MiCAR White Paper

TownSquare Services Ltd. is a technology company dedicated to the creation and development of TownSquare protocol. The company's core business activities include software development and digital asset issuance of the TownSquare protocol to ensure the sustainable development and decentralization of the protocol. TownSquare Services Ltd. operates globally.

As TownSquare Services Ltd. was established on 2025-12-29, three-year historical financial data is not available.

TownSquare Services Ltd. is a newly established entity in the early stages of development. The company has not yet generated substantial revenue or incurred significant expenses.

A brief summary of TownSquare Services Ltd.'s financial performance at the time of writing is as follows:

Funding and Capitalization:

• The company's initial share capital is USD 1.
• The entity is sufficiently self-funded with investor money.
• The TownSquare token has a fully diluted value as of $ of approximately USD 150,000,000.

TownSquare is a decentralized finance protocol focusing on facilitating user access to stablecoin and real-world asset yield.

The platform's architecture features an onchain crosschain lending and borrowing brokerage protocol where lenders and borrowers can access onchain contracts that autonomously match lend and borrow requests, and onchain yield-bearing vaults managed by curators and asset managers. The project's mission is to develop the onchain protocols by leveraging smart contracts, decentralized governance, and high-performance blockchains. Lend and borrow activities are executed by third parties, the issuer does not control, hold, transfer or otherwise handle crypto-assets.

The TownSquare token (TOWN) is the native utilty token of the TownSquare ecosystem. It is designed to govern the emission and incentives and protocol parameters within this interconnected ecosystem.

Disclaimer:
Vaults are offered by third parties, the issuer does not control, hold, transfer or otherwise handle crypto-assets. Regardless, certain functions might not be available, subject to applicable legislation. Prior to purchase, the purchaser shall be solely responsible for assessing whether token functionalities are available in the jurisdiction where the purchaser resides. No representation is made that the token's utilities will be accessible to all purchasers regardless of location.

The TOWN token has several key functionalities within the TownSquare ecosystem. The platform offers a suite of goods and services designed to offer institutional yield to retail users via strategy vaults curated by institutions, hedge funds, and RWA issuers, while providing a seamless brokerage experience in a high-performance crosschain liquidity environment.

Key utilities of the TOWN token include:

• Protocol Governance: TOWN holders can lock their tokens to receive veTOWN, granting them voting power to govern the addition of new liquidity pools, vault assets, and protocol parameter settings.

• Emission Direction: The token is used as a voting mechanism within the vote-escrow system, enabling holders to direct token emissions to specific crosschain pools and institutional yield vaults.

• Staking: Users can stake TOWN tokens to access interest fee reduction and yield vault management fee reductions as a staker.

TownSquare has secured financial resources (approximately US 16 million) through investor funding.

These resources are allocated to key areas, including:

• Product Development & Art: approximately $10 million.
• Marketing & Community Growth: approximately $2 million.
• Consultancy and Legal/Compliance: approximately $500,000.

The project is supported by a a team of 9 people with specialists in smart contract development, product design, user interface design, backend development, community growth, business development, and capital market operations. Operational support is bolstered by dedicated personnel focused on product go-to market and region marketing.

All resource allocation amounts and percentages are estimates based on data available at the time of disclosure.

The funds collected as part of the offering are intended to be used as follows:

• Product Development: iterating core products including smart contract vaults and crosschain brokerage contracts and user interface.
• Infrastructure & Security: maintenance and scaling of the network, security audits and operational continuity.
• Developer Ecosystem: SDKs, APIs, and tools for third-party development .
• Community & Growth: guerilla marketing, multi-regional marketing, cross-product marketing and partnership marketing.
• Legal & Compliance: ongoing legal and regulatory requirements for major frameworks.
• Operational Costs: staffing, adminsitration, filings.

