STON.fi
Zero-Trust Cross-Chain DEXWhitepaper
Version 0.6

Aug 2023

STON.fi Whitepaper v. 0.6 / Aug 2023

ston.fi

1. Summary
2. Problem statement
3. Solution
4. Product4.1 Mission
4.2 Value proposition
4.3 Description
4.4 Principles
4.5 How it works
4.6 Benefits
4.7 Business model
4.8 Innovation
5. Technology
5.1 Trustless swaps with Hashed Timelock Contracts (HTLC)
5.2 RFQ Based cross-chain DEX
5.2.1 Protocol definition
5.2.2 Protocol fees
5.3 TON AMM DEX
5.4 Staking
6. Customers
6.1 Target customer segments
6.1.1 End-users
6.1.2 Professional market makers
6.1.3 Liquidity providers
6.1.4 Developers
7. Market
7.1 Industry overview
7.2 Market trends
7.3 Market size & opportunity
8. Competition
8.1 Competitive analysis
8.2 Differentiation
9. Regulatory environment
10. Milestones & timeline
10.1 Current state
10.2 Traction
10.3 Roadmap
11. Marketing strategy
11.1 Go-to-market plan
11.2 Promotion strategy
STON.fi Whitepaper v. 0.6 / Aug 2023

3
3
4
5
5
5
5
6
7
8
8
11
11
11
13
13
14
14
15
15
15
15
16
17
18
18
18
19
19
20
20
21
21
22
22
22
23
23
23
25
Page 1

12. Challenges and risks
13. STON.fi tokenomics
13.1 Initial allocation
13.1.1 STON token vesting
13.1.2 Distribution
13.2 Staking
13.2.1 ARKENSTON
13.2.1.1 Examples
13.2.1.2 Efficient calculation of exponent
13.2.2 GEMSTON
13.3 Protocol Fees
13.4 Deflationary model of STON token
14. STON.fi DAO
14.1 Principles
14.2 DAO Governance14.3 Governance process
15. Contacts
16. Conclusion
Appendix A1: RFQ protocol message flowchart

STON.fi Whitepaper v. 0.6 / Aug 2023

26
28
28
29
30
31
31
32
33
33
34
35
35
35
36
36
37
37
38

Page 2

1. Summary
The STON.fi platform revolutionizes the DeFi ecosystem by addressing critical interoperability
issues, enhancing security, and reducing transactional risks and costs. Today, transferring
assets across different blockchain networks involves significant challenges, including potential
financial loss due to reliance on third-party custodians, delays, security issues, and complex
user scenarios.
STON.fi is a Request For Quote (RFQ)-based cross-chain exchange that relies on Hashed
Timelock Contracts (HTLC) to atomically execute cross-chain swaps. This approach eliminates
the need for additional trusted entities and offers a combination of deep liquidity and pricestability usually associated with RFQ-based exchanges, alongside uncompromising security
typically found in intrachain DEXs. Since the protocol doesn’t make any trust assumptions forthe participants, we define it as a Zero-Trust Cross-Chain DEX.
The platform provides a straightforward, secure, and quick solution for swapping native tokens
across multiple blockchains without the need for bridging or wrapping. Additionally, STON.fi will
be seamlessly integrated into the Telegram messenger, enabling users to manage and tradeassets directly within the messaging app.

2. Problem statement
One of the main problems in the DeFi ecosystem is the lack of interoperability between different
blockchain networks. This presents a significant challenge for users looking to move their assets
between different networks to access new trading and investment opportunities.
The risk of losing assets during the transfer process is another significant challenge. Moving
assets between different blockchain networks require users to entrust their funds to third-party
custodians or exchanges, which can be vulnerable to security breaches and hacks. This puts
traders' funds at risk, potentially leading to significant financial losses.
The process of converting crypto assets can be costly and time-consuming, making it difficult forusers. The complexity of user scenarios may lead to accidental permanent loss of funds. The
flow may be interrupted by KYC/AML procedures and delayed without any user control.
Currently, traders use for cross-chain swaps various tools having their pros and cons:
Centralized Exchanges (CEXs), Bridges, DeFi Aggregators, etc. A product that solves all
mentioned problems will be more secure, reliable, and beneficial for all parties. So, it will bringunique value to the Web3 ecosystem.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 3

