Patient Zero: End-to-End Demo

What this document is

This is the engineering and compliance specification for the first end-to-end reference implementation of Dark Matter. It describes every entity, every Position Object, every registry operation, every Rights Engine evaluation, and every settlement step required to execute a real secondary transfer on DMTR.

The demo is designed to exercise every critical subsystem — registry, rights engine, identity graph, consent chain, and settlement — on a scenario with genuine legal and regulatory complexity (defense/space portfolio, ITAR/CFIUS restrictions, deal-by-deal carry, granular GP-level unitization).

The scenario

Act 1: Fund formation

Megalith creates a de novo vehicle: "R&D Fund" (Megalith Ventures R&D, LP — a Delaware limited partnership).

Capital structure:

The four GP members hold their interests through the GP LLC. Each GP member's $25K contribution is individually tracked and unitized in the DMTR registry — this is the foundation for the granular transfer in Act 3.

Carry structure (deal-by-deal):

The waterfall follows the Megalith II LPA pattern:

1. Return of capital — 100% to LPs (via the Fund) until cumulative distributions equal the Investment Cost for that deal.
2. Carry tier 1 — 80% to LPs / 20% to Deal Carried Interest Recipients (15% Deal Originator + 5% GP), until total distributions reach 2x Investment Cost.
3. Carry tier 2 — 72.5% to LPs / 27.5% to Deal Carried Interest Recipients, on amounts above 2x.

Act 2: Portfolio construction

R&D Fund makes 10 investments through Deal Originator Investment Vehicles (DOIVs). Each DOIV is a Delaware LLC that holds the target company's shares. The Fund is the Class B Member of each DOIV; the Deal Originator is the Class A Member (carry recipient).

Saronic-specific details:

• Saronic builds autonomous AI ship infrastructure.
• The investment is made via AV R&D Saronic, LLC (the DOIV).
• The Fund (as Class B Member) contributes the $10M.
• The Deal Originator (as Class A Member) contributes $0 in capital but holds 15% carry rights.
• The DOIV holds Series [X] Preferred Stock in Saronic Technologies, Inc.

ITAR/CFIUS flag: Saronic operates in a domain subject to International Traffic in Arms Regulations (ITAR) and potential Committee on Foreign Investment (CFIUS) review. The Rights Engine must encode:

• ITAR-restricted transferability: no transfer to Foreign Persons (as defined under 22 CFR § 120.16 and the DPA)
• CFIUS notification requirements for certain transfers
• Enhanced KYC for defense-sector exposure

Act 3: NAV appreciation and the secondary transfer

T+2 quarters after investment: Saronic raises an intermediate round that marks the position at $30M NAV (3x the cost basis).

The transfer: A pre-qualified third-party buyer wants to acquire $1,000 of Saronic exposure at the current $30M NAV. The $1,000 is fulfilled with an equal $250 slug from each of the four GP members.

This is the core of the demo. Every step below is a DMTR platform operation.

DMTR registry state

Entities registered before the demo

The following entities are pre-registered in the DMTR Identity Graph with KYC/AML clearance and accreditation verified.

Identity Graph entries:
├── megalith-rd-fund        Megalith Ventures R&D, LP          [LP, US-DE, accredited, non-foreign]
├── megalith-rd-gp          Megalith Ventures R&D GP, LLC      [GP, US-DE]
├── gp-member-a             John Komkov                        [individual, US, accredited, non-foreign, ITAR-cleared]
├── gp-member-b             [GP Member B]                      [individual, US, accredited, non-foreign, ITAR-cleared]
├── gp-member-c             [GP Member C]                      [individual, US, accredited, non-foreign, ITAR-cleared]
├── gp-member-d             [GP Member D]                      [individual, US, accredited, non-foreign, ITAR-cleared]
├── anchor-lp               [Anchor LP entity]                 [institutional, US, accredited, non-foreign]
├── deal-originator-saronic [Deal Originator firm]              [institutional, US, accredited]
├── av-rd-saronic           AV R&D Saronic, LLC                [DOIV, US-DE]
└── buyer-001               [Third-party buyer]                [individual/institutional, US, accredited, non-foreign, ITAR-cleared]

Position Objects created during the demo

Step 1: Fund-level positions

When the Fund forms and capital is committed, the registry creates positions representing each participant's interest in the Fund.

