# Overview Retail revolution is coming. We are the builders of this future. $$ \text{Decentralization of private capital is not a liability but an asset of great value.} $$ Finceptor is a DeFi liquidity protocol with a launchpad plug-in, enabling unlaunched and publicly traded tokens to build protocol-owned liquidity – solving DeFi 1.0’s mercenary liquidity problem. Liquidity Mining, providing token incentives to retail liquidity providers (LP), is highly expensive, unsustainable, mercenary, and rented. DeFi needs better liquidity management. We’re building a suite of first-in-the-market liquidity products enabling projects to bootstrap and grow their protocol-owned liquidity – liquidity vaults and bonds. Moreover, we also have our own launchpad plug-in strategically placed to attract top Web3 projects and help them grow their liquidity. * **Liquidity Vault** is an on-chain initial liquidity bootstrapping tool to build protocol-owned liquidity for unlaunched tokens. * **Bond** is a structured protocol-owned liquidity growth and token liquidation tool for publicly traded tokens. * **Launchpad** for a strategic token launch and sales arm. # Manifesto ## The Philosophy We believe in the power of stories. Stories unite us, stories inspire us, and stories empower us. We have always rooted for the underdogs, the Rockies, the Stephen Currys of the world. We idolized how the unfavored, and the disadvantaged came out on top when no one expected them to. The Dawn of the digital age and blockchain technology showed that Davids could indeed triumph over Goliaths, and we believe people can also triumph over centralized figures of authority. This is why we are here, why we have founded finceptor, to equalize the skewed distribution of capital across private markets. The private market, or investments outside of the stock market, was historically reserved for institutional and wealthy individuals. The notion of the rich getting richer is an inevitable part of capitalism that no one can deny or fight against; however, giving the opportunity to access previously inaccessible financial assets can help relatively smaller investors join in on this notion. Regardless of the outcome, or the performance of an asset, the opportunity to invest at an early stage should be equal for everyone. We are always open to everyone. Built by the community for the community. We value **openness**, the core concept, and a pillar upon which we have built Finceptor. Openness is the companion virtue to loyalty, as we firmly believe open people and organizations are more likely to succeed in business terms — and more likely to contribute to good lives for individuals and communities. Openness toward capital markets is the bending of the curve for the rich in the deprived throughout the history of private markets, including venture capital and investment banking. Democratizing the private market, including venture capital and investment banking space, via lowering the investment barriers to the surface, finceptor is visioning to empower public investors. ## The Vision finceptor's vision is to equalize access to historically-reserved private market instruments, promoting equal economic opportunity. ## The Mission finceptor's mission is to create an open liquidity and token investment platform for retail investors. ## About Decentralization Through decentralization, finceptor aims to empower the underdogs and challenge the status quo. Our motto is "*Decentralization of private capital is not a liability but an asset of great value*." by being trustless and transparent along with being open to everyone, finceptor takes DeFi and liberty as core values at its heart. We know it's going to sound cliche among all other platforms, but we truly believe the future lies in decentralization; we have bet our entire careers on it. When the internet was first founded in the early 80s, it was seen as a nuisance that would only be used by academics; however, after its mass adoption, it generated a paradigm shift that completely changed our society. Similar to the internet's boom, the blockchain will garner the same effect in the near future, and finceptor aims to be the (capital T) (crowd)-funding platform of the future by granting power to the individuals and with fewer restrictions as having no restrictions would be naive Pollyannaism. What about decentralization? Well, this is easy to say but hard to create an environment that completely lacks a central correlation device that acts as a trustful authority. Most existing crypto projects make markets based on the idea that they are "*fully*" decentralized. Any rational person with little running knowledge of cryptos can unveil the curtain behind this sentiment to see it as it is, complete nonsense. Including Bitcoin and Ethereum, nothing is *fully* decentralized. Is this time to pack up and go? Absolutely not. Decentralization must be examined under social, economic, governmental, architectural, logical, and algorithmic factors. It is a single term to call but requires greater attention, especially in the cryptoeconomics context. However, the dream of building a truly decentralized future is the governing motivation for why we engineers, designers, thinkers, researchers, and artists are here. # History ## Executive History The private market, or investment instruments that are not traded on public exchanges, was historically reserved for corporations and wealthy individuals. Private equity, venture capital, debt financing, and lending are some examples of the private market. Private market assets are proven to result in better returns on investments for private investors for decades.
However, making an investment in a private market transaction has been restricted to larger, institutional, professional investors who are capable of injecting a large quantum of capital into a transaction. Hence, retail investors, the public, don't have access to venture-scale returns on their investments as their access is limited to public markets such as the stock market and today's CEX space. On the other hand, private companies issue private ownership materials such as equities or debts to access financing, which is often injected by only private investors. Thanks to Web3, tokenization enabled a trustless, fast, and efficient way of pooling capital together for investors to leverage the power of collectivity to access private assets. Simultaneously, Web3 enabled private companies to issue tokens that represent ownership in the network, creating a new financing instrument for them to access capital and liquidity. However, even though Web3 helped to lower barriers, retail investors have again been restricted from accessing a democratized, seamless, and secure way of deploying capital and liquidity across private tokens. Moreover, token issuers, aka "Web3 projects", have also suffered from the high costs of issuing tokens and accessing capital and sustainable liquidity. Hence, an efficient, democratized, seamless, and secure token and liquidity financing platform is needed for both retail investors and Web3 projects. Introducing finceptor, a tokenized financing platform that enables Web3 protocols to raise capital and protocol-owned liquidity via liquidity vaults and secondary token offerings with automated token management and launchpad plug-ins. finceptor builds DeFi liquidity infrastructures for Web3 protocols to issue vaults, tokens, and bonds to attract capital from the public. Token issuers -- DeFi protocols, Web3 games, DAOs, and other initiatives -- have three phases of their token development: pre-launch, launch, and post-launch. Each phase requires a specialized, structured, and efficient financing instrument that enables Web3 projects to access financing. Respectively, finceptor builds three Web3 financing tools to meet these requirements: Liquidity Vaults, Launchpad, and Bonds. ## Product Suite * **Liquidity Vaults (LV)**: LVs are financing contracts that enable pre-launch Web3 projects to issue vaults and access to protocol-owned locked liquidity for their future tokens. At this stage, Web3 projects seek liquidity financing on the premise of future tokens and are entitled to lock-up terms with pre-defined deal terms. * **Launchpad Plug-in**: Launchpad deals are financing and token launch tools for launch-stage Web3 projects to issue tokens, conduct initial offerings, and create a secondary trading market. ITOs cover initial decentralized exchange offerings and are similar to Web3 launchpads. * **Bonds**: Bonds are financing tools for post-launch Web3 projects, enabling them to issue bonds for their publicly traded tokens and offer structured discounts to access capital and liquidity. # Features # Credit Protocol Credit protocol is an easy way to acquire finceptor credits that represent $USDT in the platform. Credit protocol is powered by an FCT token. Finceptor Credit Token ($FCT) is a credit soulbound token, only usable in Finceptor's offerings, just like a stablecoin such as [$USDT](https://twitter.com/search?q=%24USDT\&src=cashtag_click) or [$BUSD](https://twitter.com/search?q=%24BUSD\&src=cashtag_click), but it's not. $FCT tokens can only acquire tokens in the platform; they can't be used anywhere in Web3. It gives the direct right but not the obligation to invest in Finceptor offerings. It's not a stablecoin & can't be converted to stablecoin. But, stablecoins will be converted into $FCT under certain conditions. For example, 5 FCTs have direct and guaranteed access to invest $5 worth of tokens. It’s not pegged or backed asset like a stablecoin. It’s a non-tradable asset in the secondary market. It’ll only be purchasable from Finceptor, and it’ll be purchasable after our launch at a price of more than one dollar. $1 of the sale will be sent to back up the reserves for the investments, and the rest will be a direct profit to the treasury. So for