3. Solution
STON.fi addresses the cross-chain swaps problem by introducing the Request for Quote(RFQ)-based DeFi protocol with cross-chain swaps implemented via Hashed Timelock
Contracts (HTLC). Such a solution results in eliminating the need for second-layer solutions,intermediaries, or third parties. This approach minimizes user risk associated with security
breaches and significantly enhances the transaction speed.
In RFQ-based protocols, the traders express their intention to swap a specific amount of anasset for another one by sending a Request for Quote (RFQ) to Professional Market Makers(PMMs). PMMs respond to RFQ with signed Quotes, specifying swap rate and other conditions.
The best Quote is selected by the protocol according to predefined criteria and submitted to thetrader.
HTLC-protocols (also known as “Atomic swaps”) allow to exchange crypto assets atomically, i.e.
either both parties receive the intended amount of assets or the exchange fails entirely. In theevent of misbehavior by any of the participants, the transaction is canceled, and all involved
parties receive a full refund of their assets.
Both RFQ and HTLC protocols are described in detail in Chapter 5.
The HTLC based solution has the following main advantages:●

No additional trusted entities: service eliminates the need for protocol intermediaries ortrusted third parties, ensuring that the participants have full control and ownership of
their funds in used networks.

●

No accidental permanent loss of funds: at any moment, the user funds are controlled
only by the user and are not blocked in any intermediary protocol.

●

Guaranteed rates: the protocol offers guaranteed rates for transactions, ensuringtransparency and eliminating any surprises or unexpected fees. Users can confidently
calculate and predict the costs associated with their transactions in advance.

●

Predictable transaction time (no KYC): by removing the need for Know Your Customer(KYC) procedures, such a solution enables fast and predictable transaction times.
Additionally, transaction execution time is always predictable due to the HTLC protocol
used. Each transaction has a fixed execution time, depending on the specific blockchain
network.

●

Simple user scenarios: user-friendly interface and streamlined processes make it easy
for users to navigate and engage with the platform.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 4

4. Product4.1 Mission
Our mission at STON.fi is to make it easy and fair for everyone to access financial services, nomatter where they live. We're building a cross-blockchain decentralized platform that provides areliable and secure way to trade cryptocurrencies without the restrictions of banks or centralized
services. By offering a simple, user-friendly solution, we aim to help people around the world,
including those living in unbanked and underbanked regions, take control of their financial
future.
The first step towards achieving our mission is enabling people to seamlessly swap any crypto
asset for any other. We aim to provide a secure, reliable, swift, and cost-effective means ofconducting these cross-chain swaps. This capability forms the bedrock of our platform,
facilitating the fluid exchange of value across multiple blockchain ecosystems and laying thefoundation for a more inclusive financial landscape.

4.2 Value proposition
STON.fi provides a decentralized cross-blockchain platform that allows users to effortlessly
trade and gain yield on their crypto assets across multiple blockchains without the need forbridging or wrapping. Using the RFQ-protocol combined with HTLC smart contracts, leveraging
the power of the TON blockchain for speed and security, and integrating seamlessly with
Telegram messenger, STON.fi offers a user-friendly and accessible solution that empowers
individuals to manage their digital assets while maintaining full control.