Anchor LP position:

{
  "entity_id": "pos-rd-lp-001",
  "status": "active",
  "asset": {
    "issuer": { "name": "Megalith Ventures R&D, LP", "ref": "megalith-rd-fund", "jurisdiction": "US-DE" },
    "vehicle_class": "lp_interest",
    "vintage": "2026-Q1"
  },
  "owner": "anchor-lp",
  "economic_rights": {
    "commitment": "99900000",
    "funded": "0",
    "partnership_percentage": 99.90,
    "distribution_policy": "per_lpa"
  },
  "transfer": {
    "transferable": true,
    "restrictions": [
      { "type": "consent_required", "parties": ["megalith-rd-gp"] },
      { "type": "opinion_of_counsel", "waivable_by": "megalith-rd-gp" },
      { "type": "reg_d_506b", "no_general_solicitation": true },
      { "type": "cfius_foreign_person_block" },
      { "type": "itar_restriction", "cleared_required": true }
    ]
  },
  "compliance": {
    "accreditation_required": true,
    "itar_sensitive": true,
    "cfius_covered": true
  }
}

GP Member positions (one per GP member — four total):

{
  "entity_id": "pos-rd-gp-a",
  "status": "active",
  "asset": {
    "issuer": { "name": "Megalith Ventures R&D GP, LLC", "ref": "megalith-rd-gp", "jurisdiction": "US-DE" },
    "vehicle_class": "gp_interest",
    "vintage": "2026-Q1"
  },
  "owner": "gp-member-a",
  "economic_rights": {
    "commitment": "25000",
    "funded": "25000",
    "gp_carry_share": 0.25,
    "distribution_policy": "per_lpa"
  },
  "transfer": {
    "transferable": true,
    "restrictions": [
      { "type": "consent_required", "parties": ["megalith-rd-gp"] },
      { "type": "cfius_foreign_person_block" },
      { "type": "itar_restriction", "cleared_required": true }
    ]
  },
  "compliance": {
    "accreditation_required": true,
    "itar_sensitive": true,
    "cfius_covered": true
  }
}

Step 2: Deal-level positions (after Saronic investment)

When the Fund invests $10M in Saronic via AV R&D Saronic, LLC, the registry creates deal-level positions that track each participant's economic interest in that specific deal.

This is the critical structural insight: the DMTR registry encodes ownership at the deal level, not just the fund level. Each GP member's $25K commitment allocates proportionally across deals. For the Saronic deal ($10M of $100M total = 10% of fund), each GP member's Saronic exposure is:

$$\text{GP member Saronic exposure} = $25{,}000 \times \frac{$10{,}000{,}000}{$100{,}000{,}000} = $2{,}500$$

GP Member A — Saronic deal position:

{
  "entity_id": "pos-rd-gp-a-saronic",
  "status": "active",
  "asset": {
    "issuer": { "name": "AV R&D Saronic, LLC", "ref": "av-rd-saronic", "jurisdiction": "US-DE" },
    "vehicle_class": "doiv_gp_interest",
    "underlying": {
      "company": "Saronic Technologies, Inc.",
      "sector": "defense_naval_autonomous",
      "security_type": "preferred_stock"
    },
    "vintage": "2026-Q1"
  },
  "owner": "gp-member-a",
  "economic_rights": {
    "cost_basis": "2500",
    "sharing_percentage": 0.025,
    "carry": { "gp_rate": 0.05, "member_share": 0.25 }
  },
  "valuation": {
    "cost_basis": "2500",
    "current_mark": { "value": "2500", "currency": "USD", "as_of": "2026-Q1", "provenance": "cost" }
  },
  "transfer": {
    "transferable": true,
    "restrictions": [
      { "type": "consent_required", "parties": ["megalith-rd-gp"] },
      { "type": "itar_restriction", "cleared_required": true },
      { "type": "cfius_foreign_person_block" },
      { "type": "company_transfer_restriction_bypass", "note": "Transfer is at DOIV membership level, not at Saronic cap table level. Saronic board consent not required." }
    ]
  },
  "compliance": {
    "accreditation_required": true,
    "itar_sensitive": true,
    "cfius_covered": true
  }
}

Identical positions pos-rd-gp-b-saronic, pos-rd-gp-c-saronic, pos-rd-gp-d-saronic are created for the other three GP members.

