Don't trust. Verify.
— Crypto Proverb
A system for financial reporting and disclosures backed by the blockchain for Native Asset token projects on the Cardano blockchain.
Original Author: Adam K. Dean
Welcome to FUDS, the Financial Updates & Disclosure System (FUDS) for Cardano Native Assets. The goal of this repository is to define a system that easily enables Fungible Token (FT) projects [ref: CIP-26] on the Cardano Blockchain to publish data pertaining to the project's tokenomics, display, formatting, and supply data for easy consumption by third parties such as investors, the public, auditors, explorers, and anyone else who may be interested in project accountability.
We describe this system as a hybrid model as it combines both on-chain and off-chain data to utilize the benefits and features of blockchain security, provenance, and immutability with the dynamism and flexibility of off-chain code that can be more readily modified, updated, and changed to minimize on-ledger bloat.
The pieces detailed below describe what would be considered "Self Reporting" for a token project where information is provided by the project itself. Given enough details from the project, it should be possible for a third party to audit the disclosure and verify the information provided.
The first step is for token projects to submit an on-chain registration utilizing CIP-88 for on-chain, verifiable registration of the token project information.
A URI and data hash stored in the on-chain registration points to a JSON-formatted financial disclosures document which describes various informational pieces about a project including: formatting and display information, team and investor allocation wallets, and funding round raise information.
Financial disclosure statements are included off-chain because in the case of complex projects most likely the dataset involved will become large/bloated over time. By publishing a "proof" to the blockchain we can benefit from the immutability of the blockchain without bloating the ledger with large-scale documents. Other decentralized or blockchain solutions such as IPFS or Arweave are better suited to these use cases, and it is recommended that Disclosure Documents be published on one of these solutions.
The financial disclosure document should follow the specification format found in CIP-????.
The first two steps contain mostly "static" information that is unlikely to change or change infrequently. Other information about a token project, such as circulating or total supply, may change very frequently and is better suited to a traditional API integration rather than being published constantly to the blockchain ledger.
The final step of the process will be for third parties to independently verify the information provided in the project's self-reporting disclosures. This repository will also aim to provide tools and information for third parties to build out their own systems and utilize this data efficiently.
The FUDS system was inspired by many similarly open-sourced CIPs and components of the Cardano Ecosystem including, but not limited to:
- Cardano Stake Pool Registration + Metadata Certificates
- CIP-36 Catalyst/Voltaire Voter Registration Certificates
- CIP-26 Cardano Token Registry
- Cardano-Signer Library by Martin Lang
- CIP-88 by Adam K. Dean
Where possible the metadata published to the Cardano blockchain (in JSON format) is attempted to be kept in a format similar/compatible to CBOR notation. The rationale for this is to keep the data payload published to the blockchain as small as possible while maintaining strong-typing syntax to ensure easy composability and interpretation on both sides of the situation (token projects and data consumers).
The work herein is published under Creative Commons Version 4 Attribution License and is free for any use, modification, or publication (commercial or private) as long as attribution to original author(s) is given.