4.3 Description
STON.fi, the next-generation cross-blockchain trading platform, is designed for the effortlessexchange of crypto assets across multiple blockchains without the need for bridging or
wrapping. STON.fi is a Request For Quote (RFQ)-based cross-chain exchange that relies on
Hashed Timelock Contracts (HTLC) to atomically execute cross-chain swaps. This approacheliminates the need for additional trusted entities and offers a combination of deep liquidity andprice stability usually associated with RFQ-based exchanges, alongside uncompromising
security typically found in intrachain DEXs.
We refer to this as a zero-trust cross-chain DEX because it operates on the principles ofzero-trust architecture and decentralization. It is designed to provide secure and transparent
peer-to-peer trading of digital assets without the need for a central authority or intermediary.
On such a DEX, to convert native tokens on one blockchain into native tokens on a different
blockchain, the user only needs to connect the necessary crypto wallets and execute thetransaction as if they were converting tokens on the same blockchain, without needing to trust

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 5

any third party, or make any assumptions about the trustworthiness of entities within a system.
All transactions and operations are verified and validated using cryptographic protocols andalgorithms, without relying on a centralized party to oversee or authenticate the transactions.
STON.fi will be seamlessly integrated into Telegram messenger, enabling users to manage andtrade assets directly within the messaging app. This integration will also open up possibilities forpeer-to-peer transfers of digital assets.
STON.fi also offers earning and yield-gaining options:
1. Provide liquidity and earn a share of protocol fees.
2. List and sell your tokens, create liquidity pools, and earn trading fees.

4.4 Principles●

Zero-Trust protocol

No trust assumptions can be made on behalf of participants about the trustworthiness of assets,blockchains and other participants of the protocol.
●

Truly decentralized, DAO-governed

STON.fi will be operated under a DAO governance model, ensuring major decisions are madeby the community and empowering stakeholders to shape the protocol's future development.
●

Catering to inexperienced users

While catering to both inexperienced and experienced users, we focus on democratizing accessto financial services for everyone, everywhere, in line with our mission.
●Developer-friendly and open-sourced when possible

We offer SDK and open-source code to enable developers to easily integrate our platform with
their products and services?
●

Prioritizing reputable projects

Though we are decentralized and open to everyone, including those who want to list their own
tokens, we prioritize working with reputable projects to minimize financial risks for inexperienced
users. DAO will make decisions on selecting specific projects.
●

Ecosystem impact

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 6

Our approach goes beyond developing our product; we also contribute to the growth of the TON
blockchain ecosystem and the broader DeFi landscape. We consider this impact while building
our product and devising our market and product strategy.

4.5 How it works
A typical user flow for using STON.fi can be described in the following steps, which are similar to
those found on any DEX:
1. Wallets connection
The user connects two wallets to access their token balances and authorize transactions. Unlike
a typical DEX, which requires connecting only one wallet, STON.fi calls for connecting two
wallets to enable cross-chain swaps.
2. Select trading pair
The user chooses the trading pair they want to exchange, such as swapping Token A for Token
B. These tokens may be on different blockchains.
3. Enter the desired amountThe user enters the amount of Token A they want to exchange for Token B, or vice versa.
STON.fi's protocol calculates the exchange rate and displays the estimated amount of Token B
the user will receive.
4. Review and confirm transaction
The user reviews the transaction details, including the exchange rate, any associated fees, andthe estimated amount of Token B to be received. If satisfied, the user confirms the transaction
using their wallet. Unlike a typical DEX that requires fees to be paid in native tokens (e.g., ETH
for swaps on the Ethereum blockchain), STON.fi intends to offer gasless transactions when thefee is deducted from the Token A amount. This eliminates the need to hold a native token in thewallet solely for paying gas. However, this feature will be possible only when the necessary
infrastructure, such as wallets, supports it.
5. Transaction processing
STON.fi processes the transaction through the routing mechanism.
6. Transaction confirmation
Once the transaction is complete, the user receives a confirmation and can view their updated
token balances in their connected wallet.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 7

4.6 Benefits
For end-users:●

Seamless cross-blockchain trading without bridging or wrapping.

●

Full control over crypto assets during transactions.

●Integration with Telegram messenger for easy access and user-friendly experience.