every 1 FCT, we reserve $1 to fill the investment order in the depositing periods. The rest is direct profit in dollar terms. Moreover, the marginal revenue generated from FCT sales may be used for FINC buybacks and burning to incentivize accumulation power. The marginal price will be based on supply and demand. The reasons why we introduced the FCT token * **Premium model**: It’s a premium token, providing you with a direct allocation without staking and registration. FINC is not required anyway to access deals. * **Advanced UX**: We can collect the money before even depositing periods, enabling us to auto-manage their deposits, such as auto-investing. Imagine you’re purchasing a $100 FCT in one click. Then, you don’t need to stake, register and deposit manually. All can be done in smart contracts autonomously, advancing the UX by a large margin. * **Scalable**: It’s a super scalable system in both revenue and UX terms, which aligns with our retail vision to access Web2 capital. * **Revenue generator**: As a platform, we decided not to deduct fees from retail investors investing in the staking round. This premium feature enables us to make revenue from the non-revenue-generating customer segment. * **You might be better off in the balance sheet**: Imagine you're staking $FINC to access allocations. You're basically paying some capital ($FINC) to earn investment rights. It's competitive as lots of other users are also staking to access it. As demand grows, your staking-to-allocation ratio will decrease over time. So, your capital becomes more inefficient, and launchpads don't make more revenue as demand grows. This is an inevitable outcome as the limited resource is being divided among participants. $FCT solves that problem by the paid allocation model. Imagine staking $10k worth of FINC tokens to access the $5k cost of allocation. So you've paid $15k in total and still have $10k in assets. Suppose the token price is up by %50 and the launchpad token is down 50%. Currently, you got $7.5k in project tokens + $5k of Launchpad tokens = $12.5k. Your RoI = $12.5k/$15k = 83%. Imagine the other case, case 2, buying 5k FCT tokens for $6k. $1k will be written off as revenue for the launchpad, while the rest is reserved for the order fill. So you've paid $6k for everything, 0 in assets. Suppose the token price is up by %50 and the launchpad token is down 50%. Currently, you got $7.5k in project token + $0k of launchpad token = $7.5k Your RoI = $7.5k/$6k = 125%. So you're better off. It's also a hedge for users to protect from downturned market conditions. # Auto-compounded Staking Finceptor provides staking vaults that generate automatic and compounded $FINC staking rewards, requiring no additional effort from the user. This creates a passive income that grows exponentially over time. The staking rewards are harvested back into the staking vault on a daily basis, resulting in a compounded yield. For instance, through the auto-compound strategy, the yield is maximized by automatically converting a 100% Annual Percentage Yield (APY) into a 171% APY without any user intervention. > “**Compound interest is the eighth wonder of the world.** **He who understands it, earns it; he who doesn't, pays it**” - Albert Einstein # Capital Protection ### Refund Policies for IDOs Investors can ask 100% refund following the TGE unconditionally and on an individual basis. Investors have the flexibility to request a full refund within a specified timeframe. However, at any time, if they claim the purchased tokens, there’ll be no refund option. Unclaimed tokens after the refund period will be regarded as claims. * **24-hour Unconditional Refund** * **48-hour Unconditional Refund** ### Refund Policies for Liquidity Vaults As LVs are locked and liquidity-only financing tools, any break in the LV deal terms, such as timely token launch and malicious behaviors on top of the previous clauses, will result in investor refunds to protect capital deployers from inefficient use of capital. * **When the deadline for TGE has passed:** Investors can ask for a refund up to 30 days after the deadline for the TGE date passes. After the first 30 days, all the funds generated in the LV will be used as liquidity. * **Malicious Acts:** Finceptor retains the right to initiate a refund process at any given moment before the TGE should there be a harmful or gravely problematic incident related to a project, particularly in instances of liquidity financing policy violations. If a protocol fails to meet these stringent conditions, eligible users are welcome to submit a refund request. It should be noted that Finceptor reserves the right to modify this policy at any point to better protect our investors and to adapt to the ever-evolving market environment. # Product Suite Finceptor builds three Web3 token and liquidity financing products * **Liquidity Vault** is an on-chain initial liquidity bootstrapping tool to build protocol-owned liquidity for unlaunched tokens. * **Bond** is a structured protocol-owned liquidity growth and token liquidation tool for publicly traded tokens. * **Launchpad** for a strategic token launch and sales arm.
Liquidity Vaults/pages/6N01W4VJoKJtu2FhFiAr
Bond/pages/OWPRbsfa7gKzyuxvrdFg
Launchpad/pages/SaaOKf9w4SeugJ7JbbgY
# Liquidity Vaults Liquidity Vaults (LVs) by Finceptor is an on-chain initial liquidity bootstrapping tool to build protocol-owned liquidity for pre-launch tokens. Seeding and bootstrapping initial liquidity and community members are still some of the hardest problems of any Web3 initiative — Games, DeFi protocols, and DAOs. Tight liquidity disincentivizes DEX users to swap or provide liquidity to your tokens due to high slippage and IL risks, resulting in ever-collapsing markets. To help pre-token stage Web3 projects access initial liquid markets and community members, we’re releasing our new DeFi liquidity and community bootstrapping tool, **Liquidity Vaults (LV).** LV is a DeFi liquidity financing tool natively built for Web3 tokens to enable projects to sell future governance/utility tokens by SAFT at a discounted price to raise protocol-owned liquidity (PoL) and a community of real backers. PoL enables protocols to pay a lower cost to retain liquidity by eliminating the cost of Liquidity Mining incentives. Liquidity Mining campaigns are expensive and often attract mercenary liquidity — when incentives are gone, so is the liquidity. Moreover, PoL enables projects to capture the trading fees from their own trading pair in DEX, creating another sustainable revenue stream. After the initial liquidity provisioning, the liquidity raised by LVs will be locked for a minimum of 6 months by the verifiable liquidity locker smart contracts so that investors can access a trustless trading environment. The AMM LP tokens will be vested to secure a deep liquid market over time. **LV Benefits** * **Sustainable community bootstrapping:** Bootstrapping early token holders and community of real backers. * **Protocol-owned liquidity**: Bootstrapping initial protocol-owned liquidity and deep market from day one. * **New revenue stream:** Being their own decentralized MM, accessing another strong revenue stream by capturing trading fees. ### How it works LVs require pre-defined deal terms, such as the estimated token launch date (TGE), discount rate, and valuation cap, so that investors inject their capital with predictable token metrics. If there are misaligned or malicious acts on the deal terms, investors can always get 100% of their initial investment. Similar to the SAFE note, LV is a form of a convertible note with pre-defined maturity dates and triggering events. Typically, SAFE notes convert in the first-priced financing rounds in equity financing. In LV notes, the triggering event is the public token launch date. Hence, public FDV is used as a baseline valuation. For example, let's say protocol X is a pre-launch stage project that will launch a public token in the future, but the date and exact token metrics are not finalized. Protocol X must provide the following deal terms to ensure aligned liquidity raising. * Latest TGE date: 10 months after the LV investment * Discount rate: 50% * Valuation cap: $10m In written terms, the $X token has a maximum of ten months to launch its token publicly. The LV will be converted by either a trigger discount rate or valuation cap, depending on the FDV. If protocol X decides to launch with a $15m FDV, then the discount rate applies, and LV converts into tokens with a $7.5m valuation. The conversion is based on whichever provides a lower valuation. In this example, since the valuation cap is $10m and the discount rate provides a $7.5m valuation, LV positions are converted by the discount rate. However, suppose protocol X decides to launch with a $30m FDV. In that case, the valuation cap converts the LV as it provides more favorable deal terms and protects early backers from inflated valuations. Hence, at the token generation event, LVs will be converted into tokens and must be distributed based on the converted amount. If Web3 protocol fails to follow the requirements from token metrics to deal terms, investors will always get 100% of their initial investments back, as this capital is fully locked until the public token launch. This approach by Finceptor's Liquidity Vaults reflects a novel and secure strategy in addressing liquidity challenges in the DeFi space, paving the way for new tokens to secure market presence and community support effectively. # Bonds A crypto-native secondary token and liquidity offering model based on bonds Bond is a structured protocol-owned liquidity bootstrapping and token liquidation tool for publicly traded tokens. It's a new way to raise capital and liquidity for publicly traded tokens — DAOs, DeFi protocols, and other Web3 initiatives — after initial token offerings. * **Building Protocol-owned