The offer to the public of TownSquare (TOWN) is intended to:

• Finance TownSquare protocol: To raise capital specifically designated for development and iteration needs of TownSquare protocol. This includes infrastructure scaling and security, business partnerships, product growth, community growth, legal and compliance, and ecosystem development.
• Broaden Market Access and Distribution: To facilitate the distribution of TOWN to European participants, thereby establishing a diverse holder base and deep liquidity. This initial distribution is critical for ensuring efficient price discovery upon subsequent trading.
• Demonstrate Regulatory Alignment: This offering is conducted in strict adherence to Regulation (EU) 2023/1114 (MiCA). The associated disclosures are filed to comply with regulatory requirements, maximize transparency, and investor protection during the offering period.
• Catalyze Ecosystem Participation: By offering the token directly to the public, TownSquare Services Ltd. aims to lower barriers to entry for the TownSquare protocol ecosystem, enabling a broader user base to immediately obtain the utility required to participate in governance of the protocol and incentive.

The offer price is fixed at the price of 0.0125 expressed in USDC, USDT. A maximum of 80,000,000 tokens of the 2,085,200,000 total traded tokens mentioned in E.12 will be sold in the offer to the public.

The project is targeted at all types of investors. No restrictions are being applied other than those required by relevant laws, regulations, or the internal policies of the trading platforms.

Access to the TOWN token may be restricted by the individual trading platforms where it is made available. These restrictions may include, but are not limited to, geo-fencing for users in OFAC-sanctioned jurisdictions or other individuals prohibited under the platform's terms and conditions and applicable laws.

Refunds, where applicable, will be processed to the original payment method used. The sale does not include a refund mechanism after the investor has chosen to commit to the offer via an onchain signature of their onchain wallet signed by the investor, as the tokens would be locked for the investor in the sale contract for trading release after the commitment is signed.

If the present offer is cancelled, it shall be ensured that any funds collected from holders or prospective holders are duly returned to them no later than 25 calendar days after the date of cancellation. The refund will be initiated automatically if the offer is cancelled.

Prior to the publication of this white paper, TOWN was offered to pre-seed, seed, and pre-Series A investors at increasing valuations, with the last round's valuation higher than the current valuation of the offer. Following publication of the whitepaper, the offer will be available for a period prescribed in this whitepaper. TOWN tokens will be unlocked immediately upon the liquidity event of the token on the market. Following the offer period, the TOWN will be issued to eligible holders within 30-60 days.

No discounts are applicable to the offer.

Funds received during the public offer will be processed by licensed third-party payment processors and/or smart contract infrastructure.

Funds received for the purchase of TOWN are held in escrow operated by TownSquare Services Ltd. until settlement. Buyers retain the right of withdrawal within 14 days in accordance with MiCA and Section E.26 below.

Terms and conditions apply to the services of external service providers offered as part of this offer.

Purchases of TOWN on the TownSquare platform may be made using supported crypto-assets USDT and USDC, as per the available trading pairs on the platform. The information on the specific payment methods and providers of payment services is available at https://townsq.xyz/sale and their use is subject to the applicable terms and conditions of the specific service provider.

If applicable, any valid reimbursements shall be made to the account or wallet originally used to participate in the offer.

Purchased TOWN tokens on the TownSquare platform may be withdrawn by the user to a compatible external wallet address (e.g., a wallet supporting the ERC-20 on the Base, Monad, or BNBChain blockchain). This is subject to the platform's standard withdrawal procedures, network availability, and compliance checks. To exercise the right of withdrawal the users need to submit a withdrawal request through the official platform's dedicated channel.

The TOWN acquired as a result of subscription shall be transferred through smart-contract to the compatible wallet or account as designated to the smart-contract.

Purchasers must have an account on a trading platform where TOWN is listed and abide by that platform's terms. Technically, holders must have a digital wallet compatible with the ERC-20 (Base/Monad) or BEP-20 token standard on the Base, Monad, or BNBChain blockchain. This can be a self-custodial wallet or an account managed by a third party (like an exchange). Basic requirements include internet access and a compatible device (computer or mobile).

