Dark Matter Docs

How existing private market positions enter the DMTR registry: the fidelity spectrum, three onboarding patterns, the reverse proxy coordination model, GP consent flywheel, and tax considerations.

Overview

Every private market position that exists today is brownfield. If DMTR could only encode greenfield positions (new fund formations), it would be limited to new issuances; existing positions need an onboarding path.

Brownfield onboarding is not a single operation. It is a fidelity spectrum — a progressive pipeline where each level independently delivers value, and positions promote through levels as documents arrive, verification completes, and the holder opts into structural changes.

The fidelity spectrum

Level	Label	What changes	What the holder gains
L0	Claim	Holder self-attests ownership	Position exists in `draft` status
L1	Identity	Asset identified, issuer known, vehicle class assigned	Queryable and discoverable
L2	Economics	Valuation, economic rights, carry/waterfall encoded	Assessable — collateral checks, price discovery
L3	Restrictions	Transfer rules, consent chain, jurisdictional constraints extracted	Evaluable by the Rights Engine
L4	Wrapped	Asset contributed into DOIV LLC	Transferable on-platform via DMTR settlement
L5	Decomposed	Series LLC with per-company lookthrough	Sliceable — individual underlying exposure tradeable independently

A position at L2 that never wraps still gives the holder collateral-assessability and discovery. A position at L3 can be evaluated by the Rights Engine for transfer feasibility. The SPV wrapper (L4) is only necessary when the holder wants on-platform transfers — and most positions will reach L1-L3 long before they reach L4.

✓ Fidelity is computed, not stored

The fidelity level is derived from the fields present on the Position Object by a pure function (computeFidelity()). There is no stored fidelity_level field that can drift out of sync with reality.

The reverse proxy pattern

For the majority of positions that cannot be wrapped — company ROFR would trigger on the cap table assignment, GP won't consent to the LP interest transfer, regulatory constraints prevent restructuring — DMTR acts as the coordination layer:

Discovery: the position is in the registry, queryable by counterparties
Feasibility: the Rights Engine evaluates proposed transfers against encoded restrictions
Consent orchestration: DMTR routes GP/board consent requests through the consent chain
Settlement coordination: DMTR tracks wires, document exchange, and cap table updates
Post-trade reporting: the event log records the transfer with full audit trail

The position stays on the company's cap table. DMTR doesn't hold it. This is analogous to how DTCC coordinates settlement for public securities without holding the shares. For most brownfield positions, this L1-L3 coordination surface is the product — and it requires zero structural changes to the underlying asset.

The coordination model works because the Position Object encodes the rules even when DMTR doesn't control the settlement. The Rights Engine can evaluate "can this buyer acquire this LP interest?" regardless of whether the LP interest is wrapped in a DOIV or sitting on the fund's books. The restrictions are the same either way.

Three onboarding patterns

Pattern 1: Direct equity wrap

Applies to: 83(b) shares, exercised stock options, RSA vesting completions, SAFE conversions — any directly held equity.

The holder contributes their shares into a newly formed SPV LLC. The SPV's operating agreement mirrors the company's existing transfer restrictions (ROFR, board consent, information rights). The holder receives 100% of the SPV's membership units as Position Objects.

What changes on the cap table: shares move from the holder's name to the SPV's name. The company's transfer agent or cap table provider records the SPV as the shareholder.

What doesn't change: all existing restrictions survive — they are encoded in the Position Object, not bypassed. Company ROFR still applies (the Rights Engine enforces it). Board consent is still required (the consent chain encodes it). Tax treatment is unchanged — the SPV is a pass-through.

Pattern 2: LP interest wrap

Applies to: limited partnership interests in venture, PE, or credit funds.

The LP contributes their interest into an SPV LLC. The SPV becomes the LP of record. The original LP holds 100% of SPV units.

The LP's fund exposure includes pro-rata interests in N underlying portfolio companies. If the holder opts for lookthrough decomposition (L5), the SPV is formed as a Delaware Series LLC with per-company series. Each series maps to a Position Object with asset.underlying referencing the portfolio company. The LP can then sell exposure to Company Alpha without selling their entire LP interest.

