The TòròNet project was conceived in April 2017, to provide game-changing solutions to problems that have limited the ability of persons and economies in emerging markets to achieve their aspirations. The following vision paper outlines these obstacles to development and introduces a new paradigm for solving these through an innovative blockchain infrastructure that challenges the predominant blockchain and crypto utility models of asset speculation, capital accumulation, and anonymity with a people- and impact-centered model that has been strategically crafted to prioritize end-users and applications that promote strategic initiatives such as the Sustainable Development Goals (SDGs) .
The first blockchain was deployed in 2009 by Satoshi Nakamoto, who gifted Bitcoin to the world. Bitcoin was proposed in its original white paper as a first-of-its-kind form of digital cash system with no intrinsic value and no centralized issuer. The true revolution, however, came not with the Bitcoin the asset but rather with the underlying blockchain technology which introduced several unique features into the world of finance in a congruent manner, including the establishment of a public decentralized platform with distributed consensus, a peer-to-peer payment system, a transparent record of data, and a virtually immutable ledger system.
Blockchain technology quickly evolved past Bitcoin’s applications and several academics such as Christian Catalini, the founder of MIT’s Cryptoeconomics Lab, have proposed that it is general-purpose technology with numerous applications across verticals. In the financial sector, these include the emergence of ‘smart contracts’ which enable digital contracts governed by rules enforced through code (also known as programable money), non-fungible assets, various token systems, and decentralized autonomous organizations (DAOs). In conjunction, these developments allow Blockchain technology to outsource many of the functions of a traditional financial institution or development bank to a code thereby drastically reducing administrative costs and promoting trust through the inherent transparency of the system. Furthermore, the possibility of a decentralized investment and governance structure creates the foundation for a system of finance owned and controlled by the people. Blockchain presents a new opportunity that allows communities without access to traditional financial services to leapfrog the need to wait for financial institutions to catch up with the needs of the underbanked. Thanks to this recent evolution of the Internet, users can access the benefits of loans, savings accounts, investment opportunities, insurance, and a multitude of other financial services, making universal financial and economic inclusion closer than ever before.
Despite these breakthroughs in technology, the true potential of blockchain to impact the underbanked remains unfulfilled. Few if any start-ups in this domain have managed to harness the full potential of these technologies to create a holistic architecture targeted at progressing financial inclusion, let alone developing innovative services to tackle issues as diverse as climate justice, digital inclusion, and sustainable agriculture supply-chain enhancement. Over ten years into the blockchain revolution and the percentage of the unbanked or underbanked that are served consistently by blockchain networks remains negligible.
Besides the technical setbacks of slow transaction speeds and high gas fees, this is also primarily because of a socio-cultural disconnect. Blockchain projects just like many development projects have a western bias. As such, the hype has been accentuated by its early use as the government-free currency of the criminal underworld, and subsequently swiped up by mass media as speculative assets traded on a volatile market with the propagation of meme coins and other derivatives which seek to profit off the hype more than create assets with genuine utility. However, this is not uncommon with the rise of general-purpose technologies which typically take a while to find their true utility.
Finally, there are three key differentiators which make TòròNet design unique and even opposite to the majority of blockchain projects. First, everything developed by TòròNet (including the network itself, the governance structure, and the projects) is designed to respond to real-world problems, everything that we develop and every project that uses network resources must focus on real-world impact (no meme coins here). Technology is a useful tool but not our end goal.
Secondly, we use inverse tokenomics because first we fund our tokens and then they are used to distribute and move value according to the objectives of a specific project. Anyone familiar with the crypto space knows that most projects first create tokens out of thin air and only then the token appreciates if others buy it. The main goal is to incentivize people, often retail, to buy a token with the hope of making a profit. This type of valuation is based on sustained demand not necessarily utility, we do the opposite.
Thirdly, we create value by solving real-world problems, not by creating demand. We do this by carefully creating solutions that leverage technology to jumpstart ecosystems that are self-sustaining. We move away from the dominant model of grant-based sustainability financing toward a stakeholder approach. This means that project financiers and investors help deliver long-term impact in a traceable, measurable, and economically sustainable approach. Keeping these three key differentiators in mind, let us present TòròNet .
Before embarking on an explanation of the TòròNet blockchain infrastructure it is important to understand that TòròNet is more than a financial infrastructure. It is a community guided by values that uphold human dignity, equity, and fairness and that seek to promote financial inclusion and protect an impact-centered approach to economics and wealth creation. TòròNet is a community of actors sharing a vision for sustainable development which leverages technology and not the other way around.
It has been developed by leading African technology, sustainability, and policy experts with an understanding of both the needs and demands of emerging markets and underserved communities. Through the thoughtful interplay between the Association and DAO, TòròNet strikes a balance of the benefits of decentralization with enough centralization to ensure proper chains of accountability, customer services, ethics, and an overall coherent direction to the project.
