3.2 Brick Issuing

The issuance of bricks takes place in the order of application, examination, contract, issuance, and payment of fees. Brick issuance is meaningful as the first step in the securitization of assets.Brick Issuance Application

Brick Issuance Application

The applicant for the issuance of bricks is the owner of the actual underlying asset. This entity has different status depending on the situation: Initial Holder, the last purchaser of the original NFT, the current owner of the actual underlying asset, the NFT creator in the previous stage of bidding/auction/trading, the person entrusted with the issuance of NFT bricks from the NFT owner, etc. . However, there is only one standard regardless of the status of the situation. The actual underlying asset must be owned in the wallet in the form of NFT, or the right to operate the underlying asset must be possessed in the form of NFT.

Applications for brick issuance can only be applied online at the NBRIK service website, a brick publishing platform. The application process and input are as follows:

1 .Sign in/up: create a wallet, select membership type (optional)

2. Select ‘Brick Issuance Application’ menu

3. Understand the terms and conditions, application procedures, and costs

4. Enter basic NFT information: NFT holding wallet address, original NFT key, Previous transaction information, vendor or creator including royalty, etc.

5. NFT basic information authentication (automatic)

6. Enter NFT brick issuance information: brick category, standard expiration, liquidation type, number of original NFTs, leverage type, floor price, issuing leverage, brick price (0.00001 ETH, default), number of issued bricks, the application period for IBO, details of distributing liquidation profits at maturity, etc.

Brick Issuing Leverage

Brick issuing leverage means issuing bricks by raising the total issuance price in preparation for the previous purchase or evaluation of the original NFT. Applying leverage to the issuance of bricks increases liquidity in the Web 3.0 blockchain business.

Advantages of Brick Issuance Leverage

• Suggesting a higher future price than the present raises expectations for increasing the value of the original NFT or the actual underlying asset.

• As the number of bricks issued increases, a more significant influx of users and transaction volume is expected.

• It enables the early provision of IBO revenue to brick issuers (Initial holders).

• It allows enough bricks to be distributed so that both the investor's need to hold a large number of bricks until maturity and the trader's need to realize capital gains through occasional trading can be simultaneously recognized.

Risk Reduction Methods of Brick Issuance Leverage

Brick issuance leverage has the advantage of increasing liquidity in the market. Still, it also carries risks of a decrease in IBO success probability, a reduction in the liquidation price, and a drop in the market price. There are the following ways to maintain and strengthen the brick exchange.

Leverage Risk Mitigation Method	Details
Easing IBO Sales Rate for Listing	In order to be converted to quote transactions, the IBO sales rate must be met. Even if leverage is issued, if IBO sales are achieved above the floor price of the underlying asset, an order book can be created and quoted trading is possible even if the IBO sales rate is less than 100%. However, the remaining amount of IBOs are excluded from the market cap or managed separately by the exchange.
Margin System	After the issuance of the bricks, 50% of the IBO's revenue is reserved as a provision for stable liquidation and settlement.
Early Liquidation Spread	If the market price of the leveraged bricks falls significantly compared to the IBO price, it is a method to liquidate early before expiration, considering the risk of further decline. This method is still under discussion.

Brick Issuance Examination

At the beginning of the exchange service, the bricks issuance will be reviewed by the Brick Issuance Review Committee, composed mainly of board members of XBRIK. In the future, the proportion of a more decentralized method will be increased by smart contracts.

The screening criteria are simple. The Brick Issuance Review Committee checks whether the original NFTs, underlying assets, and wallet addresses on the black list exist. Then, it is verified that the original NFT or identifiable token onboarded to the blockchain belongs to the holder of the wallet address. In addition, we focus on confirming the authenticity of trust assets by checking the marketplace transaction history and the previous transaction amount. Other conditions are not mandatory.

Brick Issuance Contract

When the brick issuance review is completed, contracts are signed to clarify the relation of rights that can issue bricks. The contents of the contract are provided in the form of terms and conditions in the case of general matters and in the form of special agreements for individual matters. All contracts are conducted as electronic contracts or smart contracts.

Contract	Details
Trust Contract	• The owner of the underlying NFT asset (Initial Holder) transfers the property rights of the underlying asset to the NFT Brick Exchange (XBRIK, the trustee) • XBRIK operates bricks within XBRIK based on Original NFT, the trust's underlying asset. • XBRIK, the trustee, manages and disposes of transferred property rights and accrued profits for issuance of bricks and liquidation of bricks for beneficiaries (the trustee or a third party designated by the trustee, i.e. Initial Holder and Brick Holders)
XBRIK Service Agreement	• Brick Exchange (XBRIK, service provider) provides services to the Initial Holders (a brick issuer): introduction of brick products, issuance of bricks, implementation of IBO, provision of information on transfer of rights of original NFTs, DAO voting operation for extension of maturity and interim liquidation, settlement processing, and community operation, etc. • XBRIK charges and collects service fees for initial holders
Custody Service Agreement	• The NFT Brick Exchange (XBRIK), which has been entrusted with the Original NFT from the initial NFT owner (initial holder, consignor), safely and transparently manages the entrusted Original NFT. • 3 players (Initial Holder, X-Bit, and custody service company) sign a contract for trust operation and vault service through their service or custody service company • The custody service may consist of services such as Vault, transfer or return, storage risk response and insurance for the original NFT key.
Personal Information Use Agreement	Initial holders and brick traders agree to the provision, posting, and sharing of their IDs, wallet addresses, virtual asset information, and transaction information to provide the convenience of use of the exchange, accumulate and provide various data, and notifying important matters, etc.

Brick Issuance Fee

Brick issuance fee is calculated as insurance cost and issuance cost according to the value of the underlying asset and the number of leveraged bricks issued. Brick issuance fee is paid by deducting IBO revenue.