TraxiaUSINGBLOCKCHAINTODISRUPTTRADEFINANCE

V1

TraxiaFoundationBaarerstrasse82,Zug,6302,Switzerland

foundation@traxia.co

February1st2018

Thisdocumentisforinformationalpurposesonlyanddoesnotconstituteanofferorsolicitationtosellsharesorsecurities.Anysuchofferorsolicitationwillbemadeonlybymeansofaconfidentialofferingmemorandumandinaccordancewiththetermsofallapplicablesecuritiesandotherlaws.

All$valuesareUSdollarsunlessotherwisenoted.

ABSTRACT

Thereareover$43trillionofinvoicessittingincompanies'balancesheetswaitingtobepaid.This lackof liquiditycanbedetrimental toasellers’ short-termcash flow,especiallyforsmallandmediumenterprises(SMEs).TheTraxiaecosystemallowsthoseshort-term assets to be digitized, tokenized and ultimately to be tradeable in adecentralizedmarket.

TraxiaenvisionsasystemwhereSellersuploadtheir invoice,Buyersapprove it

withtheirprivatekeys,IssuingProviderswriteitintoasmartcontract,LiquidityProvidersdistributecashliquidity,ListingprovidersmanagethemarketplaceandInvestorstradethenewlycreateddigitalassets.Thinkofitasfactoringonablockchain.

WehavebuiltarealusecaseusingLiqeaseLtdasourListingprovider,Porscheas

the Buyer, mediaman and Vok Damns as the Seller and a corporate investor as theLiquidityProvider.Although,theEthereumblockchainhasbeenusedinthisfirstcasetoissuethesmartcontract,TraxiaintendstobuildupontheCardanoblockchain.

TraxiaandLiqEasearethefirstinvestmentofCardanothroughtheirinvestment

armEmurgo.

Background 3

WhatisTradeFinance? 4Actors 4Objects 4Terms 5

TraditionalTradeFinanceProducts 5Factoring 5LetterofCredit 6SupplyChainFinance(SCF) 6Securitization 7

MarketOpportunityforablockchainpoweredsolution 9ThegrowthofFactoring 10

Traxia’ssolution:adecentralizedtradefinanceecosystem 11TheSmartContract 13TheActors 13

1. Seller 132. Buyer 143. Investors 144. IssuingProvider 145. ListingProviders 146. LoanWarehousing 15

TokenizedaccesstotheTraxiaplatform 15Whatwealreadybuilt 16InitialProofofConcept 18TraxiaandLiqEase 19

BusinessStrategy 19Stage1 20Stage2 20Stage3 20

ProductArchitectureandDevelopmentRoadmap 20V1 21V2 21V3 22

TraxiaMembershipToken(TMT)Sale 22TokenDemandandSupply 24TokenDiscountsduringPre-SaleandSale 24UsageofProceedsfromTokenSale 24

Team 25

Legal 25Generalinformation 25Knowledgerequired 25Risks 26Importantdisclaimer 26

WorksCited 28

Annex–TechnicalDetails 29

Background

On any given day around theworld there are around $43 trillion of accountsreceivableoraccountspayableonthebooksofbusinesses,ofwhich,banksonlyfinancearound$3trillionofthetotal(Kemper,2016).Onamoregranularlevel,thereisagapinglobal trade financeofaround$1.6 trillion,mostarising fromAsiancompanies (AsianDevelopment Bank, 2016). The International Chamber of Commerce refers to tradefinancingasthe‘oil’intheengineofinternationalcommerceandhighlightstheunmetdemandforsuchfinancing(InternationalChamberofCommerce,2017).

Thisgapisaresultofamisalignmentintermsofthedemandfortraderelated

credit and the liquidity of funds provided. It is disproportionately available tomultinationalsandlargecorporates–thetopendofthemarket–andconsistentlyabsentintheSMEsegment(InternationalChamberofCommerce,2017).Simplysaid,SMEsarefacedwithlittlechoicebuttoaccepttheirlargecustomer’spaymentterms,nomatterhowoneroustheymaybe.

FinancialTechnology (FinTech)companieshavecomeupwithsolutions to this

gap in global trade finance. However, in the absence of new instruments andmarketplacesthatconnectandbringtogetherdifferenttradeactors,newventureshavebeenunabletomakeamajordifference,yet.

Thecurrenttradefinancegapisduetothefollowingmajorissues(International

MonetaryFund,2016):1. Absenceoftrustandcooperationbetweenbanks

AcontinuousdeclineincorrespondentbankingrelationshipshasleadtoaneconomicfragilitythathasnotbeencompensatedbythelimitedgrowthinopenaccountfinancingorLettersofCredit(L/C).

2. Limitedtransparencyduetoalackofreliabledatapointsalongthetrade

financevaluechainInperiodsshapedbyalackoftrustandtransparency,tradefinanceactors(privatebanks,exportcreditagencies,andregionaldevelopmentbanks)seemtopooltheirresources(WorldTradeOrganization,2008)whichcreatesdifficultiesintermsofobtainingcomprehensiveandreliabledataonthosetradefinancetransactions.

3. LimitedCashLiquidityinthemarketsandhigherspreads

Largebankshavebeenreportingonseveraloccasionsthatthelackofaccesstocompetitivefundinghasmadethemtodropoutofseveralfinancetradeoperations.

4. BureaucracyandendlesspaperworkDigitalisationintradefinanceisfarfrombeingmainstream.Providershavebeenpromisingdigitallettersofcreditandbillsofladingforyears,

yetmostcorporatesandbanksstillroutinelyexchangepaperdocuments(InternationalChamberofCommerce,2017)

SMEsaccountformorethanone-halfoftheworld’sGDPandemploytwo-thirdsof the global workforce (World Economic Forum, 2015). The number one barrier togrowthfacedbySMEsaroundtheglobeisaccesstofinancing(InternationalLabourOffice,2015).Thisisnotanewissueandthe2008financialcrisisonlyworsenedtheproblem.Manylocalretailbanks,whoareoftentheprimaryandonlyprovidersofSMEfinancing,have lost theirappetite for takingonhigher-riskSME loans. It isestimated thatSMEsfacedin2015a$2trillionUSDglobalcreditgap(WorldEconomicForum,2015).WhatisTradeFinance? Global and local banks support international trade through a wide range ofproductsthathelptheircustomersmanagetheirinternationalpaymentsandassociatedrisks,andprovideneededworkingcapital.Theterm“tradefinance”isgenerallyreservedfor bank products that are specifically linked to underlying international tradetransactions(exportsorimports).Assuch,aworkingcapitalloannotspecificallytiedtotradeisgenerallynot includedinthisdefinition.Tradefinanceproductstypicallycarryshort-termmaturitieswhichreflectthetypicalshippingtimesandpaymenttermsof30,60or90daysormore.(BankforInternationalSettlement,2014).Actors

For the purpose of this whitepaper, wewill solely focus on the actors of the‘financialsupplychain’.Financialintermediaries,inabroadersense,offerservicesthatallowsaneasier,faster,andcheaperexecutionoffinancialcontractsbetweenoriginatorsandacceptors.

Thiscomprisesthegathering,forexampleviabrokers,ratingagencies,orstockmarkets,ofinformationtoinforminvestorsaboutborrowerqualityand/orrisk.Ingeneral,disintermediationintradedenotestheomissionofactorswithinasupplychain,ase.g.intermediary distributors or retail sellers. But, disintermediation in financing is thesubstitutionofthetraditionalbankintermediationbythemeansofalternativeformsofintermediationwithregardstoliquiditybetweeninvestorsandpartiesseekingcapital.Objects

Objectsoffinanceincludefixedassets,i.e.thoseassetsthatpermanentlyprovideabasisforthebusinessoperations,andworkingcapital,whichisvariableonaday-to-daybasis.