In contrast to western-centric development models proposed in Africa, TòròNet understands that there are cultural nuances at the community level that are important drivers for sustainable development. Africa does not need one-size-fits-all development models. In fact, we believe that instead of seeking to replicate development models that were once valid elsewhere, it is now possible to leapfrog traditional development stages thanks to technological innovation. TòròNet envisions a leapfrog over this traditional development chain into the 4th industrial revolution by prioritizing investments in individuals, in a decentralized manner, guided by principles such as sustainability and regenerative systems.
The TòròNet Chain is a custom-built Turing-complete blockchain infrastructure and network that leverages the tokenization and smart contract functionality of blockchain to create a system that enables members of the network to build and offer DeFi apps and services. This means users can interact with the blockchain directly or through other intermediary projects that are built on the blockchain allowing them to engage with independent centralized architectures that fit their needs and conform to regulations in each applicable jurisdiction.
Approved developers and users of the network can stake their holdings of the native crypto asset (Tọ̀rọ̀) to build on the platform to underwrite the provision of finance as a ‘peer-to-peer’ or through a ‘peer-financial institution-peer’ framework. Built into TòròNet chain contracts and operations are game theory incentives for all participants to enable the fulfillment of the agreed financial terms in the contracts.
TòròNet native token is a fully collateralized stablecoin that serves to prevent volatility and promote ease of use, and acceptance as use of payment. Several derivative tokens are also supported by the system to accomplish specific contractual objectives. The entire ecosystem is interoperable enabling easy integration with other blockchain ecosystems. In addition, a dedicated decentralized exchange (DEX) within the network also allows quick conversions between fiat currencies, other tokens derived on the network, and several major cryptocurrencies.
TòròNet supports the ERC-721 non-fungible token (NFT) standard which is most commonly associated with securing digital art. In TòròNet nodes can use this system to tokenize real-world items for buy-now-pay-later (BNL) loans for items such as phones, using unique attributes such as auto vehicles VIN numbers.
TòròNet differs from existing blockchain networks in many ways such as its innovative proof of authority consensus process and its elimination of minting rewards to miners. Perhaps one of the most fundamental differences is that it is a multi-role blockchain. On Bitcoin or Ethereum all users have the same roles and privileges on the blockchain. On TòròNet , all users start off with the same base access: an account, the ability to deposit funds and acquire and transfer assets to any other user on the network. However, to participate in smart contract activities, permissions are required. Some examples of these roles are Real Estate Appraisers, Insurers, Agro-dealers, and so on. This means that not anyone can create a smart contract or generate a token on the network which helps to reduce bad actors, scammers, and rug-pulls.
TòròNet is governed by a Distributed Autonomous Organization (DAO) and an Association. The Association is a Swiss-based legal entity that encompasses key stakeholders and visionaries of the project, it acts under the TòròNet Constitution as a gatekeeper that screens projects that wish to be incorporated into the network and prepares proposals to be voted on by the DAO. In essence, DAO members use Tọ̀rọ̀ Governance tokens (TorGs) to vote on projects to be incorporated into the chain, this protects the quality of the projects on the network by ensuring that generating smart contracts are only open to node members. The regulation of the network guided by the TòròNet Constitution and overseen by its governance structure is the key component that ensures TòròNet remains an impact-centered project geared towards promoting financial inclusion and sustainable development.
TòròNet seeks to solve the structural challenges of underserved communities. The foundational problem for left-behind communities is one of inclusion, primarily economic and financial inclusion. Financial tools are a prerequisite for solving a long list of subsequent problems including establishing trust, securing housing, food security, digital inclusion, environmental sustainability, and economic integration.
In 2021, roughly 1.6 billion people have no checking or savings account. About 75% live in Asia, Africa, and Latin America. Most of the time this is simply because it is not economically profitable to install traditional banking infrastructure in rural and hard-to-reach communities. Without these basic tools, individuals are required to have all their liquid capital in their homes or reinvested into their crops making them subject to complete loss without savings to fall back on. Furthermore, individuals cannot build credit histories meaning in addition to a lack of securitized collateral there is an overall lack of trust by creditors making interest rates as high as 30% in these communities. These difficult circumstances increase default rates and create a positive feedback loop further deteriorating trust, raising interest rates, and debt trapping individuals.
TòròNet provides the possibility to surpass this vicious cycle. With a smartphone or at a local computer cafe individuals can have access to easy-to-use applications that connect them to an entire array of financial services. From having savings account to using it for quick and cheap payments, to building credit history, to securing loans from individuals or financial institutions, to taking out crop insurance, and acquiring smartphones, TòròNet connects these services together with an underlying infrastructure that is safe, secure, cheap, environmentally friendly, and efficient.
There is a vast array of new projects and coins being created every year in the blockchain space, what makes TòròNet unique? Why is it the best fit to solve the problems facing the millions of people who have been left behind by traditional financial institutions?
Firstly, let’s start with the advantages that all blockchains have in common. At the core of the blockchain is a transparent immutable ledger, this means that records, accounts, and transactions exist in a public ledger using unique signatures called hashes. As Bitcoin inventor Satoshi Nakamoto put it, this eliminates trust from the equation, but at TòròNet we believe a certain degree of trust is needed to ensure a healthy ecosystem. The entire process of record-keeping is also decentralized among many nodes or servers thereby securing the system from a single point of compromise and ensuring its protection from hacks or other physical disasters that may destroy single or multiple servers.
