1. Startup with no traction. Investors may contribute $5 million USDC into an OCO. The company generates no revenues. They spend $1.5m in salaries and expenses in a year. They receive no product-market-fit and the idea is proved to be unavailable. The builders/operators agree that the best choice is to wind-down. 85% of the tokens vote to liquidate and instantly, all of the OCO triggers all “liquidation events” in all contracts tied to the treasury. In this case, the operators redeem all of their TPTs. The employment contracts tied to the treasury provide an additional 6 months of salary to the operating team in the event of liquidation (which costs another $500k). Next, the IDT contributors receive $3 million (pro rata). Each investor gets back 60% of their initial investment. There is no “equity” left for
2. Temporary Organization. An OCO is formed to host a one-time event. The event organizers get $1 million from investors to place deposits, pay salaries, and conduct marketing. The event sells lots of tickets and generates $1.5 million of proceeds. After the dust settles, there is $1.7 million left in the treasury. The operating team owns 20% of the tokens upon liquidation; the rest is owned by investors. Following the event, the OCO votes to liquidate. All TPTs are redeemed. Investors get back $1m, then the remaining $700k is distributed among all tokenholders equally. Operators earn $140k (20% x $700k). Investors get an additional $560k, which represents their profit above the initial $1m contribution.
3. Dysfunction. An organization with massive amounts of in-fighting and dysfunction chooses to liquidate in order to clear some troublesome operators and investors from the captable. They liquidate, triggering all liquidation clauses, then immediately re-form a new OCO with modifications to reduce infighting. The organization may not choose to re-form.