Productionfacilities,whichprovidetheunderlyinglogisticnetworks,aswellastheequipment needed for customs clearance and the transport within the network areconsidered fixed assetswithin a supply chain. The termworking capital comprises allcurrentassets transformable into liquidassetswithinoneproductioncycleorat leastwithinoneyear.Circulatingassetsminustheshort-termliabilitiesarecallednetworkingcapital.Akeyfigurewhich,inthiscontext,issuitedforanexaminationofthecashflowisthecash-to-cash-cycle.Thelatteriscalculatedasfollows:Cash-to-cash-cycle=averageturnoverperiod+periodofreceivables-periodofpayables

Thecash-to-cash-cycleistheperiodoftimeneededforacompanytotransformthecashdrainresultingfrompayingthesuppliersintocashinflowfromcustomersagain.Thecash-to-cash-cyclethusisakeyfiguretoadynamicandholistictreatmentofthenetworkingcapitalperformancebothwithinthecompanyandwithinthesupplychain.Terms

Supplychainfinancehasthreedimensions:1.Theamountofassetstobefinanced(volume of financing), 2. The duration of the financing and 3., the capital cost rate(financingcost).Multiplyingthesethreefactorstogethergivesthetotalcapitalcostthatacompanyhastogenerateatleastforaninvestmenttobeprofitable:

Capitalcosts=Volume*durationtime*capitalcostrate

Themostimportantstartingpointfortheoptimizationofthefinancingwithinasupplychainbeyondclassicallogisticsmeasuresisthusthecapitalcostrate.

TraditionalTradeFinanceProducts

Many SMEs find it difficult to finance their production cycle, as most buyersdemandaround60daystopayforgoodsfromthedateofdelivery.Inanytransaction,asellerwillissueaninvoice,whichtheyaccountforasanaccountreceivable.Thebuyerthenaccountsfortheinvoiceintheiraccountspayable.Accountsreceivablesareilliquidassetsuntilpaymentisreceived.Factoring

Factoring isa typeof supplier financing, inwhich firmssell their credit-worthyaccountsreceivablesatadiscount(generallyequaltointerestratesplusservicefees)andreceiveimmediatecash.Factoringisnotaloanandtherearenoadditionalliabilitiesonthe firm’s balance sheet, although it provides working capital financing. In addition,factoring is often done “without recourse”, meaning that the factor purchasing thereceivables assumes the credit risk for the buyer’s ability to pay. Factoring is acomprehensive financial service that includes credit protection, accounts receivablebookkeeping,collectionservicesandfinancing.

LetterofCredit

Oneofthemostcommonandstandardizedformsofbank-intermediatedtradefinance is a letterof credit (L/C). L/Cs reducepayment riskbyprovidinga frameworkunderwhichabankmakes(orguarantees)thepaymenttoanexporteronbehalfofanimporteroncedeliveryofgoodsisconfirmedthroughthepresentationoftheappropriatedocuments.

Forthemostpart,L/Csrepresentoff-balancesheetcommitments,thoughtheymayattimesbeassociatedwithanextensionofcredit.Thiscanoccur,forexample,ifanimport L/C is structured to allow the importer a period of time (known as “usance”)beforerepayingthebankforthepaymentitmadeontheimporter’sbehalf.Banksmayalsohelpmeetworkingcapitalneedsbyprovidingtradefinance loanstoexportersorimporters.Inthiscase,theloandocumentationislinkedeithertoanL/Cortootherformsofdocumentationrelatedtotheunderlyingtradetransaction.SupplyChainFinance(SCF)

Toavoidconfusion, it shouldbementioned that supplychain finance isonlyasubsetoftradefinanceandhasbeendefinedbytheInternationalChamberofCommerce(ICC)as‘theuseoffinancingandriskmitigationpracticesandtechniquestooptimizethemanagementoftheworkingcapitalandliquidityinvestedinsupplychainprocessesandtransactions. [Supply chain finance] is typically applied to open account trade and istriggered by supply chain events. Visibility of underlying trade flows by the financeprovider(s) is a necessary component of such financing arrangements which can beenabledbyatechnologyplatform.’

Reversefactoringisthemostwidelyusedformoffinancingunderthiscategory(PwC,2017).Incontrasttotraditionalfactoringasdescribedabove,reversefactoringisinitiatedbythebuyerandnotbytheseller.The‘factor’isafinancialintermediaryandinmoredetailtheentitythatisprovidingshort-termcashliquidity.Thefactoractsonitsown economic risk and advances a payment to the supplier and then, at the invoicepaymentduedate,atransactionfromthebuyertothefactorisinitiated.

Figure1 – Thereverse factor ingprocess

Securitization

F igure2 – a typica l secur it izat ionprocess

Before discussing in detail on how blockchain may change the securitization

lifecycle,abriefhigh-levelreviewofsecuritization(Figure2)maybehelpful.

It beginswith originating and underwriting2 of loans,which are then servicedregularly,similartotraditionalbanklending.Anissuerororiginatorpoolstogethermanyloans,placestheminabankruptcy-remotetrustorspecialpurposevehicle (SPV),andstructures the securities.Anauditing firm reviews thepool andprovidesapool auditletter and an agreed-upon procedures letter covering the pool statistics provided toinvestors.Ratingagenciesmaybeaskedtoexpressanopiniononthesecurities’credit-worthinessbyprovidingacreditrating.

Theunderwriters’task istoraise investmentcapital.Theyworkwithacounseland the transactionsponsor toprepareanofferingdocument.Theunderwriters thenpriceandbringthesecuritiestomarket,whereinvestorsmakepurchasesbasedontheirrisk-rewardpreferences.

Trustees manage the trust entity and represent investor interests. A servicercollectsborrowerrepayments,poolsthem,andforwardsthemtoatrustee,whoallocatesdistributions to security holders based on the payments waterfall defined in thetransactiondocuments.Ratingagenciesmonitorthesecurities’performanceandupdateratingsifneeded.Insecondarymarkets,investorscontinuetoreviewandreassessthesecuritiesbasedonperformance.Broker-dealersmakemarketsamonginvestorstradingthesecuritiesandestablishnewprices.

Securitization, due its current level of complexity and the participation ofnumerousintermediaries,ismostlyusedforlargertradedealsthatrangeinthemillions

ofUSDollars.Shortcomingsofthecurrentsetupandefficiencygapsinthesecuritizationvaluechainare:nonstandardizedprocessesanddependenciesoncentralclearinghousesandcustodians.

Inthiscontext,blockchaincanhavealargeimpactintransformingandenhancingsecuritization.

MarketOpportunityforablockchainpoweredsolution

OpportunitiesforblockchainsolutionsinthetradefinancesecuritizationprocessaresummarizedbyDeloitteintheflowbelow.ThisistheplatformthatTraxiawillcreate(Delloite,2017):

Figure3: B lockchain andSecur it izat ion- a poss ib le lookat the future

Step1:Asaborrowerandlenderagreetothetermsofaloan,anewelectronicassetiscreated on the blockchain and time-stamped. Ownership information and otherpertinent underwriting data, such as supporting documents or Credit scores, areattachedtotheloanandrecordedontheblockchain.Thisinformationcannotbealteredwithoutanewconsensusbetweentheborrowerandloanowner.Step2:Relevantinformationabouttheloanisautomaticallycodedintoasmartcontractwhichgovernstheautomatedservicingofthe loan.Astheborrowermakesorfailstomakepayments,thishistoryisaddedtotheloan-leveldataandsupportsfutureservicingdecisions,suchasthepossibleneedtoengageadefaultserviceriftheborrowerdoesnotpay. Ownership rights of the asset are also automatically immutably recorded andtimestamped.Step3: The sponsor/issuerpools together loansand transfers them toanSPV,whichrecordsthetransferandtherelatedloansontheblockchain.The‘automatable’portionofthetransaction’sterms,includingitscash-flowmodel,arewritteninaseriesofsmartcontracts,which the sponsor/issuer, underwriter, rating agencies, trustees, andotherrelevantthirdpartiesverifyandagreeto.