Some blockchains, most notably Ethereum, use smart contracts which allow for assets that have been onboarded onto the chain to be controlled according to rules that have been agreed upon by the contracting parties and enforced by code. This makes contract terms automatically enforceable again promoting trust by eliminating the possibilities of foul play. This may eliminate intermediaries and administrators which can, in turn, reduce fees and make business cheaper, faster, and secure.
So what does TòròNet offer? One thing that prevents many cryptocurrencies like Bitcoin and Ethereum from being used for everyday transactions either peer-to-peer or at stores is high gas fees and slow transaction times which makes everyday transactions impossible, especially for lower amounts. Bitcoin and Ethereum transaction costs have varied in the past year from 1-200 USD per transaction and take between 30 seconds to 15 minutes to complete. In TòròNet, the admission of nodes is based on trusted entities admitted by votes of the DAO and validation from the Association. In addition, each node is required to stake resources in the network to secure transactions on the blockchain. Nodes are trusted entities by virtue of their stake and reputation, and as a result, a consensus is rapid, requiring less than five seconds, and does not require wasteful use of energy as does proof of work blockchains. Subsequently, TòròNet transactions cost less than 5 cents per transaction and settle in a few seconds.
The next big challenge for current blockchains is their volatility and inaccessibility to everyday people. To address volatility which has marred the entire cryptographic currency space with an aura of casino-like boom and busts, TòròNet bypasses all of this by making its native currency a fully collateralized stablecoin pegged to the US Dollar. Furthermore, TòròNet prioritizes interoperability and views the future as multi-chain. We believe assets should not be tied down to a single chain. Financial freedom means people must be able to exchange between different currencies, platforms, and cryptocurrencies. TòròNet includes its own decentralized exchange where many major African currencies are listed and can be easily swapped promoting ease of use.
Another major facet that makes current blockchains inaccessible is that they are not inherently user-friendly. The concept of losing your primary keys and losing your assets will not gain mass adoption among regular users. A level of centralization is needed where basic services are provided to enable an easy user experience. This doesn’t mean that all accounts need to be custodial, TòròNet provides the freedom to set up both custodial and non-custodial addresses.
TòròNet is ultimately centered around people and impact and as such is focused on usability, stability, and trust. It stands as the infrastructure which bridges the gap between traditional institutions and the blockchain revolution. While it retains the benefits of decentralized financial models it equally allows a mix of third-party projects and independent nodes to be incorporated into the chain which solves a variety of real-world problems. What holds all the nodes together is the core values inscribed in the Constitution and enforced by the Association and DAO.
In traditional finance loans usually consist of two main types- secured and unsecured loans. In the case of secured loans, in the event of a default, the collateral is liquidated, and the loan value is recovered. For many loan types, including mortgages and auto loans, the purchased item is usually the collateral, which can be repossessed in the event of a default. For unsecured loans, the borrower goes through a credit check using a combination of borrower history and credit scores.
Crowdfunding has also gained momentum as another form of financing. Crowdfunding reduces risks to the funding sources since each is only exposed to the tune of a fraction of the total loan. However, most crowdfunding implementations are also skewed in favor of the borrower, they do not require collateral, and loaners have no recovery recourse in case of defaults. It is also unpredictable and can be time-consuming for the borrower who must rely on the goodwill of many individuals to achieve a target amount.
Current DeFi implementations do not accommodate unsecured loans, nor have any provision for third-party activities such as repossession, or credit scoring typical with traditional finance. A loan is usually secured by depositing some asset on the blockchain, and the loan contract on the blockchain then mints the loan value from those assets. To ensure that there will never be a debt collection situation (since there is typically no third-party involved), the loan is usually over-collateralized. If the value of the asset fluctuates lower, the borrower is required to either deposit more collateral value or risk liquidation when the loan amount exceeds the collateralization ratio. Therefore, defaults are not an issue, and loan administration costs are usually non-existent and enforced by code. This leads to potentially cheaper loans. In such systems, the collateral is made of other cryptocurrencies. Most in need of development loans in underserved communities do not have cryptocurrencies lying around to deposit in DeFi contracts as collateral. This makes current predominant blockchain finance technologies ill-fitted to serve our target audience which encompasses roughly 1 in 6 people globally. Another problem with using cryptocurrencies as collateral is that borrowers can borrow from a speculative asset and reinvest it into another speculative asset. This inevitably leads to arbitrary inflation of such assets not based on fundamentals and real-world utility. These highly speculative bubbles are what make traditional institutions wary of engaging with such financing models.
