NUTS Finance a non-profit Foundation focused on building an open technology platform to support the issuance of diversified financial instruments on public blockchains.
We observed several legacy problems regarding to the traditional financial system; lack of transparency and counterparty risks caused by rent seeking intermediaries have been a major hurdle in many financial transactions. We believe with the use of distributed ledger technology, consensus trust mechanism combined with game theory economics, the overall transparency, efficiency, and accessibility of the financial system can be greatly improved.
Our vision is to enable an open, inclusive and transparent financial system by simplifying the issuance process of traditionally complex financial instruments. The ultimate goal is to reduce the barriers to entry in financial services markets for all participants.
As we are creating the building blocks to support an open financial system, we are aware of the magnitude of this project. Hence, we would need all the development support we could get from the community. We welcome constructive feedback and challenges from anyone who shares our vision and we believe the best way to achieve this is by being transparent with our methodologies and approach.
The NUTS technology framework is designed to support a vast diversity of financial instruments characterized by the following attributes:
Exchange frequency of instrument is non-latency sensitive
Instruments possess a natural status lifecycle (delinquent, defaulted, liquidated, etc.)
Instrument trades in a peer-to-peer, off-exchange and non-atomic format
High underwriting costs
In general, we characterize such instruments as non-standard financial instruments. Instruments that fall under such category includes loan, forward contracts and various forms of promissory notes.
At the initial stage, NUTS technology framework is designed to support the issuance of financial instruments based on ERC20 tokens. Specifically, our standardized modules will support the issuance of (i) Crypto loan contracts (ii) Crypto lock-up contracts (iii) Crypto ESOP contracts (iv) Crypto PIPE contracts.
Our targeted users are Financial Service Providers (FSPs) who are interested in adopting blockchain technology as part of the financial instruments issuance process.
With that being said, we believe blockchain technology enables individuals to compete with financial institutions on a leveled playing field. Hence, our definition of FSPs in the open finance context includes both individuals and businesses.
At the initial stage, we will focus our efforts on crypto FSPs since this group is already familiar with the benefits of open finance. As on-chain asset continues to grow through native origination and off-chain migration, we envision our technology solutions to be adopted by all participants in the financial services markets; individuals and businesses, crypto maximalists to Wall Street veterans.
Modularized - our approach to simplifying the issuance process for complex financial instruments is by modularizing technology solutions in a way that is business objective focused, highly standardized and reusable. This design offers the highest level of flexibility and efficiency for application builders.
Stateful - financial contract states are immutable, discoverable and can be easily managed and analyzed by contract participants.
Open source - we are committed to providing transparency, auditability and open access to all participants interested to take part in the open financial system.
Yes, we will be issuing an ERC20 based utility token.
The primary token economics will be based on direct staking mechanism. Specifically, staking will be tied to the access of the NUTS technology framework; where different participants within the NUTS platform are required to stake NUTS tokens in order to conduct specific functions ranging from issuance, distribution, discovery and exchange of financial instruments. In addition, staking will also be tied to the conditional state of smart contracts, referred to as contract lifecycle. The redeemability of tokens staked in smart contracts is subject to the changing status of financial instruments which are controlled by different roles within the NUTS platform. A successful completion of contract lifecycle would unlock the token balance at stake.
We will adopt a serial token mining strategy for the NUTS Finance project. We believe this approach best aligns interests for all token stakeholders. In addition, we believe a serial token mining approach is the most efficient way to avoid any capital surplus or deficit; a problem we observed from many ICO projects. We will initiate up to 6 periods of token mining; our decision to adopt stake mining as our token generation strategy was led by three key factors (i) Aligning economic incentives with community supporters (ii) Aligning token utility value with Financial Service Providers (iii) Distributing tokens in a fair and systematic way. For more information on our mining program, please visit NUTS Stake Mining FAQ.
The entire NUTS token supply will be distributed using a serial token mining approach. 90% of the total token supply will be distributed to miners. The remaining 10% will be allocated to NUTS Finance Foundation for continuous product development and community building objectives.
At the current stage, the NUTS technology platform is a collection of modules comprised of smart contracts. As we continue to introduce open, secure and modularized technology for the open finance community, NUTS Finance will be introducing capabilities ranging from smart contracts to developer tools. For more information on our development roadmap, please visit our Domain Model.
We are building on the Ethereum network at the current stage. We chose to build on the Ethereum network due to two compelling reasons: (i) a large percentage of assets are denominated in ERC20 tokens (ii) the Ethereum network currently hosts the most number of decentralized finance projects.
As we prioritize the next blockchain network for deployment, our decision would be based on (i) amount of asset stored on the native blockchain. (ii) compatibility with the open finance vision.