Mineral Vault

Mineral Vault is a first-of-its-kind platform to offer simplified investment in mineral & royalty interests. These interests are real-world properties located in the continental United States which are actively producing (or are capable of producing) oil, natural gas, or other hydrocarbons. These hydrocarbons can be refined and used for various energy applications, such as the refinement of crude oil into gasoline for vehicles. Investment in these properties has historically been limited to only professionals in the United States, as the acquisition process is expensive, complicated, and costly — and even more significantly, the United States is the only major country in the world where these interests are predominantly owned by private individuals and companies rather than by the government.

The Mineral Vault vision is to bring financial interest in these properties to a global investor base in a way that is low-overhead, easy to trade and transfer, and lucrative for investors.

A Mineral Vault “token” represents an equity interest in a British Virgin Islands (BVI) business entity (also called a “special purpose vehicle” or “SPV”) which itself holds financial interest in various mineral properties located throughout the United States.  The entity does not conduct business or buy / sell any investments — the entity simply holds financial interests in the properties and collects royalty payments, lease bonuses, and other income related to the extraction efforts which are already taking place on the properties.  Because oil and gas wells deplete over time and ultimately cease to produce natural resources, tokens will be slowly bought back and burned over a 15 year term, at which point all tokens will have been bought and burned, to ensure that depletion in well production does not impact token price negatively for the duration of the token’s life.

The properties selected by Mineral Vault for inclusion in each SPV (prior to offering and issuance of tokens to investors) are selected in such a way that:

• There is healthy cash flow already coming from development efforts on the properties

• There is ample additional acreage around the existing wells where new wells could be drilled in the future, giving future upside

• They are extremely diversified in terms of geographic location, well operator(s), well type, and natural resources being produced

These factors are intended to keep investment income healthy for the duration of the token’s 15-year term while also mitigating property centralization risk as much as possible.  Take a look at our latest token offering for more information about properties included as well as target performance metrics.

Note that the extraction of natural resources from mineral interests is generally not cost-bearing to investors because the oil & gas development company (example: ExxonMobil) incurs the majority of costs associated with drilling & development.  The owner of the mineral interest simply receives an initial lease bonus and an ongoing cost-free royalty payment from this operator of the well in exchange for permission to extract natural resources on the acreage. Mineral interests are, however, subject to property taxes, just like any real estate asset, and these costs are borne by token holders for the duration of the 15-year investment term.  See our blog post Mineral Interests: An Overview for more information.

Why Tokenize Mineral Interests?

Mineral interests are everything a tokenized real world asset should be — real, tangible property producing steady, immediate, and inflation-protected cash flow, all while offering upside potential in the future and, in the case of Mineral Vault’s token, a headache-free, passive investment vehicle. However, this type of real estate is complex and largely limited to the United States, so has taken longer than other types of real estate to bring on-chain. Prior to Mineral Vault, no attempt has ever been made to tokenize mineral properties.

In addition to introducing a lucrative new asset class to the Web3 / RWA arena for the first time, Mineral Vault bringing tokenization to mineral & royalty interests resolves several critical property issues currently plaguing the oil & gas industry in the United States today. See our blog post Why Tokenize Mineral Interests? for a complete discussion.