Liquidity**: Bonds could be used as an alternative to Liquidity Mining to bootstrap protocol-governed liquidity. * **Token liquidation/treasury building**: Bonds could be used for liquidating protocol tokens in exchange for strategic assets and stablecoins, helping projects build their long-term treasury. * **Multi-chain liquidity expansion:** Projects expanding their tokens to other EVM-compatible chains could use bonds to generate chain-specific liquidity, enabling an easy way for tokens to be multi-chain. * **Secondary DEX listings:** Projects that want to list their publicly traded tokens on DEXes could use bonds to finance the liquidity needed to open liquidity pools in DEXes. * **Secondary CEX listings:** Projects could use bonds to generate financing for secondary CEX listings. Tokens are auctioned off at a discounted price with vesting relative to the market in exchange for immediate cash flow. **Auction Types** * **Fixed-swap auction**: The auction starts and ends with the same discount rate and vesting terms. * **Descending Dutch auction**: The auction starts at a pre-determined discount rate and starts decreasing linearly with the purchasers. The more bonds drive demand, the more the discount rate is decreased linearly, creating economic competitiveness for market participants. The discounted tokens are vested linearly block-by-block to eliminate quick arbitrage opportunities. All real-time price data is sourced from [SupraOracles](https://supraoracles.com), the official oracle partner of Finceptor. # Launchpad # Initial DEX Offerings Initial DEX Offerings (IDOs) serve as token launch and financing tools for launch-stage Web3 projects, enabling them to issue tokens, conduct initial offerings, distribute tokens to communities, and create a secondary trading market. ### Allocation Policy finceptor operates without boundaries, tier systems, or the race to be 'first-come-first-serve,' which often skews allocation distribution. [**It operates on one straightforward principle: The more $FINC you stake and the longer it remains staked, the bigger your allocation.**](#allocation-policy) This ensures that as long as you stake at least $1 worth of [**$FINC**](broken://pages/HsTdk02nb2wMnI6qU7F5) tokens, you're guaranteed an allocation in all our deals. finceptor sets itself apart from other similar Web3 financing platforms with its unique allocation policy, which guarantees a level playing field for all investors, regardless of their size. To understand how this system operates, have a look at our technical paper on [Compounded Tokenized Incentives for Initial Token Offerings.](https://app.gitbook.com/o/42ZryZHMtPAsw6TTw9rH/s/PdF74ba8CqM3TyyrQA52/~/changes/14/technical-papers/compounded-tokenized-incentives-for-initial-token-offerings) finceptor's Refund Policy can be found [here](/about/features/capital-protection). # Goal-Gated Private Sales **Goal-Gated Private Sales (**GGPS) is a pre-sale financing tool specifically designed for pre-token stage Web3 protocols. For projects, securing adequate financing while maintaining investor confidence is particularly paramount. In response to this critical need, we at finceptor have crafted the Goal-Gated Private Sales (GGPS), a unique milestone-based financing model that bridges the interests of projects and their investors. With this model, project teams have the freedom to focus on their milestones, secure in the knowledge that their next tranche of funding is assured upon successful delivery. This approach to financing puts investor interests and project ambitions on the same path, fostering trust and growth. The capital raised through GGPS is secured and released in stages aligned with the project's roadmap milestones, ensuring that funds are utilized effectively and strategically. This approach empowers pre-token stage Web3 projects to focus on developing their product and community, not solely on initial fundraising. We ensure that the next round of funding is released only when your team has successfully achieved the predefined goals, facilitating a steady and strategic progression in line with your roadmap. GGPS models offer a predefined set of terms that shape the agreement between projects and investors. These terms include the estimated Token Generation Event (TGE) date, the discount rate, the valuation cap, and, most importantly, the milestone deliverables. This framework provides investors with transparent and predictable parameters for their investments. Two distinct GGPS models exist: **1. GGPS-Democratic Model:** In this model, the progression to the next funding release phase is subject to a vote by the investors, reinforcing the collective decision-making ethos of the blockchain community. **2. GGPS-Attainment Model:** Here, finceptor Labs provides diligent oversight, releasing funds only after thoroughly assessing the project's progress at each milestone, ensuring steady, strategic progression in line with the roadmap. \ By aligning the release of capital with the achievement of milestones, GGPS provides a solution to the challenges faced by pre-token stage projects in Web3. It's not just a financing model, but a strategic tool that facilitates sustainable growth, transparency, and mutual trust between projects and their backers. #### Definitions 1. **Milestone Pivot**: This is when a project can redefine the deliverables, set a new date, and modify the associated budget and token release parameters for a particular milestone. This action needs to be approved by the investors. 2. **Milestone Recalibration**: A proposal that the project team can initiate within 7 days after a Milestone Challenge. This recalibration plan is a proposal to redefine deliverables and set a new date, along with reconfirming the budget and token release from the challenged milestone. 3. **Roadmap Transformation**: A comprehensive process that lets a project redefine all the parameters for the remaining milestones. This includes updating deliverables, reconfiguring dates, adjusting budget allocation, and revising token shares. This decision also needs investor approval. 4. **Milestone Approval**: When a milestone's due date is reached, the project needs to provide a delivery report, triggering a period of investor voting. If the milestone is approved, the project receives the assigned budget and token release. 5. **Milestone Rejection**: If a milestone gets rejected by the investors, the project team can initiate a Milestone Recalibration within 7 days. If the project fails to convince the investors with a Milestone Recalibration, the investors have the right to reclaim their invested capital assigned to the rejected and remaining milestones. The corresponding tokens would then be returned to the project team. *** ### Democratic Version **Goal-Gated Private Sales (Democratic Version)** In this democratic version of GGPS, we use a voting-based mechanism to ensure a transparent and decentralized decision-making process. Investors vote on pivotal project aspects, including Milestone Approval and Milestone Pivot. **Milestone Pivot:** Projects can propose a **Milestone Pivot** for one or more milestones, validated through an investor voting process. Such pivots can include redefining deliverables, setting new dates, and adjusting budgets. **Milestone Approval / Milestone Rejection:** When a milestone's due date arrives, the project provides a delivery report, triggering investor voting. If **Milestone Approval** occurs, the project receives the assigned budget and funds release. However, if a **Milestone Rejection** happens, the project can propose a **Milestone Recalibration** within seven days. If the investors reject the recalibration or if no recalibration is proposed, the assets invested in the failed milestone are returned to the investors. In this democratic version of GGPS, a voting-based mechanism is applied to ensure a transparent and decentralized decision-making process. Investors have the power to vote on pivotal project aspects, including milestone approval and recalibration. *** ### Attainment Version **Goal-Gated Private Sales (Attainment Version)** In the Attainment Version of GGPS, we at finceptor Labs govern the process. We maintain rigorous oversight of project progress and milestone completion. We also allow for a Milestone Pivot for one or all upcoming milestones under specific circumstances. **Milestone Pivot:** When a project's scope or objectives evolve, the Attainment Version permits a Milestone Pivot. All changes must receive validation from finceptor Labs. **Milestone Approval / Milestone Rejection:** When a milestone is due, the project submits a delivery report to finceptor Labs. If the Labs grants **Milestone Approval**, the next funding tranche and token release is activated. If **Milestone Rejection** happens, the project can submit a **Milestone Recalibration** within a week. If the recalibration is rejected or not presented, the remaining funding assigned to the milestone is locked, and the project has the opportunity to reassess its goals and deliverables. # Tokenomics $FINC is a native utility token of Finceptor with a limited supply of 100M and 18 decimals. * **Accessing to liquidity vaults, bonds, and launchpad:** $FINC stakers have direct access to liquidity bootstrapping/growth, bond, and launchpad deals. * **Earning $FINC yields/rewards**: $FINC stakers earn auto-compounded or boosted $FINC yields/rewards via staking/farming activities. * **Discounted fees:** $FINC stakers will get discounted fees on the bonds. * **Protocol-owned liquidity:** FINC will be used to maintain the sustainability of liquidity through protocol-owned liquidity models. # $FINC Token Metrics
NameFinceptor
Ticker
$FINC
Supply
100,000,000
Public FDV$6,000,000
*Initial Market Cap$154,000
ChainBNB Chain
\*IMC refers to an initial market capitalization of $FINC tokens without liquidity.