For professional market makers:●

Access to diverse markets●

Additional liquidity access●

Arbitrage opportunities without the need to maintain open positions in corresponding
assets●Reduced counterparty risks due to a trustless environment●

Increased trading opportunities profiting from spreads

For liquidity providers:●

Earn a share of exchange fees by providing liquidity.

●

Additional yield through staking tokens and earning liquidity mining rewards.

For developers:●

Access to SDK and open-source code for easy integration.

●

Leverage STON.fi DEX's cross-blockchain capabilities in their own projects.

●

Contribute to the development of a decentralized financial ecosystem.

●

Potential for increased adoption and visibility of their projects.

●

Opportunity to create liquidity pools for own tokens and earn trading commissions.

4.7 Business model
We are including a snapshot of our business model to demonstrate how STON.fi is integrated
within the crypto industry and how we engage with various stakeholders.
Key partners:

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 8

●

TON, TRON, Polygon, and other blockchain communities●

Professional market makers●

Liquidity providers (retail and institutional)●

Developers building on TON and other blockchains●

Token issuers●

Crypto-focused investment firms, traditional asset management firms, family offices, andother investment vehicles

Key activities:●

Developing and maintaining the cross-chain trading platform●

Integrating multiple blockchains●

Promoting the platform's trading opportunities and potential for yield growth●Establishing and maintaining relationships with market makers●

Providing SDKs and open-source code for developers●

Expanding the platform's features (e.g., limit order book, margin trading, gasless swaps)●

Fostering partnerships within the TON community and beyond

Key resources:●

Development team and technical expertise●

IT infrastructure●

Liquidity from providers●

Token and tokenomics●

Community support and network effects

Value propositions:●

Seamless cross-blockchain trading without the need for bridging or wrapping●

Fast, secure, and decentralized platform powered by the TON blockchain●

Integration with Telegram messenger for an enhanced user experience●

Multiple earning and yield-gaining options for market makers and liquidity providers

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 9●Developer-friendly platform with SDKs and open-source code

Customer relationships:●

Community-driven DAO governance model●

Developer support and collaborations●

Transparent communication with end users, market makers, liquidity providers, anddevelopers

Channels:●

STON.fi platform●

Partners●

Telegram integration●

Developer SDKs and open-source code●

Crypto and blockchain community social media

Customer segments:●

End users: crypto enthusiasts, traders, and individuals including those in unbanked orunderbanked regions●

Professional market makers●

Liquidity providers: retail and institutional investors●

Developers: creators of blockchain projects, developers building on TON and otherblockchains

Cost structure:●

Development and maintenance of the platform●

IT infrastructure●Marketing●

Security measures and audits●

Payouts to liquidity providers and stakers

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 10

Revenue streams:●

Trading fees generated by the platform

4.8 Innovation
The innovative and distinguishing aspect of STON.fi is addressing the cross-chain swaps
problem by implementing the Request For Quote (RFQ) DeFi protocol combined with Hashed
Timelock Contracts (HTLC). Such a solution allows the implementation of direct cross-chain
swaps and eliminates the need for intermediaries or third parties. This approach minimizes user
risk associated with security breaches and significantly enhances the transaction speed.

5. Technology
In this chapter, we explore the technologies, the existence of which make it possible to develop
trustless RFQ Based cross-chain DEX.
Section 5.1 reveals trustless swaps using Hashed Timelock Contracts (HTLC). HTLCs provide arobust and secure mechanism for executing cross-chain swaps without relying on
intermediaries, offering users the ability to trade directly across different blockchain networks.
In Section 5.2, we introduce the RFQ (Request for Quote) based cross-chain DEX, which
presents a novel approach to achieving asset transfers between blockchains. This section
provides an overview of the protocol, outlining its key features of enabling cross-chaintransactions without slippage.
Section 5.3 describes TON AMM DEX used for market making of STON token and as anadditional source of liquidity in the TON blockchain.
Section 5.4 explores the concept of staking as a mechanism for incentivizing active participationin protocol governance.

