Introduction

It is no secret to anyone that the blockchain and the creation of tokens such as bitcoin, ether, litecoin and others have changed the way we handle financial activities. Let's take the example of my case in particular. I live in a country whose economy is almost completely broken, however, thanks to the world of cryptocurrencies and the activities that can be done with these tokens, I have been able to survive the situation. Since my finances do not depend on a centralized entity but on a new world, completely assured by the benefits of the blockchain.

The following report we will see a very innovative platform called Fusion, which eliminates the problems of interoperability, scalability and usability that this world of blockchain finance (cryptofinance) presents. Opening a range of possibilities never imagined. Giving me the security to put even more my confidence on the cryptocurrencies and their future on the global economy.

New Era of Cryptofinance

Since the beginning of time, the activities of exchanging values and currencies within societies have always had the problem of trust and centralization of operations. Generally, a central organization is responsible for controlling the financial operations of a community, such as banking institutions, insurance companies, lenders, etc.

A transfer of money to another country, takes time (days) and a high cost for the operation (fee), without mentioning that there is a 5% chance of error when making the transaction.

With the arrival of the Internet, communications and the exchange of information became instantaneous. Creating a new paradigm that allowed to interrelate all communities in the world However, it is not until the blockchain technology emerges, which allows establishing a distributed platform that allows ensuring trust, security (encryption) and speed of transactions. This is where the concept of the Internet of value was born. With the Internet of Value, a value transaction, such as a payment in foreign currency, can happen instantly and your fee could be small or none. And it's not just money. This concept allows the exchange of any asset that is valued to any person or organization, including stocks, securities, intellectual property, music and more.

Disadvantages of the Internet of Value

Source: Fusion White Paper, page 16.

As we saw earlier, the internet of values will allow people to exchange assets. However, to perform these functions it must be improved 3 areas. Interoperability, usually the internet can send all kinds of information, however, when referring to values, there is much difficulty in making the exchange between different blockchains, as well as the exchange between different tokens of different blockchains. Looking from a particular point of view, the blockchains are islands that operate in their own ecosystems. Another problem that interoperability presents is that the blockchain does not allow interaction with external data or off-chains data, nor does it operate with external centralized organizations. This causes that smart contracts into blockchains cannot communicate with the outside world. Accentuating the island concept even more.

A second aspect that must be developed is scalability. As we saw before, each blockchain has its own ecosystem (wallet, tokens and smart contracts) which are not interchangeable among other blockchains, limiting interoperability, making impossible multi-currency scenarios and multi-organizational exchanges. It becomes very difficult to map off-chains data in the blockchain (financial assets, fixed assets, various derivatives, etc.) due to heavy computational processing reasons and operations or demands involving exchange with off-chains organizations from outside world. Affecting the scalability and therefore bringing the consequence that no off-chains values of different scenarios (finance, manufacturing and government management) are migrated to the internet of values.

The third and last aspect is usability. The value internet requires computational power, parallel processing, storage and communication capacity, programming, resistance to hacking attacks; for this, protocols of standardization, modular functionality (reusability) and ecological supervision are required by the developers. Usability is a long-term task since it involves software and hardware improvement, as well as consensus mechanisms, cryptography and other aspects.

These three problems (Interoperability, scalability and usability) are called value internet bottlenecks.

Cryptofinance

The concept of cryptofinance refers to financial activities carried out with the Internet of values and its relationships with financial activities off-chain. The prefix crypto refers to the use of cryptographic algorithms to ensure the confidentiality of operations. The values are represented by tokens in the blockchain and asset tokenization is the act of mapping the values, however, these require a variety of services such as accounting firms, law firms, custodial institutions, national legal systems, etc. Once the assets are tokenized, the smart contracts are used in the blockchain to carry out financial activities with the tokens. All these operations are what we defined as cryptofinancial activities.

Cryptofinance shows us a look at the new era of financial system that will emerge in the future, built on the Internet of Values. However, it is also affected by the bottlenecks mentioned above.

Traditional finance vs Cryptofinance

Source: Fusion White Paper, page 14.