Allocation%Price ($)% on TGELock-up Terms
Seed Round13,0%0,02 5%5% TGE unlock then 3-months locked, then 15 months DLV
Community Round8,75%0,04 10%10% TGE unlock then 1-month locked, then 7 months DLV
Public/KOL5%0,06 20%20% TGE Unlock 6-months DLV
Treasury38,75%0%36-months DLV
Liquidity10,0%25%25% TGE Unlock, 7 months MLV
Foundation15,0%0%10-months locked, then 24 months MLV
Incentives5,0%1%1% TGE unlock then 6 months DLV
Accelerators/Advisory4,50%0%12-months locked, then 24 MLV
# Roadmap ## 2022 Q3 * [x] Auto-compounded dynamic staking * [x] Liquidity Vaults R\&D * [x] Follow-on Token Offerings (FTO) design ## 2022 Q4 * [x] MVP Completion * [x] Docs v1 Public Release * [x] Investment Committee (IC) Formation for Project Listing * [x] Real-Time Portfolio Tracker ## 2023 Q1 * [x] Auto-compounded Staking Vault Private Testnet * [x] Regulatory compliance integrations (AML, KYC, and KYB) * [x] Private testnet v1.0 launch on Polygon * [x] Ecosystem partnerships and B2B affiliate program launch ## 2023 Q2 * [x] Follow-on Token Offering (Bond) private testnet * [x] Public Testnet v2.0 launch on Polygon * [x] Pre-Seed token financing * [x] Deal escrow and token management (Claiming and vesting) Development * [x] Deal marketplace development ## 2023 Q3 * [x] Third-party smart contract audits and reports * [x] On-chain Whitelisting * [x] Launchpad mainnet launch * [x] KOL partner onboarding * [x] Follow-on Token Offering (Bond) Private Testnet * [x] Web and mobile UX/UI advancements * [x] First pool creation on the platform * [x] opBNB Public Incentivized Testnet ## 2023 Q4 * [x] Public FINC Sales * [x] FINC Flexible & Locked Staking Launch * [x] FINC Listing *** ## 2024 Q1 * [x] Bonds mainnet launch * [ ] EVM-compatible Chain Expansion ## 2024 Q2 * [ ] Non-EVM-compatible Chain Expansion * [ ] Social Auth integration * [ ] Affiliate Referral Protocol launch * [ ] Liquidity Vaults mainnet launch ## 2024 Q3 * [ ] Credit Protocol Launch * [ ] Liquidity Vaults mainnet launch # Team ## Team We're currently like-minded 11 people located across Turkey, Netherlands, Mexico, and Spain. Finceptor's founding team consists of entrepreneurs, blockchain strategists, data scientists, blockchain engineers, software developers, visual artists, and lawyers, involved in many Banking, Finance, DeFi & Web3 projects, including mobile payments systems, launchpads, investment research, GameFi, & DAO. * **CEO, Can Kocagil:** Tech Entrepreneur, Blockchain Strategist, and former Data Scientist in Banking, Finance, and Crypto. [Twitter](https://twitter.com/canKocagil2). * **COO, Arman Vural Budunoğlu:** Former AI Entrepreneur, R\&D Engineer, former Machine Learning Engineer, and Blockchain and Finance Researcher. [Linkedin](https://tr.linkedin.com/in/arman-vural-budunoglu), [Twitter](https://twitter.com/ArmanVural). * **Blockchain Architect/Developer, Emre Dönmez:** Blockchain Architect, Lead Smart Contract Developer, ex Machine Learning Engineer. * **Full-Stack Engineer, Atahan Yorgancı:** Product Owner, Full-stack Engineer, MSc in Data Science in Bussiness and Entrepreneurship. [Linkedin](https://www.linkedin.com/in/atahanyorganci/), [Twitter](https://twitter.com/AtahanYorganci). * **Brand Director, Ege Kafali:** Visual Artist, Painter, and Brand Manager. [Ege Kafalı Studio](https://egekafali.com/) * **Legal Director, Gunes Serel:** Serel Legal Firm Founder, LLM Candidate IT Law, Specializing in Web3 and Blockchain Law. [Linkedin](https://www.linkedin.com/in/nusret-g%C3%BCne%C5%9F-serel-3b9802192/), [Twitter](https://twitter.com/serelkaralegal/status/1465708747074899978?s=24\&t=vKNWA2Ds2VAVsLc1nXwSGw). # Audit Finceptor is audited by PeckShield. The audit reports can be found below. {% file src="/files/ExZT79rHptbRpJHTBv2X" %} Audit v1.0 {% endfile %} {% file src="/files/N9OBql5XnrU9zlhwlN8P" %} Audit v2.0 {% endfile %} # Technical Papers 1. [***Compounded Tokenized Incentives for Initial Token Offering***](/technical-papers/compounded-tokenized-incentives-for-token-sales)*:* This paper proposes the innovative allocation model of the Finceptor and offers an incentive-aligned token sale model with network effects. Moreover, the paper analyzes the economic outputs and simulates the model in the Python programming language. 2. [**Compounded Dynamic Staking**](/technical-papers/compounded-dynamic-staking): This technical article describes the dynamic staking vault mechanism in Finceptor. 3. **Bonds:** This paper will propose a non-diluted novel bonding mechanism for token offering after the first offering (i.e., post-TGE capital raise). # Compounded Tokenized Incentives for Token Sales The technical paper for Finceptor's allocation policy: Compound Hyperbolic. **Author:** Can Kocagil **Email:** ## **Compound Hyperbolic** **Compound hyperbolic** is a state-of-the-art investment allocation calculation model of Finceptor, considering both time and token assets as input and producing the allocation amount of the users as output. Let $$A\[x], S\[x]$$and $$R\[x]$$be the allocation, $FINC staked amount, and the generated $FINC reward of the user $$x$$ in the form of the token amount for $$x = 1, ..., N$$ respectively for a certain time frame between $$t\_s$$ and $$t\_f$$ for a specific token sale round. (Say Project XYZ issues a 1,000,000 $$ $XYZ $$ token for the specific token sale round with a swap rate of $$1 \text{ } XYZ = $1$$) The final allocation is a function of both $$S\[x]$$and$$R\[x]$$. $$ A\[x] = f(S\[x], R\[x]) \text{ } f: \mathbb{R}\to \mathbb{R} $$ ​The compound hyperbolic model consists of a two-layer deterministic time-series mathematical process to compute the final allocations of the users, aiming to produce a capital-efficient resource allocation model, long-term time- and asset-based economic incentive schemes to incentive users to stake native launchpad tokens (i.e., $FINC), creating a positive-sum incentive alignment between investors, projects owners and Finceptor. ## Compound Time Layer Let $$R\[x] = R(x, \gamma)$$ where $$\gamma$$ is the compound frequency or rebase index, which calculates the reinvestment period for$$S\[x]$$, and dynamically update the following equations at every $$\gamma$$. $$ S\[x]*{t+1} = S\[x]*{t} + R\[x]\_{t} $$ which creates an exponential effect based on $$\gamma$$. Hence, $$R\[x]$$can be computed for the time period $$t\_s$$ and $$t\_f$$ as follows. $$ R\[x] = R(x, \gamma) \approx S\[x] \* (1 + \dfrac{r}{\gamma})^{\gamma} $$ where $$r$$ is the interest rate of the staking pool (vault). Then, let $$\delta = \sum\_{x=1}^N{S\[x]}$$**`​`**and$$R = \sum\_{x=1}^N{R\[x]}$$, representing **`Total Staked Amount`** and **`Total Reward Generated`** respectively. Then, let's also define $$S\_p\[x]$$ and $$R\_p\[x]$$as a staking and reward share of the user $$x$$. $$ S\_p\[x] = \dfrac{S\[x]}{\delta} \ R\_p\[x] = \dfrac{R\[x]}{R} $$ Then, $$\varphi\[x]$$ is the linear aggregator, calculated as a weighted average of $$R\_p\[x]$$ and $$S\_p\[x]$$ with weights $$<\alpha, \beta>$$. $$ \varphi\[x] = \alpha \* S\_p\[x] + \beta \* R\_p\[x] $$ where$$\alpha < 1, \beta <1$$ and $$\alpha + \beta = 1$$. $$\varphi\[x]$$ represents the linear aggregation of the staking share and reward share which will be used as an aggregate input for the hyperbolic asset layer. ## Hyperbolic Asset Layer After the calculation of $$\varphi\[x]$$, which represents the weighted average of staking and reward share of the users, **`a generalized sigmoid curve`** is adapted to re-design allocations of the users from linear to hyperbolic curves, producing greater multipliers to lower-size capital powers. The final allocation of the user $$x$$, $$A\[x]$$, can be calculated as $$ A\[x] = \sigma(\varphi\[x]) \text{ where } \sigma(z) =A+\frac{K-A}{\left(C+Q e^{-B z}\right)^{1 / \nu}} $$ $$\sigma(z)$$ is a generalized sigmoid curve, where $$z$$ is the input and * $$A$$ : the lower (left) asymptote; * $$K$$ : the upper (right) asymptote when $$C=1$$. * $$B$$: the growth rate; * $$\nu > 0$$: affects near which asymptote maximum growth occurs. * $$Q$$ : is related to the value $$\sigma(0)$$ * $$C$$ : typically takes a value of 1 . In the below graph, some sigmoidal curve functions are depicted to illustrate the behavior of the function. More importantly, the range $$1> x > 0$$ is particularly used in the allocation algorithm, which has mathematical properties as follows. 