5.1 Trustless swaps with Hashed Timelock Contracts (HTLC)As mentioned before, STON.fi protocol uses HTLC,also known as Atomic Swaps.
HTLC exhibits two fundamental properties that ensure a secure and reliable exchange ofassets:●Atomicity: if all parties involved in the swap abide by the protocol, the transaction occurs
seamlessly. That is, either both parties receive the intended assets, or the exchange
fails.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 11●

Refundability: in the event of any misbehavior by any of the participants, the transaction
is canceled, and all parties involved receive a full refund of their assets.

These properties provide a reliable guarantee to users that their assets will remain safe
throughout the exchange. It is worth noting that most blockchains rely on digital signatures totrack the ownership of the coins. Thus, the proposed protocols for atomic swaps make use ofsmart contract capabilities.
Let’s define HTLCc(X,A,B,H,T) - Hashed Timelock Contract on Blockchain C that controls
deposit X and has following capabilities:●

Hash lock: if the secret pre-image S is exposed, so that H = Hash(S), the deposit
locked in the contract is transferred to address B.

●

Time lock: if the secret is not exposed before timeout T passed, the deposit can be
refunded to address A.

With these properties, the swap is considered trustless, in the sense that the participants don’t
need to trust their funds to any additional intermediary other than the blockchains on which they
have assets.
Let's review in more detail how it works:
Consider Alice, a user of blockchain C who desires to exchange X tokens with Bob, a user ofblockchain D, for Y tokens. We assume that a common cryptographic hash function Hash, isavailable on both blockchains. Alice controls wallet Ac on blockchain C and wallet Ad on
blockchain D. Similarly, Bob controls wallets Bc and Bd on respective blockchains. Furthermore,
Alice and Bob must agree on the timelocks T1 and T2, so that T1< T2., which are functions of theblockchains involved, block times, and confirmation times. For the sake of brevity and clarity, we
omit the signing of transactions in the description.
Setup:
1. Alice generates a secret pre-image S and calculates H=Hash(S).
2. She deploys the contract HTLCc(X,Ac,Bc,H,T2), funds it with deposit X and sends theaddress of the deployed contract to Bob.
3. Bob reads the contract's properties and verifies that HTLCc is properly constructed.
4. If it is valid, then Bob generates HTLCd(Y,Bd,Ad,H,T1)on blockchain D with the samehash lock h but with the time lock T1, funds it with deposit Y, and sends its address to
Alice.
5. Alice verifies that the HTLCd is properly constructed.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 12

6. If it’s valid, Alice supplies the secret s to the contract HTLCd and receives the deposit Y.
7. Bob monitors the blockchain D and once he sees the exposed secret S, he supplies it to
HTLCc and receives deposit X.
Refunds:● If Bob on Step 3 decides that HTLCc is invalid, he doesn’t deploy the contract and Alicegets the refund of deposit X after T2 passes.
●

If Alice on Step 5 decides that HTLCd is invalid, she doesn’t expose the secret S. In thatcase Bob gets the refund after T1 passes, and Alice gets the refund after T2 passes.

5.2 RFQ Based cross-chain DEX
To enable the implementation of decentralized exchanges based on the Request for Quote(RFQ), three key actors are involved:●●●

Traders
Professional Market Makers (PMMs)
The Protocol

5.2.1 Protocol definition
Let's define the process of a trade. The Trader wants to sell the amount x of asset X on thesource blockchain C and get asset Y in the target blockchain D in return. The Trader has
preconfigured crypto wallets Ac and Ad on these blockchains.
The trading process involves the following steps:
1. The trader initiates the trade request through the user interface (UI). This request is sent
to the Protocol in the form of RFQ and contains information about blockchains, assets
and wallet addresses.
2. The Protocol forwards the RFQ to the PMMs together with expiration timeouts T1, T2 andother blockchain-specific protocol settings.
3. The PMM receives the RFQ and either replies with the Quote or passes on the request.
The Quote contains the amount y of asset Y they are willing to offer in return for theasset X, alongside with the addresses of wallets Bc and Bd operated by the PMM.
4. The protocol selects the best Quote based on the amount y of asset Y and otherconfigurable conditions and communicates the Quote to the Trader together with
expiration timeouts T1, T2.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 13

