A Price-Stable Cryptocurrency. Government Debt Securities.

Transcription

1 STAPLE: A Price-Stable Cryptocurrency ensured by Government Debt Securities. Version (June 28, 2018)

2 Contents 1MISSION STATEMENT 2 2 INTRODUCTION 2 3 TERMS AND DEFENITIONS 2 4 KEY BENEFITS OF STAPLES AS A CRYPTOCURRENCY 3 5 STAPLE PLATFORM 6 STABLECOIN TECHNOLOGY 8 6 FIRST PLATFORM PRODUCT - susd POA (PROOF OF ASSET) METHOD SUSD RESERVE WHY T-BILLS 13 7 THE STAPLE TOKEN S LIFE CYCLE Staple Token Circulation: 17 8 STAPLE TOKEN SYSTEM ARCHITECTURE 18 9 FUTURE OF PLATFORM (seur, sgbp, sbond) 20 Staple EUR & Staple GBP Staple BOND STAPLE PLATFORM FEES and STE TOKEN (STAPLE PLATFORM DISCOUNT TOKEN) MARKET APPLICATIONS FOR STAPLE (susd) 24 CUSTOMER STRUCTURE AND MARKET CAPACITY 24 STAPLE MODEL (REMITTANCE LICENSE) 25 1

3 1 MISSION STATEMENT Blockchain technology is the future of financial operations. It was embraced by the financial technological sector and made everyone take a new look at modern financial systems organizational principles and the payment system in particular. Our mission is to create a cryptocurrency that is based on blockchain technology AND backed by real asset reserves open for audit. We aim to create Staple: convenient non-volatile means of payment; used for depositing and saving assets; has transparent and justified pricing; maintains momentum and liquidity. 2 INTRODUCTION Any cryptocurrency user today needs an independent, secure and legal coin that can be used anywhere, by companies and individuals alike, to transfer money across borders, that would not have volatility risk, and that would be fast, cost-effective, and still have all the other advantages of the blockchain technology. Staple is such a currency. With its value tied to the value of a fiat currency Staple becomes the bridge between the traditional and digital financial markets. Staple is created and exists in a cryptographic form, but it is based on real assets, namely on government-issued bonds, and this gives Staple the desired stability and high level of processing control. Due to the size and stability of the government-issued bond market the price of Staple cannot be manipulated, its value cannot be created by artificial means. Supply is determined according to the amount of government bonds in circulation. It is also, however, fast, secure and cost-effective, and takes advantage of blockchain innovations to offer real value to all users. 3 TERMS AND DEFENITIONS Staple Company or the Company - the issuer of electronic money and Staple tokens, provides the collateral for issued tokens with low-risk securities. Staple Token Staple platform cryptocurrency token 2

4 Staple Platform - provider of electronic currencies (such as USD, EUR, GBP), and digital currencies that are backed by Bonds; allows the clients to purchase or return Staple tokens in exchange for electronic money. Staple USD (susd) - a stable coin (Stablecoin), a token pegged to fiat currency (US dollar). The collateral of susd tokens is low-risk securities (government debt securities). Staple BOND (sbond) - a profitable cryptocurrency, tokenized unit of the investment funds backed by Bonds. STE internal Staple Platform utility token, created in accordance with ERC20 standard. The client enjoys a 50% discount in fees if paying with STE when exchanging Staple tokens for electronic money or cryptocurrency. Staple Token System (STS) information system deployed on the basis of a highly reliable cloud platform Amazon Web Services, provides clients with purchase and exchange services. Staple Wallet 2 in 1 ewallet within Staple Token System, allows for storage and exchange of electronic money (USD, EUR, GBP) as well as cryptocurrencies (susd, seur, sgbp). 4 KEY BENEFITS OF STAPLES AS A CRYPTOCURRENCY Blockchain Application for payment purpose reshapes the financial market; they have already begun to do so. Banks will be increasingly pushed out of the end user service sector onto the payment infrastructure level. A simple and transparent movement of electronic money between users without intermediaries and without large transaction costs. Within the blockchain network, anyone can create their own ewallet, and anyone may transfer funds to another user or organization s ewallets. Real Time Payment The ideal payment system is a single distributed payments processing center that exclusively handles wire transfers in a single stable currency that can be freely exchanged into fiat currencies. All the players open accounts directly with such a center, and due to the resulting unified accounting, all transactions can be processed instantaneously 24 hours a day, 7 days a week, 365 days a year. Compare this with the usual constraints of the banking day. 3

