Firmo: Financial independence built within Ethereum
Ethereum is an open-source, public, blockchain-based distributed computing platform and operating system featuring smart contract (scripting) functionality. It supports a modified version of Nakamoto consensus via transaction based state transitions.
Ethereum was proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher and programmer. Development was funded by an online crowdsale that took place between July and August 2014. The system went live on 30 July 2015, with 11.9 million coins "premined" for the crowdsale. This accounts for about 13 percent of the total circulating supply.
In 2016, as a result of the collapse of The DAO project, Ethereum was split into two separate blockchains – the new separate version became Ethereum (ETH), and the original continued as Ethereum Classic (ETC). The value of the Ethereum currency grew over 13,000 percent in 2017.
Ethereum provides a decentralized Turing-complete virtual machine, the Ethereum Virtual Machine (EVM), which can execute scripts using an international network of public nodes. "Gas", an internal transaction pricing mechanism, is used to mitigate spam and allocate resources on the network.
Firmo attempts to augment the development of a decentralized economy by introducing secure and automated financial contracts without the involvement of trusted third parties. Firmo is in the process of creating an alternative infrastructure for financial contracts [which is/will be] transparent, fair and trustless. In our view, the application of financial services is a particularly interesting use case for distributed ledgers. Financial assets are abstract products, deriving their value from the ongoing price- discovery mechanism on the markets. Indeed, financial operations are essentially a series of transfers of value between counterparties, at selected time intervals, governed by certain conditions.
The Firmo Protocol enables users to create what we call smart derivatives, a secure type of smart financial contract, offering products including but not limited to, futures, loans, options and swaps. The Firmo Protocol is designed to operate with a diverse selection of external liquidity providers and exchanges. Smart derivatives are non-fungible and can be traded on any regulated exchange which supports the Firmo Protocol. With the introduction of the Firmo Protocol, Firmo is paving the way for the logical evolution of the emerging crypto markets.
The Firmo Protocol enables any business or individual user to create secure and automated smart derivatives using the domain specific programming language; FirmoLang. Any smart derivative or alternative financial contract that uses FirmoLang can be compiled to the Ethereum Virtual Machine (EVM). The Firmo Protocol Stack consists of 4 general groups of processes which are set out in the table below:
1. Individual Users: Can enter into smart derivative contracts and trade their positions to third parties on secondary markets..
2. Cryptocurrency Exchanges: Can offer their customers secure derivative products. Cryptocurrency exchanges may also act as the clearing institution or counterparty in a given smart derivative contract.
3. Financial Institutions: Traditional financial institutions can utilize the Firmo Protocol to achieve significant reductions in costs associated with the clearing and settlement of derivatives. By eliminating intermediaries and automating clearing processes, financial institutions can further expand their offering with exotic variations of commonly standardized instruments.
FirmoLang initially compiles to the Ethereum Virtual Machine (EVM). The current version of the EVM compiler is ERC20 compliant and supports any asset-class defined as a certified token in solidity.
In simple terms, an ERC20 token contract can be defined as a key/value pair, where the key is an Ethereum address and the value is the balance of the address, in the token. In order to transfer assets between parties and to read observables, FirmoLang relies on token contracts and data feed contracts, written in a more expressive language. The functionality of these contracts with which the compiled code interacts, cannot be expressed in the FirmoLang syntax. For this reason, the Firmo Protocol relies on an interface to perform this communication with other contracts. The communication from FirmoLang to token-contracts on ethereum can be divided into two operations:
1. Evaluating an observable by reading information through the ’get’ function defined in a data feed contract.
2. Executing a transfer of tokens from one party to another by calling the ’TransferFrom’ function defined in a token contract.
These simple instructions define how FirmoLang interacts with the EVM. Only the transfer function method call changes the state of the blockchain by transferring value from one party to another. The amount that is to be transferred and which transfers are to be executed will often depend on the value returned by the get method which only reads a state on the blockchain without alterations. This otherwise complex operation is thus reduced to two primary values:
1. A Boolean value to determine if or not a contract executes
2. An integer value defining the amounts transferred from accounts
The simplification of the specified terms, to the bare essentials in the larger contract or object oriented languages, removes any redundancies typically associated with today’s smart contracts, creating a secure execution environment for derivative contracts.
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