Platform documentation

Terms of Service & Platform Rules

Effective date: 3 May 2026 · Demo deployment on Base Sepolia testnet · Operator: CaratShares (the “Platform”)

1. Acknowledgement & Acceptance

By accessing the Platform, registering an account, linking a wallet, or executing any transaction (including transactions on the test network), the user (the “User”) represents that the User has read these Terms of Service and the Platform Rules described herein, understands them, and accepts them as a binding agreement with the Operator. Continued use of the Platform constitutes ongoing acceptance.

2. Definitions

• Stone — an investment-grade coloured gemstone (sapphire, ruby, emerald, tourmaline, or padparadscha sapphire; expressly not diamond) listed on the Platform and identified by an immutable on-chain stone identifier.
• Certificate — the ERC-721 non-fungible token minted at listing, representing the physical-custody record of a Stone and bearing the URI of the off-chain certification report (GIA, SSEF, Gübelin, AGL, GRS or comparable laboratory).
• Shares — whole-unit (decimals = 0) ERC-20 fractional ownership interests in a single Stone. Total supply is fixed at listing and may only decrease through Squeeze-Out or Redemption.
• NAV — Net Asset Value of a Stone in USDC, expressed at six-decimal precision, set by the Operator (or, in production, by an independent licensed appraiser) and stored on-chain.
• Vault — the StoneVault smart contract on Base, which custodies share supply and certificates, settles trades, and accrues fees.
• USDC — on production, the regulated USD-pegged stablecoin issued by Circle Internet Financial; on the Sepolia testnet deployment, a permission-less mock token (mUSDC) used for demonstration only.
• Operator — the legal entity (in production, a Swiss Aktiengesellschaft or Cayman Islands SPV — TBD) operating the Platform and contracting with custodians, insurers, and laboratories.

3. Platform Description

CaratShares is a fractional-ownership platform that allows Users to purchase, hold, trade, and ultimately redeem whole-number ownership Shares in individual investment-grade coloured Stones. Each listed Stone is held under bonded custody at a free-port vault facility, fully insured against loss or damage, and the Stone’s presence, authenticity, and grading are evidenced by an independent laboratory certificate referenced by the on-chain Certificate.

Settlement of all on-chain transactions takes place on Base (an Ethereum Layer-2 network). The Vault contract and the per-Stone Share contracts are written in Solidity 0.8.24 against OpenZeppelin v5 primitives.

4. Eligibility & Identity Verification

4.1 Geographic Eligibility

Production participation is restricted to Users (i) who are not residents or citizens of, and not physically present in, any jurisdiction in which trading in tokenised securities or fractional commodity interests is prohibited or restricted in a manner inconsistent with the Platform’s licensing; and (ii) who, where applicable, qualify as professional, accredited, qualified, or sophisticated investors as defined under the laws of their jurisdiction. The Operator may refuse service to, suspend, or terminate any account that does not meet these criteria.

4.2 KYC / AML

In production, the User shall successfully complete Know-Your-Customer and Anti-Money-Laundering verification through the Platform’s onboarding partner (e.g. Sumsub) before any IPO purchase or order-book transaction is enabled. Verification includes government-issued identity, proof of residence, source-of-funds attestation, and sanctions screening against EU/UN/OFAC/HMT lists. On the Sepolia testnet deployment, KYC is not enforced because no real value is exchanged.

4.3 Minimum Age

Users must be at least eighteen (18) years of age, or the age of legal majority in the User’s jurisdiction, whichever is greater.

5. Account, Wallet & Authentication

Users register on the Platform using an email address and password. The User is responsible for maintaining the confidentiality of their credentials and for all activity occurring under their account.

To execute on-chain transactions the User must link a self-custodied Ethereum wallet (e.g. MetaMask) to their account by signing a one-time linkage message with their wallet’s private key. The signed message attests that the wallet holder is the same person as the Platform account holder; the signature is verified server-side using EIP-191 personal-sign recovery. The User may unlink the wallet at any time.