5 With this new system, making adjustments for the time zones overlap, any financial operation would take from 5 minutes to 6 hours. Blockchain technology provides users with an opportunity to track a transaction in real time online, and watch as the transaction proceeds from one blockchain address to another without leaving the user s sphere of control. Cutting credit risks By using a custodian to implement the Proof of Asset (POA) method, we link Staple issuance with Bond purchase and registration through Staple s custodian account. The blockchain technology that Staple uses creates smart contracts, which allows the account owner to follow any change of asset volume in the account of Staple custodian, immediate 4

6 issuance and redemption of a Staple Token when that volume changes. Using of a custodian as the asset safe keeper neutralizes the bank credit risk to clients. Additionally, we use government bonds because: (a) their lack of credit risk; (b) the security form of Bonds helps minimize exposure to the banking system by holding the reserve with an independent custodian. Volatility Absence. Bitcoins often experience huge fluctuations in value, rising or falling by as much as 25% in a single day and three times this much in a month. The chief economic reason for this is simply that the supply of Bitcoins is fixed, and so their price is directly proportional to demand - and, therefore, by an efficient market hypothesis, also the expected discounted future demand - which is very unpredictable, and ultimately hard to control. The Digital Market Can Increase the Scalability of Fintech Blockchain Adopters. Building a scalable payment infrastructure inside of an Ethereum blockchain ultimately helps decentralized applications (dapps) of different businesses as well as 5

7 social groups and activities - to communicate and exchange information in a way that brings about economic benefits to all users. The 2 in 1 Wallet (ewallet and Crypto Wallet) makes Staple the bridge between the traditional and digital markets. Ability to use Staple platform as ewallet with real time crypto/fiat conversions make Staple the bridge between two markets. 5 STAPLE PLATFORM Blockchain technology allows using Staple Platform as a provider of electronic currencies such as USD, EUR, GBP, and digital currencies that are backed by Bonds. The Platform allows the clients to purchase or return Staple tokens in exchange for electronic money. The Staple Wallet allows storage and exchange of Staple tokens, and it is supported by cryptocurrencies and electronic money. Clients can withdraw Staple tokens from their 6

8 Staple wallet to another wallet for storage, or transfer tokens to cryptocurrency exchanges to exchange them for other cryptocurrencies. To purchase tokens, the client must first top-up the electronic money account in their ewallet. When a client returns tokens to the Company, the proceeds are credited to the electronic money account in their ewallet. Clients can also use their electronic money by withdrawing it into their bank accounts and payment cards, converting into cryptocurrency, or for payment for goods and services using a Staple debit card. Clients Asset Journey 1 Client creates an ewallet and puts fiat money into it. 1B Staple purchases Bonds from the Security Market. 1C Bonds are registered with Staple's custodian account. 1D According to the resulting change in the custodian account balance, Staple issues susd to the client s Staple wallet (ERC20). 2A Client sends susd from his own Staple wallet to Staple Company crypto wallet. 2B Staple sells Bonds. 2C The Bonds are deregistered from Staple's custodian account. 2D Staple puts USD to the client s ewallet. All users of susd can transfer money to one another between Staple wallets, or other ERC20 portable wallets (such as exchanges wallets or cold wallets). 7