1. $$\sigma(x)$$ is always increasing with respect to $$x$$. 2. $$\dfrac{\partial f(x)}{\partial x}$$ is always decreasing. ![Some sigmoid functions compared. In the drawing all functions are normalized in such a way that their slope at the origin is 1.](/files/Dnjyiw9B9XeWwm1VwoY8) In the below graph, the red line represents the derivate of the sigmoid curve $$\dfrac{\partial f(x)}{\partial x}$$. ![](/files/SR6ZXxC17wZwdF3voVbQ) ## The Economic Results: Effects & Analysis #### The Derivation of Plain Language Allocation Policy **"The more or longer the stake $FINC, the larger the allocation will be"** The compound hyperbolic allocation policy is a fully-continuous and monotonic increasing function, i.e., always increasing or remaining constant but never decreasing; hence it's strictly increasing. Hence, for our use case range ($$1 > x > 0$$) for every increase in the x-axis, the y-axis is always increasing, creating a plain language allocation policy: "**`The more or longer the stake $FINC, the larger the allocation will be`**" #### Low Entry Barriers Entry level defines the lowest capital an investor needs to deposit before investing in the form of staking the native token of the launchpad ($FINC). Compound hyperbolic is a continuous function, i.e., the function always produces $$f(x) > 0$$ for $$x>0$$; hence any positive $FINC staking in the auto-compounded staking pool (vault) yields a positive $$A\[x]$$, enabling any $FINC staker to get an allocation. #### 100% Guaranteed Allocation It is the binary (either guaranteed or not, there’s no in-between) metric defined by whether the 100% guaranteed allocation is assigned to the investor who already passes entry level in the launchpad. Since compound hyperbolic is a real-valued continuous function, meaning that there are no abrupt changes in value, known as [*discontinuities*](https://en.wikipedia.org/wiki/Classification_of_discontinuities)*, for every $FINC staker,* there is a positive $$A\[x]$$, enabling every $FINC staker to get 100% guaranteed allocation. #### Pre- & Post-IDO incentives of $FINC staking & unstaking “Pre- & Post-IDO incentives of $FINC staking & unstaking” refers to the creation of incentive schemes for investors to stake $FINC longer and unstake $FINC later in both pre- and post-IDO periods, avoiding **`"stake & unstake" schemes.`**Since the compound hyperbolic allocation model takes time as an input, investors are incentivized to stake $FINC longer in both periods regardless of what stage they're in (pre- or post-IDO). Moreover, the time has also partially compounded effect on the allocations hence longer-term $FINC stakers allocations are compounded also, creating an exponential positive incentive scheme for investors. Finally, since unstaking-then-re-staking will re-initialize $$R\[x]$$ component, the allocation of the user will drop significantly with respect to the one who doesn't. This effect is controlled by $$\beta$$ parameter. #### The incentives for extra capital contribution “The incentives for extra capital contribution” refers to the incentive scheme of depositing/allocating extra capital into investment deals on top of existing investments, measured by how much your allocation will be increased with respect to the increase in your staked native launchpad token ($FINC). Best understood under example; e.g., you staked 1000 $FINC ($$S\[x]=1000$$) and got 2% of the all investment allocation ($$A\[x] = 2%$$). Moreover, then, you decided to invest more and staked your extra 500 $FINC (summing to $1500), and get (2 + $$\pi$$)% allocation. Here, $$\pi$$ refers to the change in your allocation in response to the extra staked $FINC. The larger the $$\pi$$, the higher the incentives of the investor to deposit more capital. In compound hyperbolic, $$\pi > 0 \text{ for every x>0}$$, creating an incentive to deposit more money into investment deals. However, since $$\dfrac{\partial A\[x]}{\partial x}$$is a monotonic non-increasing function, the rate of increase of $$\pi$$is decreasing for every increase in $$x$$. #### Fair allocation economics Fair allocation economics refers to the distribution of allocation and multiplier to the investors, aiming to assign resource opportunities to participants equitably and fairly. Equitable distribution of the resources involves allowing the capital resources to be distributed equally to each division of the community rather than accumulating the resources in the hand of a few persons. In allocation economics, there is no 100% accurate metric to understand how fair the distribution is; however, technically, incentive mechanisms should be analyzed to understand how allocation and multiplier might be distributed across investors. It is more statistical than analytic; thus, it’s hard to measure; however, one objective is to avoid too centralized distribution of allocation and multiplier. [Critics](https://www.uttryckmagazine.com/a-fair-distribution-of-resources/): Many attempts have been made at defining what a fair distribution of resources in society would look like. Utilitarians have argued for any distribution that maximizes welfare, while libertarians have argued for the legitimacy of any distribution that follows from a just initial acquisition or transfer. Liberal theorists, like John Rawls, have argued that a just distribution maximizes welfare for the worst off — this is called the maximin principle. It entails that inequalities are only allowed in cases where the unequal distribution generates a better outcome for those at the bottom. Compound hyperbolic has inverse quadratic internal disincentive schemes for decreasing the multiplier of investors, creating a financially-disincentived strategy for centralized accumulation of tokens. #### Multiplier Distribution Let $$M\[x]$$ be a multiplier of the $$x$$, which is the ratio between allocation and staking pool share, is a metric for capital-efficiency for investors. The larger the multiplier, the better the capital-efficiency of the investor. $$ M\[x] = \dfrac{A\[x]}{S\_p\[x]} $$ **For example:** Bob can have **`2M`** staked $FINC, hence $$S\[x] = 2,000,000$$ tokens with a total staked amount $$\delta$$ of **`100M`** tokens, corresponding **`2%`** shares, i.e., $$S\_p\[x]$$ of the staking pool. For the allocation share, Bob can get **`1M`** a token allocation hard cap (the maximum amount an investor can deposit) on **`25M`** token sale event, corresponding to $$A\[x] = \dfrac{1,000,000}{25,000,000} = 4%$$ shares of the whole investment deal. Hence, the multiplier of the investor is $$\dfrac{A\[x]}{S\_p\[x]} = \dfrac{4%}{2%} = 2$$. The larger the multiplier, the more capital efficiency is for the investor. The first-order differential curve of the sigmoid is essential for interpreting the multiplier distribution across investors because the distribution represents the rate change of the allocation with respect to increase in $$S\_p\[x]$$. $$ M\[x] \approx \dfrac{\partial A\[x]}{\partial x} $$ ​Hence, we can utilize the graph of the first-order derivate of the allocation to represent the distribution of the multiplier over capital amounts as follows. ![](/files/zTTyafHZwLlJCTopwgoJ) ## The Hyperbolic Asset Layer Simulation The allocation of resources is the public finance field in the context of economics, tries to find a set of strategies or per-participant shares under certain preferences and privileges that lead to Pareto efficient outcomes, in which no party's situation can be improved without hurting that of another party. Hence, the state of distribution should be allocative efficient. **Allocative efficiency** is a state of the economy in which production is aligned