TòròNet draws the best aspects of the crowdfunding and the traditional finance models to create its own paradigm of neo-financing possibilities. Whether one is part of traditional financial institutions or not one can engage with TòròNet to secure a loan. Its reserve ratios are always collateralized with real-world assets and fiat currencies to prevent instability and speculation. Through its innovative use of smart contracts, smart property, and NFTs real-world assets can be coded into the chain and used as collateral with self-enforcing transfer contracts in case of defaults. If a purely self-enforcing contract like a transfer of a deed is not possible within the chain, terms of third-party mediation can also be written into the contract, such as with a repossession company for a predetermined fee. This allows securitized loans to be onboarded into the system. Equally, the establishment of a credit score system attributed to the user’s wallet yields the possibility of retaining unsecured loans down the line.
However, some people do not have the collateral to secure a loan. In this case, members of the community can lend a marginal commitment fee for a specific product to a fellow member of the community. A self-enforcing contract will automatically pay them back when the funds of the borrower become available in an agreed-upon manner. These small commitment fees indicate demand for a specific item, which are aggregated across regions or countries into a bundle that can be financed by larger institutions, development funds, and even one or many individuals. By bundling demand for a specific item by 10,000 or 100,000 people risk for the lenders is decreased likewise decreasing interest rates for the borrower. Financers yield revenue from interest as well as incremental margins, commercial retailers and manufacturers gain business as more people can afford products, and most importantly marginalized people gain real benefits from being able to afford essential ingredients such as phones, education, cars which ultimately feeds productivity and creates a positive feedback loop of development.
The TòròNet blockchain is a ledger consisting of accounts and balances. The codebase was initially set up from the Ethereum code and subsequently developed to add the desired features while replacing certain features including the fee system and proof of work consensus algorithm. However, the network retains the smart contract language syntax, as well as the cryptographic and hashing function from the Ethereum network. The resulting technical formulation for this network is described in this section.
The TòròNet consensus process is a proof-of-authority consensus model and is a modification of proof-of-work (PoW) and proof-of-stake (PoS) algorithms. In this process, only trusted participants can run nodes. Transaction processing nodes are all trusted and approved nodes with significant deposits or stakes in the reserves. The PoW difficulty algorithm is set so low that any participant can create blocks. However, the TòròNet algorithm limits the total transaction value that can be mined by any node within a span of time (set to about two weeks) to be no greater than the value the node operator has invested in reserve (staked value). Using the TòròNet model, node operators can be trusted to produce blocks without requiring them to run expensive calculations and wasting electricity and computing resources. Their staked value provides the trust necessary for the blocks generated. The blocks do still have to be computed using a PoW algorithm and are still chained to all prior blocks in history by a cryptographic algorithm built into the blockchain.
As a result of these changes, the difficulty level required to create a block is set low for the TòròNet network, and blocks are created every 2 seconds. Thus, it takes between 2 and 3 seconds to confirm a transaction on the TòròNet blockchain.
Another key modification in the current definition compared with other blockchains, including the Ethereum blockchain is that the writing of a block does not result in the minting of new value, or reward to the transaction processor, also known as the miner. So how are transactions paid for? Every transaction carries a transaction fee. The method of rewarding processing nodes with new mint, we feel is economically distortive. It might initially create an illusion of cheaper transaction costs, but that cost is simply taken from the system and other users of the currency by providing the rewards for growth in the system to transaction processors who perform a service rather than a creative process.
For simplicity, we identify two types of transactions in a theoretically isolated economic sub-domain. Those that transfer value among members of the ecosystem and those that result in a completely new value that hitherto never existed in the system.
In the TòròNet ecosystem the transactions that are creative and result in new mint include the following:
TòròNet uses smart contracts to manage assets on the blockchain. The tokens created on the blockchains are themselves created by smart contracts such that the fee structure is not on the blockchain layer and is thus part of the operational purview of the DAO. This section describes these smart contracts including those used for setting up and operating savings, loan contracts, and collateral contracts, as well as how the operational modus operandi is set up using game theory to create the off-chain and on-chain incentives to ensure contract fulfillment.
TòròNet uses tokens to bring in external tokens to TòròNet in a trustless manner and allows trustless financial contracts and trading of all major crypto-asset tokens. The token standards are similar to ERC20 on Ethereum and Omni on the Bitcoin blockchain. Through this standard, TòròNet Chain allows tokenization of any asset including fiat currencies and cryptocurrencies.
All tokens created on the network are asset-backed tokens created with the backing of crypto assets or fiat currencies. For instance, if a user on the network deposits USD 100 in the system, the amount is placed in the TòròNet off-chain reserve, and an equivalent amount in stablecoin USD is credited to the user’s account on the blockchain. Further, if the user deposits the stablecoin USD in blockchain reserve, an equivalent amount in Tọ̀rọ̀s is minted and deposited in the user’s account on the blockchain. The rate of conversion between the stablecoins and the native Tọ̀rọ̀s are set by oracles maintained by the network utilizing several public exchange rate benchmarks. The rates are set such that tokenizing an asset on the blockchain is usually 1:1.
A monetary ecosystem is incomplete without a savings strategy within the system. Savers provide liquidity within the system for enterprising entities; in this case, users seeking to purchase assets such as smartphones, vehicles, houses, or even farmers seeking development loans.