9 Staple sells to the client Staple already pre-minted with underlying assets, and adds this money to the Tier 2 Collateral. In the reverse case of demand for the fiat funds withdrawal, the necessary amount of tokens is redeemed and part of the collateral is sold to obtain fiat funds, which are then transferred to the clients. A fee is charged to account for the services of purchasing and returning Staple tokens, and that can be levied by either Staple tokens or through STE utility tokens. When issuing Staple tokens, we are using Proof of Asset method, and this means that a Staple token will only be issued after the purchased Bonds are registered with the Staple s custodian. As a result, blockchain technologies count and track the amount of Staple inquiries and the amount of purchased Bonds in real time. We also use our own turnover capital to ensure the immediate conversion from fiat money to Staple. This means that Staple can immediately digitize any asset - for example Bonds - in a manner, that creates both high liquidity and mass market availability. We believe Bonds to be the area where mass market users will be able to make vast gains using this method. STABLECOIN TECHNOLOGY 6 FIRST PLATFORM PRODUCT Staple USD 6.1 POA (PROOF OF ASSET) METHOD The susd token is a stable coin (Stablecoin) pegged to fiat currency (US dollar). The collateral of susd tokens is low-risk securities (government debt securities) in which money received from Clients in exchange for Staple tokens is invested. The STS system ensures the transparency of collateral status for both Clients and auditors. To do this, a collateral smart contract is developed and deployed in the Ethereum network. This smart contract functions when the system performs operations to issue or redeem susd tokens, and allows mirroring operations to replenish corresponding collateral (by buying securities on the securities market, or withdrawing them from collateral and selling). The smart contract allows the registration of transactions performed with the collateral of susd tokens, so that the actual state of the collateral in monetary terms is always reflected in the public blockchain network. The characteristics of the securities to be purchased or withdrawn from the collateral are recorded in the event log of the blockchain network as collateral smart contract events. 8

10 As can be seen in the diagram, susd token collateral has a two-tier structure and consists of turnover capital (Tier 1 collateral) and securities (Tier 2 collateral). susd token collateral may consist of allocated collateral, - for tokens which have already been issued, or unallocated collateral, - when money or securities are available on the Company account, but the tokens for that money have not yet been issued, or are already destroyed. The structure and operations of the Collateral smart contract can be shown as follows: Replenishment of susd token collateral (and registration of these operations in the smart contract collateral) looks like this: 9

11 Clients initiate the purchase of tokens for electronic money, so that the funds are transferred to turnover capital, and become Unallocated collateral (for which tokens have not yet been issued). The amount of Unallocated collateral increases. If the limit of turnover capital is not exceeded, new tokens are issued, and the corresponding amount of capital is transferred to the Allocated collateral (the amount of Unallocated collateral is reduced and the amount of the Allocated collateral increases). If the volume of turnover capital is exceeded, the amount of excess is directed to replenish the Tier 2 collateral. At the end of that day the amount of replenishment and withdrawal of Tier 2 collateral is netted. If the balance is positive, securities are purchased for the excess of the amount and, Tier 2 collateral is replenished (the replenishment amount is considered to be Unallocated collateral of Tier 2 until the issuance of tokens). It the balance is negative, the securities are sold and the proceeds are transferred to working capital. Next, tokens are issued, at which point the transfer of the corresponding amount from Unallocated to Allocated collateral is carried out. Conversely, token collateral is diminished (and the corresponding registration of these transactions in the smart contract is made) like this: Clients initiate the return of tokens to the Staple Company, so that the Staple Company must return the corresponding amount of electronic money to the Clients' ewallets. To do this, the returned tokens are redeemed, and the required amount is deducted from Allocated turnover capital and becomes Unallocated turnover capital. If the turnover capital volume is higher than the minimum level, funds are withdrawn from the Unallocated part of the turnover capital and credited to the Clients ewallets as electronic money. In the event of a decrease in turnover capital below the minimum level, a request is made to withdraw the missing amount from the Tier 2 collateral. At the end of that day the amount of replenishment and withdrawal of Tier 2 collateral is netted. If the balance is positive, securities are purchased in excess of the amount and thus Tier 2 collateral (the Unallocated part of it) is replenished. It the balance is negative, the securities are sold and the proceeds are transferred to the Unallocated portion of the turnover capital. After this the balance of funds is withdrawn from the Unallocated part of the turnover capital, and the funds are credited to the Clients ewallets as electronic money. 10

