Technical Documentation

PROOF ProtocolTechnical Whitepaper

Blockchain-powered MiFID II compliance for Luxembourg financial institutions. Version 3.0 - Live on Polygon Mainnet

Join BetaView Smart Contracts

Table of Contents

1. Executive Summary

PROOF Protocol provides blockchain-powered MiFID II compliance for Luxembourg financial institutions. Our solution wraps any API call with one line of code, automatically creating 7-year immutable audit trails on Polygon blockchain.

2. Problem Statement

Luxembourg financial institutions face significant annual costs for MiFID II compliance audits (industry reports estimate €10K-50K range). Traditional solutions require complex integration, expensive consultants, and lack transparency. Manual record-keeping is error-prone and difficult to audit.

3. Technical Architecture

3.1 SDK Layer

TypeScript SDK wraps fetch() calls, intercepting requests/responses. Hashes are generated using SHA-256, full data stored on IPFS with encryption options.

3.2 Smart Contracts

ProofRegistryV3 on Polygon mainnet stores record hashes with privacy controls (PUBLIC, PRIVATE, SHARED). ProofToken (ERC-20) enables progressive burns based on network usage.

3.3 Privacy Levels

PUBLIC: Hash + metadata on-chain. PRIVATE: Only hash on-chain, data encrypted. SHARED: Multi-party access control with granular permissions.

4. Tokenomics & Distribution Model

4.1 Enterprise-Only Distribution

PROOF tokens are NOT sold to the public. Distribution is exclusively controlled by Yet Technologies through private B2B allocations to vetted enterprises. No ICO, no public sale, no exchange listings. Token access requires €50K-100K minimum commitment and genuine compliance requirements.

4.2 Three Acquisition Models

Prepaid Service Credits (€50K minimum, 12-24 month contracts). Direct Token Purchase (€100K minimum, quarterly allocation rounds with limited slots). Strategic Partnerships (token warrants with 24-48 month vesting for technology partners and integrators).

4.3 Scarcity & Value Creation

Token value increases through: (1) Deflationary mechanics - 50-80% of every transaction burns PROOF permanently (progressive burn based on token price), (2) Controlled distribution - limited quarterly allocations create natural scarcity, (3) Utility requirement - companies must demonstrate genuine compliance needs to qualify, (4) Real consumption - 10 PROOF per API record drives continuous demand.

4.4 Progressive Decentralization

PROOF Protocol is currently centralized for regulatory compliance and quality control. Our roadmap includes progressive decentralization: Phase 1 (Current) - Yet Technologies controls all operations and token distribution. Phase 2 (Planned) - Enterprise partners who stake PROOF gain voting rights on protocol parameters; Yet retains execution control. Phase 3 (Future) - Full DAO governance with community-controlled treasury and automatic proposal execution. Governance and staking contracts are already deployed and ready for Phase 2 activation.

4.5 Revenue Model

Primary revenue: SaaS subscriptions where companies pay EUR for compliance services. Yet Technologies manages token procurement internally. Secondary revenue: Direct token allocations to qualified enterprises. Enterprise pricing: €199-499/month subscriptions or €50K-100K+ direct allocations.

5. Regulatory Compliance

5.1 MiCA Exemptions

PROOF Protocol operates under Markets in Crypto-Assets (MiCA) exemptions for private placements (Article 4). No CASP license required because: (1) Private B2B distribution only, (2) Qualified investors and wholesale transactions (€150K+ thresholds), (3) Utility token consumption model, (4) No public offers or retail sales.

5.2 Compliance Strategy

Four pillars: (1) No public token sale - exclusively B2B allocations, (2) Vetted enterprise partners - qualification review process, (3) SaaS revenue model - companies pay EUR, Yet handles tokens, (4) Discretionary allocations - Yet Technologies reserves right to deny any applicant.

5.3 Legal Structure

Yet Technologies SARL-S (Luxembourg) operates as token issuer and platform operator. PROOF token deployed on Polygon mainnet as utility token for compliance operations. No securities offering, no investment product, pure operational utility.

6. Security & Data Protection

6.1 Data Security

Data encoding for private records with optional client-side encryption before IPFS upload. Enterprise customers can integrate their own encryption (AES-256, etc.) through SDK hooks.

6.2 GDPR Compliance

Right to erasure: Remove IPFS data, hash remains. Data minimization: Only required metadata on-chain. Privacy by design: Encryption enabled by default.

6.3 Audit Trail Immutability

Blockchain guarantees 7-year retention. No deletion or modification possible. Cryptographic verification of all records.

7. Market Opportunity

Luxembourg hosts a significant financial services sector with substantial assets under management. MiFID II applies to all regulated financial services. Target market: banks, investment funds, insurance companies, and fintechs requiring compliance automation. Enterprise-only sales model allows for high-value contracts and direct customer relationships.

8. Competitive Advantages

One-line integration

No blockchain knowledge required. Works with existing APIs.

Cost-effective pricing

€199-499/month subscription model (plus free tier) provides significant cost savings versus traditional audit consulting.

Real-time compliance

Automatic record creation. No manual processes.

Blockchain transparency

Publicly verifiable on PolygonScan. Regulator-friendly.

9. Smart Contracts

Currently Deployed & Verified

The following contract is live on Polygon PoS Mainnet and fully verified on PolygonScan:

ProofToken

Verified

ERC-20 utility token with progressive burn mechanism

0x4c9A2a4D1686f7F468400E0c8fcB86d3FCbF5B21

ProofRegistryV3

Verified

Main registry for compliance records with V3 privacy controls

0x5Fa8A332170B7Dc759Baac5a81CbF8eE0573599e

ProofRegistry

Verified

Legacy V2 registry (deprecated, use V3)

0xB206F1A7775924d790c457297Be20511Af52cBD8

ProofStaking

Verified

Staking contract for fee discounts and rewards

0xeBe8F8606cfAceD1c14825633834573f0E23CFd9

ProofGovernance

Verified

On-chain governance for protocol upgrades

0x5D3a3Fa74683e481b14aCA6c36868bE27E757F1C

Integration Example

Add MiFID II compliance to any API with one line of code:

import { ProofClient } from '@proof-protocol/sdk';

// Initialize once
const proof = new ProofClient({
  privateKey: process.env.PRIVATE_KEY
});

// Wrap any API call
const response = await proof.record(
  fetch('https://api.yourbank.com/trade', {
    method: 'POST',
    body: JSON.stringify({
      amount: 10000,
      asset: 'EUR'
    })
  })
);

// That's it! Automatic 7-year blockchain audit trail
console.log('Record ID:', response.proof.recordId);
console.log('Transaction:', response.proof.transactionHash);

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Be among the first Luxembourg financial institutions to implement blockchain-powered compliance. Lock in beta pricing before launch.

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