As you can see, most traditional financial activities are still far from being realized in the world of internet of values or cryptofinance. Nevertheless, Fusion has developed an ecosystem that will make it possible to carry out these traditional financial operations and many more, within the world of the Internet of values.

Fusion. Rebuilding Finance

Fusion, establishes a public blockchain that will serve as a platform on which all kinds of values (tokens) can be exchanged, interconnecting different communities and tokens from different blockchains. Functioning as a bridge between centralized and decentralized organizations. Opening a new era on cryptofinance.

Fusion, creates interoperability between different ecosystems of blockchains (Cross-chain), allowing the exchange of different tokens and introduces a smarter contracts concept. Fusion establishes the interconnection between centralized organizations, off-chains (Cross-organization), and the distributed schemes of blockchain ecosystems; and finally, allows the financial exchange of data on-chains and off-chains (Cross-datasource)

Fusion, attacks the bottlenecks presented by the Internet of values, making cryptofinancial activities performed without barriers and expanded beyond. Fusion, establishes the bridge between different blockchains ecosystems, thus allowing financial operations to be carried out with different monetary systems and tokens; which was previously very difficult to do. Implementing a new blockchain, which will take the private keys of each token and be responsible for generating new keys that allow, transparently, to be exchanged by other tokens, thus expanding the possibilities of a larger market. In addition to this, it introduces this new type of smart contract that can be activated not only by programmed conditions, but also by events or for a specific period of time. Moreover, these smart contracts allow opening a breach with the outside world and conditioning its programming depending on values or off-chain conditions. Taking, in this way, the world economy to the next level.

Let's see the most outstanding goodness of the Fusion.

Inclusive

Fusion is inclusive. It provides the resources to use all types of tokens, off-chain values and data-sources in crypto-financial activities; connecting centralized and decentralized organizations

Interoperable

Fusion solves Internet of values interoperability problems. Allows mapping different types of tokens from any blockchain and share them within smarter contracts.

Innovative

Fusion creates a new type of smart contract, which allows it to operates with the outside world and gives it the advantage of being used as an asset to be exchanged or traded as value, within other smart contracts. Opening new possibilities never imagined within the world of cryptofinances.

Fusion Arquitecture

Source: Fusion White Paper, page 22.

In the previous image you can see the architecture of Fusion. Here is where the magic occurs.

Fusion, from the bottom-up, uses a layer called HHCM (Hierarchical Hybrid Consensus Mechanism), this layer is responsible for balancing the consensus of PoW and PoS, combining the virtues of both schemes, achieving an efficient use of energy and avoiding centralization of computes. It also performs transaction parallel processing. Performs a hierarchical calculation for the fragmentation and storage of application data. This way improves the security, efficiency and scalability.

DCRM layer (Distributed Control Rights Management), improves the security of assets during financial activities. This layer is what allows different tokenized assets to be mapped in the Fusion blockchain to allow operation between them. Once mapped, they can be used by the Fusion smart contracts, in this way they are assigned a role in space and time (which did not exist in their original form) over cryptofinancial activities.

CSCS layer (CryptoFinancial Smart Contract Services), this layer is responsible for expanding the functions of smart contracts. Adding a function that defines the relationship between the different tokens. It also adds the activation of the smart contracts by adding new triggering actions like events or time (MTM, Multiple Triggering Mechanism). This layer allows defining the channels for the communication of off-chain data and cryptofinancial applications (using Fusion APIs).

CDSrv layer (Cryptofinance Distributed Service), this layer simplifies the development of decentralized applications (DApps) to perform cryptofinancial activities. Fusion, will provide libraries and programming environment necessary for the creation of smart contracts by developers. This programming environment will encapsulate several codes from different blockchains and their smart contracts and datasources. What will improve usability over cryptofinancial activities.

CDApp layer (Cryptofinance DApp), executes DApp operations for cryptofinancial activities.

Use Cases

The best way to explain how it works and what the benefits of the Fusion ecosystem are is through real-life examples applied to crypto-finances. We will see three cases of uses of the operation of the Fusion smart contracts

Use case 1: The Risk-Free Token Loan

Smart contracts are programs that execute transactions automatically and serve as trust mechanisms. Fusion allows the execution of smart contracts with tokens of different blockchains (cross-currency), thus allowing a person to request a loan or lend money with any type of token, without worrying about the risk of the transaction. The smart contract will be responsible for allocating amount of the loan, the interest rate and the period of time; as long as both parties are in agreement.