12 The Company, in anticipating supply and demand, may also act on its own initiative and transfer funds from turnover capital to Tier 2 collateral and back. These operations on the cash equivalent of Tier 1 and Tier 2 collateral are reflected in smart contract variables, and are available both to any user on request and on the web page of the service. The smart contract event log also reflects the key parameters of securities purchased and sold, which are securities identification codes, currency and amount. The structure and current status of Staple token collateral is further displayed on the webpage of the STS, and is also available for viewing in any web tools that display data in Ethereum (such as with SUSD RESERVE The reserve will consist of short-term T-Bills. T-Bills are considered risk-free securities, as they are fully guaranteed by the faith and credit of the US government and the Department of the Treasury. T-Bills are typically issued at a discount from the par amount (face value). When the bill matures a holder will be paid its face value ($1,000). The market for U.S. Treasury securities is the largest, most active debt market in the world; it is highly liquid, and T-Bills have low price volatility due to their low duration and risk-free status. T-Bills and notes are usually traded over-the-counter (OTC) in transactions in which participants trade with one another on a bilateral basis. The secondary market for U.S. Treasury securities operates around the clock, but trading volume is concentrated during New York trading hours. Although Treasury securities are officially registered at the New York Stock Exchange, the trading volume in the organized marketplace is very low 1. T-Bills account for 13% of the total outstanding debt issued by the US Treasury with totaling to the amount of 1,762 million USD 2. Most international governments, central banks, international organizations and corporate entities hold US Treasury bills in their reserves; essentially, we provide our customers with the most secure tool possible as a backing for their Staple holdings. 1 The Round-the-Clock Market for U.S. Treasury Securities. Michael J. Fleming FRBNY ECONOMIC POLICY REVIEW / JULY Monthly Statement of the Public Debt of the United States (U.S. Department of the Treasury), Jan 31,

13 The OTC nature of the market and its 24-hour operational day makes the issuing and redeeming of susd possible in real time. We will also have additional reserve to cover any volatility of underlying assets, and to provide liquidity for retail customers in the event that they wish to purchase and redeem susd instantly. The initial amount of this reserve will be built by the operator, and as we increase the amount of issued susd and susd reserves, this would become self-finances by interest received; simply put, this would not require large amounts of additional financing from our side. If we take a look at a price chart of actual T-Bills with 1-year maturity, we can see that, as discussed above, the price of T-Bills goes to par closer to their maturity date and its volatility is minimal. The maximum drawdown (peak-to-trough decline of an investment during a specific period) is 0,2% in this particular case. The downside moves happened before the 10-month-to-maturity period, so the duration (a measure of price sensitivity with respect to yields of fixed income instruments) is relatively high for this kind of security. It is, in fact, the highest drawdown for any T-Bill in 2017, a function which can be explained by a lowest environment rate on record. Source: Bloomberg, internal calculations 12

