Litepaper
Introduction
“We are approaching an inflection point, where the promised potential of blockchain will be realized and be measured in billions of users and trillions of dollars in value.” Citi: "Money, Tokens, and Games" (2023)
Millicent One is the incentivized blockchain for composable onchain finance using RWAs. It has been custom-designed to unlock new use cases and higher return potential in the onchain economy. By seamlessly integrating tokenized Real World Assets (RWAs) with a suite of vertically-integrated financial applications — including a DEX, Money Market, Futures and Options exchanges — as well an integrated identity layer. Millicent One simplifies and enables sophisticated cross-asset strategies previously impossible in both traditional finance and current DeFi systems, opening up both new use cases, and the potential for higher returns.
With an initial development team of veterans from JP Morgan, Morgan Stanley, Goldman Sachs, Bank of America, PwC, and Tendermint, Millicent One is the culmination of years working at the coalface of digital currencies and onchain economies with some of the world's largest public and private financial institutions and blockchain foundations.
Millicent was founded with the goal of creating open, decentralized networks that meet the principles for financial market infrastructures — the international standards for systemically important systems in global finance — aiming to create a path for these critical systems to be operated by, governed by, and reward the very people they serve.
Millicent One is a significant step in this journey, paving the way for a financial ecosystem that is able to meet global standards while remaining true to the spirit of decentralization.
At its core is the innovative Proof-of-Participation model. This system redistributes network and application cashflows to community members engaging in positive-sum actions via non-transferable popMILLI tokens that accrue real yields. By rewarding ongoing engagement, it fosters deep liquidity, active governance, and continuous development, distinguishing it from traditional emissions-based models that often lead to short-term speculation and value erosion.
Built on cutting-edge technology, Millicent One is an Ethereum rollup leveraging the best-in-class Arbitrum Nitro stack. Its architecture and design choices are designed for high throughput, low latency, and reduced gas fees, making it an optimal choice for scalable and efficient onchain financial markets.
The network also features a chain-wide low-friction, privacy-preserving approach to identity management through user-owned identity attestations and verifiable credentials. This allows users to retain full control of their data, only selectively proving relevant attributes to chosen counterparties without disclosing personally identifiable information.
To enhance user experience, Millicent One employs account abstraction, eliminating the complexity and risk of seed phrases — which have led to an estimated $140 billion worth of lost Bitcoin. Instead, it offers secure passkey logins, significantly lowering entry barriers for blockchain newcomers.
The platform enables gasless transactions for casual users and uses USDC as the native gas token for institutions and power users, addressing key concerns around volatility and regulatory compliance that have hindered institutional blockchain adoption.
In the following sections, we'll explore how Millicent One is positioned to catalyze the next evolution in financial markets, bridging the gap between traditional and decentralized finance.
Why Does the World Need Another Blockchain?
“If they are to attain mainstream adoption, DeFi and crypto must integrate some of the regulatory and self-regulatory practices that have brought functional stability to TradFi. But there’s also an urgent need for the stewards of the global economy to explore DeFi and crypto solutions to its many problems.” Michael Casey for the IMF: It’s Time for DeFi and TradFi to Work Together (2022)
The convergence of traditional finance (TradFi) and decentralized finance (DeFi) is no longer a distant dream but an impending reality. Industry leaders like Citi and BCG project over $20 trillion of tokenized currency and offchain assets will be onchain by 2030. However, fundamental issues with current blockchain designs are impeding these promised inflows, as well as hindering broader mainstream adoption, leaving an estimated $49 billion in unrealized value on the table each year.
This unrealized potential stems from a fundamental divide in today's blockchain landscape:
Public blockchains have opened up unprecedented possibilities for financial services, creating accessible, innovative, and democratic systems promising non-custodial, decentralized, and intermediary-free transactions. However, while this potential is immense, the financial sector has yet to fully harness these capabilities. The broad focus of "one-size-fits-all" general purpose blockchains leaves them less equipped to address the specific needs and regulatory considerations of traditional finance. Moreover, the sector remains plagued by regulatory uncertainties, hacks, bad actors, and scams that hinder broader mainstream adoption.