The system would need to provide some incentive for savings. This does require some balance as well. A system where savings are too incentivized typically results in one where many hold and do not spend their resources and the economic system does not grow.
Several blockchains have introduced the concept of savings by allowing account owners to stake (lock) balances in their wallets for some length of time in exchange for some of the new mining rewards. An example is the Dash network.
In TòròNet , we introduce a new way of accommodating those who wish to save their assets while incentivizing them to do so. The savings are discounted off the reserve such that the association, the administrative node, has room off the reserve to make loans or microloans to users in the ecosystem via network members that result in growth to the reserve on repayment with interest.
To accomplish this, we designed a contract asset, Tọ̀rọ̀SV, which has the same conversion rate and value as Tọ̀rọ̀s. However, bearers of this asset receive back a proportion of the overall growth of the reserve. If the reserves do not grow, they have no reward. To convert a Tọ̀rọ̀s to Tọ̀rọ̀SV, a user simply needs to send their Tọ̀rọ̀s to the reserve and an equivalent amount of Tọ̀rọ̀SV is deposited into their account.
Loan Contracts are designed to allow the owner of the contract to take a collateralized loan against collateral locked in the contract. Each loan contract is unique to every owner (address) on TòròNet Chain. Any user can open a loan contract on TòròNet Chain. The user who opens a loan contract owns the specific contract. This ownership, however, is transferable.
Once a loan contract is opened, it may be funded with Tọ̀rọ̀s or any stablecoin on the blockchain. Once a loan contract is funded, it allows the owner to take out a loan by minting derivative loan Tọ̀rọ̀s. It should be noted that in this and other cases, the TòròNet association and the network provide these smart contract templates. Independent nodes on the platform are expected to utilize these smart contracts to develop these into services in the various communities using the network.
TòròNet also introduces tradeable collaterals in a smart contract template expected to be utilized by nodes in the ecosystem. This is a new concept brought to the blockchain space on the realization that a lot of times liquidity can frequently exist in different geographical locations by country. In such situations, owners of such resources would like to benefit from returns that could accrue from putting such resources to work in the form of making loans in the locations where they are needed. However, there currently exists no procedure to allow this to occur without risking those resources due to a lack of an ability to perform due diligence on borrowers or monitor performance, or enforce the terms of the loans.
A tradeable collateral contract allows the resource to be collateralized on the blockchain in its own jurisdiction, and the power of the collateral is traded to a member of the blockchain in the local jurisdiction, who has the local knowledge, access, and proximity to borrowers and can process such loans. The eventual tradeable contract is structured such that the operator has no means of monetizing the collateral besides the successful performance of the loans and is incentivized to receive rewards only on performance. The operator also is required to stake other resources to guarantee the loan activity. Finally, the local collateral on the loan is still retained in the form of tokenized assets as described in Section 3.5 – including deeds, auto, or smartphone registration to which the blockchain Association retains rights until the terms of the loans are satisfied.
Traded collaterals are typically expected to be bundled in a composite such that a collateral exposure is not to one loan but is secured by several loan contracts. The reverse is also the case. This is illustrated in Figure 1. This is a risk management feature built into the collaterals and loan contracts.
The TòròNet platform DeFi formulation utilizes the advantages of blockchain smart contracts to manage a loan and enforce loan terms. Unlike most DeFi projects, TòròNet loan collaterals are expected to be used for real-world items such as mortgaged homes, car loans, and loans for smartphones, which facilitate business opportunities. The loan payments are made directly to an operator or dealer by utilizing a special type of Tòròs provided to the borrower. The special Tòròs can only be cashed by such dealers. Secondly, the dealer who is also a user registered to that role on the blockchain is required to register in the real world to the node. This is critical since the node is the actual entity providing the funds guarantee from its reserves.
Like a crowdfunding structure, multiple funding sources can be aggregated using a system of tradable collaterals. In the event of a default on the blockchain, in the real world, the dealer is then able to reclaim the collateral. The dealer rewards are built into the smart contract. Like secured loans on real-world assets in traditional finance, insurance is required for items that are secured by loans throughout the duration of the loans; to ensure that no significant part of off-chain operations resolves into debt collection activities. The loan administration cost for this arrangement is the rewards allocated to dealers and the insurance cost of the secured items and is expected to be lower than for traditional finance. However, it is expected that nodes on the TòròNet platform will also still be able to make blockchain loans to real people in communities with real finance needs.
The balances of all currencies in the reserve will be published on the TòròNet public blockchain website. The values in the reserve will be maintained in a reputable banking institution so that it would be verifiable that indeed the issued currencies are backed by the reserves that are intended to cover their liquidity.