14 The graph above represents the shape of any T-Bill price dynamics. We have analyzed the market dynamics of T-Bills for the past 10 years and found that maximum drawdown, including intraday volatility, was -0.89%. Consequently, we will initially set 2% as the amount of additional reserve with which to hedge T-Bill volatility and limit the duration of T-Bills to a three-month tenure WHY T-BILLS Short term borrowing and money market instruments possess a number of advantages over USD and other fiat currency as reserve. These benefits can be outlined as follows: 1. No Credit Risk Credit risk refers to the risk that a borrower may not repay a loan and that the lender may lose the principal of the loan or the interest associated with it. Credit risk arises because borrowers expect to use future cash flow to pay current debts; it is almost impossible to be sure that borrowers will have the funds to repay their debts in the future. Interest payments from the borrower or issuer of a debt obligation are a lender's or investor's reward for assuming credit risk. When lenders offer borrowers mortgages, credit cards or other types of loans, there is always an element of risk that the borrower may not repay the loan. Similarly, if a company offers credit to its client, there is a risk that its clients may not pay their invoices. Credit risk also describes the risk that a bond issuer may fail to make payment when requested, or that an insurance company will be unable to meet a claim. Staple will use custodians instead of banks to avoid any credit risk from fiat stockers, and will purchase US securities through short term borrowing in order to avoid failure of payment at any moment. This methodology has the advantage of relying on US government debt, which is more secure than commodities, basic fiat currency, or any other asset. 2. Market Default and Huge Drawdown Treasury bills, as they are officially called, are a form of US government debt, but one that the US will not default on. The yield on T-Bills is near zero, although some have maturities of as little as four weeks. The financial world knows how little risk is involved in holding T-Bills and will almost certainly not trade them lower. A final advantage of T-Bills is that they can be bought at almost any bank branch. 13

15 3. Yield Covers Necessary Immediate Liquidity Amount and Provides 24/7 Money Service According to the model of own turnover capital, Staple must possess its own capital in the amount of 1% of all issued money in order to provide immediate liquidity of susd. Staple s business model has the advantage of making commissions for the client the lowest amongst its competitors, as these provide the company with the necessary amount of capital for growth and scaling. 4. Good for a PoA Method. Staple believes that the key feature of a stable cryptocurrency is transparent pricing and a transparent model for the provision of a reserve. Unlike with incoming money, the Bond requires the registration of a transaction between the company, the broker, the clearing house and also the custodian of the buying and selling party, which in turn is a factor adding to the decentralization of the deposit of assets. Using a Bond, we add participants to the PoA process and make the imitating an issue impossible, as it is monitored by both the user and the external auditor (or state). 7 THE STAPLE TOKEN S LIFE CYCLE The participants in the process of a Staple token s circulation are as follows: Staple Company is the issuer of electronic money. It provides its clients with services in the form of electronic money and Staple tokens. The Company provides the collateral for issued tokens with low-risk securities. The Client is a company or individual, registered with the Company system for the purchase or exchange of Staple tokens, who underwent the KYC procedure. The Broker is the company that performs operations with securities on behalf of the Company in order to replenish the collateral required for tokens. The Custodian is a legal entity that has state license to register and account the securities movement. The over-the-counter (OTC) market is a decentralized market, with no physical location, where market participants trade with one another using multiple modes of communication such as by telephone, , and by using proprietary electronic trading systems. 14

16 The Company carries out its operating activities through a service provider, an operator of the information system, STS (Staples Token System). The main stages of Staple token circulation are described in the diagram below: The Company s internal procedure to create tokens looks like this: The Company periodically assesses the needs of the cryptocurrency market in Staple tokens. If it is necessary, the Company creates a reserve amount of tokens in the Company s emission wallet. These tokens are not yet in circulation. Replenishment by Clients of electronic money in electronic wallets goes like this: Clients transfer fiat money to the Company. These fiat funds are credited as electronic money in the clients ewallets, nominated in the fiat currency. Staple tokens come into circulation and purchased by Clients like this: The Client makes a purchase of Staple tokens for electronic money in their ewallet, or for cryptocurrency by sending cryptocurrency funds to the Company's cryptocurrency wallet. 15

17 The Company converts cryptocurrency funds received from Clients into fiat funds within that day. The Company charges a fixed fee for the purchase of tokens by subtracting the fee from the amount of electronic money transferred to it. After the end of that day, at T=00:00 GMT, the Company accumulates the fiat funds received during that day and transfers them into the Broker's account. Based on the funds received from Clients, the Broker acquires securities packages on the securities/otc market. After the Company receives purchased securities (and it is reflected in its account with the Custodian) information on purchased securities is recorded in the public blockchain network. This process runs in T+1 (next day delivery) mode. Upon receiving information on securities purchases, the Staple tokens smart contract issues tokens for circulation and sends tokens to the Clients ewallets. 16