Step 3: NAV update (T+2 quarters)

Saronic raises an intermediate round. The GP marks the position at $30M NAV (3x cost). The registry processes a mark update event on all Saronic-linked positions.

{
  "event_type": "position.mark_updated",
  "positions_affected": [
    "pos-rd-gp-a-saronic",
    "pos-rd-gp-b-saronic",
    "pos-rd-gp-c-saronic",
    "pos-rd-gp-d-saronic",
    "pos-rd-lp-001-saronic"
  ],
  "new_mark": {
    "deal_nav": "30000000",
    "multiplier": 3.0,
    "provenance": "intermediate_round",
    "as_of": "2026-Q3"
  }
}

Each GP member's Saronic position is now marked at $7,500 ($2,500 cost × 3.0x).

The transfer: step by step

What is actually being transferred

The buyer is not buying Saronic stock. The buyer is acquiring a fractional membership interest in AV R&D Saronic, LLC — the DOIV that holds the Saronic shares. Specifically, the buyer acquires $250 worth of DOIV membership interest from each of four GP members, at the current $30M NAV.

This is the key structural move: the transfer operates at the DOIV level, above the cap table. Saronic's cap table does not change. The DOIV still holds the same shares. Only the ownership of membership interests in the DOIV changes hands. This means:

• No Saronic board consent required
• No Saronic ROFR triggered
• No cap table amendment at the company level
• No Saronic information rights affected (the DOIV retains them)
• Transfer restrictions are governed by the DOIV operating agreement and the Fund LPA, not by Saronic's charter

Why this doesn't trigger general solicitation

The transfer is structured as a private secondary — not a new offering:

1. No general solicitation. The buyer is pre-identified and pre-qualified. The position is not advertised. Discovery occurs through the DMTR platform, which is itself access-restricted to accredited investors who have completed KYC/AML onboarding. This is consistent with Rule 506(b), which permits offers to accredited investors with whom the issuer (or its agent) has a pre-existing substantive relationship.

2. The DMTR platform as a restricted access environment. DMTR is not a public marketplace. Access requires identity verification, accreditation confirmation, and execution of platform terms that include investment representations analogous to those in a subscription agreement. The Rights Engine enforces eligibility before any position is discoverable by a given participant. A buyer who has not cleared the Identity Graph cannot see, query, or express intent on any position.

3. Pre-existing relationship. The Megalith GP has a pre-existing substantive relationship with the buyer (or the buyer has been introduced through a channel that satisfies the "pre-existing relationship" standard under SEC no-action guidance). The DMTR registry records the relationship provenance.

4. Transfer, not new issuance. This is a secondary transfer of existing membership interests, not a new securities offering. Section 4(a)(1) of the Securities Act (and the "Section 4(a)(1½)" doctrine) permits resales of restricted securities by non-issuers, provided the transaction does not involve a public distribution.

Step-by-step platform operations

Step A: Buyer discovery

The buyer queries the DMTR registry for available Saronic exposure.

POST /v1/positions/search
{
  "filters": {
    "underlying_company": "Saronic Technologies, Inc.",
    "transferable": true,
    "vehicle_class": ["doiv_gp_interest", "doiv_lp_interest", "lp_interest"]
  },
  "requester": "buyer-001"
}

The Rights Engine pre-filters results: the buyer only sees positions that are potentially transferable to them given their identity graph status. Positions with restrictions the buyer cannot satisfy (e.g., ITAR-blocked for a foreign person) are excluded from results.

Result: Four GP-member Saronic positions are discoverable.

Step B: Transfer feasibility evaluation

The buyer requests a feasibility check for acquiring $1,000 of Saronic exposure ($250 from each GP member).

