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Financial Overview 

Following its formation, Magic Newton Foundation received a grant of $USD 1 million from Magic Labs in order to fund its near term expenses including legal costs, operating costs, contractors, and contracts with unaffiliated third party vendors. The Foundation has not raised any capital from investors.  As of the date of this document, the Foundation has not conducted any public or private sales of NEWT tokens. Any future token sales by the Foundation will be conducted transparently in accordance with written, predefined policies and reported in quarterly transparency reports, including details on amounts sold, counterparties (where appropriate/possible), and use of proceeds across key treasury categories (e.g., operations, development, and community initiatives).

Since 2018, Magic Labs has raised a total of ~$87M to date, backed by notable investors such as PayPal Ventures, Placeholder, DCG, Volt Capital, and Polygon. As a pioneer of embedded wallets and a leading Wallet-as-a-Service company, all prior fundraising was completed based on an equity valuation, not based on token valuation. Given their early backing of Magic Labs, which served as the initial core contributor to Newton Protocol, all Magic Labs investors (Early Backers) received the opportunity to participate in receiving a portion of the Internal allocation based on their partial pro forma equity ownership of Magic Labs, resulting in ~16.5% allocation of total supply. Neither Magic Labs nor the Foundation intend to return cash flow to equity holders via token-based revenue.

Foundation-controlled wallets and token allocations are included in Exhibit A: On-Chain Addresses. These wallets are subject to public onchain verification.  See Exhibit D: Financial Policies for a copy of the Foundation’s token management policy.

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Use of Funds Oversight

The Magic Newton Foundation is responsible for managing the operational and grant-related funding of the Newton Protocol ecosystem.   All onchain funds held by the Foundation are managed in designated multisignature wallets and allocated according to predefined treasury categories. The Foundation is committed to using tokens solely for their designated purpose (e.g., protocol development, validator rewards, or ecosystem growth).

Magic Newton Foundation’s transparency framework is built around verifiable, blockchain-native practices that ensure trust and accountability in how NEWT tokens are managed and used. (See Section 8: Verification of Data for more details.)  To reinforce these commitments, the Foundation will publish quarterly transparency reports disclosing:

  • NEWT balances and movements across all Foundation-controlled wallets or offchain accounts
  • The amount and purpose of any funds held offchain (e.g., in fiat)
  • Aggregate tokens sold or distributed and their use by category (e.g., operations, grants, development)
  • Disbursements from ecosystem funds, reported in aggregate

All wallet activity will remain continuously verifiable onchain by the public. This approach is designed to raise the standard for operational transparency in token launches and long-term protocol stewardship.

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Loan Arrangements

To promote fair access to NEWT tokens, the Foundation has entered into strategic loan arrangements to lend NEWT tokens to global liquidity partners. These agreements facilitate equitable token distribution and accessibility, without requiring partners to engage in specific trading activities and without incentives that disadvantage the community.  As of the date of publication, the Foundation has partnered with Lead Accelerating Limited (Amber) and Flow Traders Investments Limited.  

Each partner is subject to the same key terms: 

  • Each contract is for 12-months
  • Each partner has received a loan of 0.5% of the NEWT total token supply
  • The loan agreements do not include any market KPIs or performance conditions
  • Magic Newton Foundation may accelerate repayment and terminate the loan upon 30 days’ notice, following the completion of a minimum commitment period
  • As payment for the partners’ services, each loan includes a call option divided into four equal tranches, exercisable at maturity, with varying escalating strike prices

As part of the Foundation’s commitment to regulatory compliance, each partner has contractually agreed to comply with all applicable laws and regulations, including not to engage in market manipulation or deceptive trading practices of any kind.  These arrangements are designed to ensure that all services are conducted lawfully, ethically, and in accordance with applicable laws. Any changes to these engagements will be included in the Foundation’s quarterly transparency reports.

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Centralized Exchanges

In connection with the NEWT token launch, the Magic Newton Foundation has entered into agreements with certain centralized exchanges to facilitate token availability and access for users. 

Key terms of these arrangements are as follows:

  • Token Allocations: The Foundation has not allocated any NEWT tokens to centralized exchanges for market making or liquidity seeding. 
  • Duration: These arrangements are not structured as exclusive or long-term agreements. Token support on centralized exchanges remains subject to the exchanges’ standard platform terms and may evolve based on exchange policies.

The Foundation will disclose any changes or updates to its centralized exchange arrangements in its quarterly transparency reports.

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Accounting Treatment of Digital Assets

The Foundation will account for the genesis issuance of the fixed-supply NEWT token and its subsequent distribution in accordance with applicable accounting standards.  At genesis, the minting of NEWT tokens will be recorded as a non-cash balance sheet transaction, recognizing the tokens as an increase in digital asset holdings with a corresponding entry to revenue.

For treasury-held tokens, valuation and impairment will follow the fair value method in accordance with generally accepted accounting principles (e.g., U.S. GAAP or IFRS), including:

  • Periodic remeasurement of digital assets to fair value
  • Recognition of both unrealized gains and losses through profit and loss (P&L)
  • Use of observable market data or appropriate valuation techniques when active market prices are not available

Any material updates to the Foundation’s accounting methodology will be provided in future quarterly transparency or audited financial reports.