18 7.1 Staple Token Circulation: The Client can buy or sell Staple tokens on the cryptocurrency exchange, where Staple tokens are traded against other cryptocurrencies. The Client may transfer tokens to another user who has an ewallet supporting ERC20 tokens. The Client can transfer and store susd with any Ethereum portable wallet. The Company is currently negotiating with various crypto-exchanges for listing and conversion of Staple tokens. 17

19 8 STAPLE TOKEN SYSTEM ARCHITECTURE The Staple token purchase and exchange services are provided to Сlients by the Staple Token System (STS), the architecture of which is shown in the diagram below: Basic information about the STS system architecture: The STS service provides Clients with the opportunity to purchase and return Staple tokens for electronic money, and ensures the charging of an fixed fee for the exchange of tokens. The central element of the STS service architecture is the Client's ewallet, which displays the balance of Staple tokens and cryptocurrency funds, as well as contains the Client's electronic money account. Clients carry out transactions of exchange of tokens for money or cryptocurrency funds and deposits and withdrawals of electronic money using their ewallets. The STS service provides issues and redeems the tokens, provides analytics for clients and employees of the Company, and also provides access to public Company data. The Ethereum blockchain network reflects all transactions on the movement of Staple tokens, from issuance to redemption. STS includes a payment service for Clients to make transactions with electronic money in their ewallets. 18

20 Blockchain network includes a smart contract that reflects the state of the token collateral (the amount and kind of securities purchased to backup tokens). This smart contract reflects the actions of the Broker, who performs the sale and purchase operations of the securities. The open data on the movement of assets in this smart contract is available to clients and auditors. The information in the smart contract can be used by the state regulator controlling the activities of the Company. Analytics for Сlients: On its website the Company publishes the amount of issued tokens and the amount and structure of securities purchased as collateral and updates this information on a regular basis. The information about transactions with tokens and their collateral is available in the public blockchain network. The services for an auditor/regulator: The Company provides the auditors and regulator with a software service that displays information about all transactions with tokens, movement of fiat funds and cryptocurrencies stored in the secure and immutable public blockchain network. 8.1 PERSPECTIVES We are ready to ensure the transparency of our business, to share our data with regulators and partners on blockchains at any time. We realize that the financial industry is just beginning to adapt to new technologies, and we assume that government regulation may require us to move our registers into a regulator s established blockchain - and we are preparing for this. We also plan to expand cooperation with other cryptocurrency exchanges in order to promote transparency. In the future, Staple tokens will be issued to other advanced blockchain networks as well. For example, we are considering the benefits of the Lightning network and similar technologies as means of expanding the issuance of Staple tokens. Using the Lightning Network technology will allow for off-chain, secure and fast transactions, and will tie several different blockchain networks into a unified framework. This can be achieved 19

21 through new technological solutions in the Lightning platform, which allows organizing of payment channels and special gateways for the exchange of cryptocurrencies and tokens between different blockchain networks. Lightning technology is going to vastly reduce the current blockchain scalability problem, improve the diversification of cryptographic currencies and tokens, and increase their attractiveness to users. 9 FUTURE OF PLATFORM (seur, sgbp, sbond) Staple EUR & Staple GBP We intend to develop and provide Staple users with a wide variety of digital currencies backed by money market securities in G20 currencies. 9.1 Staple BOND As soon as we adapt our platform to the needs of a fully transparent regulatory audit with our module solution for external counterparts - such as auditors, administrators and regulators - we will be able to tokenize other fixed income instruments. This will enable our users to hold their money in a safe and stable manner, but will also allow them to generate income by using crypto assets with greater liquidity than bank deposits. Staple has already investigated and identified the legal framework that allows the issuance of profitable cryptocurrencies backed by Bonds (Staple BOND). This, combined with our technology, will allow Staple to provide clients with a PoA method and tokenized units of investment funds. Today this is possible through Staple s subsidiary, the investment vehicle Boson Fund. This approach allows issuing tokens at the same time as fund units are registered in the administrator s ledger: When a customer becomes the owner of a profitable Staple token, the corresponding fund unit is registered in their name. While the customer owns the token, they is unable to transfer it out of the Staple system on the basis of its being their property, and its transfer thus being subject to the registration of property rights needs for regulatory reporting and the Securities Commission. The transfer of such tokens owned by clients can thus occur only between Staple users and in token form, using the necessary standard version of protocol. As soon as a customer transfers their profitable Staple tokens (Staple BOND) to another user, this initiates a change of registration of the fund 20