with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing. {% hint style="success" %} Resource allocation efficiency includes two aspects: * At the macro aspect, it is the allocation efficiency of social resources, which is achieved through the economic system arrangements of the entire society \[1] * The micro aspect is the use efficiency of resources, which can be understood as the production efficiency of the organization, which can be improved through innovation and progress within the organization \[1] {% endhint %} When a market fails to allocate resources efficiently, there is said to be a [market failure](https://en.wikipedia.org/wiki/Market_failure). Market failure may occur because of imperfect knowledge, differentiated goods, concentrated [market power](https://en.wikipedia.org/wiki/Market_power) (e.g., [monopoly](https://en.wikipedia.org/wiki/Monopoly) or [oligopoly](https://en.wikipedia.org/wiki/Oligopoly)), or [externalities](https://en.wikipedia.org/wiki/Externalities). With a private-goods market mechanism where people can buy as many voices as they want at the same price per voice, the individual with the strongest preference (or the wealthiest) carries everything. We are Finceptor and here to find allocative efficient and fair ways to distribute capital and voices. ### Fair Division of Resources Fair division of resources is a challenging and dynamic problem, and an active research area in mathematics, economics, social choice theory, dispute resolution, etc. Moreover, in game theory, the challenge of distributing a set of resources among numerous people who have an entitlement to them so that each person gets their fair share is known as fair division. {% hint style="warning" %} **Disclaimer**: The following code is just a simplified representation of the potential modelling of Finceptor token sales and does not reflect the actual IDOs or similar. Numbers, data, visualizations and everything else are just pre-assumptions of the rational players in the Finceptor market and the code snippets may or may not be used in the production environment, and is given for transparency. {% endhint %} ### Coding The Welfare of Finceptor Citizens We'll be modelling the behaviour and distribution of Finceptor citizens as a function of how much they stake via digesting Pareto optimality and allocative efficiency with Finceptor dynamics such as openness, fairness and beyond. Here are basic Python numerical computing and visualization library imports. {% embed url="" %} ### IDO Variables Let's imagine that there is an IDO with a $XYZ token, with an IDO-preserved token supply of 1M. Then, for the sake of simplicity, let the deal size be $1M, setting the per token price as 1 $XYZ = $1. Then, to model the IDO participant's stakes, let's generate random Gaussian numbers with 3 welfare classes. Let's made up 1500 Finceptor citizens with relatively low welfare, a staked average of 50 $FINC tokens with 15 standard deviations. In the same way, let's generate 1500 citizens for the middle and high welfare class with (300, 2000) mean and (70, 1500) standard deviations. {% embed url="" %} {% embed url="" %} We form the data as a list of tuples where each element of the list contains 3 numbers: mean stake, std stake and size. ### Gaussian Modelling of Finceptor Citizens Let's create random gaussian vectors of 3 classes as follow. {% embed url="" %} ### Gaussian Welfare Distributions of Finceptor Citizens Who doesn't love visualizations? We love. The figures are self-explanatory. ![](/files/KbGtfgdD5Ll8Ehd6pwSj)![](/files/j3TvJVnppFpVOQLhPbIb) ![](/files/IKcUP1VuPYHk8ZLMnFKc) ### Allocation Modelling Let's start an actual business. {% embed url="" %} In the *df\_agg\_stakes variable,* we concat the 3 gaussian vectors. ### Linear Multiplier How most IDO launchpads calculate your allocation in certain deals is by taking the linear percentile of your stakes! Your unit of influence is directly proportional to your stakes. Simple, right? Most of the time, linear models are preferred as they are easy to explain and compute but not always the efficient ones. {% embed url="" %} ### Quadratic (Decreasing) Multiplier We can be more liberal. Taking the square root of the stakes, then computing the per-citizen allocation gives superior multipliers to low-welfare people while quadratically decreasing the unit of influence as stakers purchase influence. {% embed url="" %} ### Logaritmic Multiplier Here we are way closer to becoming technoliberalist. Taking the log of citizen stakes, then normalizing them to in the range \[1, 100] gives crazy multipliers to low welfare stakers, whereas exponentially decreasing the unit of influence as stakers purchase influence. {% embed url="" %} ### Sub-Quadratic Multiplier Okay, let's be more conservative. Sub-quadratic functions give a more conservative multiplier than direct quadratic functions, which can be scaled more to be more linear. However, as the number of citizens increases, to allow more distributed capital investment and more people to join, the systems can be sub-quadratic. {% embed url="" %} ### Scaled Tangent Hyperbolic Sigmoidal and tangent hyperbolic functions are non-linear processes mostly used in neural network contexts but have certain hyperbolic properties that we can utilize, especially when they are scaled to the unit range. For the sake of representation, we utilized a scaled hyperbolic tangent function. {% embed url="" %} ### Visualizing the Multipliers Let's visualize the gaussian-modeled and computed multipliers as follows. ![](/files/groQiREIsZAthsok0aFZ) ![](/files/bntG19MHu8TbegfkjoSV) ![](/files/j2VjUjN6a0JBgAY4J1zO) ![](/files/cvW0lnWjhRWVlyrI3MUq) ![](/files/NlNPC3FCIYX9YmpXdapi) In the above figure, we can visualize the correlation between the number of $FINC tokens staked and the corresponding allocation in the $XYZ IDO. We can see that the linear model is just linear! HAHA! Let's leave the linear model aside. Being more serious, the scaled tangent hyperbolic function is most conservative among other functions, caring for every size of the welfare, empowering the low-welfare citizens via enabling higher multiplier whereas not much decreasing the high-welfare citizen's multiplier, which can be optimal IDO to IDO. ![](/files/mFQonSX7DwAcNroYaxab) You can compare the models we presented in the form of $XYZ token allocations numerically. | Num Linear IDO Token | Num Quadratic IDO Token | Num Sub-Quad IDO Token | Num Scaled Tanh IDO Token | | -------------------- | ----------------------- | ---------------------- | ------------------------- | | 81.37 | 1552.15 | 323.21 | 87.52 | | 108.82 | 1795.01 | 404.22 | 117.05 | | 132.29 | 1979.11 | 469.73 | 142.29 | | 178.74 | 2300.46 | 592.08 | 192.24 | | 225.48 | 2583.83 | 707.94 | 242.52 | | ... | ... | ... | ... | | 72258.96 | 46254.16 | 59911.93 | 62606.00 | | 72330.73 | 46277.12 | 59957.70 | 62645.10 | | 74154.12 | 46856.79 | 61117.03 | 63622.46 | | 82528.56 | 49431.87 | 66360.19 | 67731.24 | | 82880.36 | 49537.12 | 66577.68 |

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| ## A Future Work ### Machine Learning in IDO Allocations Most members of our technical team have a machine learning background so it is natural to develop ML-backed algorithms for IDO allocation calculation. What can we do is infinitely many, but for the sake of representation, we provide a K-means unsupervised learning algorithm, which tries to find a set of clusters with the optimization criterion, which is to minimize the total squared error between the training samples and their representative prototypes. Let's fit the model. {% embed url="" %} We have 8 clusters with their centroids! The are several strategies we can deploy, but let's take a simpler example as follows. {% embed url="" %} What we do is calculate per-cluster allocations with linear percentile and the number of citizens in each cluster, and divide them to find per-citizen allocation. {% embed url="" %} Finally, we can compare the algorithm's multipliers as follows. ![](/files/vsS5SVZkKCfWs3qBWTBU) ## References \[1]  # Compounded Dynamic Staking ## Compound Dynamic Staking Finceptor employs an auto-compounded vault mechanism for $FINC staking, compounding investor stakes to generate exponential returns and calculate the token sale allocations based on the compounded capital. An auto-compound mechanism is used to reinvest rewards generated from the staking pool into the same staking pool, creating a compound effect. ### Reward, APR, & APY Calculations A time-based mathematical formula is used to track the rewards and staking balances of every staker in the vault and the formula is updated according to the last update time and current time after every staking amount changing transaction. The parameters are as follows: * **`LastUpdateTime`** (can be any user) * **`TotalSupply`** (total staked amount) * **`UserBalance`** * **`Rewards[.]