Tokenize it! Creation and exchange of digital assets WHITE PAPER

Transcription

1 Tokenize it! Creation and exchange of digital assets WHITE PAPER 1

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3 WHITE PAPER White Paper Version 0.3 March 23, 2018 ABSTRACT This document describes a platform that applies the Ethereum s blockchain technology and Smart Contracts to create a system of creation, exchange and promotion of digital assets: cryptocurrencies, tokens or commodities. A tool that offers a simple and intuitive user experience with the main objective of simplifying the creation of tokens and smart contracts. This way, it facilitates the adoption of the emerging blockchain technology in the fintech sector of companies, SMEs and producers of raw materials. INDEX 1. Introduction 2. Lescovex 3. Token shares 4. The contract 5. Token distribution 6. Collect your profits 7. Token price 8. The platform 8. 1 Registration 8. 2 Trading tools 8. 3 Issuance of contracts 8. 4 Main models of assets & smart contracts 8. 5 Business models 9. Revenue sources 3

4 WHITE PAPER 1. INTRODUCTION The Internet is experiencing a new technological revolution, a paradigm shift where the World Wide Web is evolving towards the World Wide Ledger. With the incorporation of distributed networks that use blockchain technology and its smart contracts, a new Internet of Value scenario is being created where finance flows freely. In this new universe, value management will be available to all and not only to a few. Thanks to this technology anyone can create digital values that can be negotiated, distributed and exchanged as a token or cryptocurrency. In the last 10 years, cryptocurrencies have become an innovative investment, since they are a mechanism of conservation of value and a method of payment at the same time. This favors the growth of new business models since it promotes innovation for any company or business where a value is exchanged. One clear advantage offered by the smart contracts is that they eliminate all the intermediaries that make the goods more expensive. Usually, the increase in the cost of goods tends to affect only small consumers, making them suffer the bad consequences of long chains of intermediaries. The case of small agricultural producers or raw materials is an example of this, since they are subject to the power of large companies in the markets. These regulate the price of goods from large investment funds and intermediation platforms, maximizing profits for distributors and losses for producers, affecting in many cases the price and quality of products. Small and medium-sized companies do not have the possibility of attracting financial resources in regulatory frameworks that only benefit big companies. Accessing public sale offers or other financing measures is a long and expensive process. Often, they also provide no security to the investor, as they are often rigged or corrupted by regulatory entities. This always harms civil society, which ends up paying the financial industry s chaos. It is easy to see how most of the time, the centralization of power and the regulatory framework tailored for a few people, makes it impossible to access most of the citizens to the market. This prevents and hinders the growth of new industries and the generation of employment. This situation makes the wealthiest people get richer, negatively affecting the purchasing power of the rest of the population. We can see throughout recent history how the intermediaries in the market processes are destroying the markets in which they participate. 4

5 WHITE PAPER 2. LESCOVEX 3. TOKEN SHARES Lescovex was created with the aim of establishing a more just, free and secure financial market. Lescovex is a real-time digital goods market that provides simple and effective access to create the financial products that a producer or a company needs. For this, the platform will offer a simple and intuitive environment that complies with current regulations in your region and puts your products directly in contact with the final buyer, allowing you to make purchases and sales at the real market price. Lescovex offers an open and participatory way of investment, where all people can benefit from the profits produced by the project. Half of the benefits produced by the exchange rates or services of Lescovex will be sent to the smart contract for distribution where, only LCX holders who have not moved their tokens in 30 days, will be able to extract their profits. Lescovex is a platform for the exchange and creation of digital assets. A tool that, through Ethereum s smart contracts technology, creates financial product and simplifies the process of tokenizing any good or digital asset. At the same time, the platform offers an online market where all kinds of digital goods can be exchanged: Cryptocurrencies, Tokens and Commodities. 5

6 WHITE PAPER 4. THE CONTRACT The LCX contract is designed to guarantee the possibility of withdrawal of liquidity without the intermediation of third parties. At the same time, it guarantees the equitable benefit according to the amount of tokens that each investor owns. Therefore, all LCX token investors are subject to the specified conditions of the smart contract, in addition to the standard of the Ethereum ERC20 model. 5. TOKEN DISTRIBUTION When an investor wants to make a contribution, he can do it through the buy function of the contract, or by sending ETH directly to the contract address. The smart contract will create LCX in proportion to the ether paid to the contract. The price will be relative to the price established in the same contract in each bonus phase, being the price without bonus 1 LCX = 0.01 ETH. The ICO will have different periods and the price of the token will increase as the end of the currency issuance period approaches. For every token that is generated when receiving a contribution from a crowdfunder, another LCX is issued and stored in the contract itself. These tokens will be used by Lescovex Project to finance of the project. Distributed tokens in ICO: Token price: 1 LCX = 0.01 ETH Presale: LCX ICO: LCX The token issuance will have 6 periods whose bonus will decrease every 10 days: 25% - February 12 - PRE-SALE 20% - March 1 - ICO 15% - March 10 10% - March 20 05% - March 30 00% - April 99 No more than 10 million tokens will be generated in total. 6