Thisconsensuscreatesasinglegoverningmodelforthetransaction.Ratingagencies,investors,andotherrelevantstakeholdersreferencethismodeland,ifdesired,alsotheunderlying loan-leveldatatoperformtheirassessmentofthenewly-createdsecurities.Inaddition,relevantportionsoftheofferingandlegaldocumentsarealso automatically created with smart contracts. Regulatory compliance is largelyautomated, as smart contracts are programmed to immediately note any potentialirregularities.Step4:AseparatesmartcontracttoservicethesecuritiesislayeredontopoftheSPVandthesmartcontractdevelopedforthetransactionitself.Thisnewcontractcollectspaymentsfromloanservicers,referencesthecash-flowmodelspecifiedinthecontractgoverningtheSPV,anddistributespaymentstothebeneficiaryholdersofthesecuritywith onlyminimal delays for settlement. This information stream is related to ratingagenciesandthesecondarymarkets.Step5:Ratingsmonitoringsoftwaresometimereferredtoas‘Oracles’areplacedontheblockchaintomatchthesecurityperformancewithexpectedcashflowsandtriggerratingreviewswhendiscrepanciesarise.Step 6: Trading or market information platforms are constructed with blockchaintechnology to interoperatewith theblockchainsused for the transactionsandenablemarketmakerstocreaterobustsecondarymarketsinsecuritizedassets.Withthehelpofmarketmakers,securitiestradingontheblockchainisnear-instantandlowcost,withregulatorycomplianceclosetoautomatic,asdataonassetownershipisreportedinreal-time to regulators while it remains hidden from competitors. Large investors couldpotentiallydirectlytradeontheseplatformswithouthavingtogothroughbroker-dealers.Step7:Asthesecuritiesarecreatedandtraded,beneficiaryinformationisstoredandupdatedinaseparaterepository,whichactsasacustodialentity.Thisupdatedbeneficiaryinformationisreferencedtofacilitatefuturesecurityservicing.Tomaintainconfidentiality,onlyrelevanttrusteesandregulatorspossessfullaccesstothisinformation.Lesssensitivedatasuchasratingsorunderlyingpaymentsinformationcouldbemadeavailabletootheractors.ThegrowthofFactoring

Commercial,non-bankfactoringenterprisesareplayingalargeroleintheUS,UK,and China, and with the rise of FinTechs, non-bank players will have an increasinglysignificantimpactontheindustry.Theexplosivegrowthoftheindustry,especiallysincethestartofthefinancialcrisis,isinlargepartinspiredbyanimprovedperceptionofriskglobally, but also stemming from a shift from overdraft/unsecured credit facilities toreceivables-basedfinancing(InternationalChamberofCommerce,2017).Combinedgrowthofnationalandinternationalfactoring:

Totalfactoringvolumefrom2010to2016:

Those trendsallowLiqeaseandTraxia to tap intoamassivemarketwithhugegrowthpotentialwhichissupportedbyincreasinglyfavorablemacroeconomicdataandvalidatedbystartupsoperatinginsimilarsegments.Traxia’ssolution:adecentralizedtradefinanceecosystem

The vision of Traxia is to establish an open and decentralized ecosystem toimprovetradefinanceglobally.Traxiacombinesblockchainandanopen,connectedITarchitecturetocreateanewecosystemfortradefinance.Itallowscorporatestocreatesmartcontracts—automated,self-executingdigitalcontractsthattriggerpaymentsandreceiptsinrealtimeasgoodsmovethroughthesupplychain.

Tracking of goods through modern Internet of Things (IoT) solutions can furthereliminateuncertaintyaboutwherephysicalgoodsare;blockchainhelpstoverifyidentityandownershipandcould conceivably simplify complianceandgovernance, aswell asreducingmanualworkandhumanerror.Thetransparencygainfromsuchadvancementsultimatelyleadstobetteraccesstofinanceinseveralways:

1. TrustandTransparency-aninherentfeatureofblockchaintechnology,further

enhancedwithsmartcontractsRecordingandconfirmingatradeontheTraxiablockchainwillcreatehigherlevelsoftrustinB2Btrades.ASellerandBuyerareaskedtosignsuchtradetransactionusingtheirprivatekeystorecordandcreateanimmutableentryonablockchain.The technology makes it seamless to assign privileges to data entries inaccordancetotheroleofeachparticipantsuchas:TradingBusinesses,Investors,Regulators, Logistic Providers etc. therefore combining data ownershipwith anewleveloftransparencyasneeded.UsecasesaroundIoTandbusinessprocessautomationwillbethefocusofournextphase.Suchusecaseshavethepotentialtofurtherincreasesupplychaintransparency.

2. SecuritizationandStandardization–theinitialTraxiafocus,withLiqEasedevelopingtheusecase Securitizationcanbeattractivetobothbankandnon-bankinvestors.Forbanks,securitizationallowsthemtoeconomizeoncapitaland/orliquidityandreduceUSdollarfundingneeds,whilepreservingareturnonfirms’expertise/comparativeadvantageinoriginatingandmanagingtradefinanceloans.Distributiontooutsideinvestorscanalsofreeupcounterpartyspaceonbalancesheetsandreducetradeloanconcentrations.Fornon-bankinvestors,directorindirectinvestmentintradefinanceassetsoffersapotentiallyattractivereturnrelativetorisk.Wewill introducehowTraxiawilluse blockchain technology to streamline the securitization process below.StandardizationranksamongtheTop3challengesofhavingmore institutionalinvestorsenteringexport finance (InternationalChamberofCommerce,2016).TheTraxiaEcosystemwillprovidestandardizedprocessesandproductstomaketheissuanceofaSmartContractbackedbytrademoreseamlesswiththesupportofourtechnologyproviderLiqEaseLimited.

3. Accesstocapitalmarketsthroughdecentralization

Traxia will decentralizes trade finance technology and will work closely withinternationalregulatorstomakesuchanopenmarketpossible.Thelargestglobalbanksaccountforaquartertoathirdoftheglobalsupplyofbank-intermediatedtrade finance, with local and regional banks providing the remainder(InternationalChamberofCommerce,2017).Suchcentralizationcomeswiththedisadvantage of dedicated market knowledge that favours local and regionalbanks.ThosebanksontheotherhandfacethedisadvantageofL/Csbeing80%denominated inUSDollarswhichmakesrefinancing inUSDollarsahurdleandmajor obstacle for those banks (Bank for International Settlement, 2014). Inresult,61%ofbanksperceivethatthereismoredemandthansupplyfortradefinance (International Chamber of Commerce, 2017). Decentralization has thepotential to stabilize the trade finance markets. New entrants such as fixed

incomefundscangetaccesstoastandardizedtradefinanceproductsimilartoacorporatebond.SuchadigitalplatformcanalsoprovidecreditriskinsurerswithanadditionalchanneltoselltheirproductsdirectlytoSMEs.

Our proposedmodel for optimizing financial flows in supply chains, turns the

actorswithin the supply chain into intermediarieswhocanovercome theproblemofasymmetric informationbetween capitalmarkets (e.g. banks) and theparties seekingcapital.TheSmartContract

Traxia creates a new trade finance platform that operates through smartcontracts running on a blockchain. Those smart contracts hold information such asvolume and duration of an underlying trade,while also becoming interoperablewithexistingEnterpriseResourcePlanning(ERP)Systems,PaymentNetworkssuchasSWIFT,[Ripple Settlement System] and others. Traxia is also a tool tomodel and automatebusinessprocessestosavetime,costsandgenerateahigherefficiencyforcorporatesalongtheirrespectivesupplychains.

AsarguedbyHans-ChristianPfohlandMoritzGommintheirpaper‘Supplychainfinance:optimizingfinancialflowsinsupplychains’,theproposedmodelforfinancingthesupply chain, turns the actors within the supply chain into intermediaries who canovercometheproblemofasymmetricinformationmentionedabove.

Traxiawill taketheirscientificmodelthathasbeenprovensuccessfullyusingaqualitativeapproach,asourunderlyingassumptiontoimprovecashallocationintotrade-related financial products. In a nutshell, their model assumes that the informationasymmetrybetweenactorswithinthesupplychainandfinancial institutionsprovidingcashliquiditycanbesolvedbymakingthesupplychainactorspartofthefinancialsupplychain.We thereforemake the B2B trade intermediaries (Buyers, Sellers) part of thefinancialsupplychainbylettingthemissuethetraderelatedsmartcontractsusingourtechnology. We therefore propose the following Actors to be part of the TraxiaBlockchainEcosystemforTradeFinance.Besides theTraxia itself,wehavecompaniesengaging inaB2BtradewhichwecallSellersandBuyers,aswellas Investors, IssuingProviders,ListingProvidersandafacilitytowarehouseloans.TheActors

1. SellerAcompanythatisofferingaproductforsale.Inourecosystem,italsorepresentsthepartythatislookingtoimproveitscashliquidityand,solelyorjointlywiththeBuyer, lookingto issueasmartcontractrepresentingatradeobligation. IntheTraxiaecosystem,theseareoftenSMEs.