Private blockchains were designed to enhance safety and compliance, and while they achieve these goals, they do so at the expense of the foundational elements that make blockchains great. Often operating in isolated environments, private blockchains miss out on the rapid innovation cycles, product composability, broad accessibility, user freedoms, community engagement and network effects of public chains. This isolation limits their growth and stifles the development of new products.
This divide has significant implications. Although the Real World Asset (RWA) sector has seen exciting growth, showcasing the increasing appetite for bringing traditional assets onchain, the full potential of RWAs remains blocked by regulatory silos, fragmented user experiences, and limited integrations with onchain ecosystems.
These gaps present an exciting opportunity for purpose-built solutions to bridge the worlds of open blockchains and established financial systems. This is where Millicent One comes in.
Millicent One is custom-designed to be the first blockchain to overcome the fundamental dichotomy between public and private chains — supporting the needs of regulated assets while embracing the openness, accessibility, innovation, and community-first ethos of public blockchains. As a sector-specific platform for onchain finance, Millicent One is uniquely positioned to catalyze the next evolution in financial markets.
Driven by a vision of a world where the tools for prosperity are accessible to everyone, everywhere, Millicent One will help catalyze the adoption of more efficient and rewarding financial market infrastructures. By unlocking the full potential of onchain finance and RWAs, using the unique Proof-of-Participation system to redistribute network cashflows, Millicent One provides compelling long-term incentives for all ecosystem participants to drive sustainable growth and widespread adoption for the journey ahead.
Core Features
"We have to go is to where this technology is improving and impacting the lives of real people on a daily basis. This transformation from experimental into mainstream impact is the hardest in any technology's adoption lifecycle and is often referred to as 'crossing the chasm'. The first major trend that will help DeFi cross the chasm is the tokenization of real-world assets. This means we are taking the traditional financial infrastructure, markets, assets, and value, and bringing it onto the blockchain so it becomes available to interact with DeFi protocols." Rune Christensen: "What's Next for DeFi? (Devcon5, 2019)
Vertically-Integrated Financial Primitives
At the heart of any onchain economy are three fundamental building blocks: a DEX, a money market, and derivatives exchanges, Millicent One is no exception.
Yet, relying on unknown parties to create core foundational infrastructure can introduce misalignments as these projects may lack key features, have limited composability, prioritize their own agendas over the ecosystem's holistic needs, or even turn out to be created by malicious actors.
Recognizing this, Millicent One takes a novel approach by developing and integrating this core set of primitives as enshrined, network-operated, applications:
mDEX: Highly capital-efficient AMM featuring three distinct liquidity provision methods. Features both permissionless and permissioned pools, enhancing flexibility for a variety of asset types and trading strategies while optimizing liquidity utilization and user control.
mLEND: Unlocks (often illiquid) RWA use in overcollateralized lending, maximizing capital efficiency while managing risk through segmented collateral markets with tailored configurations and liquidation mechanisms, enabling the use of diverse assets classes.
mFUTURES: Provides onchain exposure to a broad range of offchain assets beyond just crypto — including forex and commodities — increasing diversification opportunities, enabling sophisticated trading and hedging strategies, as well as the potential for compounded returns through the use of RWAs as collateral assets.
mOPTIONS: Enables the creation of fully onchain oracle-less options — one of the most traded instruments in traditional finance — on any asset pair within mDEX, unlocking capital-efficient ways to hedge, speculate, or create defined-risk positions with granular user control over their positions.
By integrating these applications into the core network, Millicent One creates a vertically-integrated ecosystem with solid day-one foundations. In addition to adding to the cashflows redistributed through Proof-of-Participation, this approach ensures alignment of interests across the ecosystem, as all components work together towards the common goal of growth and stability.