Administrative privileges (the “Admin Wallet”) are bound to a single configured Ethereum address and granted automatically to whichever User links that address. Unlinking the Admin Wallet revokes administrative privileges immediately.

6. Listed Assets, Custody & Insurance

Each Stone listed on the Platform is, in production:

1. Physically held in a sealed, individually-numbered safe-deposit compartment at the Geneva Free Port (or an equivalent bonded free-port custodian under negotiation).
2. Insured under a Lloyd’s of London-syndicated all-risks policy at one hundred and ten percent (110 %) of appraised NAV, with policy renewals procured by the Operator at its expense.
3. Independently graded by at least one of: GIA, SSEF, Gübelin, AGL, GRS, or another internationally recognised gemmological laboratory. The grading report number, lab name, weight in carats, colour, clarity, cut, origin and treatment status are recorded both off-chain (database, lab PDF) and on-chain (Certificate tokenURI).
4. Re-appraised no less than once every twelve (12) months, or upon request of holders of fifty percent (50 %) or more of the Stone’s Shares, with the cost of supplementary appraisals borne by the Custody Fee.

Investment-grade coloured stones only. The Platform does not list, accept, or hold diamonds; it does not list synthetic or treatment-disclosed-but-undisclosed material; it does not list stones whose origin cannot be supported by a recognised laboratory.

7. Tokenisation Structure

For each Stone the Vault deploys a dedicated StoneFractional contract — a non-rebaseable whole-unit ERC-20 token whose total supply is fixed at listing and is initially minted in full to the Vault itself. Whole-unit means decimals = 0; the smallest tradable unit is one (1) Share.

The Vault also mints one ERC-721 Certificate per Stone, held by the Vault until either (i) the certificate is transferred to a sole 100 % holder pursuant to Section 14 (Redemption); or (ii) the certificate is transferred to the squeezer pursuant to Section 12 (Squeeze-Out execution).

Shares confer beneficial economic ownership in the Stone proportional to the holder’s balance versus total supply. Shares do not, of themselves, confer voting rights in the Operator entity; they confer only the rights enumerated in Sections 9 through 14 of these Terms (i.e. trade, vote on sale, squeeze, be squeezed, redeem).

8. Initial Public Offering (IPO)

Upon listing, the Vault holds 100 % of the Stone’s Share supply and offers them at a fixed IPO price denominated in USDC. The IPO window — by default 30 days, configurable at listing — runs from the listing timestamp. During the IPO window:

• Any User may purchase any whole-number quantity of Shares at the IPO price by transferring the corresponding USDC into the Vault (after first granting the Vault a sufficient ERC-20 allowance).
• From each IPO purchase, a 5 % Listing Fee (Section 15) is routed to the Platform fee pool; the remaining 95 % is credited to the Stone’s withdrawable IPO Proceeds, controllable by the Operator.
• The Operator may withdraw IPO Proceeds at any time, in any quantity not exceeding the credited balance, to fund acquisition of the underlying Stone, custody, insurance, and Operator working capital.

After the IPO end date, no further IPO purchases are accepted, regardless of remaining Vault inventory; trading thereafter occurs exclusively in the secondary order book (Section 9).

9. Secondary Market — On-Chain Order Book

The Vault operates a fully on-chain limit order book per Stone, supporting:

• Sell orders — a Share-holder posts a sell order for a stated quantity at a stated price per Share. The contract immediately locks the offered Shares in the Vault until the order fills or is cancelled.
• Buy orders — a User posts a buy order for a stated quantity at a stated price per Share. The contract immediately locks the corresponding USDC in the Vault until the order fills or is cancelled. Buy orders may exceed the User’s pro-rata share of supply but may not be partially-self-filled (no self-fill; the order maker cannot also be the taker).
• Order fills — any other User may take an order, partially or in full, by submitting a fill transaction. On fill, the contract atomically: (a) settles Shares from seller to buyer, (b) settles gross USDC from buyer to seller, and (c) deducts the 1.5 % Trading Fee (Section 15) from the seller’s proceeds and routes the fee to the Platform fee pool.
• Order cancellation — the maker of an active order may cancel it at any time, releasing the locked Shares or USDC back to the maker’s wallet.

