What is Mojoflower?
Mojoflower is a blockchain platform that provides Government issue share-ledgers and share-management tools for SMEs powered by Stellar.
The focus is on issuing SME shares and certificates on behalf of governments in tokenized form. The tokenized shares are delivered to Shareholders’ wallets following a formal application process. We provide shareholders with tools to manage their shares in the tokenized form, increasing usability and enabling them to use smart contracts with ease. Secured by Stellar, the assets can be managed for the asset’s full lifecycle while staying compliant with regulations.
The platform acts as a single source layer of truth so multiple parties can exchange assets being free from siloes so participants can enjoy a greater network effect and unlock frozen value.
Mojoflower is currently a Finalist in the Stellar Community Seed Fund
Share-ledgers record ownership of companies, and most often, companies are legally obliged to keep these share-ledgers readily available to all shareholders and Government officials. Share-ledgers constitute the highest legal proof of the ownership — if your name is in the newest version, legally, you are the owner. However, the keepers of share-ledger are not required to adhere to a set standard method, and people can use paper, spreadsheet programs, or dedicated services.
In some areas, such as the EU, Anti Money Laundering laws have increasingly been put in place to increase transparency and make ownership records public with mandatory registration of Beneficial ownership. This registration requires companies to record direct ownership of shares and indirect owners, voting rights, and control through related parties.
The different methods people use to maintain records make it hard for the Government to sustain adequate oversight. Governments struggle to keep files up to date and rely on self-reporting from shareholders who see it as tedious and a non-value-adding task. The result is a problem that creates inefficiencies that result in both economic and societal costs. These inefficiencies hamper the growth of businesses and make the current system prone to corruption.
A share-ledger system built on Stellar will allow owners to control their shares while keeping the officials updated in real-time without extra effort and receive benefits from keeping their records neat and tidy. Our platform will increase the value and liquidity of shares for the owners and lower government costs.
All private limited liability companies (SMEs) in Iceland are required to do the following:
Register the LLC with the Government registry and get an official ID number. (It’s an electronic application process with an Electronic ID as an authenticator for the individuals. Founders are listed, board members, etc.)
When the application is approved, the company is required by law to establish a “Share-ledger.” The share-ledger is a record of shareholders and the number of shares they own. For each newly founded company, the share-ledger includes much of the same information as “1)”. The share-ledger constitutes the legal authority on ownership. (Majority uses excel. Meanwhile, many do not keep one.)
LLC’s are required by law to update and inform the Government registry on changes in ownership due to the beneficial ownership legislation under recommendation from FATF and EU legislation. (This is an electronic process, initiated by logging into a government portal with an electronic ID)
The problem is this. Reporting in compliance and personal record-keeping are independent processes. Compliance relies on self-reporting and self-verification of ownership that can lead multiple versions of “truths” to co-exist at any given time.
Focusing on each group independently, Government, and shareholders, respectively, we can identify issues better.
The situation facing the Government
The Government relies on self-reporting, and legally there is a window of 2 weeks to inform the Government of change. Documents can easily be backdated and fixed.
The beneficial ownership reporting is time-consuming and takes some effort. As it provides little benefit to companies, other than being compliant, the risk is that records are not kept well and up to date.
The records that the Government keeps are not the highest authority — it’s simply the last known report. It’s always the Share-ledger that has the final say.
The situation facing shareholders
The reporting is a non-value-adding task and extra work. There is no real benefit to companies other than being compliant.
The share-ledger system is currently “self-verifying.” By that, we mean that it’s the company’s representatives that verify its correctness at any given time, and no external party needs to validate this.
Transfer of shares is not transparent — buyers and sellers need to enforce the share-ledger’s update and verify the correctness themselves. Often this includes going through gatekeepers.
The “Self verification” of the share-ledger decreases the value of the company in multiple ways. There are transparency issues and hidden costs, making it harder for financial institutions and investors to engage with the assets actively.
The current system increases burdens on good actors and favors bad actors. It’s extra work for the diligent one, yet it’s easy to maintain sloppy or wrong records on the side.
The opportunity and vision
We at Mojoflower believe that blockchain technology can help this situation described above. With new technology and vision, we can unlock value for parties involved, making the whole system more efficient, effective, and valuable.
The new process looks like this.
Register the company via the electronic process it’s currently done.
Registered data from the Government database is ingested into our systems and shares tokenized as verified assets.
Custody is given to the LLC’s owners through the platform, enabling them to unlock value at low cost since verified assets are more valuable.
1. For Government, self-reporting becomes automatic reporting and more correct in almost real-time with better results.
2. For Shareholders, self-verified assets become officially verified and thus more valuable and more tools to harvest that value.
3. 3rd Parties, Investors, FI, and service providers can better interact with verified assets and ensure that the underlying asset’s process is compliant and transparent.
Utilizing Stellar’s Smart Contract logic, we can build powerful tools that our users can interact with. This is what we mean by saying. “We make smart contracts. Simple “.
Our Smart contracts will enable users to interact with assets more freely and at low costs than before.
Our Smart contracts include simple transfers, pledging contracts, dividend payments, and more.
We envision our Smart Contracts being integrated with other wallet and service providers in a reciprocal relationship.
If you have any questions, please share, and we’ll respond promptly.