5. If the Trader accepts the quote, they generate secret pre-image S and calculate
H = SHA256(S). After that, they create a transaction that deposits amount x of asset
X into the HTLCc(x,Ac,Bc,H,T2).
6. The Protocol monitors the blockchain C, and once it sees the transaction initializing
HTLCc, it sends the deposit notification to the PMM.
7. The PMM creates a transaction that deposits the amount y of asset Y into the
HTLCd(y,Bd,Ad,H,T1).
8. The Protocol monitors the blockchain D, and once it sees the transaction initializing
HTLCd, it sends the deposit notification to the Trader.
9. The Trader generates a transaction on blockchain D that exposes the secret pre-image S
and claims the deposit y.
10. The Protocol notifies the PMM that the secret S has been exposed.
11. The PMM generates a transaction on blockchain C that exposes the secret pre-image S
and claims the deposit x.
The message flowchart for trade is presented in Appendix A1.

5.2.2 Protocol fees
The protocol fees for the trades are deducted from Trader’s deposit and collected on HTLC
contracts on source blockchain. The PMMs receive fee settings for specific trade together with
RFQ and calculate quotes taking fees into account.
The blockchain fees are paid by the participant that generates the corresponding transaction.

5.3 TON AMM DEX
We have implemented AMM DEX mechanics on the blockchain TON to provide an opportunity
to trade tokens, the liquidity of which cannot be provided by PMMs, and to implement STON
token liquidity pool and staking.
In AMM DEX, users provide liquidity to the platform by depositing cryptocurrencies into liquidity
pools, which are then used to facilitate trades between tokens.
The price of tokens is determined by the ratio of tokens in the pool, rather than by order books
or bid/ask spreads. This allows for peer-to-peer trading of cryptocurrencies without the need fora central authority or order book.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 14

The STON.fi AMM DEX protocol is a set of main smart contracts on the TON blockchain. Read
more about AMM architecture on our documentation portal.

5.4 Staking
Staking is a mechanism that enables users to actively participate in protocol governance (DAO)
and contribute to the overall functioning of the protocol.
Protocol governance refers to the decision-making process involved in managing the protocol
through governance tokens. These governance tokens are distributed among staking
participants, providing them with the power to make decisions and proposals.
Participants gain the opportunity to engage in protocol governance while earning rewards in theform of additional tokens.
To stake tokens and participate in protocol governance, users lock up their tokens by depositing
them into a smart contract. This smart contract acts as an automated system that ensures theintegrity of the staking program.
The smart contract determines the distribution of rewards among participants and the time stepover which these rewards will be disbursed. Rewards are distributed depending on the total
tokens staked by each participant and also consider the duration of the staking period.
When tokens are staked, the staking contract mints governance tokens and sends them to theuser.
At the end of the staking period, smart contract allows the user to unstake tokens. Upon
unstaking the governance tokens becomes inactive.

6. Customers
6.1 Target customer segments
6.1.1 End-users●

General description:

Individuals who are interested in managing and trading their crypto assets across multiple
blockchains in a decentralized, secure, and user-friendly environment. These users may havevarying levels of experience with cryptocurrencies, from beginners to experts.
●

Location:

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 15

Worldwide, including those living in unbanked or underbanked regions, where access to
traditional banking systems is limited or unavailable, driving the need for alternative financial
solutions like cryptocurrencies.
●●●

Use cases:○

Trading cryptocurrencies.

○

Sending money to peers in the form of cryptocurrencies or directly within amessenger app.

Needs and goals:○

Explore and obtain additional sources of income, such as holding, trading, andarbitraging cryptocurrencies.