10. Net Asset Value (NAV) & Appraisal

The NAV of a Stone is set on-chain by the Operator (or, in production, by an independent licensed gemmological appraiser commissioned by the Operator). NAV updates trigger:

1. Accrual of any pending Custody Fee against the prior NAV (Section 15).
2. Comparison of the new NAV against the per-Stone High-Water Mark; if the new NAV exceeds the High-Water Mark, the Performance Fee (15 % of the appreciation) is accrued to the Platform fee pool and the High-Water Mark is reset to the new NAV.
3. Use of the new NAV in subsequent Squeeze-Out price calculations.

The High-Water Mark is initialised at the listing NAV and never decreases, even if NAV is later marked down. A subsequent Performance Fee is only accrued when NAV exceeds the all-time High-Water Mark.

11. Sale Vote (30 % Shareholder Decision)

Any Share-holder may initiate a Sale Vote in respect of a Stone, provided that no Sale Vote is already in progress and at least three hundred and sixty-five (365) days have elapsed since the conclusion of the previous Sale Vote in respect of the same Stone.

A Sale Vote runs for thirty (30) days. During the voting period any Share-holder may cast a YES vote, weighted by the holder’s Share balance at the time of cast (snapshot weighting; later transfers do not retroactively change the cast weight). NO votes are not collected; abstention is treated as opposition.

A Sale Vote is approved if and only if YES votes equal or exceed thirty percent (30 %) of total Share supply at the moment of finalisation. Finalisation is a permission-less call available after the voting period ends; its on-chain effect is to record the outcome.

An approved Sale Vote is a binding shareholder direction that the Operator should liquidate the Stone through a public auction at a recognised auction house (Christie’s, Sotheby’s, Phillips, Bonhams) at the earliest practicable date and distribute proceeds pro-rata, net of fees, to Share-holders. Liquidation execution is an off-chain workflow.

12. Squeeze-Out (75 % Majority Buy-Out)

A Share-holder holding seventy-five percent (75 %) or more of the Stone’s total Share supply (the “Squeezer”) may declare a Squeeze-Out, by which the Squeezer compulsorily acquires the remaining Shares from minority holders at a price equal to the prevailing per-Share NAV plus a fifteen percent (15 %) premium (the “Squeeze Price”). On declaration:

1. The Squeezer transfers, in advance, the entire Squeeze Price for the remaining Shares (Squeeze Price × Shares-not-held) into the Vault as escrow.
2. A seven (7) day cooling period commences.
3. During the cooling period:
   • Any minority holder may initiate a Minority-Protection Sale Vote (which bypasses the 365-day interval). If approved, the Sale Vote cancels the Squeeze and refunds the escrow.
   • Any User may submit a Challenge transaction if the Squeezer’s holding has dropped below 75 % during cooling. A successful Challenge cancels the Squeeze and refunds the escrow.
   • The Squeezer may not unilaterally cancel a Squeeze on the original deployment of the Vault. The current production deployment supports a Squeezer-initiated cancellation that refunds the escrow at any point before execution (Section 13).
4. After cooling and absent challenge or a successful Sale Vote, the Squeezer (and only the Squeezer) may execute the Squeeze. On execution:
   • If the Squeezer has acquired further Shares during cooling, the escrow is reduced and excess refunded; if the Squeezer has lost Shares (still ≥ 75 %), the Squeezer must top-up the difference.
   • The Squeezer’s Shares are burned and the Certificate transferred to the Squeezer.
   • The Stone is marked inactive on-chain. Trading ceases.
   • A one (1) year escrow window opens. Minority holders may, during this window, submit Claim Squeeze Payout transactions that burn their remaining Shares and pay them out at the Squeeze Price.
   • After the escrow window expires, the Squeezer may reclaim any unclaimed residual escrow.