22 unit owner in the administrator s ledger, a process which is accompanied by the signing of FATCA and Transfer documents by the originator of the transfer. This Staple product is at its base a mass market financial product that will reduce the minimal threshold to safe investment products for the end user. The blockchain architecture with which we secure funding units allows an increase in the liquidity of any asset, and also reduces operational and transaction costs during the investment process. As a result, the user receives a profitable and safe investment instrument, rather unlike a bank deposit, and the security market will ultimately have increased liquidity and demand. The analysis and continuing development of this technology also demonstrates the inevitability of changes to the landscape of financial transactions the relationship between market participants and the needs of future consumers. sbond will be available through Staple after susd has been fully implemented. 10 STAPLE PLATFORM FEES and STE TOKEN (STAPLE PLATFORM DISCOUNT TOKEN) Type of operation Transaction Comissions (payable in fiat) Discoun t Transaction Comissions (payable in STE) susd Issue 0,1%(10 bp) or 15$ 50% 0,05%(5 bp) or 7.5$ susd Redeem 0,1%(10 bp) or 15$ 50% 0,05%(5 bp) or 7.5$ Transfer outgoing comission 2$ 50% 1$ The STE token is the transaction discount comission token of Staple Platform. The client enjoys a 50% discount in fees if paying with STE, when exchanging Staple tokens for electronic money or cryptocurrency. The STE token is: 1. Staple platform fee token, created in accordance with ERC20 standard 2. If users pay fees in STE, they will benefit from a 50% discount to all transaction fees using Staple currencies, covering costs such as issuance charges, redemption fees, conversion fees and transaction fees. 21

23 3. Staple will issue STE, and will offer to market 60% of all STE tokens for a price of 0,5 USD. All unsold STE will be destroyed after Token Sale ends. 4. After Token Sale, the STE price will be determined by demand, depending on the exchange price. In the future we plan to develop Proof Of Authority mechanisms so that clients would be able to use STE to earn transaction fees by validating Staple transactions STE PREMISES (MARKET PROBLEM) We have chosen an Ethereum blockchain as the parent system of Staple in order to develop technology capable of providing Proof of Asset Reserve for the susd Stablecoin. The use of Ethereum blockchain technology allows us to have a platform which we believe can match the fastest and most incisive modern financial technologies. As the Ethereum system exists within gas fees, users would normally need to use their Ethereum wallets to pay for gas for the parent system, and to transfer susd or ETH to a Staple wallet to cover these costs. However, we recognize that this is not a practical solution for users, and that it complicates their use of the Staple service. Consequently, to address this problem we have created the STE; users can use this to pay fees internally, and to transfer susd as often as they want without needing to change applications, and without needing to buy different types or assets in order to function in different systems. We believe that the STE makes the user experience vastly more convenient and friendly than the current market standard, and consequently we will be offering STE for purchase in the same application area as that in which costs are due STE VALUE TODAY AND TOMORROW, OR WHY BUY STE? The foundation of STE value is that it will allow users to grow along with the expansion of the digital market; STE demand will grow correspondingly with digital market correction and stagnation. This means that owners of STE will be able to rely on permanent STE market demand regardless of market phase. As previously mentioned, users of STE will also receive a 50% discount on all transactions. Clients can use their own Ethereum wallet to transfer susd outside of the Staple system, or can use internal Staple token STE to cover costs for their transactions on a daily basis. 22

