SAFT
Simple Agreement for Future Tokens. A contract that grants an investor the right to receive a project's tokens at TGE, usually at a steep discount to the public price, in exchange for capital paid today.
Also known as: Simple Agreement for Future Tokens, token warrant
A SAFT is the standard legal instrument for raising venture capital against a future token. The investor wires money to a corporate entity (usually a Delaware C-corp or a Cayman foundation), the entity promises to deliver tokens to the investor when the network launches, and the strike price plus any discount defines how many tokens the investor receives. Until TGE, the investor holds a paper claim. After TGE, the claim converts into a real, vested token balance.
Two things distinguish a SAFT from a pure equity round. First, the investor’s upside is denominated in tokens, not company shares, so the return profile depends on the token’s market price rather than the company’s enterprise value. Second, the implicit token valuation in the SAFT sets a floor on what early insiders paid per token, which is information the market uses to evaluate fair value at TGE. When the headlines say “Paradigm led a $50M round at a $1B token valuation,” that $1B figure is the SAFT-implied fully diluted valuation, not a public market price.
SAFTs are heavy in DeAI because most decentralised AI projects need significant up-front capital for compute, model training, and engineering payroll, and tokens are the natural unit of value capture in a network protocol. They also create governance and supply tensions. SAFT holders typically have multi-year vesting schedules and contractual rights that aren’t visible to public token buyers. When a project launches with a heavy SAFT cap table, the on-paper Token Distribution Fairness score is low even if the public sale tranche looks fair, because the SAFT holders are the first real shareholders the protocol has to answer to.