The LECTRO Project

What is Lectro?

Lectro is an energy technology services group based in Houston, Texas, the Energy Capital of the World.

Lectro is developing new blockchain-based services for the electrical power industry. Lectro is the

project where new meets traditional to fundamentally change the way we buy, sell, use and create

electricity. The Lectro project aims to improve the electrical power industry to give consumers more

freedom and choices. The project is global – Lectro can benefit anyone anywhere in the world.

The Lectro project is uniquely positioned to bring together many aspects of the current electrical energy

market – production, technology, transactional systems and more – to create an efficient synergy not

achieved before. The Lectro team includes corporate supporters and experts from both the traditional

energy sector as well as the renewable energy industry. Our relationships and associations can help to

link these two sectors and provide value to both.

Lectro was developed to address problems within the electrical power industry today that include:

 Inefficiency for renewable energy producers to transact with electric companies

 Many consumers have no choices regarding electricity providers or prices

 Many people have no access to electricity

 People sometimes lose power for days or weeks in the event of major storms

The Lectro project initially focuses on the edge of the electricity grid – where customers interact with

electric companies to obtain electrical power and, in the case of renewable

energy, sometimes selling power back to the electric providers. The Lectro

project provides a method for improving those interactions as well as

introducing new methods and choices.

The centerpiece of the Lectro project is blockchain technology. It is the

component that ties everything together. Blockchain is already in full

deployment mode for many industries and sectors, including financial and

banking, legal, and supply chain. The energy industry has also seen the

advantages of blockchain and is beginning to adopt it. Lectro aims to

provide the way forward.

Lectro is using blockchain to design specialized software applications for use in a robust platform and

network that can connect users and bring increased efficiencies and benefits to the electrical power

industry.

The Lectro project represents a unique way to buy, sell and trade electricity; establish location-specific

projects and grids; and creatively develop new electricity-producing projects and technologies.

The Lectro project and community were established to invest in our values in three ways:

1. Develop blockchain to be used with renewable energy

2. Give back to communities that need help

3. Support research and development of new technology for the energy industry

The Lectro project encompasses four phases and has the potential to impact people’s lives all across the

world in a positive and meaningful way.

Why Blockchain Technology?

Blockchain is the underlying technology that serves as the foundation

of the Lectro project. The blockchain is an ingenious invention that

was first defined in the original source code for bitcoin. It is a list of

records (blocks) that continuously grows.

Transactions on the blockchain are linked and secured using

cryptography. The blockchain’s distributed digital ledger can record

not only financial transactions but also everything of value, including

electricity and other measurable forms of energy. It is not corruptible

by hackers. Blockchain is possibly the most secure computing

environment conceived to date.

Like many technologies you use every day, you don’t need an in-depth understanding of blockchain for it

to be useful in your life. Most people don’t understand the complexity of how a car engine, microwave

oven or laptop computer works, but we recognize their value and how they enhance our lives.

Blockchain brings the same potential and has already proven to be quite valuable in numerous ways.

Blockchain provides certain advantages and efficiencies not found elsewhere. For instance, this method

allows users to transact directly with one another, eliminating the need for intermediaries or

“middlemen” that can add expensive and unnecessary fees for transactions.

Blockchain information exists as a transparent, shared, and continually reconciled database. The

database is not stored in any single location, so the records are public and verifiable. The blockchain

cannot be controlled by any single entity, and it has no single point of failure. Since data is stored across

its network, the blockchain eliminates much of the risk that comes from storing data centrally.

The blockchain gives users the ability to create value and authenticate their digital information. Some of

the many useful applications of blockchain include:

 Smart contracts  Financial transactions  Supply chain auditing

 Internet of Things (IoT)  File storage  Data management

 Neighborhood microgrids  Land title registration  Sharing economy (Uber, AirBnB)

The list above is by no means all-inclusive. Like all computer code, blockchain is an evolving product. As

more individuals and businesses realize its value, the adoption of blockchain will continue to grow.

More specifically, Lectro will implement the Consortium Ethernet blockchain. This solution is a “hybrid”

between public and fully private blockchains.

What is a Smart Contract?

Smart Contracts are computer programs that facilitate, verify or enforce the rules of a traditional

contract, thereby providing a new model from the traditional method of executing contractual clauses.

Smart contracts emulate the logic and automate the processes of contractual clauses.

Smart contracts can exchange money, property, shares or anything of value in a transparent, conflict-free

way while avoiding the services of a middleman. Ordinarily, a process would require payment to a

middleman, government agency, bank, lawyer or notary, and then time required for payment processing

before the receipt of goods or services. However, with smart contract technology, it is all automated.

