moats

Why typical crypto moats are weak: code can be forked instantly, technology can be copied, communities can migrate, and first-mover advantage dissipates quickly.

Why Permuto’s moat is different: regulatory approval isn’t forkable, one-structure-per-stock creates natural monopoly tendencies, relationship capital can’t be copied from GitHub, and network effects in regulated securities create operational lock-in.

This is defensibility based on regulatory positioning and institutional integration—different category entirely from typical crypto competitive advantage.

12. Who This Is For: Target Markets

Permuto’s institutional-first strategy reflects deliberate choices about where separated securities create most value. Retail and crypto-bros come last.

12.1. Why Institutions Come First

Five reasons institutions lead adoption:

1. They have mandate mismatches AC/DC solves
2. They could save millions of dollars due to reduced on-chain fees
3. They trade in size creating liquidity
4. They have compliance frameworks for new security types
5. Their adoption validates structure for others

12.2. Primary User Categories

Registered Investment Advisors (RIAs) are portfolio managers constructing strategies for diverse clients. Why they’re ideal: client needs vary (income versus growth, different tax brackets), AC/DC enables precision allocation matching exact requirements, tax optimization through strategic placement, and transitional allocation as clients age.

Use cases include retiree portfolios with heavy DC allocation, accumulation phase portfolios with heavy AC allocation, and tax-loss harvesting where separate AC/DC trading creates opportunities.

Pension funds and insurance companies have regulatory requirements for steady income. Why they care: must generate predictable cash flows for liabilities, volatility creates regulatory capital problems, and DCs provide pure income without unwanted volatility. Scale implications: billions in mandated income exposure globally means even single-digit allocation creates substantial demand.

Private credit funds seek equity-like returns with debt-like income. Why interested: need 8% to 12% yields for investors, traditional debt markets crowded, and DCs provide steady cash flows without full equity volatility.

Hedge funds use AC/DC for factor strategies and arbitrage. Applications include pure growth exposure through ACs, income arbitrage through DCs, AC + DC mispricings, and cross-venue arbitrage opportunities.

Retail access comes last. Retail participation happens after institutional infrastructure matures. Expected entry path includes going through RIAs allocating portfolios, automated services like robo-advisors, and direct ownership after liquidity is robust. Timeline: don’t expect material retail participation in year 1 or 2.

12.3. What Success Looks Like

Not success indicators: social media followers, retail wallet downloads, or Reddit discussion volume.

Actual success indicators:

• RIA assets under management using AC/DC
• Institutional custody solutions offering support
• Market maker participation and spread compression
• Additional trust approvals from SEC
• Third-party structured product development

This is financial infrastructure, not community-driven protocol. Success looks like institutional adoption curves, not viral social media growth.

13. Market Implications Worth Understanding

When AC/DC trusts reach meaningful scale, several market dynamics shift in ways that are predictable and significant.

13.1. Cleaner Price Discovery

Separating income and growth demand makes signals clearer. Today’s bundled discovery: Microsoft at $400 reflects combined growth + income expectations. When price moves, can’t tell which factor is driving change.

Tomorrow’s separated discovery: AC rallies and DC flat means market pricing in growth without changing income views. DC rises and AC steady means income expectations improving independently. Clear relationship analysis observes which component drives movements.

Benefits: corporate management, activist investors, and portfolio managers get clearer market signals.

13.2. Liquidity Expansion Not Contraction

Common concern: splitting shares fragments liquidity. Reality is more nuanced. What changes: 1 share becomes 2 tradeable instruments that can be held by different parties in different venues simultaneously. On-chain components trade 24/7 versus 6.5 hours for whole shares.

The liquidity math: if 5% of Microsoft moves into trusts:

• Direct MSFT liquidity: 95% of original
• AC trading volume: potentially 3% to 5% of share volume
• DC trading volume: potentially 2% to 4% of share volume
• On-chain 24/7 trading: additional temporal liquidity
• Net effect: Total market access potentially increases

13.3. Portfolio Construction Evolution

Income-focused construction transforms from buying whole shares (get dividends + unwanted volatility) to buying pure DC baskets (diversified income without equity volatility). Growth-focused construction evolves from buying whole shares (get appreciation + unwanted dividend tax complications) to buying pure AC baskets (zero dividend drag, maximum growth efficiency).

Balanced strategies gain dynamic allocation capabilities:

• Young investors: 90% AC / 10% DC
• Mid-career: 60% AC / 40% DC
• Near retirement: 30% AC / 70% DC
• Retired: 10% AC / 90% DC

Rebalance without liquidating positions or triggering capital gains.

13.4. Live Dividend Expectations

DC prices surface market’s real-time view of future dividend streams. How DC pricing reveals expectations: company rumored to cut dividends leads to DC price drops before announcement, company expected to increase leads to DC price rises ahead of confirmation, DC premium to current yield means market expects growth, and DC discount means market expects cuts or stagnation.

Who benefits: corporate management gets real-time feedback, activist investors identify opportunity, income investors compare opportunities across companies, and researchers study dividend expectation formation.

13.5. The Arbitrage Opportunity

Multiple arbitrage vectors exist:

• Cross-venue: Same certificate, different prices on exchange versus blockchain
• Component: AC + DC versus whole share to create or redeem capturing spread
• Temporal: 24/7 on-chain versus limited exchange hours where news breaks after close

Unknown magnitude matters: nobody knows exactly how much arbitrage activity will occur, but every on-chain arbitrage requires XCH for fees—mechanical blockchain utility demand. For sophisticated traders: early-stage markets with dual-venue settlement typically offer wider spreads and more frequent dislocations.