7 WHITE PAPER The transferbuy () and buy () function manage and limit the issuance of tokens by contract, the period of time available to buy tokens, the maximum amount of tokens that will be issued and the distribution to their owners. function buy() public payable status{ require (totalsupply<= ); require(block.timestamp< ); uint256 tokenamount = (msg.value / buyprice)*tokenunit ; // calculates the amount transferbuy(msg.sender, tokenamount); LescovexAddr.transfer(msg.value); } As can be seen in the function, the contract stores the moment when the tokens are received; the contract will never allow you to withdraw benefits if the token has not been held for at least 1 month. This encourages investors to maintain their tokens to collect the profits generated, adding value to the token in the markets and guaranteeing a stable demand for LCX tokens at a solid price. function transferbuy(address _to, uint256 _ value) internal returns (bool) { require(_to!= address(0)); // SafeMath.sub will throw if there is not enough balance. totalsupply=totalsupply.add(_value*2); holded[_to]=block.number; balances[lescovexaddr] = balances[lescovexaddr].add(_value); balances[_to] = balances[_to].add(_value); Transfer(this, _to, _value); return true; } 7

8 WHITE PAPER Every time someone makes a purchase to the contract, it will check the price to adapt the issuance of tokens to the different bonus phases. These phases will be detected by the status () modifier, described below: modifier status() { _; // modified function code should go before prices update if(block.timestamp< ){ //until 1 march 2018 if(totalsupply< ){ buyprice= ; }else{ buyprice= ; } }else if(block.timestamp< ){ // until 10 march 2018 buyprice= ; }else if(block.timestamp< ){ // until 20 march 2018 buyprice= ; }else if(block.timestamp< ){ // until 30 march COLLECT YOUR PROFITS Each month, Lescovex platform will deposit the corresponding ETH gains in the contract. These can be raised by investors if they have held the tokens for more than a month without moving them in their wallets. When the platform deposits ETH in the contract for its distribution, it will calculate the reward amount for each token that the investor owns in this way: function deposit() public payable status returns(bool success) { // Check for overflows; assert (this.balance + msg.value >= this. balance); // Check for overflows tokenreward=this.balance/totalsupply; //executes event to reflect the changes LogDeposit(msg.sender, msg.value); return true; } buyprice= ; }else if(block.timestamp< ){ // until 9 april 2018 buyprice= ; }else{ buyprice= ; } } 8

9 WHITE PAPER tokenreward shows the amount in ETH that corresponds to each token with the possibility of generating profits so, using the function withdrawreward (), the investor will be able to withdraw his profits by executing the function of the contract. 7. TOKEN PRICE LCX token price will be settled by the activity in the markets once the tokens distribution has ended. Lescovex team will aim to add LCX token in all the main exchanges. function withdrawreward() public status { require (block.number - holded[msg.sender] > ); //1 month holded[msg.sender] = block.number; uint256 ethamount = tokenreward * balances[msg.sender]; } //send eth to owner address msg.sender.transfer(ethamount); //executes event ro register the changes LogWithdrawal(msg.sender, ethamount); Each time an investor decides to extract their profits, this monthly account will be restarted making it impossible to withdraw more profits from the contract until the next month. The user needs execute this function each month to get his profits, else he lose the token reward fo this month distribution. holded[msg.sender] = block.number; 8. THE PLATFORM 8. 1 Registration: With the intention of adapting to the new regulations in each region of the planet, Lescovex outsources the KYC service to experts to ensure compliance with all policies for the prevention of money laundering and terrorist financing. All with the objective that no user can make an improper use of the technology financing or carrying out illegal activities. That s why we have a strict privacy and identification policy for our users. We store all the information in an encrypted form with the maximum guarantee that your data will only be used for compliance with current regulations and will not be transferred to third parties at any time, and no one will have information regarding the status of your accounts or balance sheets. The KYC process is limited to the investigation of each of our users regarding their previous business activities and their relationships with executives or companies that may be related to activities declared illegal. 9