The TòròNet ecosystem includes a decentralized exchange within the network. Several assets can be traded or exchanged for each other based on the exchange rate determined by oracles within the blockchain. The exchange allows trading (exchange) of several assets including fiat currencies in operating communities, Tọ̀rọ̀s, derived Tọ̀rọ̀s, and several cryptocurrencies including Bitcoin and Ethereum.
|Stablecoin of Fiat
|Local Fiat Currency eg. Cedi, Naira, Kenyan Shillings, etc.
|Fiat Currency to Stablecoin Fiat Token on Blockchain
|Tokenized Local Currency or Stablecoin
|1:1 conversion to stablecoin
|Stablecoin or Tokenized Local Fiat Currency
|Stablecoin Fiat Token back to Fiat Currency for Withdrawal
|Local Fiat Currency
|1: (1 – x)
x is a small margin such as 0.02
|Stablecoin to Tọ̀rọ̀
|Rate set by Blockchain oracle
|Cryptocurrency to Tokenized Cryptocurrency
|1:1 conversion to tokenized cryptocurrency
|Tokenized Cryptocurrency to Cryptocurrency
|1: (1 – x)
x is a small margin such as 0.02
|Tokenized Cryptocurrency to Cryptocurrency
|1: (1 – y)
y is a small margin such as 0.02
|Stablecoin to Derived Stablecoin
TòròNet will support local currencies in each jurisdiction of operation (Figure 1.) as well as cryptocurrencies. At the start, Bitcoin and Ethereum will likely be supported. Other cryptocurrencies may be added later as decided by the DAO. Each supported asset will have its own reserve account to maintain backing for the tokenized asset on the blockchain. The balance of each reserve will be transparent and verifiable on the blockchain as shown in the Figure.
The TòròNet blockchain includes a derivative version of stablecoins. These are tokens on the blockchain minted and backed by equivalent stablecoin tokens coded on the blockchain to accomplish some contractual objectives. This allows developers to create their own tokens as derivatives of Toro.
There are several types of derived stablecoins currently programmed in smart contracts on the blockchain, including:
Derived Stablecoins That Function Similar to an Escrow Payment
An example of this is a contract for the delivery of a physical asset. Such a contract may be funded by the buyer. The blockchain can then lock the funding in the contract and create a derivative equivalent in the same currency. The derivative stablecoin could then be paid to a delivery agent contingent on the ability of the delivery agent to “cash” the derivative or convert it back to the stablecoin on verification of delivery. The physical asset delivery contracts developed on the blockchain function in this manner. Unlike a traditional escrow, they do not require a third party to initiate the release or conversion of the stablecoin as the conditions are coded directly in the contract and enforced by the blockchain.
Derived Stablecoins that Enforce Conditions of a Contract
An example of this is a contract that issues a loan to purchase an auto vehicle. Such a contract may be funded by the lender. The funding is retained in reserve while an equivalent stablecoin of the same value is generated. The derived stablecoin could be programmatically coded by the smart contract to only be convertible back to the underlying stablecoin by a user on the blockchain designated as an auto dealer. The derived stablecoin can then be provided to the borrower, who can only utilize the derived stablecoin to purchase an auto vehicle, by virtue of the instructions carried within the stablecoin asset’s program. An example of this type of derived stablecoin is depicted in Figure 3.
Derived Stablecoins Programmed with Time Release
Similar to the first two types of derived stablecoins, this version can only be converted to the underlying stablecoin maintained by the reserve under some conditions. In this case, the condition is some time interval programmed by the contract and encoded within the derived token.
Other types of derived stablecoins may be constructed as new template contracts for real-world finance and commerce are addressed on TòròNet Chain. Note that some of the derivative stable coins are expected to be transferrable or not depending on the terms of the contract as agreed upon by both parties. In all cases, the principle and goal are for peer-to-peer agreements enforced and managed by the blockchain such that third-party entities are not required to enable commerce or financial transactions between pertinent entities. This reduces costs, increases trust, reduces risks, and potential defaults of contract terms.
TòròNet supports the ERC721 non-fungible token (NFT) standard. This standard was developed to define non-fungible tokens (NFTs) or more simply unique digital items. Like ERC20, adhering to this standard allows a uniform interpretation of unique asset tokens on devices and applications, regardless of the blockchain they are built on. The standard has since spawned growth in NFTs in 2021. Besides its use for tokenizing digital art, the application of this standard is currently leading the growth of NFTs in the gaming industry and leading the pay-to-earn games phenomenon. Beyond securing digital art, this standard is also being used by nodes on the TòròNet network to tokenize real-world items for buy now pay later (BNL) loans for items such as phones, using unique details such as their MEIs, auto-vehicles by their VIN and attributes.
The TòròNet blockchain by virtue of the type of smart contracts it fundamentally supports is designed to be a multi-role blockchain. This is distinct from virtually any other blockchain but is necessary to make the blockchain useful in addressing the real financial and commercial needs of the communities it addresses. For instance, on the Bitcoin or Ethereum blockchain, all users of the blockchain have the same role and privileges on the blockchain.
On TòròNet , all users start off with the same fundamental access. This includes an account, and the ability to deposit funds, to create stablecoins of equal value to fiat or crypto assets they deposit, and transfer assets (make payments) to any other user on the network. However, to participate in some smart contract activities, several roles are created by the contracts, and users may apply to, or be assigned to those roles according to the terms of the contract. These roles provide the users’ access to features of different contracts to enable the terms of the contracts.