13. Cancellation of a Squeeze

The Squeezer may, at any time after declaration and before execution, irrevocably cancel the Squeeze. On cancellation, the entire escrow is refunded to the Squeezer, the Squeeze state is cleared, and the Stone remains in normal trading. Sale Votes (whether ordinary or Minority-Protection) that are already in progress are not affected by cancellation and continue to their natural conclusion under Section 11.

14. Physical Redemption (100 % Holder)

A Share-holder holding one hundred percent (100 %) of a Stone’s Share supply may request Physical Redemption. Physical Redemption is the surrender of all Shares for delivery of the underlying Stone (and the Certificate) out of bonded custody to the holder.

On execution of Physical Redemption by the Operator:

1. A final Custody-Fee accrual is triggered against the prior NAV.
2. The 2 % Redemption Fee (Section 15) is collected, in USDC, from the holder’s wallet before delivery. The fee covers armoured private delivery, transit insurance, on-arrival lab re-verification and the chain-of-custody audit trail. The holder must, prior to redemption, grant the Vault sufficient USDC allowance to cover this fee.
3. The holder’s Shares are burned and the Certificate transferred to the holder’s wallet.
4. The Stone is marked inactive on-chain.
5. The Operator coordinates the off-chain physical hand-over of the Stone to the holder, by armoured carrier, against a notarised Bill of Hand-Over executed at the Custodian’s Geneva facility (or equivalent delivery point agreed in writing with the holder).

15. Fee Schedule

The Platform charges and accrues fees as set forth in the schedule below. All fees are denominated in USDC, are explicitly enforced by the smart contract for the on-chain components, and are documented and audited on the Platform fee pool. The Operator may, by sole motion, lower (but not raise) any fee on a per-listing basis at the time of listing.

16. Distribution & Settlement of Fees

All on-chain fees accrue to a single Platform fee pool denominated in USDC, held within the Vault. The Operator may withdraw fees at any time, in any quantity not exceeding the pool balance, to a designated operating account.

The Operator commits to publishing, no less than quarterly, a report reconciling fees collected with the services rendered (custody invoices, insurance premia, lab fees, audit fees) for each Stone.

17. Risk Disclosures

The User acknowledges and accepts the following risks:

• Market risk. The market price of Shares may fall below the IPO Price or NAV, or to zero. Coloured-stone valuations are subjective, illiquid, and vulnerable to taste shifts, supply discoveries, and macroeconomic conditions.
• Custodial risk. Although the Stone is held under bonded custody and insured, residual risk of loss, theft, mis-grading, mis-attribution, or fraud at any party in the custody chain remains. Insurance recovery may be subject to deductibles, exclusions, and dispute.
• Regulatory risk. The legal characterisation of Shares (commodity interest, security token, collective investment scheme) varies by jurisdiction and may change. The Platform’s licensing in any jurisdiction may be revoked, varied, or refused.
• Smart-contract risk. Despite security audit, on-chain code may contain bugs that result in loss of funds, locked positions, or unintended behaviour.
• Counterparty risk. The Operator, custodian, insurer, lab, or any third-party service provider may default, become insolvent, or otherwise fail to perform.
• Liquidity risk. The on-chain order book may not, especially at small TVL, support timely or full liquidation of a position; bids may be thin or absent.
• Squeeze-out risk. A holder of ≥ 75 % may compulsorily acquire your Shares at NAV+15 %, which may be below the price you paid. The Sale-Vote and Challenge mechanisms are your protections.
• Network risk. Base, Ethereum, and bridges are subject to outage, congestion, censorship, or chain-level reorganisation. Transactions you submit may fail or be delayed beyond your trading intention.
• Test-network disclaimer. The current Sepolia deployment is for technical demonstration only. Test mUSDC has no economic value. No assets or funds on the Sepolia deployment can be redeemed for anything.

Nothing on the Platform constitutes investment advice, a recommendation, or an offer of securities to any person in any jurisdiction in which such offer would be unlawful.