`** (total reward added to the user so far) * **`PaidReward[.]`** (Total rewards paid to all users so far) * **`RewardRate`** (reward to pay in return for a single token per second) Let’s imagine ***user A staking 100 $FINC*** tokens. The **`updateRewards`**function is called before the staking action and the initial parameters are updated as follows. $$ rewardsPerTokenStored = 0 \text{ (Since totalSupply is zero initially)} \lastUpdateTime=t\_0 $$ ​Then, the reward parameters of user A, **`rewards[A] and userRewardPerTokenPaid[A]`**, are updated as follows. $$ rewards\[A] = 0 \text{ (Since balance of A is 0 initially) } \ userRewardPerTokenPaid\[A] = rewardsPerTokenStored \text{ (0 in this case) } $$ ​After updating these parameters, the algorithm continues with the accumulation of **`totalSupply and balances[A].`** $$ totalSupply=0+100=100 \\ balances\[A]=0+100=100 $$ Now that we have initialized the first staking parameters and we have a non-zero **`totalSupply`**; let’s imagine a new **user B staking 200 tokens** assuming `t1` is the current time. $$ rewardsPerTokenStored = 0 + (t\_1-t\_0) \* \dfrac{rewardRate}{100 \* totalSupply} \\ lastUpdateTime=t\_1 \\ $$ ​​Then, the reward parameters of user B, **`rewards[B] and userRewardPerTokenPaid[B],`** are updated as follows. $$ rewards\[B]= 0 \text{ (Since balance of B is 0 initially)} \\ userRewardPerTokenPaid\[B] = rewardsPerTokenStored = \dfrac{(t\_1-t\_0) \* rewardRate}{100 \* totalSupply} $$ After updating these parameters, the algorithm continues with the accumulation of **`totalSupply and balances[B].`** $$ totalSupply=100+200=300 \\ balances\[B]=0+200=200 $$ Now, let's imagine that another user joins the staking pool, say user C, staking 300 $FINC tokens.​ **`rewardsPerTokenStored and lastUpdateTime`** is updated as follows. $$ rewardsPerTokenStored= (t\_1-t\_0) \* \dfrac{rewardRate}{100}+ (t\_2-t\_1) \* \dfrac{rewardRate}{300} \\ lastUpdateTime=t\_2 $$ ​Then, the reward parameters of user C, **`rewards[C] and userRewardPerTokenPaid[C],`** are updated as follows. $$ \\ rewards\[C]=0 \text{ (Since balance of B is 0 initially)} \ userRewardPerTokenPaid\[C]=rewardsPerTokenStored =\dfrac{(t\_1-t\_0) \* rewardRate}{100} \* \dfrac{(t\_2-t\_1) \* rewardRate}{300} $$ After updating these parameters, the algorithm continues with the accumulation of **`totalSupply and balances[C].`** $$ totalSupply=300+300=600 \\ balances\[C]=0+300=300 $$ Now the essential part of the algorithm comes to play. What if user **B wants to claim their rewards**? How does the algorithm calculate how much B has earned since they staked after A but before C? **`getReward`** function also triggers the **`updateRewards`** function so the parameters are updated. $$ rewardsPerTokenStored= (t\_1-t\_0) \* \dfrac{rewardRate}{100} + (t\_2-t\_1) \* \dfrac{rewardRate}{300} + (t\_3-t\_2) \* \dfrac{rewardRate}{600} \ lastUpdateTime=t3 $$ ​Then, the reward parameters of user B, **`rewards[B]`**, are updated as follows. $$ rewards\[B]=balances\[B]\* (rewardsPerTokenStored-userRewardPerTokenPaid\[B])+rewards\[B] \ rewards\[B]=200\* ((t\_1-t\_0)\* \dfrac{rewardRate}{100}+ (t\_2-t\_1)\* \dfrac{rewardRate}{300}+ (t\_3-t\_2) \* \dfrac{rewardRate}{600}- (\dfrac{(t\_1 - t\_0) *rewardRate}{100 \* totalSupply})) \ rewards\[B]=200* ((t\_2-t\_1) \* \dfrac{rewardRate}{300} + (t\_3-t\_2) \* \dfrac{rewardRate}{600}\\ $$ ​Finally, **`userRewardPerTokenPaid[B]`** is calculated as follows. $$ userRewardPerTokenPaid\[B]= \dfrac{(t\_1-t\_0) \* rewardRate}{100} + \dfrac{(t\_2-t\_1) \* rewardRate}{300} + \dfrac{(t\_3-t\_2) \* rewardRate}{600} $$ Now the necessary updates have been completed and user B is ready to claim their rewards which are stored in the **`rewards[B]`** mapping that we just updated. The reward is sent to the user and is reset to 0 until they claim again at a later time. As seen from the calculations, the reward is calculated so that it does not account for the time period where B has not staked (There was only user A) but accounts for the time periods where there is**``** and **` separately. This algorithm handles every user’s rewards in the same way. ### Auto-Compound Strategy To understand auto-compound strategy in $FINC staking, the concept of **`APR (Annual Percentage Rate)`** and **`APY (Annual Percentage Yield)`**should be understood. Simply, **`APR`** is simple and **`APY`** is compound interest, reflecting the interest you make in your interest. $$ APR = (\dfrac{(\dfrac{InterestReturn}{Principal})}{n} \* 365) \*100 $$ where **`InterestReturn`** is the total interest paid over the life of the staking, **`principal`** is the total deposit, and **`n`** is the number of days in the total reward period. Hence, there is no rebasing or reinvesting included whereas, in the APY calculation, interest on the earned interest (reinvesting effect) is also considered. $$ APY = (1 + \dfrac{APR}{n})^N - 1 $$ where **`N`** is the compounding frequency (e.g., daily, weekly, monthly, quarterly, etc.) With every rebase, the returned interest reward is added to the stakers' balance automatically resulting in a higher compound rate in the next period. To compare **`APR`** and **`APY`**, let's imagine that $FINC staking offers 100% **`APR`** at a certain timeframe, and imagine this **`APR`** continues to remain the same for over one year. Then, let **`N = 365,`** i.e., if compounding frequency is daily, and let **`Principal = $10,000`** then **`APY, TotalInterest`** and**`FutureValue`** will be $$ APY = (1 + \dfrac{100}{365})^{365} - 1 = 171.4567 % $$ Hence, there is a **`71.4567%`**interest rate difference between **`APR`** and **`APY.`** $$ \ Future Value = $27,145.67 \ Total Interest=FutureValue -Principal = 17.145,67 $$ ​Daily compound interest accumulated **`FutureValue`**of the user to **`27,145.67`**which will be **`20,000`** if compound interest wouldn't be considered, creating a **`7,145.67`** extra interest. To compare the compound effect of the $FINC auto-compound staking pool with the simple staking pools, here is the graph representing the accumulated $FINC amount over time; the difference between auto-compounded capital and simple capital is increasing over time, reaching `7,145.67` at the end of the first year and **`43688.76`** at the end of the second year. ![The dark filled area represents the difference between $FINC capitals over time](/files/rXj55wfPEnBh4SSui3Cs) #### Protocol Fees Note that staking/vault fees are not considered here; however, the calculation of the APR can be computed considering network fees as follows. $$ Realized APR= APR \* (1 - F\_P) \ RealizedAPY = (1 + \dfrac{APR \* (1 - F\_P)}{n})^N - 1 $$ ​where **`RealizedAPR`** is the actual **`APR`** rate after subtracting protocol fees **`FP.