Smart contract technology can be compared to that of an automated vending machine. With a vending

machine, money is deposited into the machine and the desired item drops for collection, provided that

the correct amount is deposited. Comparable to that, with a smart contract, the money is deposited into

escrow on the blockchain for receipt of a transfer of a token (e.g. a digital certificate of title for a house),

which is instantaneously transferred into a counterparty’s control once conditions are met.

Smart contracts not only define the terms and conditions around an agreement in the same way that a

traditional contract does, but also provide enforcement of those obligations.

Blockchain and the Power Industry

The electrical energy sector faces many challenges in the years ahead. With world population growing

continually, demands for power will increase.

The telecom industry was radically and fundamentally changed when the adoption of mobile phones

and smartphones reduced our dependence on landlines and hard-wired networks. Blockchain possesses

that same potential to revolutionize how the electrical power industry works.

Traditional energy giants like British Petroleum and Austria’s Wien Energy have tested blockchain

technology in recent energy trading platform trials. Pilot projects have begun to accept cryptographic

tokens for payments. Japan’s Marubeni Corporation accepts cryptocurrency as payments in parts of the

country. Others have taken it a step further and utilized blockchain and cryptocurrency payments for

bitcoin-compatible smart meters in certain remote areas of South Africa.

Advantages of blockchain for the energy industry:

 Lower transaction fees

 Faster processing for metering, billing and other functions

 Real-time monitoring of transactions

 Solves trust and verification issues

 Contracts, documentation and payment transactions are simplified

 Decentralized data storage provides process and transaction transparency

 More flexible system

 Customers can become service providers

 Consumers gain independence from centralized corporations/authorities

The examples presented above represent only a start to the many ways blockchain can change the

power industry. Blockchain has led to many other changes, including peer-to-peer energy trading as well

as multiple rates within a market instead of the single, fixed-rate system currently used by the

traditional electricity providers.

Blockchain technology provides the ability to buy and sell renewable energy produced by individuals,

neighborhood microgrids, and entire communities. When solar panels or wind turbines produce more

energy than is used, smart contracts can redistribute the electricity automatically.

Blockchain-enabled meters can feed information into the system to match buyers and sellers. The

power of smart contracts makes all of this possible and extremely efficient by activating transactions

automatically for both the consumer and the producer. The smart contracts execute the energy transfer

as well as payment. This transfers control from the traditional electric company into the hands of

individuals and provides transparency and decentralization that has not existed before.

This peer-to-peer trading can convert energy consumers into energy producers and enable them to sell

excess energy to the main grid, other individuals, or a neighborhood microgrid. These new digital peer-

to-peer processes eliminate the middleman and efficiently connect renewable energy producers directly

to those who need it.

In Lectro’s platform, users can choose the best supply propositions based on their needs and conclude

an agreement (smart contract). The smart contract as a computer code consists of the list of predefined

conditions, and when the supplier meets all conditions, remuneration (tokens) from the buyer’s wallet

to seller’s wallet will be transferred in a constant way. This is an absolutely transparent process which

could be tracked at any time.

According to a Navigant Research report:

“While many use cases have been proposed for the energy industry, the one gaining the

most traction at present is peer-to-peer (P2P) power trading, where owners of small-scale

generation can sell excess generation direct to other consumers. Today, centralized control

of distributed energy resources (DER) restricts to whom and when DER owners can sell

their energy back to the grid. A blockchain-enabled P2P model allows much greater

flexibility and could be a powerful enabler for truly customer-centric transactive energy.”

This decentralized network approach can alter current methods of power distribution and usage,

thereby providing choices, efficiencies and savings. The blockchain’s public ledger also makes the

process faster and reduces costs, all without having an electric company in control.

Other reasons contributing to the power shift from traditional methods to widespread adoption of

renewable energy include:

 Improvements in the efficiency of solar panels that have reduced costs and increased demand by

consumers in recent years

 Battery storage has dramatically increased the ability to store electricity

 Customers have more flexibility in buying and storing electricity to take advantage of rate fluctuations

The energy-sharing economy is real and will grow. And there are many more areas that will benefit from

the new technology, including electrical vehicle charging.

Lectro’s Current Project

Lectro is currently in the first of four stages – development of the P2P energy trading prototype,

completion of basic customized software, Lectro utility token and initial smart contracts. The blockchain

will be the basis of the software that will direct and coordinate network transactions.