18. Regulatory Status & Jurisdictional Restrictions

The Operator is in the process of structuring the production Platform under a Swiss Aktiengesellschaft (or, alternatively, a Cayman Islands SPV) to issue Shares as security tokens under the relevant ledger-based securities or comparable regime, and to obtain a FINMA opinion (or equivalent) confirming the regulatory treatment of Shares and the Operator’s licensing. Pending finalisation of this structure, the Sepolia deployment is offered as a public technical demonstration and not as an offer of securities or investment products.

Until production go-live, the Platform is unavailable, by Terms, to:

• Persons resident, citizens of, or physically present in: the United States of America (including its territories and possessions), the People’s Republic of China, the Democratic People’s Republic of Korea, the Russian Federation, the Republic of Belarus, the Islamic Republic of Iran, the Syrian Arab Republic, Cuba, the Republic of the Sudan, or any sanctions-list jurisdiction maintained by the EU, UN, OFAC, HMT.
• Politically Exposed Persons (PEPs) without enhanced due diligence.
• Persons listed on any sanctions or restricted-party list maintained by the foregoing authorities.

19. Prohibited Conduct

The User shall not:

• Engage in market manipulation, spoofing, layering, wash trading, or any deceptive trading practice on the order book.
• Use the Platform in furtherance of money laundering, terrorism financing, sanctions evasion, tax evasion, or any other illicit activity.
• Attempt to interfere with, exploit, reverse-engineer, or compromise the security of the smart contracts, the Platform back end, or any User account other than the User’s own.
• Misrepresent identity, residency, or source of funds in connection with KYC/AML procedures.

20. Intellectual Property

The Platform user-interface, brand, copy, photography, certificate-rendering templates, and platform code (other than the smart contracts, which are released under the MIT licence) are the exclusive property of the Operator. The User receives a non-exclusive, non-transferable, revocable licence to access and use the Platform for personal, non-commercial purposes consistent with these Terms.

21. Limitation of Liability

To the fullest extent permitted by applicable law, the Operator’s aggregate liability to any User in respect of any claim arising from or relating to use of the Platform shall not exceed the lesser of (i) fees actually paid by that User to the Operator in the twelve (12) months preceding the claim, or (ii) US$1,000.

The Operator does not warrant uninterrupted operation, freedom from defect, or any specific outcome. The Platform is provided “as is” and “as available”.

22. Modifications to These Terms

The Operator may modify these Terms at any time by publishing an amended version at this URL, with a revised Effective Date. Changes that materially affect User rights (including changes to the Fee Schedule) will be announced by email to all account-holders at least fourteen (14) days before they take effect. Continued use of the Platform after the Effective Date of an amendment constitutes acceptance of the amended Terms.

Smart-contract constants are immutable. Changes to TRADING_FEE_BPS, LISTING_FEE_BPS, CUSTODY_FEE_BPS_ANNUAL, PERF_FEE_BPS, REDEMPTION_FEE_BPS, SQUEEZE_PREMIUM_BPS, SQUEEZE_THRESHOLD_BPS, VOTE_THRESHOLD_BPS, the cooling and voting durations, or any other on-chain rule require deployment of a new Vault contract and a coordinated migration. The current Vault’s parameters bind the Operator with respect to Stones listed under the current Vault.

23. Governing Law & Dispute Resolution

These Terms shall be governed by, and construed in accordance with, the laws of Switzerland (or, in the Cayman alternative, the Cayman Islands), without regard to conflict-of-law principles. Any dispute arising from or relating to these Terms or the Platform shall be referred to and finally resolved by arbitration under the Swiss Rules of International Arbitration (or, in the Cayman alternative, LCIA Rules). The seat of arbitration shall be Zurich (or London). The number of arbitrators shall be one. The language of the arbitration shall be English.

24. Contact

Questions, complaints, KYC submissions, redemption requests, and notices to the Operator should be addressed to:

CaratShares · Operator entity TBC
legal@caratshares.com · caratshares.com

Effective date: 3 May 2026 · Network: Base Sepolia (testnet) · Vault contract: see /api/config · Source: open at contracts/StoneVault.sol