POST /v1/transfers/evaluate
{
  "proposed_transfers": [
    { "position": "pos-rd-gp-a-saronic", "seller": "gp-member-a", "buyer": "buyer-001", "amount_usd": "250" },
    { "position": "pos-rd-gp-b-saronic", "seller": "gp-member-b", "buyer": "buyer-001", "amount_usd": "250" },
    { "position": "pos-rd-gp-c-saronic", "seller": "gp-member-c", "buyer": "buyer-001", "amount_usd": "250" },
    { "position": "pos-rd-gp-d-saronic", "seller": "gp-member-d", "buyer": "buyer-001", "amount_usd": "250" }
  ],
  "nav_reference": { "deal_nav": "30000000", "as_of": "2026-Q3" },
  "requester": "buyer-001"
}

Rights Engine evaluation (per transfer):

Verdict: CONDITIONALLY ALLOWED — pending GP consent.

Step C: Indication of interest (IOI)

The buyer creates a formal IOI.

POST /v1/ioi/create
{
  "buyer": "buyer-001",
  "positions": [
    { "position": "pos-rd-gp-a-saronic", "amount_usd": "250" },
    { "position": "pos-rd-gp-b-saronic", "amount_usd": "250" },
    { "position": "pos-rd-gp-c-saronic", "amount_usd": "250" },
    { "position": "pos-rd-gp-d-saronic", "amount_usd": "250" }
  ],
  "price_basis": "nav",
  "nav_reference": { "deal_nav": "30000000", "as_of": "2026-Q3" },
  "total_consideration": "1000"
}

What happens internally:

• Registry creates IOI object with ioi_id: "ioi-001"
• Each seller (GP member) receives notification
• Platform computes the fractional unit math:

Step D: Seller acceptance

Each GP member accepts the IOI. In the demo, this can be a single action by the GP entity (since all four are acting through the GP LLC with delegated authority).

POST /v1/ioi/accept
{
  "ioi_id": "ioi-001",
  "acceptors": ["gp-member-a", "gp-member-b", "gp-member-c", "gp-member-d"],
  "authorized_by": "megalith-rd-gp"
}

Step E: Consent chain

The Rights Engine triggers the consent chain. For this transfer, the required consents are:

POST /v1/consent/request
{
  "transfer_id": "txn-001",
  "consent_chain": [
    {
      "party": "megalith-rd-gp",
      "role": "managing_member",
      "required": true,
      "timeout_days": 30,
      "authority": "LPA §9.4; DOIV OA §9.1"
    }
  ]
}

In the demo: The GP approves with a single action. The Rights Engine records the consent event.

POST /v1/consent/approve
{
  "transfer_id": "txn-001",
  "party": "megalith-rd-gp",
  "approved": true,
  "signer": "gp-member-a",
  "authority": "authorized_signatory"
}

Step F: Atomic settlement

All conditions are met. DMTR executes atomic settlement — all four partial transfers succeed or none do.

POST /v1/transfers/settle
{
  "transfer_id": "txn-001",
  "settlements": [
    {
      "from": "gp-member-a",
      "to": "buyer-001",
      "position": "pos-rd-gp-a-saronic",
      "fraction": 0.0333,
      "consideration_usd": "250",
      "new_position_id": "pos-rd-buyer-001-saronic-a"
    },
    {
      "from": "gp-member-b",
      "to": "buyer-001",
      "position": "pos-rd-gp-b-saronic",
      "fraction": 0.0333,
      "consideration_usd": "250",
      "new_position_id": "pos-rd-buyer-001-saronic-b"
    },
    {
      "from": "gp-member-c",
      "to": "buyer-001",
      "position": "pos-rd-gp-c-saronic",
      "fraction": 0.0333,
      "consideration_usd": "250",
      "new_position_id": "pos-rd-buyer-001-saronic-c"
    },
    {
      "from": "gp-member-d",
      "to": "buyer-001",
      "position": "pos-rd-gp-d-saronic",
      "fraction": 0.0333,
      "consideration_usd": "250",
      "new_position_id": "pos-rd-buyer-001-saronic-d"
    }
  ]
}

What happens atomically:

1. Registry updates: Four new Position Objects are created for buyer-001. Four existing GP positions are reduced by 3.33% each.
2. Event log: Eight events are appended — four position.transferred (partial, from each GP member) and four position.registered (new positions for buyer).
3. Capital account adjustment: The DOIV operating agreement ledger is updated to reflect new membership percentages.
4. Carry preservation: The buyer's new positions carry the same deal-by-deal carry structure. The buyer is subject to the same waterfall: their $1,000 of Saronic exposure participates in distributions per the DOIV waterfall (capital return first, then carry split).
5. No cap table change at Saronic: AV R&D Saronic, LLC still holds the same number of Saronic shares. The ownership change is entirely at the DOIV membership level.

