FIC Network Review: Bonds on Blockchain

Original article by EVALUAPE

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A. Introduction

FIC Network is an end-to-end decentralized fixed income securities network based on Stella that enables the listing, exchange, and securitization of fixed income financial instruments.

B. Industry

The size of the global credit and fixed income financial markets have well surpassed $230 trillion, at the same time the total market capitalization of cryptocurrencies reaches over $200 billion. The former industry still sees tremendous space for growth, while there are few crypto credit and fixed income products on the market. Conventional fixed income security markets based on centralized third parties are known for many inherent drawbacks, such as illiquidity, asymmetry of information, operational risks and etc. Therefore, the use of blockchain technology can be very promising as a solution to the problems of traditional financial issuance and circulation.

FIC Network builds a blockchain-based fixed income market, on which users can buy and sell a variety of fixed income securities and financial instruments, including loans, bonds, asset-backed securities (ABS), credit default swaps (CDS), and futures. The goal of this platform is to reduce costs, raise capital globally and improve the auditability and transparency of the industry. There are a comparatively large number of competitive projects on the market, including Polymath, Harbor, Tzero, Securitize, Templum, etc. In spite of that, the problem of compliance is still the prime obstacle in the way of FIC Network. (7/10)

C. Mode

The innovation of the project is that investors can trade with expected cash flow (ECF) in a certain period as the basic unit. An ECF is a means of splitting a financial product into smaller parts. ECFs can be exchanged for its nominal value currency and be traded for currency tokens. Investors can choose to purchase an ECF of a particular financial product over a specific period of time, diversify risk through flexible allocation, or choose when to obtain profit based on their own demand for money. Users can buy and sell financial assets with any currencies, as FIC Network enables the seamless exchange of both fiat currencies and a variety of cryptocurrencies at the optimal rate on Stellar blockchain. Tokens can be used to release financial instruments and bid for ECF on the network. The total number of tokens is fixed, which forms FIC’s appreciation logic and restricted the total amount of on-chain financial products based on the current infrastructure. In general, the platform only provides a tool for the tokenization of the fixed income assets. However, more off-line problems are involved in the implementation of this project, primarily including the compliance issues regarding the issuance of financial products and AML/KYC services, which makes it difficult to be truly decentralized. (7/10)

D. Technology

FIC Network is developed on the basis of Stellar blockchain, the protocol of which consists of three concepts: local currencies, accounts and assets. To satisfy the characteristics of fixed income securities, FIC Network has added some special concepts and created an adapted clone of Stellar. FIC’s whitepaper has elaborated the smart contract templates for loans, bonds, CDS and etc. With eDepository, the first native dApp of the project, the project allows participants to publish, update, manage, verify and exchange assets information during the life circle of each loan.

FIC Network can improve the transaction speed, liquidity and security of assets as well as the auditability and transparency through the underlying protocol of smart contracts. The underlying technology is not hard to achieve. Besides, it has launched its mainnet in October.

Github:https://github.com/ficnetwork . The project is open-sourced on Github. However, its main codes are forked from those of Stellar and has few self-developed codes. Besides, the popularity of FIC Network is low. (7/10)

E. Team

The core members of FIC Network come from the traditional financial industry and do not have much experience in blockchain technology. Arturs Ivanovs is the founder and CEO of the company. Arturs received his LLB in Law and Business from Riga Graduate School of Law. He also had experience of Fintech regulation in European Union and started to research blockchain technology in-depth since 2015. Alvar Soosaar is the co-founder and COO of FIC Network. He holds an MBA from the Saïd Business School of the University of Oxford and BA from the University of Virginia. Alvar is a sophisticated investor with experience of over 20 years in a variety of assets classes. Aigars Staks is the co-founder and senior FIC network architecture advisor. He received his M.Sc. in Computer Science from the University of Latvia. Aigars previously worked as the top executive of many companies and possesses rich experience in strategic planning and large-scale IT projects management.

The advisors of FIC include Jed McCaleb, co-founder and CTO at Stellar.org; Matiss Ansviesulis, co-founder and CEO at Creamfinance; Angel Colon, co-founder of Public Offering Corp.; Ismail Malik, strategic ICO advisor based in London and chairman of BlockchainLab; Jon Chou, co-founder and CEO at Bee Token; and etc. (6.5/10)

F. Ecosystem

Telegram: 6,282 members; Twitter:2,423 followers. The monthly traffic of its website is about 3,800, with a tendency of dropping from this March to September. Factury Inc., FIC’s parent company, was founded in 2016. The FIC Mainnet was launched in October 2018, which is mainly geared to institutions in the early stages but will also open to individuals later. (6.5/10)

G. Conclusion

FIC Network is dedicated to the tokenization of traditional financial products. Although the traditional security market is considered to be of great potential, the value of this market comes from off-line companies and underlying assets. Therefore, instead of the architecture of the blockchain, the difficulty of FIC Network falls on the compliance procedures to list the financial assets on the blockchain. At present, there is a small part of countries showing intention of realizing the tokenization of securities, including Switzerland, Malta, Singapore, which well proves that the tokenization of traditional financial products has to be carried out from bottom to up. FIC Network has abundant resource accumulation in the traditional industry and has shown some advantage in terms of the product architecture and development progress, compared with its peer projects. The FIC Mainnet was also launched in October 2018. However, it has not disclosed any bonds that can be issued in consistency with the laws and regulations, which means that regulatory compliance is still the biggest challenge that FIC Network faces.

Hype Score:Medium

Risk Score:Medium

Expectation: Medium

Total Score: 6.7

All information in this article is provided for reference only and does not constitute investment advice.


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