10 WHITE PAPER To do so, all the documentation sent by our customers will be reviewed and contrasted with official and private lists to guarantee our users that any buyer or seller in our platform doesn t collaborate or participate in any illegal activity. allows to issue tokens to the markets, manage the options of its contract and use its smart contract directly from our platform Main models of assets & smart contracts: 8. 2 Trading Tools: Buy & Sell orders Trading views Balances Administration Cash in and cash out sercvices Complete tradding reports Fiat currencies: Thanks to our partnership with Kantox, we have more than 10 fiat currencies in our market. This makes us the cryptocurrency platform with the largest variety of fiat currencies that exists today Issuance of contracts: Our platform has a system for issuing digital goods based on Ethereum technology, so that any person who produces goods or wants to tokenize any type of good has a simple tool to issue their smart contracts and include them directly in our markets. For this purpose, it is being developed a Digital Assets Launcher (DAL) tool for the creation and issuance of contracts. This Investment Funds Participate in investment funds through state-of-the-art Smart Contracts. Cryptocurrency Easily create a cryptocurrency for use in projects, companies or specific markets. Crowdfunding and Equity Crowdfunding Multiple models of contracts where to design a collective financing of an idea or project. Share Capital Design governance contracts to distribute dividends among partners or employees transparently. Futures of raw materials Participate in the market of raw materials and futures using various smart contracts Business models For each trade, the exchange applies only a small 0.15% fee to the users that participate in the transaction. 10

11 WHITE PAPER Each time a new asset is added to the exchange, the platform charges a fee for the issuance of the digital good in the markets. The platform will have a sponsorship program with different paid advertising spaces for those customers who request the service in our highlighted spaces in the tokens portfolios. Lescovex presents a near future where any value can be digitized and traded in a simple and intuitive exchange. This scenario has the potential to reach a huge audience that has not yet become familiar with blockchain technology and even less with the creation of its first digital token. 9. REVENUE SOURCES Lescovex s business model is built upon six main sources of revenue: 1. Trading fees 2. Token creation fees 3. Listing fees 4. Advertising fees 5. White label licenses 6. Arbitrage trading Trading fees Trading fees comprise percentage fees based on EUR volume per trade in the trading platform. Our fee schedule will be transparent, with no hidden fees. Token creation fees Fees in relation to the creation of new tokens from the token launcher tool. Token creation fees might involve an upfront fee as well as fees based on token supply or similar variables. Listing fees Listing fees include due diligence activities performed by Lescovex for token listing requests, including token and project/ company assessments.as well as regulatory and legal impact analysis of new tokens. 11

12 WHITE PAPER Advertising fees Advertising campaigns range from banners to paid articles and other featured content in Lescovex s website. White label license Lescovex offers a white label license for its trading platform and operational structure. Subscribers to this license will need to customise a front-end display for the platform and select which digital assets, out of those trading in Lescovex s exchange, wish to make available for trading during the license period. Arbitrage consists in making an instant, and virtually risk-free, profit by simultaneously buying and selling in two different markets when the price of a same asset differs. Lescovex is entitled to fill any limit order, either buying or selling, in the trading platform before any other market participant does so. This provides an advantage to exploit arbitrage opportunities arising from price differences between Lescovex s market and any other. Arbitrage trades are made by algorithms run by software using Lescovex s API keys and others from different digital assets exchanges. The license includes not only the trading platform software but also associated operational capabilities such as AML and KYC services as well as a wide variety of fiat currencies for trading. White label licenses are a strategic approach to expand the user base and enjoy network effects from regions difficult to market by non-locals, such as Asia and the Middle- East, while earning an attractive fee with no marginal cost. Arbitrage trading Project website link: Lescovex.com Main repository link: Authors of this document: Lescovex team, Vicent Nos, David Proto 12

13 Tokenize it! Creation and exchange of digital assets SMART CONTRACTS GUIDE 13

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15 SMART CONTRACTS GUIDE Type Crypto Currencies Crypto Currencies (CYC) Payment Token Utility Token Features Initial supply Token name Decimal units Token symbol Minimum listing requirements AML & KYC Ticker CYC Token (Blockchain) ERC20 (Ethereum) Solidity code: github.com/lescovex Description Crypto currencies can be used as a store of value and medium of exchange as well as provide some functionalities such as access to web applications and other services. We contemplate crypto currencies as commodities. They are highly fungible and have no intrinsic value, so their value is driven by their utility and scarcity rather than a stream of cash flows. Sub-type: Payment Token Examples: Bitcoin, Litecoin, Dash Description: Crypto currencies without functionalities apart from storing value and medium of exchange. Sub-type: Utility Token Examples: Ether, NEO, Waves Description: Crypto currencies with functionalities besides storing value and medium of exchange. 15