Currently, the blockchain includes the following default roles:
|2. Loan Originators
|3. Smart Phone Dealers
|4. Auto Dealers
|5. Mortgage Agents
|6. Real Estate Appraisers
|8. Agricultural Produce Offtakers
|9. Agricultural Produce Certifiers
|12. Village Aggregators
The TòròNet governance structure is divided into two main bodies: the Association and the decentralized autonomous organization (DAO). They are guided by the principles and operational guidelines agreed upon by the TòròNet Constitution signed by the founding members and subsequent board and association members.
The Association is a non-commercial and not-for-profit legal entity headquartered in Geneva, Switzerland among the headquarters of many UN organizations, NGOs, development institutions, and diplomatic organizations. This means it is situated within the “Crypto Valley” of Switzerland which provides regulatory clarity and is home to the world’s top blockchain projects at the same time positioning itself closer to the headquarters of major humanitarian organizations with whom TòròNet seeks direct partnerships. The Association is the high-level governance organ that establishes strategic partnerships with institutional stakeholders. By adding highly reputable individuals and institutions to its board, it seeks to promote TòròNet and establish trust in the network.
The DAO is the on-chain entity made of all network members who hold “TòròGs” TòròNet’s governance tokens. TòròGs are then used by members to vote on projects and govern the blockchain as well as its reserves. Any holder of TòròG is given the opportunity to participate in a voting mechanism through the TòròNet DAO.
TòròNet’s primary aim is usability. Its infrastructure is versatile but at the same time practice-oriented and well-defined. The founding team has incubated core projects released in tandem with the infrastructure to instantly spark impact and inspire direction. These use cases can be divided into those that provide access to physical commodities made possible through TòròNet’s micro-financing model as well as projects that provide services that link producers, consumers, and investors by codifying aspirations into smart contracts. The following section goes into detail about a selection of core use cases that both explain precisely how the infrastructure is put into practice by providing ready-made models of smart contracts and how they are applied. It also signals to stakeholders how the visions of the founders are already coming to fruition with projects that are up and running. TòròNet envisions seven broad pillars that it wants to define its operationality. These are the key indicators that the Association will look for when seeking to present a project for consideration by the DAO.
Africa has 60% of the world’s arable land but is responsible for just 10% of economic output. Holland, a country of just 18 million people exports $70 billion worth of agricultural produce, almost the same as Africa. If Africa can leapfrog and achieve even a quarter Dutch levels of output, the poverty problem will be greatly alleviated.
Today, the reality in Africa’s agriculture sector is one in which:
These are essential market failures to be addressed:
A possible step to correct this is to rethink how to connect farmers, producers, and financiers. We must consider a shift from a centralized operating, fiscal, and monetary strategy for agriculture to a decentralized strategy. This is where blockchains come into play. The possibility of using this technology to solve this problem without spending millions of dollars is available today. It is possible to know who has produced and connect them to those who can process, store, and transport it in a unique way as well as provide all the capital to offtake surpluses.
TòròNet introduces into agriculture a mechanism that allows the non-fungible agricultural assets to become fungible or tradable as a crypto asset. These include assets such as:
By tokenizing these intangibles via smart contracts that convert them into tradeable crypto assets (spot/forward/futures) that can be listed on exchanges for investors. This mechanism democratizes the functioning of markets in agriculture because it ensures that those who have the knowledge (what is available and it’s quality), are able to interact with those who have the assets. This mechanism not only solves the trust and market linkage problem but also shifts the agriculture markets in the direction of stakeholder capitalism treating individual actors at each step of the value chain with the information and tools they need to establish fairness and efficiency.
TòròNet has already created a working use case of micro-financing for smartphones. Smartphones are integral to economic and financial integration, it connects one to their community, to endless financial services, including TòròNet itself, online education, online marketplaces, and work opportunities. As such, making smartphones widespread and accessible is high on the TòròNet agenda for good and global inclusion. It is important to note however that this financing model is not limited to only smartphones but can also be applicable to automobiles, computers, solar home systems, and even homes.
To achieve this TòròNet leverages its financing model where an aspiration by a single individual for a smartphone is uploaded into the chain through a smart contract and verified by a small commitment fee ranging from 2-5%. The smart contract creates a token that is aggregated with the aspirations of other individuals in a community or country who also seek smartphones and listed on the TòròNet marketplace as a bundle that financers can invest into to reap interest rates and rewards. An independent node is responsible for aggregating the demands and creating the investment bundles. Another independent node handles the fulfillment of delivering the smartphone to the individual and repossessing it in case of default.
This model is already working in Nigeria with an organization (node) called MoneyWorx which aggregates the regional demands for smartphones and creates a financial asset for investors, while a separate company Aspiro Africa (also a TòròNet node) handles the delivery of the device and fulfillment.
