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Terms

Participation Incentives Program Terms

Effective Date: 6 February 2023

1. Important Information

This Document is issued by and on behalf of the Buzz Development Inc. (defined below) (“we”, “us” or “our”) and contains important information about the significant features, benefits, and risks for people (“you”) interested in interacting with the participation incentives program (Participation Incentives Program).

Participation Incentives is an experimental program to achieve greater decentralisation of governance and participation in behaviours that support social cohesion and optimal governance. The Participation Incentives Program involves contracts deployed to the Ethereum blockchain that include the following key functions:

  • $PERC tokens can be sent to the staking contract address (Principal $PERC tokens) from a person’s address (Principal Address);
  • The ETH-$PERC LP token can be sent to the staking contract address (Principal LP token) from a person’s Principal Address;
  • As a condition to being eligible to accrue and claim a particular number of $PERC tokens per incentivised activity, Principal $PERC tokens and/or the LP token (as applicable) must be locked for a time period that can be specified by the person where locking prevents withdrawal and use of Principal $PERC tokens or LP token for that time period;
  • $PERC token incentives can accrue to a person’s Principal Address per each incentivised activity undertaken (Incentive $PERC tokens), and can be claimed and then staked;
  • Incentive $PERC tokens, Principal $PERC tokens and LP tokens can be withdrawn to the person’s Principal Address.

Buzz Development Inc. is not licensed by, or registered with, any company or securities or commodities regulator. This document has not been lodged with any regulator.

The information in this document is of a general nature only and in preparing this document, Buzz Development Inc. has not taken into account your objectives, situation or needs. You should obtain your own independent advice and consider the appropriateness of acquiring $PERC and/or interacting with the Participation Incentives Program having regard to your objectives, situation and needs. The significant risks are summarised in section 3 of this document.

No person is authorised to give any information or to make any representation in connection with this document which is not contained in this document. Any information or representation not contained in this document may not be relied on as having been authorised by Perion DAO.

Neither Buzz Development Inc. or any of their core contributors (including founders and service entities), members, agents or associates in any way guarantee the performance of $PERC, and, to the maximum extent permitted by law, they each deny liability for any loss or damage suffered by any person holding $PERC or interacting with the Participation Incentives Program to stake, lock, accrue, claim and withdraw $PERC tokens or LP tokens. To the extent that any statement in this document is inconsistent with statements made on the Perion Website, Discord, Medium, Twitter, Instagram, Facebook or any other channel, the statements in this document prevail. However, any change approved by the prevailing model of Buzz Development Inc. governance supersedes this document if this document is not updated concurrently with the change proposal.

Any statements in this document about future matters are subject to known and unknown risks, uncertainties and other factors that could cause the actual performance of PERC tokens and Performance Incentives to be materially different from those implied by such statements. Such statements are based on assumptions current as at the date of this document and there can be no assurance that such statements, estimates or projections will be realised.

2. About Perion

Overview

Buzz Development Inc. is on a mission to accelerate the shift to web3 gaming by building and backing its best teams. The DAO is an ecosystem of multiple SubDAOs and modules. Buzz Development Inc. can be contacted via any of the official social media links set out below.

Buzz Development Inc.’s Participation Incentives Program is designed with the goal of incentivising Perion ecosystem participation, for the benefit of the social cohesion of the DAO members. Accruing $PERC tokens requires interacting with Perion via voting, social platform interaction and other contribution mechanisms, helping all DAO participants to collectively grow the Perion ecosystem while reducing the likelihood that harmful practices could eventuate. 

Governance

Buzz Development Inc. is about to launch the first version of its decentralised governance model. Governance will continue to be subject to change based on the expectations of the Perion community and ecosystem needs.

Token

$PERC is an ERC-20 token minted on the Ethereum blockchain with no associated rights currently other than the anticipated ability to participate in governance behaviours within the Buzz Development Inc. ecosystem and to access and become involved with the Participation Incentives Program.

There will only ever be a maximum, finite supply of 100,000,000 $PERC tokens.

Distribution allocations are subject to community discussion. Participation Incentives are set at 10% of the total supply of $PERC and subject to 4-year vesting as well as the prevailing mode of Perion DAO governance. 

Participation Incentives Program

Beginning on 7 February 2023, a fixed allocation of pre-mined $PERC tokens are scheduled to be released over 4 years with 10,000,000 $PERC tokens set aside for Participation Incentives.