Use case 2: Risk-Free Contract Market

Fusion smart contracts are like checks issued by a bank, they are valid contracts without risk. Like checks, smart contracts are a future secure payment.

In the following example Alice wants to buy a 0.3 bitcoins plane ticket from to Bob (a travel agent). However, the 0.3 bitcoins of Alice have been invested in a Risk-Free Token Loan smart contract (let's call it RFTLsc), which will end in 10 days returning an interest of 0.01 bitcoins. To buy her plane ticket, Alice creates a Credit Purchase smart contract (CPsm) with BOB and endorses it with its RFTLsc (which will cover the 0.3 + a waiting interest for 0.01 bitcoins). But if Bob wants to make his payment immediately, he will not be able to do it until 10 days have passed. But Bob can create a Discount Sale smart contract (DSsc) and sell it to another customer, let's call him Carl. Bob endorses his DSsc with Alice's CPsm, so when Carl accepts the DSsc, he will have to pay 0.3 bitcoins, but in 10 days he will get an interest of 0.01 bitcoins.

We can see the flow of the token in this scenario, this is possible within the Fusion ecosystem, where the smart contracts represent a value or flow of money (flow of tokens). The control of the rights of smart contracts can be commercialized, exchanged or used as payments by their owners in the market. We call this a new market of draft contracts.

Use case 3: FUSION Mortgage smart contract

In this scenario, Alice wants to sell her house for 100 Bitcoins, but she must first convert the house into a tokenized value, for this she must look for House Token Organization, which is a legal service provider, who will establish a price in tokens to Alice’s house and verify that Alice really is a full ownership of the house.

Let's say Bob wants to buy Alice's house, but he only has 30 bitcoins. A Tokenloan Company (Risk Taker) creates a Mortgage smart contract (MSC), which will include Alice, Bob with his 30 bitcoins and a series of Risk-free investors that complete the remaining 70 bitcoins (let's call them Risk-free investors smart contracts, RFIsm). Similarly, the Tokenloan Company invests 70 bitcoins as collateral for their investors. Once the MSC is created, Alice will receive her 100 bitcoins and stops being the owner of the house. Bob receives the mortgage loan of 70 bitcoins and will become the new owner of the house. However, until he pays all of his total debt (70 bitcoins), the house will remain as guarantee for the loan. Bob will have to pay 0.67 bitcoins for the mortgage payment monthly for 120 months. The MSC includes conditions to resell the house in case Bob does not pay. The monthly payment of Bob will be distributed among the Risk-free investors. At the same time, Tokenloan Company will use inverters' RFIsm as an investment in their own Risk-Free Token Loans. Once the 120 months have passed, the house will be Bob's legally and the Tokenloan Company will receive back 70 bitcoins. This will make mortgages simpler, much more available and less expensive for everyone involved

Conclusion

It is clear that Fusion is going to improve financial activities in the blockchain world, or what we called cryptofinance. The innovative character of Fusion, will allow opening that breach that separates the different blockchains, allowing to interconnect all types of crypto-values or tokens, escalating the power of cryptocurrencies and financial activities. Moreover, Fusion allows the mapping of off-chain values within its ecosystem, opening the doors to the outside world not only by tokenizing values but also by making the smart contract equally able to interact with the outside world in a safe and efficient way.

Imagine a world where you can buy a car or a house without having the problem of intermediaries and whose value can be valued in tokens. Moreover, a Risk-Free Token Loan smart contract can continue to be used as a value and be traded in other financial transactions, thus ensuring that the flow of tokens remains in motion and does not lose its value as cryptocurrencies. It is clear that this is the beginning of a new financial era, open to a wide range beyond those traditionally we known.

In word of the Fusion creators:

We open our arms and welcome those who share the same vision of Internet of Values to join us in the Fusion project and collaboratively create an inclusive cryptofinance platform. We believe that FUSION is worthy of our efforts and will be at the epicenter of critical infrastructure for the Internet of Values.

Annexes

My Video about Fusion