TOWN is available on several centralized and decentralized trading platforms. Investors can access these platforms by creating an account on their respective websites (e.g., https://www.kraken.com, https://www.okx.com, https://www.coinbase.com, https://www.revolut.com, https://www.gate.com/en-eu, https://www.kucoin.eu, https://www.bitvavo.com, https://www.bitpanda.com, and https://www.bybit.eu) and complying with the platform's requirements, including KYC/AML verification.

Access to the trading platforms is typically free, but users will incur costs related to trading and transactions. These may include transaction fees (maker/taker fees), withdrawal fees, and network fees. These costs are set by the individual exchanges and are not controlled by TownSquare Services Ltd.. Users are advised to review the fee schedule on the respective platform's website at https://www.kraken.com, https://www.okx.com, https://www.coinbase.com, https://www.revolut.com, https://www.gate.com/en-eu, https://www.kucoin.eu, https://www.bitvavo.com, https://www.bitpanda.com, and https://www.bybit.eu.

The total expenses related to the offer are estimated to be [Offer Expenses Amount]. These costs primarily consist of legal and regulatory advisory fees, technical audit costs for smart contracts, marketing and distribution expenses, and administrative fees for admission to trading.

To the best knowledge of TownSquare Services Ltd., no conflicts of interest have been identified in relation to the offer to the public.

Subject to mandatory applicable law, any dispute arising out of or in connection with this white paper shall be governed by and construed in accordance with the laws of the British Virgin Islands.

Subject to mandatory applicable law, any dispute arising out of or in connection with this white paper shall be exclusively subject to the jurisdiction of the courts in the British Virgin Islands.

TownSquare is classified as an "Other Crypto-Asset" under Regulation (EU) 2023/1114, as it is not an Asset-Referenced Token (ART) or E-Money Token (EMT). It is a fungible token based on the ERC-20 and BEP-20 standard.

The TOWN token's primary functionalities within the TownSquare ecosystem include:

• Vote Escrow and Emission Direction: Holders can lock their TOWN tokens to receive veTOWN, granting them voting power that is used to direct TOWN token emissions to specific crosschain liquidity pools and institutional yield vaults.

• Protocol Governance: Through mirrored gveTOWN tokens, users can participate in decentralized governance by voting on the permissionless addition of new liquidity pools, asset vaults, and specific pool parameters.

• Staking: Users can stake TOWN tokens to access interest fee reduction and yield vault management fee reductions as a staker.

Disclaimer:
Vaults are offered by third parties, the issuer does not control, hold, transfer or otherwise handle crypto-assets. Regardless, certain functions might not be available, subject to applicable legislation. Prior to purchase, the purchaser shall be solely responsible for assessing whether token functionalities are available in the jurisdiction where the purchaser resides. No representation is made that the token's utilities will be accessible to all purchasers regardless of location.

The functionalities described in F.2 are planned for progressive activation through governance related feature rollout starting in Q3 2025.

TOWN is a fungible crypto-asset classified as an "Other Crypto-Asset" under MiCA. It operates on the Base, Monad and BNBChain blockchains as an ERC-20 and BEP-20 token. Monad uses Proof-of-Stake (PoS), where validators and delegators stake MON to participate in the Proof-of-Stake (PoS) consensus mechanism; BNBChain uses Proof-of-Staked-Authority (PoSA); and Base is an optimistic rollup whose transactions are ordered by a centralized sequencer and which inherits settlement security from Ethereum. The consensus mechanisms are designed for high throughput and low transaction costs. TOWN does not represent ownership, profit rights, or legal claims, and functions solely to support the protocol's technical and economic operations.

The issuer operates in the field of crypto technology services and issuance and provides the following services as part of its everyday business activity: software development.

Purchasers or holders of TOWN do not acquire any contractual rights, equity interests, profit-sharing rights, dividends, or other legal claims against TownSquare Services Ltd. or any affiliated entity by virtue of holding the token.