Unlocking the Onchain Potential of RWAs
Today, tokenized RWAs have limited utility in the onchain ecosystem. While the market for tokenized traditional yield-bearing assets has grown 100x over the past two years, the fact that fewer than 6000 wallets hold a stable, yield-generating, product like tokenized T-Bills indicates limited accessibility and utility in today's onchain landscape.
What's worse is that, despite promises to democratize finance, onchain wealth remains concentrated at the top. Of the 6000 wallets holding tokenized treasuries, more than 90% of these assets are held in fewer than 100 wallets.
One major barrier to broader RWA adoption is the fragmented approach to compliance and asset access. Each RWA protocol typically requires its own KYC/KYB process, creating a terrible user experience that one fund manager described as "needing to retake your driver's license test every time you get behind the wheel." Separate asset whitelists further fragment the ecosystem.
The true power of DeFi lies in its composability - the ability to seamlessly combine different financial primitives to create novel, efficient strategies. This "money lego" approach enables sophisticated financial maneuvers like flash loans, yield farming, and permissionless hypothecation. However, the current siloed nature of RWA protocols severely limits this composability for tokenized traditional assets.
This lack of composability matters because it prevents RWAs from fully participating in the onchain ecosystem's most innovative features. Imagine using tokenized yield-generating Treasury bills as collateral for a forex futures trade, or unlocking liquidity on a real estate investment through an onchain NAV loan. These strategies — blending the best of TradFi asset classes with DeFi's programmable nature — remain largely theoretical due to the industry's fragmented state, and can unlock significant end-user yield sources that are currently being captured higher up in the system.
Millicent addresses these challenges by facilitating the necessary requirements for traditional assets while benefiting from the innovative, composable financial primitives and network effects of public chain infrastructure. This approach unlocks the true potential of RWAs, allowing seamless integration into composable onchain primitives, opening new possibilities for both traditional and crypto-native investors.
Proof-of-Participation: Aligning Incentives for Sustainable Long-Term Growth
Millicent One introduces an innovative Proof-of-Participation (PoP) incentivization model, designed to create a sustainable and growth-oriented ecosystem that — unlike most TradFi, and many DeFi ecosystems — fairly rewards all contributors for their efforts.
At its core, PoP uses a non-transferable token, popMILLI to reward value-adding actions within the network. This token can only be acquired through positive contributions to the ecosystem, ensuring that participants are genuinely invested in its success.
One of the key features of PoP is its distribution of real value, with popMILLI holders receiving a portion of the ecosystem's cashflows. This approach moves away from the common practice of inflationary token emissions that often lead to short-term speculation.
The PoP model addresses several common issues prevalent in today's tokenomics. By redistributing actual value from network activities, it creates a system where individual success is tied to the overall health of the ecosystem. This alignment of interests fosters a community of engaged, long-term participants, rather than attracting mercenary capital seeking quick gains.
This approach creates a positive feedback loop within the Millicent One ecosystem. As participation increases, more value is created and distributed, which in turn attracts more participants and activity. The result is a more stable and valuable network that benefits all stakeholders.
By focusing on sustainable growth and active participation, Proof-of-Participation aims to redefine how blockchain networks incentivize and reward their communities. It has the potential to create a more resilient and valuable ecosystem in the long term.
See Proof-of-Partcipation Tokenomics for a more detailed explanation.
Fantastic User Experiences
Millicent addresses key usability challenges that are well-known deterrents to widespread adoption of onchain systems by offering Account Abstraction (AA) smart wallets designed to make blockchain technology more accessible and user-friendly.
One of the most significant barriers to entry has been the complexity and vulnerability of seed phrases. AA wallets replace vulnerable seed phrases with secure passkeys, offering a familiar Web2-like login experience using biometrics or device PINs. This approach lowers the learning curve for new users and reduces the risk of catastrophic loss — addressing issues like the estimated $140 billion worth of Bitcoin currently inaccessible due to mishandled seed phrases. Recovery mechanisms, such as social recovery, further protect users from losing access to their funds.