16 SMART CONTRACTS GUIDE Type Asset-Backed Tokens Ticker ABT Token (Blockchain) ERC20 (Ethereum) Solidity code: github.com/lescovex Description Asset-Backed Tokens (ABT) Commodities Financial assets ABTs represent digital ownership with respect to an underlying tangible, intangible or financial asset. Lescovex only considers for listing ABTs whose underlying assets are highly fungible, such as commodities and financial securities. To decide which asset class an ABT represents to we look at its underlying asset. If an ABT is backed by a commodity, we will consider it a commodity. Likewise, if an underlying is a financial security the ABT will undoubtedly be a financial asset. ABTs are traded in the spot market and thus cannot be regarded a financial derivative unless the underlying asset is indeed a financial derivative. Features Initial supply Token name Decimal units Token symbol Asset category Contract specs Minimum listing requirements AML & KYC Highly fungible underlying Contract standardisation: With the aim of facilitating the trading activity for asset-backed tokens, Lescovex will define standardised contracts with some specifications such as contract unit, settlement method and procedures as well as delivery period for the underlying asset. Sub-type: Commodities Examples: Agriculture, Metals, Energy, Currencies Description: Asset-backed tokens whose underlying asset is a commodity. Therefore, they have no intrinsic value. Sub-type: Financial assets Examples: Equity, Debt, Derivatives Description: Asset-backed tokens whose underlying asset is a financial asset. Therefore, they have intrinsic value. 16

17 SMART CONTRACTS GUIDE Type Income Smart Contract Ticker ISC Income Smart Contract (ISC) Equity Token Debt Token Features Initial supply Token name Decimal units Token symbol Holding time Payments Minimum listing requirements AML & KYC Payments schedule disclosure Token (Blockchain) ERC20 (Ethereum) Solidity code: github.com/lescovex/lcx/blob/ master/lcx_isc.sol Description ISCs allow issuers the distribution of income by setting fixed or variable payments in Ether to token holders. Capital distributions are automatically executed provided some predefined contract specifications are met. Income Smart Contracts are classified as financial assets and may be analogous to conventional equity and debt instruments. Sub-type: Equity Token Examples: Common stock, Preferred stock Description: Tokens set up with variable payments at issuers discretion. Sub-type: Debt Token Examples: Loans, Bonds Description: Tokens set up with one-off or fixed periodic payments. 17

18 SMART CONTRACTS GUIDE Type Crypto Investment Fund Ticker CIF Token (Blockchain) ERC20 (Ethereum) Description Crypto Investment Fund Closed-end Open-end Solidity code: github.com/lescovex/lcx/blob/ master/lcx_cif.sol CIFs may take the form of closed-end or open-end and whose underlying investments comprise digital assets of any kind. Smart contracts unleash efficiency improvements for investment funds operations, including fast and auditable capital calls and distributions alongside transparent, errorproof, Net Asset Value (NAV) calculations. We label crypto investment funds as securities Features Initial supply Token name Decimal units Token symbol Holding time Payments Automatic NAV calculations Closed-end supply Open-end supply Minimum listing requirements AML & KYC Statutory regulatory requirements Sub-type: Closed-end Examples: ETFs Description: Closed-end crypto funds have a fixed token supply so they cannot be redeemed but traded in the secondary market. Tokens price will depend on markets demand and therefore may trade above or below the NAV attached to the underlying investments. Sub-type: Open-end Examples: Mutual funds, Hedge funds Description: Open-end crypto funds have a variable token supply, meaning they can be issued and redeemed upon request. Tokens value equals the NAV of the underlying investments which includes any management fee. 18

19 SMART CONTRACTS GUIDE Tokenize it! Creation and exchange of digital assets BLOCKCHAIN CERTIFICATION AUTHORITY (BCA) 19