The TOWN token is a decentralized digital asset designed for functional use within the TownSquare ecosystem. Any "rights" are limited to the token's protocol-level utility, such as:

• Protocol Governance: The ability to participate in decentralized governance by voting on the addition of new cross-chain pools and yield vaults, as well as determining specific pool parameters.
• Emission Allocation: The ability to lock the token into the vote-escrow system to receive veTOWN, utilizing this voting power to direct protocol emissions toward specific cross-chain liquidity pools and institutional yield vaults.
• Yield Enhancement: The ability to utilize the vote-escrow mechanism to secure added yield for institutional vaults and incentivize liquidity across cross-chain brokerage pools.

Holding TOWN does not represent ownership in any legal entity and does not confer any right to financial returns.

There are no formal contractual rights to "exercise." Any functionality associated with TOWN is exercised technically by interacting with the TownSquare protocol's smart contracts.

For example:

• Governance: Rights are exercised by submitting an onchain vote with the gveTOWN token.
• Utility: Rights are exercised by submitting an onchain vote with the veTOWN token.

These actions are carried out on-chain and are validated by the decentralized network, not by TownSquare Services Ltd.. Procedures are defined in the project's public documentation (e.g., https://docs.townsq.xyz).

TownSquare Services Ltd. cannot unilaterally modify the token's functionalities. As TownSquare is a decentralized protocol, any changes to the token's utility or the network's rules are subject to the project's established governance process. Modifications occur through the proposal and implementation of changes to the protocol, such as the addition of new pools and assets, as well as adjustments to pool parameter settings, which must be approved by the community through voting using the gveTOWN vote token, ensuring the progressive decentralization of the protocol's governance.

TownSquare Services Ltd. does not intend to conduct any future public offerings of the TOWN token. The token is already in circulation and available on secondary markets.

TOWN functions as a utility token within the TownSquare ecosystem, providing access to its core goods and services. These include:

• Institution-backed Yield Vaults: These curated strategy vaults provide users with access to institutional-grade returns derived from trading strategies, private credit, and real-world asset issuers managed by specialized hedge funds and managers.
• Cross-chain Brokerage: This service enables decentralized and non-custodial asset borrowing across high-throughput blockchains such as BNBChain, Base, and Monad, facilitating seamless liquidity movement and sub-second transaction execution.
• Automated Loop Vaults: These specialized vaults automate leveraged borrow strategies for yield-bearing assets, allowing users to maximize rewards through high-efficiency positions that offer up to 95 percent loan-to-value ratios.

The TOWN token is "redeemed" or used within the ecosystem to access the goods and services listed in G7. This occurs when holders lock the tokens for a designated period to obtain vote-escrowed power, allowing them to access the protocol's governance services to vote on the permissionless addition of new cross-chain pools and institutional vaults or to direct emissions to specific brokerage markets. The type of goods or services that can be redeemed may evolve over time based on ecosystem development and governance.

There are no restrictions on the transferability of TOWN at the protocol level; TOWN may be freely transferred between users. However, a portion of the total supply is subject to contractual lock-up and/or vesting arrangements ranging from 12 to 84 months, as set out below. In addition, individual trading platforms may impose their own transfer restrictions in accordance with applicable law and their internal policies.

The relationship between TownSquare Services Ltd. and the crypto asset-holder is subject to the terms and conditions available at: https://www.townsq.xyz/terms.

The competent court in the case of disputes between TownSquare Services Ltd. and the crypto asset-holder is subject to the terms and conditions available at: https://www.townsq.xyz/terms.

TOWN is deployed as an ERC-20 token across multiple EVM-compatible networks. This standard ensures universal compatibility with wallets, decentralized exchanges, and smart contracts across the entire Ethereum ecosystem and EVM-based chains.

