Frequently Asked Questions

Common Maintenance

We believe distributed ledger technology is the next step  for financial services applications. The two most widely adopted instances currently demonstrated with blockchain technology are peer-to-peer payment (Bitcoin) and issuance and trading of ERC20 tokens (Ethereum), both financial applications. Transparency issues and counterparty risks caused by asymmetric information have been a major hurdle in over-the-counter financial markets. At NUTS we believe with the use of distributed ledger, consensus trust mechanism combined with game theoretic, the overall transparency, efficiency, and accessibility for over-the-counter financial transactions can be greatly enhanced.

Over-the-counter describes a decentralized market (as opposed to an exchange market) where geographically dispersed dealers are linked by telephones, computers, or other forms of communication mediums. The foreign exchange market is the largest over-the-counter market in the world.
The OTC market is typically used for securities or assets not listed on a stock or derivatives exchange. Other forms of derivative financial instruments traded through an OTC network include swap, forward, swaption, and asset backed securities.

The NUTS network is designed to support the issuance of non-standardized financial contracts traded through an over-the-counter network. Many financial products fit into the non-standardized category – loan, forward, and IOU are all examples of non-standardized contracts. At the initial stage, NUTS is designed to support the issuance of: (i) Crypto forward contracts and (ii) Crypto loan contracts.

NUTS is designed to host both crypto and traditional financial service applications. During the Earthnut stage our target go-to-market is the crypto asset space, supporting crypto FSPs such as crypto forward underwriters, crypto/crypto lenders, block trade desks, and crypto/crypto exchanges. As we begin stage 2 development, we will expand to include traditional FSPs such as banks, lending institutions, and P2P platforms.
At NUTS, we believe credibility is essential to a sustainable, efficient financial market. We envision a truly trustless and permissionless blockchain network where participants can benefit from network effect while partaking in network governance without any significant barriers. With the hopes to achieve this we are introducing a new consensus protocol, Credibility Proof of Stake (also referred to as CPoS).
CPoS is a hybrid consensus protocol composed of accumulation of on-chain credibility and token stake. Credibility can be obtained through a diverse range of activities on the network, which then can be directly translated into network mining resources. Credit mining is a monetary incentive mechanism designed for network participants with healthy behaviours, and qualified FSPs can  become a mining node to earn token rewards from the Credit Mining pool.
The key differentiators between NUTS and other blockchain networks are (i) CPoS consensus protocol and (ii) Credit Mining. Integrating CPoS and Credit Mining create the following benefits for FSPs in the NUTS network:
  • Accessibility – Anyone (individuals or FSPs), at anytime, can issue financial contracts on the NUTS network. Execution and settlement processes are defined by contract creators, and governed by parameters set forth in the smart contract. In addition, CPoS can qualify FSPs in becoming a network validation node.
  • Pricing and Discovery – FSPs can conduct risk adjusted pricing based on counterparty credit profiles. This is particularly useful for transactions conducted over-the-counter due to the high level of asymmetric information. Transaction participants can audit a counterparty’s credit profile at any time, creating a more transparent pricing and discovery environment for all participating roles.
  • Reward and Reputation – CPoS provides the opportunity for FSPs to qualify as a network validation node. Network nodes have the capability to mine for NUTS tokens. In addition to reputation, pricing, and discovery benefits, credibility level and token stake determines the network node’s mining power.
At NUTS, we believe the most sustainable token economic model is validated only after network adoption kicks in. With that in mind, we have designed a preliminary utilization framework for NUTS token. The framework adheres to three utility principles:
  • Network utility fees for access to the infrastructural services provided by NUTS to complete the issuance and execution of financial contracts. This includes services such as a credit scoring oracle, credit registry, financial contract modules, and more.
  • Service fees for financial transactions that involve services carried out by a third party FSP
  • Contract collateral for financial contracts that require collateral deposits in order to complete execution of contract
Creating financial contracts on NUTS is intuitive. Currently, NUTS supports the issuance of crypto forward and crypto loan contracts. You can access our proprietary DApp, ACoconut, and follow our simple steps to create a crypto forward and loan contract (Click here to access ACoconut).  
At the current stage, an address can accumulate credibility from (i) activities on the Ethereum network and (ii) financial contract behaviour. Examples of network activities and contract behaviour include: transfers, issuance of financial contracts, execution of financial contracts, collateral staking, and transaction validation.
Yes – the majority of innovation and work including smart contracts, credit scoring and risk pricing is deployed at the state transition machine and consensus layer. NUTS integrates on-chain credit scoring with smart contracts, implanting financial attributes into smart contracts and enabling FSPs to create decentralized financial applications (or FDapps) through on-chain credit protocol.
By design, NUTS will only incorporate on-chain data for credit scoring. We believe this is the only way to analyze blockchain addresses in a truly decentralized fashion. At the initial stage, on-chain data from the Ethereum network will be used for building credit profiles for public keys. During the second stage, credit scoring models will incorporate on-chain data from the proprietary NUTS network. In the future NUTS will seek to incorporate data from other reputable blockchain networks such as Bitcoin, Ethereum, and EOS subject to development of interoperability protocols.
At NUTS, we understand the value of financial applications that make use of both on-chain and off-chain data. We also believe that centralized and decentralized processes can co-exist in financial services applications. Our mission is to provide the necessary tools to support that decentralized component.
At the initial stage, NUTS does not support the transfer of assets across blockchain. NUTS will utilize oracle service to retrieve validated data from the Ethereum blockchain. NUTS will strive to become cross-chain compatible with the Ethereum and Bitcoin blockchain, as well as any other public blockchain networks that have been recognized and accepted as asset issuance platforms. NUTS will actively seek to collaborate with blockchain projects that focus exclusively on cross-chain interoperability. The ultimate goal for the NUTS network is to be compatible with cross-chain asset and data transfer.