Step G: Post-settlement state

Buyer's new consolidated position:

{
  "entity_id": "pos-rd-buyer-001-saronic",
  "status": "active",
  "asset": {
    "issuer": { "name": "AV R&D Saronic, LLC", "ref": "av-rd-saronic" },
    "vehicle_class": "doiv_membership_interest",
    "underlying": {
      "company": "Saronic Technologies, Inc.",
      "sector": "defense_naval_autonomous"
    }
  },
  "owner": "buyer-001",
  "economic_rights": {
    "cost_basis": "1000",
    "nav_at_acquisition": 1000,
    "aggregate_sharing_percentage": 0.00333,
    "carry": { "subject_to_deal_carry": true, "do_rate": 0.15, "gp_rate": 0.05 }
  },
  "valuation": {
    "cost_basis": "1000",
    "current_mark": { "value": "1000", "currency": "USD", "as_of": "2026-Q3", "provenance": "transfer_price" }
  },
  "transfer": {
    "transferable": true,
    "restrictions": [
      { "type": "consent_required", "parties": ["megalith-rd-gp"] },
      { "type": "itar_restriction", "cleared_required": true },
      { "type": "cfius_foreign_person_block" }
    ]
  },
  "provenance": {
    "acquired_via": "secondary_transfer",
    "transfer_id": "txn-001",
    "source_positions": [
      "pos-rd-gp-a-saronic",
      "pos-rd-gp-b-saronic",
      "pos-rd-gp-c-saronic",
      "pos-rd-gp-d-saronic"
    ],
    "transfer_date": "2026-Q3"
  }
}

Each GP member's updated position (example: GP Member A):

{
  "entity_id": "pos-rd-gp-a-saronic",
  "status": "active",
  "owner": "gp-member-a",
  "economic_rights": {
    "cost_basis": "2417",
    "sharing_percentage": 0.02417,
    "carry": { "gp_rate": 0.05, "member_share": 0.25 }
  },
  "valuation": {
    "current_mark": { "value": "7250", "currency": "USD", "as_of": "2026-Q3" }
  },
  "provenance": { "acquired_via": "primary" }
}

What the demo proves

1. Granular unitization and divisibility

A $25,000 GP commitment to a $100M fund is decomposed into per-deal positions. A single deal position ($2,500 cost, $7,500 mark) is further divided into a $250 fractional transfer. DMTR handles sub-position math at arbitrary granularity without manual legal restructuring.

2. Asset slicing from portfolios

The buyer acquires exposure to a single company (Saronic) out of a 10-company portfolio, without acquiring any interest in the other nine investments. This is position-level liquidity, not fund-level liquidity. Traditional fund structures require selling an entire LP interest; DMTR enables single-asset extraction.

3. Operating above the cap table

The entire transfer occurs at the DOIV membership level. Saronic's cap table is untouched. No board consent. No company-level ROFR. No information rights renegotiation. The DOIV is a clean abstraction layer between the investors and the company. DMTR operates on that layer.

4. Near-instant clearing and settlement

From feasibility evaluation through consent through settlement: DMTR can execute in minutes what traditionally takes 6–8 weeks and $30–50K in legal and administrative costs. The consent chain is the only human-gated step, and in a prepared demo it resolves in seconds.

5. Compliance as product

The ITAR restriction, CFIUS Foreign Person block, accreditation check, KYC/AML clearance, solicitation guard, and PTP safe harbor test all execute deterministically before settlement. A transfer that would fail legal review also fails the Rights Engine. Same rules, millisecond execution, complete audit trail.