Network Options:

• Monad: An independent Layer-1 blockchain with EVM compatibility, delivering 10,000+ transactions per second through parallel execution and near-instant finality.

• Base: An Ethereum Layer-2 optimistic rollup that settles to Ethereum mainnet, inheriting L1 security while offering significantly lower fees and faster confirmations.

• BNBChain: A Layer-1 blockchain using Proof-of-Stake consensus, designed for DeFi and high-performance applications with its own validator set.

All three networks support the ERC-20 token standard natively, enabling TOWN to operate with consistent functionality across chains. Bridges enable seamless token transfers between networks while maintaining security and composability.

As an ERC-20 token, TOWN is deployed as smart contracts across multiple EVM-compatible networks: Monad, Base, and BNBChain. Users can hold, store, and transfer the token using any wallet software (non-custodial or self-custody) that is compatible with these networks. Cross-chain bridges enable seamless token transfers between networks. Users may also manage the token through accounts provided by third-party custodians or centralized exchanges.

The Base, Monad, and BNBChain networks, which TOWN relies on, operates using a proof-of-stake consensus mechanism.

In this system, validators are chosen to create new blocks and validate transactions based on the amount of native tokens MON, BNB or ETH they have staked as collateral.

The validators who secure the network are rewarded with economic incentives for their work. These incentives consist of network fees from transaction distributed to the validator.

The BNBChain, Base, and Monad DLT is a decentralized, permissionless network. It is not operated or controlled by TownSquare Services Ltd. (the issuer) or any other single, central entity. It is maintained by a distributed, global network of participants (e.g., validators and nodes).

The audit was successfully completed. The audit reviewed the smart contract for the TownSquare cross-chain brokerage protocol and institution-backed yield infrastructure, including the autonomous smart contracts  used for RWA-backed yield curation and cross-chain liquidity. The outcome was that the protocol successfully finalized two distinct security assessments during the third quarter of 2025 as part of its commitment to periodic technology reviews.

https://github.com/TowneSquare/audit-reports-2025Q3

TownSquare Services Ltd., as the entity related to the TownSquare ecosystem, is subject to several risks that could impact the project and, consequently, the token:

• Regulatory Compliance Risk: TownSquare Services Ltd. operates in a highly uncertain regulatory environment. Evolving laws or enforcement actions in various jurisdictions could lead to fines, sanctions, or the inability to continue operations, which could negatively affect the project.
• Operational & Financial Risk: The issuer faces internal risks, including failures in processes, personnel, or technology. It is also exposed to financial risks (e.g., liquidity, market) that could affect its ability to fund operations and support the ecosystem.
• Legal & Reputational Risk: The project could face litigation or adverse publicity. Negative sentiment, whether due to operational failures, security breaches, or other events, could damage the project's reputation and the token's perceived value.
• Dependency on Key Individuals: The project's success may be highly dependent on a small group of key individuals. The loss or departure of these members could disrupt development and strategic direction.

N/A

Holding TOWN involves risks inherent to most crypto-assets:

• Market Volatility: Crypto-asset prices are extremely volatile and subject to significant, rapid fluctuations. The value of TOWN can be influenced by market speculation, shifts in sentiment, and macroeconomic factors, and may not reflect the project's fundamentals. There is no guaranteed price floor, buyback or redeemability mechanism, which means that acquiring the TOWN may result in total loss of the invested amounts.
• Liquidity Risk: The market for TOWN may lack depth and liquidity. It may be difficult to buy or sell large quantities at a desired price, or at all, leading to significant financial losses.
• Custody & Private Key Risk: Holders are responsible for securing the private keys to their wallets. The loss, theft, or compromise of these keys will result in the irreversible loss of all associated TOWN tokens, with no recourse.
• Regulatory Risk: The legal and regulatory treatment of crypto-assets is uncertain and evolving. Future regulations could impose restrictions on the holding, use, or trading of TOWN, or it could be classified in a way that adversely affects its value or legality.
• Utility Risk: The expected utility of the TOWN token within the TownSquare ecosystem may fail to materialize due to low user adoption, technical failures, or superior competing projects, undermining its fundamental value proposition.