A person who holds $PERC tokens or an LP token (from having made available ETH and $PERC in the SushiSwap pool), can stake the tokens they hold by connecting their wallet to the staking contract through a webpage on the Perion website staking.perion.gg When tokens are staked, the balance staked is mapped as coming from the $PERC holder’s wallet (Principal Address) to the staking contract and can only be withdrawn to the Principal Address. The balance of $PERC and/or LP token in the staking contract is updated by a blockchain transaction to record an increase in balance to represent the $PERC staker’s or LP staker’s instruction. It is intended that the $PERC holder / LP holder maintains beneficial ownership of staked $PERC or staked LP token, respectively, at all times.

Stakers can optionally lock their $PERC tokens or LP tokens for a period of up to 36 months. By increasing the lock duration, the token weight increases the multiplier. Staked LP tokens attract a higher emission of $PERC incentives than staked $PERC tokens.

Nature of a person’s involvement with the Participation Incentives Program

Buzz Development Inc. does not seek to carry on a business with a view to a profit. Separate and independent factors may exist for stakers to accrue, claim and withdraw $PERC incentives without any requisite degree of control or requirement to be actively involved in the management, strategy or governance of the Buzz Development Inc..

Staked $PERC tokens or LP tokens are not used in carrying on any activities of Buzz Development Inc.. Incentive $PERC tokens are not produced from the efforts of the Perion community and have been allocated from the pre-mined and fixed supply of $PERC.

The primary intent of involving staking with Participation Incentives is to demonstrate a person’s humanity and eligibility to interact with the Participation Incentives Program thereby reducing exposure to bot-based attacks. Concurrent intents are to achieve greater decentralisation of governance and participation in behaviours that support social cohesion and optimal governance.

An ancillary intent of the Participation Incentives Program includes the possibility that those that participate in the Perion ecosystem and the Participation Incentives Program can recoup or defray the costs of their participation by receiving Incentive $PERC tokens (until the incentives supply is exhausted). This is an experimental form of supporting the mutuality and sustainability of participation in the Perion ecosystem for enjoyment and as a hobby rather than for a business purpose.

3. Risks

General

The purchase of tokens such as $PERC and involvement with blockchain technology such as the Ethereum blockchain and contracts involved in the Participation Incentives Program carry risk. Risks can be managed but in many cases risks cannot be eliminated.

The appropriate level of risk for you may depend on your age, objectives and needs and what other assets you hold. It also may vary depending on how comfortable you are with the possibility of the reduction of value of assets you acquire.

It is important to understand the following:

  • Risk can be managed but it cannot be eliminated and that the performance of $PERC tokens is largely determined by its free market value, which is reflective of interest in $PERC tokens as a speculative token class despite, and because of, its use to promote greater decentralisation and social cohesion of the Buzz Development Inc.. The value of $PERC tokens may fluctuate, and past performance is not a reliable indicator of future performance.
  • The value of $PERC tokens may decrease, which means that your $PERC tokens may reduce in value over time.
  • Laws affecting Buzz Development Inc. may change over time. There are ongoing consultation processes being carried out by governments and policy makers around the world, including the Australian Government, in relation to the regulation of tokens and token activities and it is not clear how this would affect Buzz Development Inc., $PERC tokens and the Participation Incentives Program, if at all.

Some of the significant risks associated with $PERC tokens and the Participation Incentives Program are set out below.

Market integrity risk

$PERC is intended to be a freely transferable token to maximise its reach to promote the goal of robustness and resiliency through decentralisation, as well as composability and utility within the web3 ecosystem. The value of your holding of $PERC tokens will fluctuate because of external market forces. Buzz Development Inc. is newly established, and both the DAO structure and blockchain technology are nascent and emerging fields, so there is limited history upon which you can evaluate the likely performance of the Buzz Development Inc. and its ecosystem, $PERC tokens and the Participation Incentives Program. Tokens are high risk and carry significant price volatility.

When a decentralised technology network such as the validators that support the Ethereum blockchain underlies the governance and development of a DAO such as Buzz Development Inc., there is no proven economic model that values any or all the deployed smart contracts that make up the Perion protocol, the auditing of those smart contracts and the potentially global network effects of interactions with other smart contracts on the Ethereum blockchain.

The value of a token is heavily influenced by factors external to the Buzz Development Inc., including unrelated third-party influencers, media focus, public announcements, the actions of individuals who hold large amounts of a token, including actors that may act inconsistently with the interests of the Buzz Development Inc., as well as circumstances impacted the underlying blockchain protocol and its network. This is a key reason why Buzz Development Inc. has a focus on social cohesion, such that with a stronger community harmful practices both inside and out of the Perion community are both disincentivised and once identified, addressed quickly.