6. Carry waterfall preservation

The buyer's new position inherits the deal-by-deal carry structure. The 15% Deal Originator carry and 5% GP carry apply to the buyer's pro-rata share of future Saronic proceeds. The waterfall computation is encoded in the Position Object, not in a side letter that needs to be manually amended.

Securities law considerations

Exemption framework

The "above the cap table" structure

The structural elegance of the Megalith DOIV model is that every portfolio company investment lives in its own LLC. The LLC is wholly owned by the Fund (as Class B Member) and the Deal Originator (as Class A Member). When a GP member sells a fraction of their interest, the transfer is of LLC membership units — not of the underlying company's securities.

This means:

• Saronic's ROFR does not apply. The ROFR, if any, in Saronic's charter applies to transfers of Saronic stock. The DOIV still holds the same Saronic stock. No transfer of Saronic stock occurs.
• Board information rights are preserved. The DOIV retains its board observer seat (if any) and information rights. The internal reallocation of DOIV membership interests does not affect the DOIV's relationship with Saronic.
• Transfer restrictions in Saronic's charter are not triggered. Many venture charters include transfer restrictions on the holders of preferred stock. Those restrictions bind the DOIV as a stockholder of Saronic. They do not bind the members of the DOIV.

This is not a loophole. This is the intended operation of the SPV/LLC co-investment structure that has been standard in venture capital for decades. Dark Matter digitizes it.

Demo script (live presentation)

Setup (before the room)

1. Pre-register all entities in the Identity Graph
2. Pre-create the Fund, DOIV, and all Position Objects through Act 2
3. Pre-execute the NAV update to $30M
4. Pre-register buyer-001 with full KYC/AML/ITAR clearance
5. Have the GP consent workflow ready for single-click approval

In the room (90 seconds)

[Screen: DMTR registry showing Saronic position held by four GP members]

"This is a live Megalith fund holding 10 defense and space investments. One of them is Saronic — AI-powered autonomous naval vessels. Bought at $10M, now marked at $30M after an intermediate round."

[Action: Run buyer feasibility check]

"A buyer wants $1,000 of Saronic exposure. The Rights Engine evaluates: accreditation — cleared. KYC — cleared. ITAR eligibility — cleared, US person. CFIUS — cleared, not a foreign person. No lockup. Consent required from the GP."

[Screen: Rights Engine verdict — CONDITIONALLY ALLOWED]

"The system knows who can hold this position and who can't. A non-US buyer would be blocked here. Not by a lawyer reviewing documents — by the schema."

[Action: Create IOI, accept, trigger consent]

"The $1,000 is sourced equally from four GP members — $250 each. That's 3.33% of each GP member's Saronic exposure. DMTR handles the fractional math."

[Action: GP approves consent with one click]

[Action: Settle]

"Settlement. Four partial transfers, atomic — all succeed or none do. The buyer now holds $1,000 of Saronic exposure. The carry structure travels with it. Saronic's cap table hasn't changed. The DOIV still holds the same shares. The transfer happened above the cap table."

[Screen: Buyer's new Position Object with full provenance, restrictions, and carry terms]

"That took 90 seconds. The traditional version takes 6 to 8 weeks and costs $30,000 to $50,000 in legal fees. Every step you just watched — discovery, feasibility, consent, settlement — ran through the same schema that encodes ITAR restrictions, carry waterfalls, and ownership state. The compliance isn't bolted on. It's the product."

The closer

"Now imagine 500 positions in this registry instead of 10. Imagine agents evaluating feasibility, computing haircuts, and routing collateral — all operating on the same Position Objects. That's Dark Matter."

Implementation requirements

Platform subsystems exercised

Data model requirements

• Position Objects must support fractional splitting (partial transfers)
• Carry structures must be inherited by child positions on split
• Event log must record full provenance chain (source positions, transfer IDs)
• NAV marks must propagate to all derivative positions in a deal
• Identity Graph must support ITAR and CFIUS eligibility flags

API endpoints required

Pre-demo data setup

All entities, positions, and NAV marks described in Acts 1–3 must be registered with DMTR before the live demo. The demo itself executes only Act 3, Steps A through G.