2. BuyerAcompanythatispurchasingtheproduct.IntheTraxiaecosystem,theBuyerisoftenalargercorporationwhichgenerallyhasabettercreditratingthananSMESeller.BetterratingscanbeusedtomitigatetheriskfortheInvestorsifthesmartcontractrepresentingthetradeobligationisjointlyissued,whichissimilartothereversefactoringmodel.Inshort,alargecompanylikePorsche,ismorethanlikelytopaythanasmallercompanyandthatabilitytopaycanhelpthecreditratingofthecontract.3. InvestorsApersonororganizationthatputsmoneyintofinancialproducts,assets,etc.withtheexpectationofachievingaprofit.4. IssuingProviderDuetothenoveltyofputtingtrade-financeonablockchain,Traxiacameupwiththeconceptandroleofthe‘IssuingProvider,’whichisthetechnologyproviderthatsetupsandmaintainstheTraxiaplatform.The issuingprovidercreatesaplatformtostreamlinetheprocessofuploadingand validating business and trade details by combining commonly used webtechnologieswithamodernblockchaininfrastructurerunningonthebackendinamannerthatistransparenttotheBuyer,SellerorInvestor.Theonlyexposurethattheactorwouldhavetotheblockchainistheneedtosignatransactionwithanindividualprivatekey/passphrasethathasbeenassignedtotheuser.The issuing providerwill be responsible for the technical integration of ratingagenciesanddataproviderse.g.accessingdirectlyviaOraclesormoretraditionalviaAPIinterfacesaswellasprovideaccesstolicensedpaymentgatewaystomakesettlementoffiatcurrenciespossiblebetweenactors.

Tosumitup,theIssuingProvider:-Setsupandmaintainsthetechnicalinfrastructuretogatherinformationrelevant for issuing the smart contract on behalf of the Buyer and/or SellerrepresentingaB2Btradeand including informationsuchas ‘ContractVolume’,‘ContractCurrency’,‘ContractDuration’etc..-ImplementstandardstoguideBuyersandSellersthroughaduediligenceprocess including KYC and AML checks based on Business Certificates, staffPassports,FinancialStatements,audits,lettersofgoodstandingetc.-Takenecessarytechnicalprecautionsintermsofdatasafetyand-Implementthepublickey,asymmetricencryptionmethodtoletBuyersandSellersdigitallysigntheirsmartcontractanddigitalassetissuingtransactions5. ListingProvidersAListingProviderisamarketplacethatmatchesinvestorsofsecuritieswithlistedandunlistedsecurities.A listedsecurity isa financial instrument that is tradedthroughanexchange.Exchangeshave listing requirements toensure thatonly

high-qualitysecuritiesaretradedonthemtomaintaintheexchange'sreputationamonginvestors.AlthoughthereisincreasedscrutinyofregulatorsregardingcryptocurrenciesandincreasedtargetingoffraudulentICObusinesspractices,thereisinnojurisdictionthathasadedicatedsetofrulesand laws inplacetocategorizeadigitalassetand/orblockchaintoken.Alsoconsideringthataccountsreceivablesare in factcategorized as current assets under international bookkeeping standards, itseemsunlikelytoseeanewsetofrulesapproachingthatwilltransformaccountsreceivablesintoasecurity,astraditionalfactoringserviceshavebeeninoperationfor many years. In some markets, like the US, UK and Brazil, factoring isunregulated, giving commercial factors an advantage over their bankcounterpartsinthetraditionalfactoringfield.

6. LoanWarehousingLoanWarehousingistheinitialprocessofacquiringdebtfromvarioussources,asanexample,abankorsimilarinstitutionprovidingfundstoaborrowerwithoutusingthebank’sowncapital.IntheTraxiaecosystem,debtsthatarisefromB2Btradetransactionsthatdonot“find”animmediateLiquidityProviderarewarehoused.Traxiaisimplementingloanwarehousingtoensurethatthethematchingprocessdoesnotbecomeabottleneckfortheecosystem.TheTraxiaownedwarehousingfacilitywillbeusedatlaunchfortheinitialtrialperiodtoprovetheconcept,andmakedecentralizationpossibleoverthemid-tolong-term.TraxiaisnotaspecialistinpricingdebtsowillbeworkingwithCreditsafe,1aratingagencywhosescoresarerecognizedbymajorCreditInsurerssuchasEulerHermesandCoface.

TokenizedaccesstotheTraxiaplatformOurmembershipmodelisstraightforwardandinvolvestwotypesofaccessa)accessingthe ecosystem through Issuing and Listing services and b)membership fee on a pertransactionbasistobesettledinTraxiaMembershipToken(TMT)attheconversionrateofwhentheIssuingandListingserviceshavebeenprovided.Thefollowingdiagramillustratesthebusinessmodel:

1www.creditsafe.com

As illustrated in the graphic above, the technology provider LiqEase is providing theservicesofListingandIssuingtointerestedBuyersandSellerstoaccesstheecosystem.LiqEasecanbecomparedtotheEthereumSwitzerlandGmbHwhichisassociatedtotheEthereumFoundationandisentitledtousethefundsoftheCrowdsaleaccordingtothestatuteoftheFoundation.ForestablishingthebasisoftheTraxiaEcosystem,LiqEaseaswellasTraxiaarethereforeentitledtoashareoftheoverallproceedsasillustratedabove.WhereasIssuingandListingFeesisallocatedtoLiqEaseandEcosystemfeetoTraxia.Whatwealreadybuilt

Figure4:LiqEasehomepage

3008.02.18

Invoice Volume

Discount Total cost of funding

$ 1.000.000 6% $ 60.000

$ 50.000 Investor (Spread)

$ 10.000LiqEase(service fee due in TMT)

1

Issuing Service Listing Service Ecosystem Fee *)

30-60% 30-60% 0-20%

$ 3.000-6.000 $ 3.000-6.000 $ 0-2.000

2

LiqEase places an order on a marketplace where TMT istraded based on the market rate and in accordance withthe Total Service Fee which is 1% in the example.

1

The Service fee is paid in TMT in accordance to the servicesprovided by the company in question.

2

AwardwinningLiqEase2isaLimitedcompanyregisteredinHongKongsince2017andborneoutofaprojectthatbegunin2016.LiqEaseisthetechnologyproviderwithinthe Traxia ecosystem providing Issuing and Listing Services to Buyers, Sellers andInvestors.

LiqEasehasthus-farbuiltasimpleanduser-friendlyWeb-InterfacethatcanbeusedtodaybyBuyersandSellerstouploadtheirinvoice.InthebackendLiqEaseisrunningablockchainapplication layer forvariousblockchainssuchasEthereumandwillbuilduponCardanowhenready.LiqEaseLimitedoperatesasaListingprovideri.e.runninganOver-The-Counter market which targets professional investors as defined by theregulatorsinHongKong[15].YoucanfindoutmoreaboutLiqEaseathttp://liqease.co

TheworkflowofthecurrentproductbuiltbyLiqEaseisasfollows:

2LiqeasewasthewinnerofSLUSHShanghai2017(http://www.slush.org/news/liqease-to-win-the-slush-shanghai-pitch-competition/)

Figure5:asimplifiedversionofLiqEaseprocess(toseeavideooftheprocessvisit:https://goo.gl/jNHuna

Astheassetscreatedontheplatformaremerelyadigitalrepresentationofarealtradeasset issuedbytheBuyers/Sellers,thereisnoneedforanInternationalSecurityIdentificationNumber(ISIN).Inaddition,thereisnocustodianasthedigitalversionofthe asset has already been digitally signed by the Supplier and/or Buyer with theirrespectiveprivatekeysandrecordedonablockchain.Astheblockchainisdistributed,this adds an additional layer of trust as compared to a traditional central custodiansafekeeping the asset. The asset is then listed on the marketplace instantly andsettlementtimescaneasilybereducedtominutesratherthandays.InitialProofofConcept

Inoneofitsfirstusecases,LiqEasewastheIssuingProviderandListingProviderforaPorscheDigitalInnovationProject(theBuyer)wholisteda30daysinvoicewortharound$50.000intotal.TheSellerwasVOKDamsanda3rdpartycorporateinvestorwas

the Liquidity Provider. The smart contract was registered on the Proof EthereumBlockchainunderthetransactionnumber:http://www.proofsidechain.com/#/transaction/0x7453e318039cc04c08cfb475ec62b2107bc9898361138de71eef32285a7b9475.

LiqEase is currentlyworking on another project involving anotherGerman carmanufacturer,aswellasonprojectsintheFastMovingConsumerGoods(FMCG)sector.LiqEase expects to work on a number of different financing projects during 2018.Focusingitsactivityonthemulti-billion-dollartradecorridorbetweenEuropeandChina.TraxiaandLiqEase

Traxiaisanon-profitfoundationbeingestablishedunderthelawsofSwitzerland.Itisthecreatorandinitiatoroftheblockchainmodeldescribedinthispaper.TheTraxiafoundation’s mission is to promote and support the Traxia platform throughdevelopmentandeducationandprovidebuyers,sellersandinvestorsaroundtheworldwithamoreaccessible, transparentandmoretrustworthysystemtoengage inglobaltrade.