24 Type of operation Basic Cost Discount Cost with STE susd Issue 10 bp or 15$ 50% 5 bp or 7.5$ susd Redeem 10 bp or 15$ 50% 5 bp or 7.5$ Transaction 2$ 50% 1$ Staple STE Economic Model: susd Purchase Goal Cost Value In USD Without STE With STE Necessary STE amount to Proceed with Cost STE price = 0,5 STE price = 1 STE price = $ $ $ 15 $ 7,5 15 7, $ 15 $ 7,5 15 7,5 2 Consider the following example according to the above table: А. Investor A wants to buy USD. Normally it costs 0,1% for the investor, or USD. B. For USD susd purchased, an investor will need to pay 15 USD normally. С. For USD susd purchased, an investor will need to pay 15 USD normally. А. A purchase of 1000 STE on ICO for an initial price of 0,5 USD is equivalent to 500 USD, which is enough for the investor to pay for his transaction. B. 15 STE with value 7,5 USD does the same for investor B. С. 15 STE with value 7,5 USD does the same for investor С. A. If the price goes high according to the exchange to 1 USD, investor A can buy 500 STE to close his transaction costs. If the price goes to 4 USD, investor A will need only 125 STE. B. Investor B will need only 2 STE. 23

25 С. Investor C also needs only 2 STE to cover his costs. This means that the price of STE will depend only on market demand. STE will also - as previously mentioned - be available for purchase in the Staple Clients area via application, so users do not need to leave the system space. 11 MARKET APPLICATIONS FOR STAPLE (susd) CUSTOMER STRUCTURE AND MARKET CAPACITY Platform users - both companies and individuals - can open accounts in susd or fiat currencies according to what is available on the system. Currency risks associated with fiat currency conversion is insured by performing the online transaction with the help of foreign exchange brokers. Customer Category Reason for Using Users of Payment Systems 1. Simple and instant currency conversion transactions 2. Transparent method of money transfer (decentralized) 3. Cheapest ewallet Professional Investors (large private investors, private funds, family funds) 1. Protected storage (diversification of portfolio risks) 2. Additional liquidity (arbitrage of markets) 3. A convenient tool for funding and investing in the crypto industry. Trading Platform Providers (cryptoexchange) 1. Safe storage of assets (separate from the assets of the exchange and customers) 2. Stable currency value (0 volatility) 3. Opportunity to provide funding to clients of the exchange in susd 4. Lower transaction fees, conversion and storage costs 24

26 Crypto Traders 1. Easy market entry 2. Convenient settlement method between cryptocurrency users 3. Best profit-taking tool 4. Best tool for the market drawdown situation Crowdsale Companies 1. Funding without any volatility risks 2. Stable currency is a way of providing transparency for investors Retail, E-Commerce 1. Newly prospective sales markets (owner of any cryptocurrency can exchange it for susd and legally pay for goods and services) 2. Quick payments, low maintenance costs 3. Cheaper than electronic money Depositors (2019 product release) 1. Better than bank deposit (higher liquidity, acts as payment method) 2. Profitable Stablecoins in future (sbond) STAPLE MODEL (REMITTANCE LICENSE) An individual can put money into the system through one of the European intermediaries and send it to another client of the system, who can in turn withdraw assets to the other European intermediary that is working with the Staple Platform. The system also works with all currencies of countries where it is represented, and is able to perform conversion to local currencies at rates close to exchange rates. The client can put assets into the system through bank accounts, a payment card, partner exchanges, or through receiving points located in specified jurisdictions. There will be no cash opportunity. Concerning organizational issues that may arise through operating globally, several branches or subsidiaries are planned to open in the required jurisdictions, and will cover responsibilities including obtaining licenses required for the operation of remittances. 25