In Nigeria, the journey starts for a consumer by going to an internet cafe or asking a relative or friend with access to the internet, or walking directly to an affiliate phone store and selecting a smartphone they wish to buy. At the checkout, they are asked to pay the full price upfront or given the option to finance the phone through MoneyWorx at an interest rate of 10% per year. If they select the financing option, they are asked to create an account on TòròNet which gives them access to the TòròNet wallet. The MoneyWorx financing contract requires the individual to pay a 2% down payment to secure the loan. The individual then uses the TòròNet exchange to easily convert their local currency into Tòròs either in the affiliate store, at a bank or atm, or through a friend or relative that whom they can hand them cash in return for a transfer. Once the Toro is in their wallet they accept the MoneyWorx smart contract, transfer the down payment and receive their device from the store or if it is from an online retailer it is fulfilled by Aspiro Africa. The immediate partial payment to the vendor comes from the down-payment and TòròNet reserve. MoneyWorx then aggregates all demands in each time period into a bundle and presents it as a financial product for investors or individuals in the TòròNet token marketplace. The consumer is required as per the smart contract to pay a certain amount to MoneyWorx through their TòròNet wallet every month, this can also be made automatic. If the payment is not made by a set date depending on the contract a fee is automatically incurred or in the case of default Aspiro Africa is contacted to recover the device. While Moneyworx and Aspiro Africa are partners in Nigeria, these nodes vary greatly from country to country. For instance, in Colombia, the national post office provides a better infrastructure and framework to become a fulfillment node.
Plastoken is an example of a non-tangible service provided by TòròNet rather than the provision of a physical asset. Its aim is to incentivize recycling and regenerative economies by partnering with companies that use plastics such as plastic bottles to give incentives to individuals to recycle plastic bottles as a reward. A company like Coca-Cola can reduce its manufacturing costs if it uses recycling while also promoting a sustainable environment. Equally society at large benefits from cleaner streets, and waterways, and from reducing plastic pollution and microplastics in the water. These benefits are internalized by Plastokens which are funded by partnerships with governments and companies and used as rewards for individuals who take plastics to designated drop-off locations.
At the same time, Plastoken goes way beyond a recycling incentive program. Plastoken has the potential to incorporate an already widespread informal sector into the formal economy by recognizing the value added by trash collectors. Registration on the chain will give these individuals access to financial tools and investments that can spur a new economy. Incentives to do this kind of work can be boosted by health insurance schemes, skill training, and foodbank programs that can be coded as rewards into the plastoken smart contract. For instance, at 1000 bottles one earns X reward.
Recycling of plastic bottles also requires much more than individuals collecting bottles. There is an entire logistical infrastructure behind it that can gain attention and formal investment through such a framework. From investing in more drop-off bins, transportation services, balers, crushers, label removers, weighing scales, forklifts, and an extensive list of other necessary components to make a zero-waste world a reality, TòròNet and Plastoken in specific creates a platform and investment asset where all these demands nurtured and operationalized.
TòròNet has partnered with Espees Corporation which is backed by thousands of monthly users forming an already well-established community stretching across various apps. From communications to e-commerce Espees has integrated its utility token, a stable coin, to make transferring and purchasing easy and efficient while maintaining security. As a node on the TòròNet network Espees provides core last-mile apps and services that are already up and running and can use the power of TòròNet’s smart contract functionality to expand its services to new horizons.
Clean energy is one of the most exciting places where the TòròNet financing model can excel. Currently, 940 million people do not have access to electricity at all while only 11% of the world has access to clean energy. While in places like Sub-Saharan Africa up to 77% of people do not have access to electricity. Access to electricity traditionally requires investments in grid infrastructure that is not cost-beneficial to private capital in rural areas and hard-to-reach places. However, recent developments in technology have drastically lowered the price of mini-grid and stand-alone systems meaning access to electricity can finally penetrate these left-behind places. What’s more, it is estimated that up to 90% of these systems are based on renewable energy sources. This means that we are now at a point where many of these communities can leapfrog the traditional polluting and extractive energy systems and achieve not just access to energy but access to clean and sustainable energy at a lower cost.
Access to energy, like access to financial services is a core service that unlocks a long list of subsequent benefits, rights, and opportunities. Access to energy allows these communities to greatly improve productivity, access online services, and connect with the world. Unfortunately, financing the aspirations of these individuals has been uncoordinated and difficult to implement by international organizations and central governments because they are not massive infrastructure projects but individual ambitions. Many do not have any on the ground presence in these rural and hard-to-reach places to recognize the demand and equally they do not have a platform to regularly collect payments in a reliable manner. TòròNet’s people-centered approach allows for individuals to go to an internet cafe or community center, upload their demands and connect with organizations from across the world who are ready to finance their aspirations and provide innovative systems of clean renewable energy for a fraction of the cost. By aggregating demands and offers and benefiting from economies of scale both consumers and suppliers benefit.
Although this case study focuses on those with limited access to electricity, the same financing model and opportunities can be applied to those with adequate access to electricity but with no state projects for clean and renewable energy. In this case, consumers can finance individualized clean energy solutions for their homes like solar panels and turbines.