TheTraxiafoundationwillsupportprojectslikeLiqEaseandcaninvestinentitiesandprojectsthatsupportthepurposeofthefoundationasstated.

LiqEase operates a for profit businesses and is building the gateways andapplicationstoconnectandbepartoftheTraxiaecosystem.LiqEase isanIssuingandListingProviderandisinfactthefirstsuccessfulproofofconceptoftheTraxiaecosystem.

Coming back to our initial assumption, the Traxia platform creates moretransparencywithinasupplychainbyintegratingsmartcontractsintobusinessprocessesandiscreatingthebasisforBuyersandSellersinB2Btradetobecomeactiveparticipantsinsupplychainfinance,henceimprovingtheinformationsymmetrybetweenthesupplychainandcapitalmarkets.Higher informationtransparencybetweenactors, increasesthelikelihoodthatfinancingcanbeprovidedforanassetthatisissuedbyaSeller/Buyer.

ThedevelopmentofLiqEaseincreasesthedemandfortheTMTandimprovementof theSmartContracts,creatinghigher levelsof transparencywithin thesupplychainpoweredbytheTraxiaFoundation.BusinessStrategy

Ourstrategyfocusesoncreatinganetworkeffectasourdecentralizedtrustandtransparencyecosystemenablesus todoso.Wewilluse thewell-knownbowlingpinstrategy i.e. start with a niche market, and then move to other niches and broadermarkets.

Stage1

Focusingonthesupplysidefirst:Traxiawillworktoacceptedandusedbysellersto finance their B2B trade. Establishing partnerships with distributors that have anexistingrelationshipwiththosesuppliersandavettedinterestinsuccessfullyfinancingsuchdealcanenableinstantscale.

To achieve that, we will partner with distributors, importers and exportersfocusing on the FMCGmarket segment first in particular the trade corridor betweenEurope and China. We are already in positive talks with major players and workingtogether with a team belonging to Intermarché which in 2016 had a turnover thatsurpassed€30bnUSD.

To get a head start and accelerate growth, the LoanWarehousing Facilitywillprovideastrategicadvantageovercompetitorsandmakesitpossibletostreamlinetheprocessfromtheoriginatingofthedebttothebundlingandsecuritizationaspectwhichisrelevantforinstitutionalinvestorstodeploytheirmoneyefficiently.

ThegoalistousetheWarehousingasanentrystrategyfordifferentmarketswithlarge gaps in trade credit and traditionally low default rates. It will be replaced byindependentbanksandinvestorsatalaterstagetofullydecentralizethemarket.Stage2

Educatetheinitialclientbaseandfosterword-of-mouthcampaignsthroughthecreationofareferralprogram.Stage3

Broadermarketadoptionbytargetingglobalinvestorssuchashedgefunds.ThemoreTraxiaisrecognizedasareliableecosystem,theeasieritwillbetoexpandglobally.Educationwillagainbekey.TraxiawillneedtoshowinvestorshowtheycantapintoanewmarketofstandardizedtradeassetsonthebasisofimmutablesmartcontractsthatisonlyaccessiblethroughtheTraxiaEcosystemanditspartners.ProductArchitectureandDevelopmentRoadmapConcerningourproductdevelopment,ourroadmaplooksasfollows:

V1(alpha)January2018V1(beta)March2018

MonolithAPI(PHP),webclients(Angular4/Typescript)V2April2018MonolithAPI(PHP),webclients(Angular4/Typescript)V3June/July2018MicroserviceAPI(NodeJS/Typescript/GraphQL),webclient(ReactJS/Typescript/Redux),mobileclient(ReactNative/Typescript/Redux)

V1

Intermsofarchitecture,wehavethreeentitiesworkingtogether.

First,webuildthecoreoftheprojectaroundourfirstusecaseandinitialfocustomake the Traxia ecosystem viable i.e. our CMS, Liqease.com. This CMS has beendevelopedusingrobusttechnologiessuchas(PHP,Typescript,Angular).TheCMShasamonolitharchitectureAPI(PHP)andusesAngular4/Typescriptasclient.

Second,wehave amarketplacewhere professional investors can tradedigitalassetsthatarecollateralizedbyinvoicesandotherrelevantcontractsinrelationtosuchatrade.Thismarketplaceispoweredusinganopensourceprojects(currentlyproofsuiteandweareinclosecontactwiththeirdevelopmentteamandCTO-TaiKersten).Wearealsoworkingwithotheropensourceprojectsforoperatingsuchamarketplacesuchase.g.LykkeandareintouchwiththeirSingaporeteam(ZhengWeiQuahandAlanLaubsch).

Third,theecosystemwillbepoweredbyamembership/voucherToken(TMT)thatremunerates and incentivizes the participants and technology providers within theecosystem.V2

Our second version will have a different approach, based on the latest clientfeedback as well as the product roadmap and the necessary flexibility within thatroadmap.Thekeyphilosophyistoeasetheprocessandmaketheplatformaseasytouseaspossibleforourusers.

TraxiawillalsodevelopthenextgenerationoftheCMSanduseamicroserviceAPIarchitecture (NodeJS/Typescript/GraphQL) thatwillberesponsible toorganise thedifferent services and clients. Our platform clients will be web client(ReactJS/Typescript/Redux)andmobileclient(Reactnative/Typescript/Redux)

The second version of the product will be built on the Cardano BlockchainInfrastructure.TheTMTTokenwillbemadeavailableonCardanoandwebelieveamore

seamless integration between the Traxia Ecosystem requiring TMT to pay for thetechnicalservicesprovidedbyLiqEase.V3

ThethirdversionwillfocusontheSmartContractsandmakingthem‘trulysmart’.OurfocusinV1andV2istosatisfymarketdemandandprovethatablockchain-basedsolutionisviablefortradefinance.Operatingastableandscalableproductthatsolvesthetradefinancegaputilizingablockchainforsecuritizationoftheunderlyingtradewillgiveusthenecessaryfundamentalstoevolvetheproductovertimeandintegratesmartcontractsintotheenterprisesystemsandworkflows.

FurtherdetailsabouttheTechnologyandSmartContractscanbefound intheAnnex.TraxiaMembershipToken(TMT)Sale

To fund the initial operation and creation of the Traxia platform, we will beofferingthesaleofTMTtokens.

ThesupplyofTMTislimitedtoamaximumofmax.onebillion(1,000,000,000)tokensintotal,includingthoseavailableforsaleduringtheTokenSale.Thetokenswillbegenerateduponthetokenlaunchandwillbedistributedinthefollowingmanner:

70%ofthetokenswillbeeventuallyallocatedamongstthecommunity.Distributedinthefollowingorder30%+30%+5%+5%20%willbeallocatedtothefoundationcreation,developmentteam,earlybackers.10%will be allocated to treasury with the purpose of providing TMT Liquidity ifnecessaryaswellasbeingacontingencyfund.

The Traxia crowdsale and the corresponding token creation process will be

organized around smart contracts running on the Ethereum blockchain. ParticipantswillingtosupportthedevelopmentoftheTraxiaprojectcandosobysendingEther(ETH)andADAtokenstothedesignatedaddress.Bydoingso,theyarepurchasingTMTattherateof1TMTperUS$0.15whichwillbesenttotheirETHwalletafterthesale.AnyADAandETHthatissendtothedesignatedaddresswillbeconvertedtoTMTatmarketrateofETH,ADAtoUS$eachdayduringthesaleat12.30pm(UTC+8).ADA,ETHthathasbeentransferredwithinthe24hourspreviousto12pm(UTC+8)oneachgivendayduringthesalewillbeincludedinthedailyconversionandTMTdistributedtotheETHaddressthathasbeenprovidedbythepurchaser.

Allocation Percentage Distribution

400,000,000FirstTokenSale 40% TMTTokenPre-Sale(February/March2018)andTokenSalinMarch/April2018.UnsoldTMTwillbeburned.

200,000,000 Second TokenSale

20% AdditionalTokenSale

100,000,000Treasury 10% EmergencyFund&LegalFees-Thesewillbesubjecttoa2-yearlock-up.

50,000,000BountyProgram 5% Distributedtodevelopersforbackingtheprojectoverthefirst2yearsuntilprojectedprofitability.