The future success of the TownSquare ecosystem is subject to significant implementation risks:

• Adoption & Competition Risk: The project may fail to attract a sufficient number of users, developers, and participants to create a viable ecosystem. It faces competition from other projects that may have substantially greater financial, technical, and marketing resources.

• Roadmap & Development Risk: The project may experience delays, fail to deliver on its published roadmap, or encounter unforeseen technical complexities. Strategic shifts or "pivots" may result in features that do not align with community expectations.

• Funding & Treasury Risk: Continued development depends on the effective management of the project's treasury. A shortfall in funding or misallocation of resources could slow or halt ecosystem development.

• Governance Risk: For decentralized projects, governance "deadlock" or misalignment of incentives among participants can impede critical network upgrades and strategic decisions.

• Concentration Risk: There is practically no concentration risk as the tokens are vested for different groups in the contracts based on the numbers in G.11.

The TOWN token and TownSquare platform rely on complex, emerging technology, which introduces specific risks:

• Smart Contract Risk: The smart contracts for TOWN and the ecosystem's applications, despite audits, may contain hidden bugs, flaws, or vulnerabilities. Such flaws could be exploited by malicious actors, potentially resulting in the theft or irreversible loss of funds.

• Underlying DLT Risk: The project relies on the security and performance of the underlying Base, Monad and BNBChain network. This network is subject to its own risks, such as network congestion, high transaction fees, consensus failures (e.g., 51% attacks), forks, or operational halts. Execution of transactions requires gas fees, which are subject to market conditions and may fluctuate during periods of high activity. Users who interact with TOWN via decentralized exchanges (DEXs) may face exposure to front-running or Maximal Extractable Value (MEV), where third parties reorder or insert transactions for their advantage.

• Cybersecurity Risk: The ecosystem, including its protocols, bridges, and front-end applications, is a target for cyber-attacks (e.g., DDoS attacks, hacks). A successful attack could disrupt services or lead to a loss of user assets.

• Bridge Risk: TOWN exists on multiple blockchains. The bridges connecting them are a critical vulnerability. An exploit of a bridge protocol could lead to de-pegging or unrecoverable losses.

• Scalability Risk: The underlying technology may not scale effectively to handle a high volume of users or transactions, leading to slow performance and high fees, which would deter adoption.

TownSquare Services Ltd. has implemented several measures to mitigate the identified risks:

• Security Audits: Commissioning comprehensive security audits of all smart contract code from reputable, independent third-party security firms before deployment.
• Bug Bounty Program: Operating an active bug bounty program to incentivize ethical hackers and security researchers to discover and responsibly report vulnerabilities.
• Regulatory Monitoring: Actively monitoring the global regulatory landscape with the assistance of external legal counsel to ensure compliance with applicable laws.
• Use of Reputable Technology: Building on a secure and battle-tested DLT (like Base, Monad and BNBChain) to leverage its established consensus mechanism and security.
• Decentralized Governance: Implementing a decentralized governance framework to distribute decision-making and align stakeholder incentives for the long-term health of the protocol.
• Strategic Partnerships: Strategic partnerships and exchange listings are pursued to improve liquidity and operational resilience.

N/A

The Base, Monad, and BNBChain networks, which TOWN relies on, operates using a proof-of-stake consensus mechanism.

In this system, valitors are chosen to create new blocks and validate transactions based on the amount of native tokens MON, BNB or ETH they have staked as collateral.

Data provided by CCRI; all indicators are based on a set of assumptions and thus represent estimates; methodology description and overview of input data, external datasets and underlying assumptions available at: carbon-ratings.com/dl/whitepaper-mica-methods-2024 and docs.mica.api.carbon-ratings.com. We do not account for any offsetting of energy consumption or other market-based mechanism as of today.