The Lectro token is an Ethereum-based compliant token. The Lectro token is easy to send and receive. A

special benefit of the Lectro token is that there are minimal transaction costs when used in the Lectro

network.

For the Lectro platform’s economics and processes flow, we will deploy an ERC-20 token. ERC-20 defines

a set of rules that must to be met in order for a token to be accepted and to interact on the Ethereum

network. An ERC-20 token is a blockchain asset that can have value and can be sent and received like

Bitcoin, Litecoin, Ethereum or any other cryptocurrency.

The Lectro token is your gateway to the Lectro network. Our network will provide token holders with

many uses and advantages, including:

 Buying, selling, trading electricity  Data management

 Payment at electric vehicle charging stations  Recordkeeping

 Settlement of payments in the Lectro network  Other uses as the project expands

The process flow is quite simple. For example, if a user wants to purchase electricity, he creates an order

to the supplier (smart contract) and puts his signature and tokens to the smart contract. When the order

for electricity supply is executed, the supplier will automatically receive its revenue and platform fee as

a service provider and the electricity will instantly be transferred to the purchaser.

As an added measure of efficiency and safety, Lectro’s bonus/reward and penalty systems will further

enhance operation. The platform can reward good behavior of its users by implementing discount

systems for platform use, by paying tokens as bonuses, or rewards in “electricity form.” This is a very

scalable and flexible system with a long list of “good to have” features.

The blockchain is a highly secure and transparent system with an opportunity to track each transaction.

Nevertheless, parties can still attempt to trick the system by giving wrong data or by trying to attack the

system. In such cases, Lectro can minimize or eliminate these instances by using penalties or block

access to the network system.

The Lectro utility token does not represent an investment or ownership in the equipment (solar panels,

wind turbines, hybrid units) utilized in Lectro projects. In addition, the Lectro token does not imply an

ownership in shares or equity of Lectro Group. However, the Lectro token will be the sole transactional

medium that can be used for transactions listed previously as well as other uses.

The Lectro project will conduct a token sale beginning in September, 2018. Lectro will offer 35% of the its

tokens to the pubic in the crowdsale.

There are no barriers to participate. Lectro is not limiting participants in the sale that would give priority

to large donors or any special interest group. It is truly equal for anyone who wants to participate,

except in locations or jurisdictions prohibited by law or not allowed.

Funds will be used primarily to complete technology and network deployment. Additional information

about the Lectro token sale is presented in the Crowdsale section later in this document.

New Technology

The major part of funding proceeds will first be used to complete all parts of the Lectro software that

will direct and coordinate network transactions. This will include the smart contracts, transactional

coordination and verification, billing, payments and other features.

Lectro’s software retains all the benefits that blockchain was designed to

accomplish, including transparency, speed, anonymity, decentralization,

security and authenticity. The Lectro development team is currently working

on the underlying software code for our wallet and mobile app, network

dashboard with easy-to-use, customer-friendly graphic interface, and is

preparing for security audits.

Lectro will provide the ability to conduct peer-to-peer trading of electricity,

which can convert energy consumers into prosumers (both a consumer and a

producer) and enable them to sell excess energy to other individual users, a

microgrid, or electric company. These new digital peer-to-peer processes can

efficiently connect renewable energy producers directly with those who need

it and eliminate the middleman. The Lectro project provides an easier, cheaper

and more efficient way to transact.

Although electric companies set their own rates for selling energy back into their grids, Lectro’s

decentralized peer-to-peer trading adds the flexibility for users to transact directly among themselves

(with no central authority in control) to set their own prices. This can have a significant effect on the

current marketplace.

Lectro’s blockchain-enabled platform can also be used for much more than executing energy supply

transactions. Other uses include:

 Metering  Billing

 Asset management  Guarantees of origin

 Ownership documentation  Emission allowances

 Renewable energy certificates  Clearing processes

Interconnected IoT devices will track all data gathered and send its value to the data storage (hash-

data). When the supplier has executed his order for electricity supply, the smart contract will call for this

data from IoT for operation confirmation. When the order is confirmed, the smart contract is completed

and calls for the kill function. On the other hand, if the order is not confirmed, the client will be notified

about this and will be able to call the smart contract back. Furthermore, this will prevent the system

from electricity theft, because all electricity is tracked by the system as well.

The upcoming enhanced next-generation iteration of the Lectro platform will begin its development and

evolution later this year. The next-gen will expand its capabilities to allow other energy producers –

traditional electric companies as well as renewable – to utilize the expanded Lectro platform to assist

with their accounting, management, monitoring, reporting and other needs.