50,000,000Advisors 5% Advisortokenswillbe60%lockedfor12months;40%lockedfor24months

200,000,000 TeamMembers,EarlyBackersandInvestors

20% TeammemberandInvestortokenswillbe60%lockedfor12months;40%lockedfor24months

TokenDemandandSupply

ThepricefortheTMTwillbepricedbymarketsandexchanges,identicaltoanyothertoken.Asournetworkandecosystemgrows—moreBuyersandSellers issuingtheirdigitalassetsusingtheservicesfromIssuingandListingProvidersintheecosystem—thetotalamountofTMTremainsfixedtomax.1,000,000,000Tokens.Suchanupperceilingtriggers traditionalmarketdynamics,assoonasBuyersandSellers issuesmartcontracts representing their B2B trade obligation, generating TMT demand since amembershipisrequiredtoaccesstheecosystem.TokenDiscountsduringPre-SaleandSaleThepricefortheTMTwillreducedduringthepre-Saleandearlysale:Phase Pre-Sale Sale(1stweek) Sale(2ndweek) Sale(3rdweek)TMTMaxAmount 220.000.000 180.000.000 180.000.000 180.000.000Discount 40% 20% 10% 0%Max.USD 19.800.000 21.600.000 24.300.000 27.000.000

UsageofProceedsfromTokenSaleBusinessArea Max. allocated

BudgetinUSDMax. Portion ofBudget

Activities

BusinessDevelopment&Sales

5.000.000 33% Salaries and SalesRelatedExpenses

Smart-ContractDevelopment

3.000.000 20% Productdevelopment

LegalandCompliance 1.500.000 10% Companyestablishment,Contracts,licenses

LiquidityBuffer 1.500.000 10% ManageUncertaintyLoanWarehousing 26.400.000 64% Warehousing and

MarketMakingTeam

TheLiqEasecore teamholdsdeepexpertise in launchingandexecutingdigitalprojects successfully both independently and for large corporations. The team has avarietyofknowledgeinvariousdisciplinessuchasdigitalplatforms,payments,fintech,FMCG,supplychainmanagement,softwareengineeringandmore.Profilesoftheteammembersarepostedonwww.traxia.coLegalGeneralinformation

TheTraxiatokendoesnothavethelegalqualificationofasecurity,sinceitdoesnotgiveanyrightstodividendsorinterests.ThesaleofTraxiatokensisfinalandnon-refundable.Traxiatokensarenotsharesanddonotgiveanyrighttoparticipatetothegeneralmeetingof Traxia Foundation. Traxia tokens cannothaveaperformanceor aparticularvalueoutsidetheTraxiaPlatform.Traxiatokensshallthereforenotbeusedorpurchased for speculative or investment purposes. The purchaser of Traxia tokens isawarethatnationalsecuritieslaws,whichensurethatinvestorsaresoldinvestmentsthatincludealltheproperdisclosuresandaresubjecttoregulatoryscrutinyfortheinvestors'protection,arenotapplicable.AnyonepurchasingTraxiatokensexpresslyacknowledgesandrepresentsthatshe/hehascarefullyreviewedthiswhitepaperandfullyunderstandstherisks,costsandbenefitsassociatedwiththepurchaseofTraxiaTokens.Knowledgerequired

The purchaser of Traxia tokens undertakes that she/he understands and hassignificant experience of cryptocurrencies, blockchain systems and services, and thatshe/he fully understands the risks associated with the crowdsale as well as themechanism related to the use of cryptocurrencies (incl. storage). Traxia shall not be

responsibleforanylossofTraxiatokensorsituationsmakingitimpossibletoaccessTraxiatokens, which may result from any actions or omissions of the user or any personundertakingtoacquireTraxiatokens,aswellasincaseofhackerattacks.Risks

Traxiatokensandstoringtheminvolvesvariousrisks, inparticulartheriskthatTraxiaFoundationmaynotbeabletolaunchitsoperationsanddevelopitsblockchainandprovidetheservicespromised.Therefore,andpriortoacquiringTraxiatokens,anyusershouldcarefullyconsidertherisks,costsandbenefitsofacquiringTraxiatokensinthecontextof thecrowdsaleand, ifnecessary,obtainany independentadvice in thisregard.Anyinterestedpersonwhoisnotinthepositiontoacceptortounderstandtherisksassociatedwiththeactivity(incl.therisksrelatedtothenon-developmentoftheTraxiaandassociatedplatforms)oranyotherrisksasindicatedintheTerms&ConditionsofthecrowdsaleshouldnotacquireTraxiatokens.Importantdisclaimer

Thiswhitepapershallnotandcannotbeconsideredasaninvitationtoenterintoaninvestment.Itdoesnotconstituteorrelateinanywaynorshoulditbeconsideredasanofferingofsecuritiesinanyjurisdiction.Thiswhitepaperdoesnotincludeorcontainany informationor indication thatmightbe consideredas a recommendationor thatmightbeusedasabasisforanyinvestmentdecision.TraxiatokensarejustmembershiptokenswhichcanbeusedasautilityonlywithintheTraxiaplatformandecosystemandarenotintendedtobeusedasaninvestment.TheofferingofTraxiatokensonatradingplatformisdoneinordertoallowtheuseoftheTraxiaplatformandecosystemandnotforspeculativepurposes.TheofferingofTraxiatokensonatradingplatformdoesnotchangethelegalqualificationofthetokens,whichremainasimplemeansfortheuseoftheTraxiaplatformandarenotasecurity.TraxiaFoundationisnottobeconsideredasanadvisor inany legal, taxor financialmatters.Any information inthewhitepaper isprovidedforgeneralinformationpurposesonlyandTraxiaFoundationdoesnotprovideanywarrantyastotheaccuracyandcompletenessofthisinformation.TraxiaFoundationisnotafinancialintermediaryaccordingtoSwisslawandisnotrequiredtoobtainanyauthorization for AntiMoney Laundering purposes. Acquiring Traxia tokens shall notgrantanyrightorinfluenceoverTraxiaFoundation’sorganizationandgovernancetothePurchasers.Regulatoryauthoritiesarecarefullyscrutinizingbusinessesandoperationsassociated to cryptocurrencies in the world. In that respect, regulatory measures,investigations or actions may impact Traxia Foundation’s business and even limit orpreventitfromdevelopingitsoperationsinthefuture.AnypersonundertakingtoacquireTraxiatokensmustbeawareoftheTraxiaFoundation’sbusinessmodel,thewhitepaperortermsandconditionsmaychangeorneedtobemodifiedbecauseofnewregulatoryandcompliancerequirementsfromanyapplicablelawsinanyjurisdictions.Insuchacase,purchasers and anyone undertaking to acquire Traxia tokens acknowledge andunderstandthatneitherTraxiaFoundationnoranyofitsaffiliatesshallbeheldliablefor

anydirectorindirectlossordamagecausedbysuchchanges.TraxiaFoundationwilldoits utmost to launch its operations anddevelop the Traxia ecosystemand supportingplatforms such as the ones of LiqEase) undertaking to acquire Traxia tokensacknowledgesandunderstandsthatTraxiaFoundationdoesnotprovideanyguaranteethatitwillmanagetoachieveit.TheyacknowledgeandunderstandthereforethatTraxiaFoundation(incl.itsbodiesandemployees)assumesnoliabilityorresponsibilityforanylossordamagethatwouldresultfromorrelatetotheincapacitytouseTraxiatokens,exceptincaseofintentionalmisconductorgrossnegligence.

WorksCitedAsianDevelopmentBank.(2016).RetrievedfromAsianDevelopmentBank:

https://www.adb.org/news/global-trade-finance-gap-reaches-16-trillion-smes-hardest-hit-adb

BankforInternationalSettlement.(2014).TradeFinance:Developmentandissues.Retrievedfromhttps://www.bis.org/publ/cgfs50.pdf

Delloite.(2017).Applyingblockchaininsecuritization.Retrievedfromhttps://digitalchamber.org/assets/sfig-blockchain-report.pdf

InternationalChamberofCommerce.(2016).2016RethinkingTrade&Finance.Retrievedfromhttp://store.iccwbo.org/content/uploaded/pdf/ICC_Global_Trade_and_Finance_Survey_2016.pdf

InternationalChamberofCommerce.(2017).2017RethinkingTradeFinance.Retrievedfromhttps://iccwbo.org/publication/2017-rethinking-trade-finance/

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InternationalMonetaryFund.(2016).Recenttrendsincorrespondentbankingrelationships—furtherconsiderations.

