WazirX Allocates Recovery Tokens After Completing First Distribution

Source: CryptoTale Original Title: WazirX Allocates Recovery Tokens After Completing First Distribution Original Link:

• WazirX completed Recovery Token allocation within 60 days, with balances visible in the app.
• Recovery Tokens are non-tradable and track user entitlement to future buybacks by WazirX.
• RT buybacks depend on quarterly reviews and a minimum $10 million recovery threshold.

WazirX has issued Recovery Tokens, or RTs, to users under its recovery scheme. The exchange said it completed the allocation within the 60-business-day timeline. Users can view the RT balance on the Funds tab in the WazirX app.

The issuance follows earlier steps that WazirX linked to its platform restart on October 24. The company said it completed a first distribution within 10 business days of reopening. WazirX said that payment represented about 85% of each user’s approved claim, valued at the scheme’s reference token pricing date.

Recovery Token Allocation Follows Approved-claim Pro-rata Rules

WazirX said it allocated RTs on a pro-rata basis using each user’s approved claim. The method ties each allocation to a creditor’s share of total approved claims. The company said it applied the same rules to all users.

The scheme documentation also sets the pool for distribution and the reference claims date. WazirX cited total claims of about $546 million as of July 18, 2024. It also said creditors will share a fixed supply of recovery tokens, with a 1 billion RT issuance for allocation.

WazirX said RTs do not trade at this stage and do not function as a spot asset. Instead, the company described RTs as a record of entitlement to future buybacks. WazirX said it will link those buybacks to profits and recoveries from illiquid assets during scheduled evaluation cycles.

RT Buyback Process

WazirX said the scheme moves into recurring three-month evaluation periods after RT allocation. At the end of each period, the company will review recoveries and profits eligible under the scheme. It will also assess unencumbered value realized from illiquid assets, shared surpluses, and other recovery sources.

If unencumbered value reaches $10 million in a period, WazirX will set aside funds. The company said it will use them to buy back RTs. Those buybacks would create the next distribution for users. WazirX said the scheme ties the payout amount to what the company can realize and release for distributions.

If recoveries in a period fall below the $10 million threshold, WazirX said the value carries forward. The scheme allows the amount to roll into the next period and combine with new recoveries. Consequently, smaller recoveries can still contribute to a later distribution once the trigger is met.

What Recovery Tokens Mean for WazirX Scheme Creditors

WazirX said RTs aim to keep creditors included in future milestones as recoveries unfold over time. The company framed RTs as a transparent link between each approved claim and later distributions. It also said the pro-rata approach avoids special treatment and subjective decisions.

To explain the math, WazirX shared an illustrative example for a creditor named Priya. The example uses a $10,000 claim and total claims of $546 million, with a 1 billion RT pool. Priya’s claim percentage equals her claim divided by total claims, and the RT allocation equals that percentage times total RTs.

WazirX also said RTs could become tradable later, subject to legal and regulatory requirements. Trading could let some creditors exit the scheme early by selling their entitlement. Others could buy RTs if they expect higher future recoveries. For now, WazirX directed eligible users to the app’s Funds section to track RT holdings during each quarterly cycle.