Financial risk

There are several financial risks, including Buzz Development Inc.’s ability to maintain a strong enough treasury to continue operations. There is a risk that Buzz Development Inc., as a borderless and transnational thing, is not sufficiently responsive to changes in the industry, market and regulatory conditions due to financial resources that could be limited depending on the influx of financial demands that may arise due to increased regulation of DAOs and token activities.

Operational risk

Operational risk includes but is not limited to, technology risk (including smart contract technology which is nascent and on a public blockchain), reputational risk, fraud, compliance, outsourcing, business continuity planning, legal risk and key person risk.

Custody risk

$PERC tokens are tokens that are generally represented in a self-hosted digital wallet or hardware wallet. $PERC tokens rely on cryptography and technology such as blockchain for security and other features.

Your digital wallet will have a public key and a private key (like a password or PIN). However, blockchain systems allow users to remain relatively anonymous (pseudonymous) and there is no central authority that collects identity information or that can recover lost or stolen tokens or private keys. If a hacker steals your private key, you have little hope of getting the private key back in order to deal with the tokens you held.

Using a wallet that’s held offline, called a ‘hardware wallet’ or ‘cold storage’, may provide additional protection. You are responsible for seeking independent, professional advice in relation to the cyber security of your blockchain and token activities.

Staking contract risk

Sending $PERC tokens or an LP token to the staking contract is a signal that you seek to be eligible for the Participation Incentives Program, but is a behaviour that exposes your $PERC tokens and/or LP token and potentially your other tokens to risk. The longer you stake $PERC or an LP token, the greater the risk you will be exposed to adverse price movements in $PERC and other risks of interacting with nascent smart contract technology on a public blockchain subject to a decentralised and evolving model of governance.

Governance risk

Under Buzz Development Inc.’s decentralised and evolving governance structure, it is possible that there will be changes to the $PERC tokenomics and the Participation Incentives Program. You are responsible for monitoring Perion’s official social channels and staying updated on changes that affect you. Any person considering purchasing $PERC and interacting with the Participation Incentives Program should seek independent advice.

Regulatory risk

Buzz Development Inc. is not licensed by ASIC or any other regulator to provide financial services. You will not have access to the protections available to investors acquiring a financial product under Australian (or other) financial services laws but should have protections available to consumers under Australian (or other) consumer and contract laws.

If Buzz Development Inc., $PERC or the Participation Incentives Program fails, your $PERC and staked $PERC and/or staked LP token will likely be of no value and there is no complaints scheme or ombudsman that can protect you from losses.

4. How to interact with the Participation Incentives Program

Staking and unstaking $PERC and/or LP tokens

You can stake your $PERC tokens and/or LP tokens by connecting your wallet to webapp at staking.perion.gg, clicking “Stake”, and signing a transaction with Perion’s staking contract. Unstaking $PERC tokens and/or LP tokens is the same process except for clicking “Unstake”.

Accruing Incentive $PERC tokens

You can accrue and claim Incentive $PERC tokens every 24 hours. Activities that you can accrue Incentive $PERC tokens will be published on the webapp at staking.perion.gg and are subject to change based on the prevailing model of Buzz Development Inc. governance.

Claiming Incentive $PERC tokens

You can claim Incentive $PERC tokens every 24 hours by connecting your wallet to the webapp at staking.perion.gg, clicking “Claim”, and signing a transaction with Perion’s staking contract.

Activities may be required to allow you to claim such as participating in a poll, and engaging in a questionnaire.

Withdraw Principal $PERC tokens and/or LP tokens and/or Incentive $PERC tokens on expiry of locking period

You can withdraw $PERC tokens and/or LP tokens and/or Incentive $PERC tokens once the lock period has expired by connecting your wallet to the webapp at staking.perion.gg, clicking “Withdraw”, and signing a transaction with Perion’s staking contract.

Note that Incentive $PERC tokens can be withdrawn at any time and staked.

5. Additional information

Fees and charges

Buzz Development Inc. does not charge any fees for the purchase of $PERC or interaction with the Participation Incentives Program. Ethereum gas fees apply when performing certain interactions with the suite of solidity contracts that may be used to purchase $PERC and that form the Participation Incentives Program (e.g., staking, claiming, unstaking, and withdrawing).