Kemper,S.(2016).SandyKemperkeynoteattheFinTechFinancialFutureSummit.Retrievedfromhttps://c2fo.com/zh-tw/2016/05/05/sandy-kemper-keynote-fintech-financial-future-summit/

PwC.(2017).SupplyChainForumBarometer.Retrievedfromhttps://www.pwc.nl/nl/assets/documents/pwc-scf-barometer.pdf

WorldEconomicForum.(2015).Retrievedfromhttps://www.weforum.org/agenda/2015/10/5-steps-to-closing-the-2-trillion-credit-gap/

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Annex–TechnicalDetailsIntroduction

Thesmartcontractrepresentsanassetissuedbyabusinessentityafteratradehas been confirmed. By providing the necessary infrastructure, issuing and listingprovidersearnTMTtokensforprovidingsuchservices.ThetokensTMTandthesmartcontractsmakethecreationofsuchanecosystemthereforeviable.Thepurposeofthissectionisto(1) IntroducetheTraxiaNetwork,provideanoverviewof thetransactionschemeandlogicandlooksatsomecomponentsinmoredetail.(2)categorizeanddefineadecentralizedliquiditynetwork(DLN)andargueforTraxiaasaDLN.(3)Formalizesverifiableassetsandconstructstwoscenarios,LiquidityProvisionandaLiquidityRetrieval,governedbytheinformationwrittentoandreadfromsmartcontract,respectively.(4) Discusses use cases, connections to other systems, and how tomake use of theecosystem.

Our smart contracts provide liquidity and retrieval services from a network ofindependent liquidity providers and payment service providers to settle transactionsthrough traditional channels. (a) issuers pay to get access to liquidity providers (b)liquidityprovidersgetpaidthroughtraditionalbankingchannels3(c) issuingandlistingprovidersearntokensbyprovidingthetechnicalinfrastructure

(1) FundamentalComponentsTheTraxianetworkanditstokensbuildupontwouniquecomponents:

1. DecentralizedLiquidityNetwork (DLN):anetworkof independententities thatprovisionliquiditythroughissuingandlistingproviders.TheTraxianetworkisanincentivized,auditableandverifiableDLNconstruct.

2. VerifiableAssets:LiquidityprovisionrequestsandretrievalrequestsaremodeledastraditionalordersonthemarketsprovidedbytheListingProviderswithintheTraxia network. Verifiable assets ensure that payments are initiated when aservicehasbeenlegallyagreeduponbetweenaBuyerandSeller.

Participants

Any active business can participate as a client and make use of the servicesprovided.LiquidityProvidersneedtoholdthenecessarylicensesandmaybeclassifiedasprofessionalinvestorinthejurisdictiontheyareoperatingin.

3Thisissubjecttochangedependingontheregulatoryenvironment.Settlingalltransactionsonablockchaindoesofcoursemakemoresensefromaefficiencyandtechnologypointofview.

Clientspaytoaccessadditionalliquiditythroughthetechnicalinfrastructureprovidedbythe Traxia ecosystem and its partners (Issuing and Listing Providers) within the DLN.LiquidityProvidersandIssuerssettletheirtradeindividually.

Issuing and ListingProviders are required toprovide the services asdescribedunder section ‘Traxia’s Solution’. For the near future, the foundation is exclusivelyworkingandsupportingLiqEasetoguaranteequalityandcompliancesinceTraxia’sboardcontrolsLiqEase.Itwillbeaguideddecentralisationprocessdrivenbythefoundationdueto the regulatory uncertainty and the need for guidelines and laws in the respectivejurisdictionstomakeatrulydecentralizedTraxiaecosystemfeasibleandcompliant.

ProofofissuingneedstobesubmittedbytheIssuingProvidertotheNetworkthatanassethasbeengeneratedatacertainpoint intime.MissingproofscanbeusedtoimposepenaltiesontheIssuingProviders.

Listing providers need to proof that an asset is verifiable, liquidity has beenprovisionedandretrieved.TheEcosystemAllusersandpartnersthatareprovidingsoftwareandinfrastructuretomakeaccesstotheTraxianetworkpossible,aredefinedasoneabstractentity:TheEcosystem.TheEcosystemactsasanagenttomanage,validateandrepairpotentialmistakeswithinthenetwork.TheLedgerOursmartcontractsareappliedontopofaledger-basedtechnologyandweintendtouseCardanoforourfuturedevelopment.TheLedger isaccessiblebytheusersatanygiventime.TheTraxiaDLNcanbeimplementedanddeployedontopofanyotherledgerthatallowsforthestructureofthesmartcontractsasdefinedinthisdocument.TheIssuingProvidersIssuingProvidersofferthetechnologicalinfrastructuretomakeitseamlessandsmoothforbusinessestoissuetheirassetsusingtraditionalwebtechnologiesinacombinationwithmodernblockchainelements.TheListingProvidersLiquidity(Supply)andtheDemandforsuchismetatthemarketsoperatedbytheListingProviders. In brief, Issuers and Liquidity Providers set theprices for the services theyrequestbysubmittingtheirorderstothemarkets.Thosemarketsprovideawayforuserstoidentifysuitableoffersandexecutedeals.SmartContractOverviewThesmartcontractsarethebasisoftheDecentralisedLiquidityPlatform.Issuers(Buyers,Sellers)whomakeuseofthesmartcontract‘template’andlisttheirindividualassetswillneedtopurchaseTMTtoaccesstheecosystem.

ThepurchaseanddistributionofTMTonbehalfoftheIssuerwillbeautomaticallyhandledbythesmartcontract. (a)verifyingtheamountofatobe issuedasset inthecurrencychosenbyBuyerand/orSellerviatheirdigitalsignature(b)postingtransactionandcurrencysettlementrequeststopaymentserviceprovider(c)initiateTMTpurchaseorderanddistributioninaccordancewiththepricesdefinedbetweenIssuersandIssuingandListingProviders.

The Traxia DLN can handle liquidity provision and retrieval requests ListingProvidersandtheirmarkets.IssuersandIssuing,ListingProviderssetthepricesfortherequestedservices.

Issuing and Listing Providers are independent business entities that act andconductbusinessonbehalfofthemselvesandintheirownbestinterest.Tosomeextenttheycanbecomparedtominingproviderswhereanofflinehardwareinfrastructureisneededbut the service is completelyautomatizedandessential for theecosystem tofunctionandthereforenecessarypartoftheTraxiaecosystemandnetwork.

Smartcontractoverview

NetworkateachtimetintheNetworkN:

1. ForeachnewListingrequest(a) Checkiftheassetisintherightformat(b) Checkifallproofsarevalid(c) Discardassetifanyabovefails

2. Foreachnewassetaintroducedint(a) IssuingContractattached(b) Invoiceattached(c) Tradedocumentsavailable(d) Tradecontractsavailable(e) Discountdefined(f) Maturitydefined

IssueratanytimeviaIssuingProvider

1. Submitnewassetgenerationrequest2. SubmitLiquidityprovisionrequest

LiquidityProvisionMarketatanytimeviaListingProvider

1. Submitnewaskandbidorderforlistedasset

atanytimetviaListingProvider

1. Foreachasset(a) Find matching assets based on

requirementsonreceivingassetifromissuerI

1. Check if token matches asset defineduponissuing

2. Initiate payment through paymentserviceprovider

LiquidityRetrievalMarketatanytimeviaListingProvider

1. OnMaturityofasseta(2) payment through a payment service

providertoIssuerisinitiated(3) TMT are distributed to Issuing and

ListingProvidersfortheirservices

DefinitionofaDecentralizedLiquidityNetwork

A Decentralized Liquidity Network (DLN) runs as an autonomous system thataggregates liquidity from various independent liquidity providers, providing liquidityprovision and retrieval markets for Issuers in a self-coordinated way. Having adecentralizedcoordinationwithouttrustedpartiesinplaceistechnicallyfeasiblethroughtheuseofprotocolstoverifyandcoordinateoperationsthatarecarriedoutbyindividualIssuers.ADLNisgovernedbytwomainprinciples:

Put(asset)!identifier:ClientsexecutethePutrequesttoissueanassetunderauniqueidentifier.