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21 BLOCKCHAIN CERTIFICATION AUTHORITY (BCA) Introduction Falsification of identities and hacking are widespread threats among digital assets exchanges. Companies which need to verify the identity of their customers spend a great deal of time and economic effort in human resources, certification processes and audits to cope with such risks. Despite companies efforts on this issue, user-related incidences such as distrust and large waiting periods in the verification of accounts, and sometimes even millions in losses of users funds which lead to bankruptcy, come out often. Surprisingly, in the age of technology revolution and internet, most entities need to go through the same independent, and costly, identity verification processes when in fact there are government and other trusted entities, such as banks and insurance companies, that follow tight controls with respect to such verification processes. Is it not a redundancy? These trusted entities could ideally become centralised certification entities for those other non-trusted which need to verify their user base. the identity verification process, along with its reliability, while increasing confidence among all stakeholders. The BCA smart contract works with identity verification certificates of trusted entities. It generates binding digital signatures associated with these certificates which in turn are registered in a common database embedded in the contract. This way, Lescovex aims to change the paradigm of identity verification and its implications for Anti-Money-Laundry (AML) and Know-Your-Customer (KYC) activities. Blockchain technology provides a neutral and secure framework where information can be shared and customers privacy assured without incurring in key legal risks relating to personal data. Lescovex makes available this technology to any entity willing to be part of the BCA network, which has the potential to lower costs and speed up 21

22 BLOCKCHAIN CERTIFICATION AUTHORITY (BCA) BCA REGISTER BCA integrates a method to add trusted certification entities (e.g. from governments and banks), and their root certificates into a smart contract run on Ethereum s blockchain. Lescovex easily and securely adds these root certificates into the smart contract. Corporations and individuals then submit their identity certificates which are verified by the BCA smart contract once the root certificates and those submitted match. Since encrypted root certificates are of public domain, it is not necessary to trust the entity responsible for managing the contract. Anyone can query vetted fingerprints by the smart contract and, thereby, confirm whether they are the same as in the official website or database available of the certification entity which issues those certificates. The BCA incorporates the possibility of querying any entry record through the smart contract functions as shown below: After recording the fingerprint and the public key of the certification entity, it is possible to confirm, unequivocally, that the certificates submitted by users relate to the root certificates, and thus attest whether entities have performed the pertinent controls necessary to validate the identity of any corporation or individual. At the beginning of the creation of the smart contract, Lescovex s team, alongside the collaboration of Hervé Falciani, is responsible for adding root certificates from countries where government entities provide x509 certificates. In Spain, certificates from the FNMT (Fabrica Nacional de Moneda y Timbre), the Treasury Department and the digital DNI (Documento Nacional de Identidad) are some examples of root certificates x509 which are compatible with BCA. Solidity code mapping (uint256 => CA) certificateauthority; mapping (address => Entity) entities; struct CA{ string issuer; string certificate; } struct Entity{ string publickey; string signature; } 22

23 BLOCKCHAIN CERTIFICATION AUTHORITY (BCA) SIGNATURE OF ETHEREUM ADDRESSES Lescovex BCA desktop application enables users the possibility of signing and exporting any Ethereum address from their wallet or smart contract. The below illustrates the key steps on the BCA process: 1. Trusted certification entities publish their public keys and signed Ethereum addresses which serve as proof of ownership 2. Users choose the entity which needs to verify their identity and therefore will be given access for the validation of data 3. Users select the identity certificate they want to use for verification, only the public side, and encrypt its content with the public key of the entity with given access. Hence, only this entity can decrypt the certificate which in turn releases the data while protecting users privacy. Signatures linked to digital identity certificates will confirm if users are indeed who claim to be, as well as if they have correctly signed with the certificate issued by any of the trusted certification entities available. BCA, therefore, allows users the following: 1. Proof they are the actual entity or person who claim to be. 2. Sign a document which is legally binding. 3. Sign a smart contract which is legally binding. 4. Accept terms and conditions when contracting online. 5. Keep privacy while neither revealing nor sending any personal or corporate data to non-trusted entities. 4. Lescovex adds root certificates in the smart contract, so there is a central register where any trusted certification entity can join and customers give service-provider entities permission to read and verify their digital certificates. Solidity code struct Signature{ string certificate; string signature; } 23

24 BLOCKCHAIN CERTIFICATION AUTHORITY (BCA) SIGNATURE VERIFICATION The application for the verification of signatures can be downloaded from the Github account of Lescovex: github.com/lescovex/lcx The below screenshot shows how to easily access the signatures and the trusted certification entities register from Lescovex BCA application besides the verification of signatures. Additionally, Lescovex provides a repository with some examples so developers can implement the application in their portals for each of the functionalities underlying BCA, as described throughout this document. Overall, such a small change in the verification process of identities and the application of blockchain technology, alongside cryptographic technics, can drastically change the way corporations and individuals are verified worldwide. 24

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