Gas fees have long been another pain point for blockchain users, especially in today's multi-chain environment. Millicent addresses this by offering 50 free transactions per user per month, effectively removing the barrier to entry for new participants. Power users who exceed this limit pay extremely low gas fees that are denominated in USDC, a stable, well-regulated asset.
Session keys allow users to delegate certain transactions for automatic signing, streamlining experiences in financial app interactions. Users can configure transaction limits for added security. Importantly, while offering conveniences like session keys and auto-execution, AA solutions remain non-custodial, allowing users to retain control over their private keys and permissions.
USDC as the Native Gas Token
Millicent's decision to use USDC as its native gas token is a significant step towards enhancing institutional adoption of onchain finance. This choice offers several key advantages that make the platform particularly attractive to traditional financial institutions.
One of the primary benefits is the simplification of tax obligations. Unlike transactions involving cryptocurrencies like ETH, USDC transactions don't trigger taxable events, which dramatically streamlines tax accounting for institutions. This removes a major pain point that has historically deterred many traditional finance players from engaging with public blockchain technologies.
Using USDC also brings much-needed stability to institutional balance sheets. Unlike volatile cryptocurrencies such as ETH, USDC eliminates the need for frequent mark-to-market adjustments. This stability simplifies financial reporting and auditing processes, making it easier for institutions to integrate blockchain activities into their existing financial frameworks.
Perhaps most importantly, USDC offers clear regulatory compliance. As one of the few stablecoins that is MiCA compliant, it provides a clear regulatory framework for institutions. This reduces legal and compliance risks, offering a level of certainty that is crucial for traditional financial entities looking to enter the world of onchain finance.
User-Owned, Privacy-Preserving, Identity
"Privacy is necessary for an open society in the electronic age. Privacy is not secrecy. A private matter is something one doesn't want the whole world to know, but a secret matter is something one doesn't want anybody to know. Privacy is the power to selectively reveal oneself to the world." Eric Hughes: "A Cypherpunk's Manifesto" (1993)
Low-Friction, Tiered Verifications
Millicent One implements a low-friction, tiered, privacy-preserving identity system. This allows users to selectively disclose only the necessary information for each level of participation, enabling access to regulated assets without compromising user privacy. The system uses verifiable credentials, enabling users to prove their eligibility for certain activities without revealing unnecessary personal data.
Permissionless Access: Initial access to the network and many features and use cases is permissionless, up to a de minimis threshold. This allows users to explore, onboard, and engage with the platform with no barriers to entry.
Light-Touch Verification: To transact in large volumes, or for certain use cases, light-touch identity verification is required. This could be as simple as a Coinbase onchain attestation, maintaining a low barrier to entry while adding a layer of security.
Full KYC: For specific use cases, particularly those involving regulated activities or assets, full KYC may be required at the app or asset level. This uses verifiable credentials to meet verification requirements while maintaining user privacy.
This tiered approach ensures that the platform remains accessible to a wide range of users while complying with necessary regulations.
Governance-Gated Contract Deployment
To enhance security and prevent malicious actors, Millicent One employs a governance-gated approach to smart contract deployment. New contracts must pass through a community review process before going live on the network. This process remains decentralized and democratic, while helping to mitigate risks of rug-pulls and scams; ensure high-quality, audited code across the ecosystem; maintain a high signal-to-noise ratio for users; and ultimately a more useful and more trustworthy environment for all participants.
Conclusion
At its core, Millicent One is built on the principles that community comes first, everyone has a role to play, and we're all stronger together. Unlike systems that benefit only a select few, Millicent One is designed for the many — a platform that accrues value rather than extracts it, creating an environment where the tools for prosperity are accessible to everyone, everywhere.
This overview provides just a glimpse of Millicent One's capabilities. We invite you to explore the rest of our documentation for in-depth explanations, and ways you can get involved with the Millicent Movement.
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