Get(identifier) ! asset: Clients execute the Get protocol to retrieve asset(information)thatiscurrentlystoredusingtheidentifier.PropertiesIntegrityNoattackercanconvinceIssuerstoacceptalteredorfalsifiedassets.Definition:ADLNschemeprovidesassetintegrityif:foranysuccessfulPutexecutionforsomeasset (a)under identifier (i), there isnocomputationally-boundedadversary (A)thatcanconvinceanIssuertoacceptfalsifiedasset(a’)attheendofaGetexecutionforidentifier(i).RetrievabilityThispropertycapturestherequirementthat,givenourfault-toleranceassumptionsof,ifsomeassethasbeensuccessfullystoredinandissuingandlistingproviderscontinuetofollowthestandardsdefinedinaSPAtokentemplate,thenuserscaneventuallyretrievetheasset.Definition:ADLNschemeprovidesretrievabilityif:foranysuccessfulPutexecutionforassetunderidentifier,thereexistsasuccessfulGetexecutionforidentifierforwhichauserretrievestheasset.PubliclyverifiableDefinition:ADLNschemeispubliclyverifiableif:foreachsuccessfulPut,thenetworkofissuingproviderscangenerateaproofthattheasset iscurrentlybeingissued.Itmustconvinceanyefficientverifier,whichonlyknowstheidentifieranddoesnothaveaccesstotheasset.Auditable

Definition:ADLNschemeisauditable,ifitgeneratesaverifiabletraceofoperationthatcanbechecked inthefuturetoconfirm liquiditywas indeedprovisionedfortherightdurationoftime.IncentivedrivenDefinition:ADLNschemeisincentivedriven,if:Issuing,ListingandLiquidityProvidersarerewarded for successfully offering liquidity and retrieval service, or penalized formisbehaving,sothattheIssuingandListingproviders'dominantstrategyistoprovideaworkingtechnologyinfrastructuretomaketheprovisionofliquiditypossible.LifecycleofaDigitalAsset(SmartContract)backedbyaB2BTrade1.Put:BuyersandSellersissuedigitalassetsusingthesmartcontractinfrastructure.BuyersandSellerscanissuetheirassetsbypayingIssuingandListingProvidersinTMTtokens.WithaPutrequest,BuyersandSellersissueadigitalassetviaanIssuingProviderandsubsequentlytriggerabidorderonthemarketoperatedbyaListingProvider.Aftermatching suchabidorderwithaaskorder fromaLiquidityProvider, theBuyersandSellerssendthedigitalassettotheLiquidityProvider.Thepartiessigntheorderandatransaction is recorded on the blockchain. The pricing of such orders is been madebetweenIssuersandLiquidityProviders.2.Get:BuyersandSellersretrievedigitalassetsusingthesmartcontractinfrastructureTheGetrequestisdefineduponissuingintheSmartContractalreadyandexecutedinaccordancewiththematurityofthedigitalassetthathasbeendefinedbytheIssueruponcreation.Ingeneralthedurationshouldnotextend270daysbutitistothesolediscretionoftheIssuertosetsuchdurationandmaturitydate.LiquidityProvisionandRetrievalMarketsTraxia makes use of markets that are operated by Listing Providers and aim to bedecentralizedinthefuture.StructureandDesignofthosemarketsisinherentlydefinedbytherequirementsofTMTandthesmartcontractsrepresentingaB2Btrade.Theyarecreatedandadaptedaroundthosegivennecessities.The Liquidity ProvisionMarket allows the Issuers to pay Listing Providers to list theirassetsontheirmarketplaces.TheLiquidityRetrievalMarketisanintrinsicrequirementthatisgivenbythesmartcontractstructureandduetothelimiteddurationandvalidityofanysuchlisteddigitalassetrepresentedbysuchsmartcontract.IssuersandLiquidityProviders can set their own supply and demand driven prices to initiate transactionsbasedonavailableoffersonthemarket.DLNRequirementsandGuaranteesTo achieve integrity, retrievability, public verifiability and being incentive driven, theTraxiaDLNestablishedthefollowingguidelines.Integrity:APutrequestisinitiatedbyBuyerandSellerafterbothpartiessignedsucharequestwiththeirindividuallyassignedprivatekeys.Thecryptographichashresultingfromsuchaction

isassignedtothedigitalassetandthereforeallowstoverifythe integrityoftheassetduringthetimeoflisting.Retrievability:Storing theasset inadecentralizedway isadefault featureof theblockchainwearebuilding on. The digital asset is stored fault tolerant on various instances within theEcosystemandausercanthereforeincreasethelikelihoodofrecoveryifoneinstancecrashesordisconnects.PublicVerifiabilityandAuditability:IssuingProvidersarerequiredtosubmitproofsofissuingtotheblockchain.ThevalidityofthoseblockscanhencebeverifiedbyanyuserintheEcosystemusingthoseproofswithouttheneedtoaccessingthedetailedinformationassociatedwiththeissuedasset.Beingstoredontheblockchain,thoseimmutableproofsareatracethatcanbeauditedatanygiventime.IncentiveCompatibility:IssuingandListingprovidersarebothrewardedfortheservicestheyareproviding.WhenIssuersinitiateaPutrequest,IssuingProvidersarerequiredtogenerateproofsandListingProviderstohaveafullyoperationalmarketplacetolisttheassetonbehalfoftheIssuer.IssuingProvidersthatdonotcreateproofswillbedeniedaccesstotheListingProviderand are not entitled to any rewards. Listing Providers that don’t operate a workingmarketplaceasdefinedhereinarenotentitledtoanyrewards.Confidentiality:Issuersthatdesiretheirassetstobeprivate,canlistandofferthoseassetstopreselectedLiquidityProvidersonly.TradeValidationandSettlement-VerifiableDigitalAssetsTransactions that are traditionally conducted between Buyers and Sellers for theexchangeofgoodsandservicescanonlybevalidatedtoacertainextent.Wehowever,needandrequirethosetransactionsandunderlyingassetstobeverifiablesothatactorscanverifythelegitimacyoftheassetandtradebetweenBuyersandSellers.Verifiabledigitalassetsneedconfirmationviadigitalsignaturesfromtwoormorepartiesandthetransactionsaretransparent.Verifiableassetsareadigitalrepresentationthataimstobestored in a decentralized fashion. Issuing and Listing Services are provided byindependentparties.IssuingcanbeverifiedbytheparticipantsoftheEcosystemandtheordersandtransactionsthatareinitiatedonaMarketplaceoperatedbyaListingProviderarerecordedonablockchain.Averifiableassetcanbeissuedwiththeintenttoreceiveliquidityandberetrievedduetothelimitedamountoftimesuchadigitalasset isvalid. Itsexistenceandownershipstatuscanbeaccessedatalltimeduringitslifecycleonablockchainexplorer.FutureWorkonSmartContractsUserswillbeabletointeractwiththesmartcontractbysendingtransactionstotriggerspecific functions. We aim to optimize those contracts to execute features that are

desiredbyparticipants in theTraxiaecosystem.Anexamplewouldbe the interactionwith a trusted Oracle to gather and verify data that is linked to the Issuer and theunderlyingcollateralofatrade.Those digital asset related contracts can have a variety of useful features such ascontracted issuingand listing,predefinedremunerationschemes,escrowservicesandmorecomplexoperationssuchasupdatingdataassociatedwiththeassetbasedontheactualstatusofthetradeandsupplychain.Asmentionedabove,ourinitialproductionsystemiscurrentlyrunningonEthereumandanEthereumSidechain.Thereisasignificantworkinprogressintermsofcreatingbridgesbetweenthedifferentblockchains.WearemostbullishonthedevelopmentsofCardanoandintendtobaseourentiresolution(TMTandtheSmartContractframework)ontheirtechnology.Ouroverallaim is touseandbring themostadvanced technology to theIssuers and participants of the Traxia ecosystem and we will therefore support suchinitiatives, as well. Depending on the regulatory environment it would be great tointegrateintocryptofundsandcrossborderpaymentsettlementsystemssuchasSWIFTandothers.ThisdocumentprovidesaclearpathtowardstheconstructionandestablishmentoftheTraxiaEcosystem.WestillconsiderthisworktobetheinitiatorfordiscussionandfurtherresearchonpotentialofaDecentralizedLiquidityNetwork.Ourongoingworkconsistsofadaptingourcurrentsystemtothefeaturesandprinciplesdescribedherein.Operatingasystemgivesustheopportunitytodevelopaccordingtomarketdemandandfeedback.OurfutureworkwillthereforebedrivenbytheusersandparticipantswithintheTraxiaEcosystemandweaimtomakethoseworkspubliclyavailablebytheendof2018togetandmakeuseofadditionalfeedbackfromthecommunity.