6. Resources

Smart contracts and audits

$PERC token: https://etherscan.io/token/0x60be1e1fe41c1370adaf5d8e66f07cf1c2df2268

Single-sided staking contract: https://etherscan.io/token/0xf64F48A4E27bBC299273532B26c83662ef776b7e

Single-sided staking contract audit: https://staking.perion.gg/audit.pdf

SushiSwap LP staking contract: https://etherscan.io/token/0xc014286360Ef45aB15A6D3f6Bb1E54a03352aC8f

SushiSwap LP staking contract audit: https://staking.perion.gg/audit.pdf

Social channels

Website:https://perion.gg/

Discord: https://discord.com/invite/pShCj4BWYb

Twitter: https://twitter.com/PerionDAO

7. Taxation

Overview

Buzz Development Inc. acknowledges that the tax treatment of token activities can vary depending on your country of tax residence and nature of activities. In addition, you are responsible for keeping your own records that are sufficient for you to determine the tax treatment of your activities in relation to the Perion ecosystem. This summary is a general guide only, based on Australian law, and is not a complete statement of any relevant tax law nor does it take account of your individual circumstances. You are responsible for seeking your own independent, professional taxation advice with reference to the laws of your country of tax residence before participating in any aspect of the Perion ecosystem. No liability will be accepted in relation to the tax treatment of your token activities in relation to the Perion ecosystem.

Perion has prepared a summary of general tax implications of interacting with the Participation Incentives Program. This summary is subject to change from time to time to take account of changes in the Perion ecosystem, as tax authorities around the world issue updated guidance and as tax laws are subject to review and change to take account of the nuances posed by blockchain technology and token activities.

The general tax comments made in this document refer only to the token activities in relation to the Participation Incentives Program, encompassing:

  • persons acquiring and holding $PERC on capital account;
  • persons in the business of, or carrying out profit-making schemes, in relation to $PERC on revenue account; and
  • persons acquiring and mainly keeping or using $PERC for personal use and enjoyment, including as a hobby.

Depending on the applicable laws of the country or countries of your tax residence, it can be possible for you to maintain a split portfolio which may comprise of two or more of the above categories. For example, part of your $PERC may held on capital account and part may be held as a profit-making scheme (such as if you have contributed $PERC and ETH to the SushiSwap pool, the LP token may constitute an intention to make a profit from trading fees earned from the pool and from Incentive $PERC tokens that may be accrued). Usually, accurate and real-time record-keeping is essential to demonstrate that a split portfolio is being maintained.

Capital account

If you purchased $PERC on capital account, you may be liable for capital gains tax (CGT) when you sell your $PERC.

You must calculate your capital gain or loss on sale under the CGT rules. If you have held the $PERC for at least 12 months, you may be entitled to claim a CGT discount. Under Australian law, it should be the case that the acquisition date of $PERC tokens is when they are purchased and not when staked since there should be no disposal or cancellation tax event where you remain absolutely entitled to your Principal $PERC tokens and/or LP token in a staking arrangement.

If your capital proceeds exceed the cost base of the $PERC tokens sold, a capital gain will arise. If the capital proceeds are less than your reduced cost base for the $PERC tokens sold, a capital loss will arise.

Your cost base of each parcel of $PERC tokens should be calculated based on the money (i.e. fiat currency) or property (i.e. USDC or ETH) you provided to acquire the $PERC tokens. If you have purchased $PERC tokens with USDC, your cost base per 1 $PERC will generally be determined as the fiat currency value of USDC at the time of acquisition of the $PERC token parcel. Additional costs you incur with respect to your $PERC tokens could also be added to the cost base of $PERC tokens.

If you receive other tokens on sale of your $PERC tokens, you must determine the fiat currency amount of the other tokens at their market value at the time of sale and treat that amount as the capital proceeds received for the sale. Transaction fees on sale could be included in the cost base of your $PERC tokens sold, at the fiat currency value when incurred.

Business or profit-making scheme

If you are in the business of carrying out $PERC token activities, your purchase of $PERC tokens may be treated as an acquisition of a revenue asset or trading stock and may be deductible in the income year that $PERC tokens are sold. If you are undertaking one or more profit-making schemes with $PERC tokens, your purchase of $PERC tokens may be treated as an acquisition of a revenue (or ‘profit-making’) asset and the net income or net loss may be treated as ordinary income or an allowable deduction, respectively, in the income year that $PERC tokens are sold.

Amounts you receive from the sale of trading stock or assets acquired with a profit-making intention may represent ordinary income of your $PERC token business. There may be special tax rules that deal with the tax implications of buying, holding and selling trading stock.