`** # Legal ## Disclaimer Purchasing, holding, and transacting in any way with FINC token shall not warrant, commit nor guarantee any revenue, profit, or value appreciation. Purchasing FINC shall not be construed as an investment. FINC merely offers utilities and features within the Finceptor ecosystem and platforms. Finceptor reserves its right to amend and modify the utilities and features offered by FINC. Crypto assets and crypto assets transactions, including FINC, are very risky in terms of potential losses, merchantability, technical failures, and legal and tax requirements, indeed the price of crypto assets can even become zero or be excessively volatile. By purchasing and holding or transacting in any way with FINC token, you agree and acknowledge that you undertake such risks on your own and that you shall consult your own legal and tax consultants for compliance purposes. We do not provide investment or financial advice, and all projects reviewed are done objectively in accordance with established reporting and information dissemination best practices. Before investing in any Web3-related project, you should conduct your research. As a result, Finceptor is not liable for any losses incurred due to a consumer’s investment decision. ## Decentralized Finance Risks **51% attacks**: This is one of the common blockchain security threats. It is more common in the case of Proof-of-Work protocols due to the design of their consensus algorithm. The issue could arise when hackers gain control over a major share of the computational power and rewrite the contents of the distributed ledger or even open the doors to double-spend attacks. An example of this is Bitcoin Gold in 2018 with over $18 million lost due to double spending; Vertcoin with about $100,000 stolen; Ethereum Classic with more than one 51 percent attacks since 2019, wherein the second attack the double-spending reached $5,6 million. **Access control failure**: The privileged functions of some smart contracts provide the owner of these contracts with access to enforce them through the specification of calls to the function. Often the access controls are implemented in the wrong way or are not implemented at all, and hackers could gain privileged access to a smart contract and use it to their advantage. **Cryptographic failures:** This occurs when sensitive data is insufficiently protected and, as a result, it suffers data leaks or is exposed to unauthorised audiences. **Code failures:** A great example of this is the attack against the Poly Network in August 2021, when over $600 million worth of crypto was stolen. Poly Network pleaded with the hacker to return the money, and sure enough, nearly half of the sum was returned two days later. **Stolen or leaked private keys**: Private keys are the code you need to access transactions sent to your public key address. This could include, for example, a compromised MetaMask interface (an application for interacting with the Ethereum blockchain). There are also malicious versions of MetaMask, resulting in crypto losses. Also, poor practices for crucial generations, like a lack of randomness, can lead to a private critical vulnerability. Such is the case with the Mt. Gox exchange, which had its wallet credentials continuously stolen beginning in 2011, until 2014, grand theft of a total of 850,000 BTC. Another example is the Coincheck exchange based in Tokyo, which in 2018 suffered an attack on its hot wallet, and the stolen NEM coins amounted to $534 million. More recently, less than a year ago, the cybersecurity company Intezer discovered an elaborate and sophisticated campaign whose goal was to steal crypto users' private keys to their digital wallets. The scheme was named “Operation ElectroRAT” (RAT stands for remote-access-Trojan). The hackers built three unique applications to carry their malware and three malware versions for the Windows, Linux, and macOS operating systems. The attackers focused on members of the crypto community by promoting the apps on forums and social media channels. More than 6,000 victims of this malware have been reported. **Flash loan attacks**: A common issue that might lead to a security breach is the incorrect token value calculation in the liquidity pools. Usually, the value of tokens in a pool is determined by its existing condition rather than external oracles. Attackers generally introduce an imbalance in the pool during a specific transaction, which leads to an incorrect calculation of the token value. The most recent flash loan attack happened in May 2021 at PancakeBunny, a BSC-powered yield farming aggregator, which suffered an exploit that caused its token to plummet by 95%. The largest flash loan hack was in February 2021, when the Alpha Homora protocol drained $37 million using Iron Bank, Cream’s lending platform. Another similar attack occurred in July 2021 on ApeRocket’s BSC platform and Polygon fork, costing users $1,26 million. **Front-running attacks**: Before being broadcasted, transactions are stored in mempools of each node prior to being added to the ledger in blocks. Malicious actors use this segment of time to create their version of the transaction with higher transaction fees, as blockchain miners generally arrange the transactions in order of their fees. That’s how the attacker’s transaction comes before the original one. In March 2021, the DODO DEX experienced a smart contract hack where attackers could steal nearly $3.8 million in cryptocurrency from several of DODO’s crowdfunding pools. Later, $3.1 million of the stolen assets were returned. **Ponzi schemes and rug pulls**: Sometimes, users can fall victims to an insider attack by owners and developers of the protocol who misuse their privileges and drain its value. A Ponzi scheme named “OneCoin” was launched in 2014, which is rumoured to have cost its investors more than $4,4 billion (other sources have claimed as much as $19,4 billion, but it is impossible to say for certain). The project was not traded on cryptocurrency exchanges as it had its platform. In 2018, the customers of the Italian exchange BitGrail were reported to have had their Nano was stolen, which amounted to $120 million. Its director was later accused of hacking his exchange. Some of the ways to prevent DeFi hacks * Testing the DeFi protocol in a testnet or beta phase before the official launch can prevent specific business logic errors. According to Hacken, a leading security consultancy company focusing on blockchain security, the arbitrage check function should have a lower tolerance value than 2% (arbitrage is the strategy of taking advantage of price differences in different markets for the same asset type). * It is also advised that deposit functions should not be accessible to third-party smart contracts, or if they are, certain value limits should be set. * Using decentralised pricing oracles like Chainlink and Band Protocol could reduce the attack vector, especially for flash loan exploits, instead of relying on a single DEX for their price feed. * Audits from a third party do not always guarantee that a protocol is free of coding errors. Still, it signals to the community that you are taking all measures to mitigate any risks of protocol vulnerabilities. * Traders can still fall victims to scams and fraud, so checking a project’s white paper, team, community activity, exchange listings, number of security audits, and backing from institutional investors is vital to deciding on whether to invest or not. As the DeFi industry grows, so will the malicious attacks. After being hacked, scammed, or having your funds sent to the incorrect place, you rarely find assistance resolving the problem. Adequate personal protection, like keeping your private keys safe and having a secure lip, is of the utmost importance. The more money that flows into the DeFi sector, the more hacks, exploits, crimes, and fake projects will keep springing up here and there. The DeFi space needs better tools for preventing human mistakes and errors. Even though one of the benefits of DeFi is that it eliminates intermediaries, on the other hand, there is no one to take responsibility for user errors besides the users themselves. Economic and crypto volatility could become a new reality, and every new fact creates new opportunities. Some projects die, some survive, and others thrive. Volatility creates an opportunity for those who have more to gain than lose.