13.6. Development Timeline

Phase 1 (Months 0 to 6): wide spreads and limited depth, active price discovery, frequent arbitrage opportunities. Phase 2 (Months 6 to 18): spreads tightening, liquidity deepening, arbitrage more efficient. Phase 3 (Months 18+): tight spreads comparable to underlying stocks, deep liquidity across venues, efficient pricing.

Patience during early phases matters. Structural improvements compound as participation scales.

14. Why This Could Matter for XCH

If Permuto succeeds at meaningful scale, XCH transitions from “cryptocurrency with unclear utility” to “operational requirement for multi-billion-dollar financial infrastructure.”

14.1. Understanding Mechanical Demand

Speculative demand (typical crypto): buying hoping price rises, sentiment-driven and volatile, evaporates when narratives change. Mechanical demand (what Permuto creates): buying because operationally necessary, required for conducting business, persistent as long as activities continue.

Permuto creates mechanical demand. Institutions holding certificates on-chain need XCH for transaction fees. Market makers need XCH for arbitrage. This exists regardless of speculation.

14.2. Custody Requirements

Using conservative illustrative assumptions: 20 trusts launched, each captures 5% of stock float (average $1 trillion market cap per stock), total trust assets reach $100 billion, on-chain holdings at 40% equal $40 billion in certificates on Chia.

For operational XCH requirements, institutions maintain custody buffers for transaction fees. Using an illustrative example where they maintain 0.1% of holdings in XCH (this percentage is purely for illustration and will vary based on actual institutional practices):

$40 billion × 0.1% = $40 million in XCH custody buffers

At $25 per XCH, this represents approximately 1.6 million XCH locked in vaults, which would be roughly 10% of current circulating supply removed from liquid markets for operational purposes. This is mechanical requirement, not speculation.

14.3. Transaction Fee Demand

Using an illustrative trading volume scenario: $40 billion on-chain holdings times 2% daily turnover equals $800 million daily volume.

For fee consumption: 80,000 transactions daily times 0.0001 XCH per transaction equals 8 XCH consumed daily. Annual consumption reaches approximately 2,920 XCH per year from 20 trusts. Scale to 80 trusts with higher volumes, and annual consumption reaches tens of thousands of XCH permanently removed from supply.

14.4. The Composability Multiplier

Once AC/DCs exist as standard Chia assets, builders create applications.

Potential applications:

• DEXes specializing in securities
• Lending protocols accepting certificates as collateral
• Structured product platforms
• Yield aggregation strategies
• Dividend futures and options

Each application layer adds XCH demand. Every DeFi interaction requires gas. Every automated strategy needs XCH for execution. Base-layer demand gets multiplied by derivative applications.

14.5. What This Means for Token Economics

Current state: XCH used primarily by farmers, limited operational utility, price driven by speculation.

Potential future state: XCH required by institutions managing tens of billions, continuous consumption from trading and arbitrage, composability multiplier from applications, and mechanical demand that doesn’t disappear with sentiment shifts.

If custody locks up 5% to 10% of supply, consumption removes additional supply, and composability creates demand layers—basic economics suggests price support mechanisms that don’t exist today.

14.6. Critical Caveat

Everything here is conditional on Permuto’s success. If trusts don’t launch, if institutions don’t adopt, if regulatory approval doesn’t materialize—none of this XCH demand materializes.

Evaluate through concrete milestones:

• SEC approvals
• Institutional adoption announcements
• Trading volume data
• Structured product launches

These signals reveal whether potential demand is becoming actual demand.

15. Conclusion: From Vision to Reality

After examining Permuto in detail, 2 conclusions emerge that are both true. The opportunity is genuinely enormous—if Permuto executes successfully, we’re discussing blockchain infrastructure potentially settling hundreds of billions in tokenized securities, creating mechanical XCH demand transforming it from speculative asset to operational necessity, and establishing Chia as settlement layer for traditional finance moving onto blockchain rails through One Market infrastructure.

The execution risk is substantial—this requires sustained SEC approval, institutional adoption at scale, operational infrastructure working reliably, market makers maintaining tight markets, and ecosystem development creating composability effects.

15.1. Where We Are Now

The hard conceptual and technical work is largely done. Chia built blockchain infrastructure purpose-designed for regulated finance and One Market vision. Permuto designed trust structures working across traditional and blockchain venues. The SEC is currently evaluating the approach under 40 Act framework with case-by-case exemptive relief. World Bank precedent with carbon credits proved tokenized RWAs work on Chia.

What remains is execution—methodical, unglamorous infrastructure building:

• Sequential trust launches, learning from each iteration
• Market maker onboarding with operational capabilities
• Institutional education demonstrating value
• Infrastructure maturation for wallets, custody, tax reporting
• Ecosystem development enabling derivative applications

None of these steps is particularly dramatic. No single moment when everything works. It’s incremental progress, trust by trust, institution by institution.

15.2. Why Measured Optimism Makes Sense

The One Market vision isn’t aspirational anymore—it’s operational. The regulatory pathway exists under 40 Act framework. The technical infrastructure is purpose-built. The institutional need is real and proven from historical precedent. The market scale is enormous relative to current blockchain adoption. If SEC approval comes through, it would represent a watershed moment potentially reshaping how global equity and bond markets operate.

This is what it looks like when serious financial infrastructure gets built on blockchain rails advancing the One Market vision. Not through viral social media or speculative mania, but through regulatory dialogue, institutional adoption, and patient capital supporting measured build-out of systems that could matter for decades.

Pay attention to concrete milestones: trust approvals, institutional adoption, trading volume, market maker participation, structured product launches. These signals reveal whether theoretical potential converts to actual progress.

The track is being laid toward making One Market vision real—anyone trading any asset with everyone, 24/7, across all borders. And that journey is worth watching closely.

This analysis is informational only and does not constitute investment advice. Evaluate your own risk tolerance, conduct your own due diligence, and consult qualified professionals before making investment decisions.