Solv Protocol is using NFT to reconstruct the primary market
Vesting Voucher is the first innovative product launched by the Solv team based on the original asset standard vNFT
Solv Protocol is the decentralized platform for creating, managing, and trading Financial NFTs. As its first Financial NFT product, Vesting Vouchers are fractionalized NFTs representing lock-up vesting tokens.
What problems are Vesting Vouchers solving?
In the primary market, what investors buy from the team is often not the spot, but the futures with a certain lock-in period. That is to say, the transaction between the investors and the team is a right to withdraw the tokens in the future. Hence two core questions have come up
First, the investor’s lock-up share lacks liquidity. When investing in the primary market, a large number of Token shares in the hands of investors are locked. Facing the ever-changing market, they cannot respond in a timely manner. It is easy to miss good opportunities. The bull market cannot be transferred and circulated. When it finally unlocks, they often swarm Plate, resulting in a lose-lose situation.
Secondly, it is very prone to friction between investors and investors, investors and all parties to the project in investment transactions. When investors try to transfer locked positions, it is generally difficult to find a counterparty. Even if a counterparty is found, the transfer process will be difficult. Full of various risks, cumbersome procedures and high trust costs make it difficult for the OTC market of share trading to develop. At the same time, for investors, the release of locked positions in most projects is currently managed in a centralized manner, or even manually, which brings many risks of default and increases transaction friction between investors and projects.
In summary, while we have witnessed that the DeFi protocol uses extremely low costs to help people solve trust problems and facilitate financial transactions in various markets such as secondary market transactions, lending, and insurance, the primary market of blockchain is still stuck in the “CeFi Era”.
Vesting Vouchers empowered by NFT as the One-stop Solution
Voucher represents the contractual relationship between investors and project parties. The transfer of vouchers represents the transfer of investment shares. And vouchers can support splitting and merging, so that share transactions are full of flexibility.
The projects first deposit the Token into the Solv protocol, agree on the lock-up form (linear unlock-up, Phase unlock-up, one-time unlock-up[1] ), lock-up start time, lock-up end time, and generate an NFT with the agreed conditions, This is the process of creating vouchers. After that, whoever owns this NFT will have the right to withdraw the tokens from the Solv protocol in accordance with the agreement. The token release will be entirely based on smart contract supervision and execution.
vNFT is a new token protocol created by the Solv team, specifically used to describe Financial NFTs. Vesting Vouher is the first vNFT to be released.
Why do we have to invent a new token protocol? Can’t the existing ones be used?
Obviously, in order to accurately express and execute lock-up conditions, voucher needs stronger information description capabilities, and ERC20 is obviously incompetent. However, ERC721 cannot support quantity splitting at the protocol level, nor can it meet the needs of vouchers. ERC1155 does not support the splitting of non-homogeneous assets at the protocol level. Although it can partially simulate this feature through its ability to describe the number of tokens, the shares after such simulated splitting are homogenized by default. However, in the scenario of share transactions, the most important capability is that each share can be differentiated due to the different withdrawal progress. Therefore, we have to abandon the ERC1155 standard.
Therefore, Solv must create a new asset agreement, which is vNFT. vNFT is compatible with ERC721, so it can be regarded as an upgraded and enhanced version of ERC721. vNFT has very strong information description capabilities, expressing complex lock conditions and release patterns. It can also support free split and merge, share assets, and each share can support further operations and state changes. (Currently vNFT has not yet submitted an EIP proposal)
vNFT has been equipped with both the financial attributes and the fun collectible attributes. In addition to describing the lock-up information of the Token, each voucher will also be linked to an exquisite bill design and its corresponding commemorative meaning. When the rights of voucher are fully fulfilled (the user has withdrawn all the tokens), is it possible that this exquisite bill that once represented the investment rights become the collection of someone?
The first project to adopt the Vesting Voucher is the Solv itself. The official will deposit a certain amount of $SOLV into the protocol, mint vouchers and distribute them to the seed round investors to open the free transactions in the primary market.
Solv Marketplace will integrate OpenSea to build a market around the creation, splitting, merging, display and trading of vouchers. OpenSea supports a variety of trading modes by default, including the limit price sales, bundle, Dutch auctions, and whitelisted sales, etc.
The contract-supervised investment rights, rich and transparent trading experience, and freely circulating global trading markets will be the panorama of the primary market in the DeFi era. Solv is committed to creating a new primary market infrastructure.
Vesting Voucher Application Cases:
Manage Lock-up Allocations
Most projects reserve lock-up allocations or vesting tokens for their team members or investors as an effective solution for the coherence in long-term interests. By adopting Solv Vesting Vouchers, there will be no need for additional code development for projects managing their allocations, while facilitating an open, transparent, fraud-free OTC market on-chain for trading and lending allocations and their derivatives. Thus, All allocation holders could obtain liquidity in a more efficient way, while the vast majority of users could also participate in this market for their acceptable quota at a relatively low cost.
Initial Voucher Offering (IVO)
While raising funds for a public round, projects could sell their lock-up allocations represented by Vesting Vouchers to investors as an Initial Voucher Offering (IVO). This round is often named as pre-IDO, a financing round before IDO. As a matter of fact, IVO does not necessarily take place before IDO, because allocation sale is an effective way for fundraising without any affection on the secondary market. IVO is an ideal fundraising method for projects of any developmental stage.
Community Building
Lock-up allocations are also a powerful bridge for users and projects. The coherence of users and projects in their interests were usually realized by distributing tokens to users in the past, but too much liquidity in tokens themselves leads to less willingness for users to hold them. Vesting Vouchers are different here. With significantly low costs for distributing lock-up allocations, Vesting Vouchers are more suitable for airdrops or liquidity mining to establish a stronger value network of users, other than spot tokens.
Learn more:
Solv Protocol: Official Website | Twitter | Medium | Telegram | Discord