8. Personal use and hobby

If you purchase one or more $PERC tokens with the intention to mainly keep or use the tokens for your personal use and enjoyment, including as a hobby, your $PERC tokens may be treated as ‘personal use’ assets, and any capital gains on sale may be disregarded, if the $PERC tokens were acquired for less than the specified amount,which in Australia is AU$10,000.

The application of the ‘personal use’ taxation rules to tokens continues to be a highly contentious area for taxpayers and tax authorities, particularly in Australia. The Australian Commissioner of Taxation’s guidance on this issue in relation to bitcoin was published in 2014 and is available here: https://www.ato.gov.au/law/view/document?DocID=TXD/TD201425/NAT/ATO/00001.

10.1.4 Activities

The presently existing and anticipated activities with $PERC tokens in the Perion ecosystem give rise to the following considerations for tax purposes (including income tax and goods and services tax (GST)):

  1. Interacting with SushiSwap to contribute liquidity to the incentivised pool may be considered a taxable disposal event of your ETH and $PERC or venturing your ETH and $PERC tokens into a trade or business or enterprise for profit, and which may also be subject to GST that you (the Sellor) is responsible for determining.
  2. Staking $PERC tokens and/or LP tokens to interact with the Participation Incentives Program should not be considered a taxable disposal event since the intent of the Perion staking contract design is that the staker maintains beneficial ownership, absolute entitlement and ongoing connection to the staked tokens. The staked tokens are not on-lent or on-traded by the Perion staking contract or Buzz Development Inc..
  3. The time of derivation of Incentive $PERC tokens for income tax and GST purposes is uncertain and could occur at accrual, claim or withdrawal, or even at the time the tokens are sold/realised for other tokens, property or fiat currency.
  4. Sale by you of $PERC tokens on external marketplaces may be considered taxable events.

GST and Value Added Tax (VAT)

Your purchase and sale of $PERC tokens may be subject to GST (or VAT, as applicable). All prices quoted are exclusive of any applicable GST, VAT or other equivalent or similar tax.

All prices quoted by persons conducting secondary market sales of $PERC will be responsible for specifying whether the prices are quoted as inclusive or exclusive of any applicable GST, VAT or other equivalent or similar tax as well as any tax obligations applicable to that person such as a requirement to issue a tax invoice to the purchaser and collect information about the purchaser. For the avoidance of doubt, any persons using the Perion website (including Perion protocols and applications) in this way are responsible for determining their obligations to collect information, disclose applicable taxes and collect the applicable amount of GST, VAT or other equivalent or similar tax for remittance to the applicable tax authority.

The application of GST and VAT laws to DAOs, and secondary market peer to peer trading in tokens issued by DAOs on various platforms, is unclear.

To the extent that any tax authority considers that GST, VAT or other equivalent or similar tax applies to your purchase and sale of $PERC tokens whether or not on the Perion website, then you are responsible for meeting any amount of GST, VAT or other equivalent or similar tax and any associated penalties or interest for late payment.

DAO legal and tax characterisation

It is unclear whether the Buzz Development Inc. meets  the existing or proposed requirements to collect and report information under the existing OECD Common Reporting Standard or proposed Crypto-Asset Reporting Framework.

It is also unclear whether the Buzz Development Inc., or a component of the DAO, is a tax resident (including as a permanent establishment) of one or more countries in respect of the Buzz Development Inc. activities and if it were a tax resident, what the legal and tax characterisation of the DAO is to form the basis of one or more tax filings.

Buzz Development Inc. activities such as the design, development and deployment of the Participation Incentives Program have been designed by consensus with the Perion community including through discussion on official Perion forums.

Tax indemnity

To the extent one or more tax authorities seek to impose liability upon Buzz Development Inc. (or its agents) in respect of tax that is alleged should have been collected and remitted by Buzz Development Inc., you agree to indemnify Buzz Development Inc. in respect of the additional tax, penalties and interest where that indemnity may be funded out of the Buzz Development Inc. Treasury.

9. Tax law and policy environment

The tax treatment of token activities is subject to uncertainty. Tax authorities around the world are seeking to understand the technology, issue guidance to the public and consult on relevant tax reform that is necessary. The application of traditional tax principles to novel technology, the DAO structure and token activities remain largely untested in court.

There is a risk that the general tax summary at the date of publication of this document, including applicable case law and guidance published by tax authorities could change. The value and tax treatment of your $PERC tokens may be impacted by this uncertainty and risk in how the tax laws apply and may change.