GP consent is the critical dependency. See the GP consent flywheel below.

Pattern 3: GP stake wrap

Applies to: general partner interests, carried interest, management company stakes.

GP interests are the hardest to structure because they encode carry, management fee streams, governance rights, and clawback obligations. The Position Object must represent:

Carry with split rates (economic_rights.carry)
Management fee stream as an economic right
Governance rights (voting, fund decisions, key person provisions)
Clawback exposure as a conditional encumbrance

GP stakes are the highest-value brownfield assets and the ones institutional buyers (Dyal, Petershill, Blue Owl) most want access to. Encoding them as Position Objects makes the GP stake secondary market programmatic rather than bespoke.

The hardest part of LP interest brownfield onboarding is GP consent. But there is a flywheel:

GPs who use DMTR for greenfield fund formations (Patient Zero / Megalith) already have consent infrastructure on-platform.
Those GPs can pre-consent to DMTR-mediated transfers for positions they manage — a PreConsentPolicy that short-circuits the consent chain for brownfield wraps that meet specified conditions (buyer accreditation, ITAR eligibility, jurisdictional match).
Brownfield holders of Megalith-originated positions get a frictionless L3 to L4 path.

Patient Zero also creates the GP relationship that opens brownfield onboarding to the entire LP base of that GP's prior funds.

Tax considerations

IRC 721: Non-recognition on contribution

Contributing an asset into a single-member LLC is generally a non-recognition event under IRC 721. The LLC is disregarded for tax purposes. The holder's tax basis in the contributed asset carries over to the LLC membership units (brownfield_source.tax_basis). The holding period tacks (brownfield_source.holding_period_start).

Multi-member LLCs

If the SPV has multiple members (e.g., co-holders contributing different tranches), IRC 721 still applies but the allocation rules under IRC 704(c) require that built-in gains or losses be allocated to the contributing partner. The Position Object's economic_rights can encode this attribution.

Hot assets (IRC 751)

For LP interests in funds holding inventory or unrealized receivables ("hot assets"), a contribution may trigger gain recognition to the extent of the hot asset share. This is a fund-specific analysis that the onboarding pipeline flags during fidelity assessment.

Carried interest (IRC 1061)

GP carried interest is subject to the three-year holding period requirement under IRC 1061 for long-term capital gains treatment. The Position Object records the original holding period start date in brownfield_source.holding_period_start and the Rights Engine can enforce minimum hold periods.

The onboarding flow

Five steps, designed to be completable in a single session:

Attest — the holder self-attests ownership and uploads governing documents (stock certificate, LP agreement, operating agreement). A draft Position Object is created at L0.
Verify — cross-reference against available records (cap table provider, fund admin, Blackmoat entity data). Flag discrepancies. Position promotes through L1-L2 as identity and economics are confirmed.
Form — automated DOIV LLC formation (Delaware Series LLC for lookthrough patterns, standard LLC for direct wraps). Operating agreement generated from templates with extracted restrictions.
Contribute — legal assignment of the asset into the SPV. For shares: stock power and cap table update. For LP interests: assignment agreement and GP consent (triggered via consent chain). Position promotes to L4.
Unitize — the SPV issues membership interests. Each unit is registered as a Position Object. The position is live in the DMTR registry — discoverable, transferable, pledgeable.

Steps 1-2 can be self-service. Step 3 requires legal automation (standardized Delaware LLC formation). Step 4 requires counterparty cooperation (the company or GP must acknowledge the assignment). Step 5 is mechanical.

ℹ Not every position completes all five steps

Many positions will stabilize at L1-L3 indefinitely. The value of the fidelity spectrum is that every level is independently useful. An L3 position that never wraps is still evaluable by the Rights Engine and coordinatable through the reverse proxy pattern.

Lookthrough Decomposition — Series LLC decomposition and NAV attribution for L5 positions
Decomposability — Structural vs economic decomposition
Provenance — Terms hash, document extraction, and source of truth model
Position Object — The canonical representation of a private position
Rights Engine — Deterministic transfer evaluation
Encumbrances — Liens, pledges, and collateral encoding

Brownfield Onboarding