○

Feel connected and be part of technological innovations, including those that
democratize access to the financial system.

Behavioral patterns:○

The target users predominantly rely on mobile devices rather than desktop
computers or laptops, which influences their behavior patterns and preferences.
They extensively use messaging apps.

6.1.2 Professional market makers●

General description:

Professional traders, investment firms, or financial institutions standing ready to buy or sell
assets at quoted prices.
●

Needs and goals:○

Access broad markets to diversify their operations and manage risks.

○

Find profit opportunities from the spread between buying and selling prices ofassets.

○Develop reliable trading infrastructure to execute trades quickly and manage theirpositions effectively.

○

Access additional liquidity for better arbitrage opportunities.

○

Lower counterparty risks to enhance their operational security.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 16

6.1.3 Liquidity providers
General description:
Both retail and institutional participants who seek to earn additional profits on their crypto assets
beyond holding and capitalizing on their price growth. These are individuals and businesses
focused on expanding their presence within the decentralized finance (DeFi) space.
Retail liquidity providers:●Largely similar to the end-user profile, but typically possessing higher amounts of crypto
assets.

●Individuals with varying levels of experience in cryptocurrencies, interested in exploring
additional income sources by providing liquidity to the platform.

●

Willing to diversify their crypto holdings and engage in multiple blockchain ecosystems.

●

Appreciate the user-friendly experience and seamless integration with Telegram
messenger, which caters to their mobile-first behavior patterns.

●

Motivated by earning opportunities such as getting a share of exchange fees andliquidity mining rewards.

Institutional liquidity providers:●●●

Dedicated liquidity providers:○Businesses specializing in providing liquidity to various platforms, aiming to earnyield on their assets.

○

Focused on identifying and participating in platforms with high growth potential tomaximize returns.

Crypto-focused investment firms:○

Interested in diversifying their asset portfolios across multiple blockchain
ecosystems.

○

Seeking additional drivers for growing their assets by providing liquidity.

○

Keen on forming partnerships within the growing TON community.

Traditional asset management firms, family offices, and other investment firms:○

Managing substantial portfolios and interested in diversifying their investments
into the crypto industry.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 17

6.1.4 Developers
They primarily focus on building their own projects on TON and other blockchains. Developers
require funding to support their projects' growth and development, and actively explore
additional or alternative sources of funding beyond traditional methods like venture capital.
Thus, they are interested in creating and launching their own tokens as a means of raising funds
for their projects.

7. Market
7.1 Industry overview
Decentralized finance (DeFi) has become increasingly popular in recent years. According to the
DeFiLlama aggregator, as of May 1, 2023, the TVL volume amounts to $49.88 billion, which isalmost 100 times higher than three years ago. This growth is a clear indication of the increasing
demand for DeFi services.
The range of financial instruments available in DeFi is expanding every year, and in 2023 it
includes not only decentralized exchanges but also lending protocols, bridges, CDPs
(collateralized debt protocols), liquid staking protocols, insurance, liquidity aggregators,
launchpads, NFT marketplaces, derivative protocols, and decentralized storage. This variety of
protocols is a reflection of the crypto community's interest in decentralized services that work ina trustless format.
As a result of this demand, the DeFi market is constantly evolving. New protocols are being
developed and existing ones are being improved to meet the expectations of users. For
example, there is now a growing interest in decentralized cross-chain exchanges. While
THORSwap was the pioneer in this area, it created its own blockchain to implement swaps
between blockchains. Interswap, on the other hand, is developing its solution based on Layer
Zero, an omnichain interoperability protocol for the cross-chain applications. STON.fi is also
developing cross-chain exchange functionality based on its own infrastructure on TON
blockchain.
However, it should be noted that the cross-chain exchange segment in DeFi still has a huge
growth potential with a number of protocols remaining small. Currently, multiple companies areworking on cross-chain functionality, including Circle and Hashflow. This is a clear indication of
the growing demand for decentralized cross-chain solutions. It is likely that we will see more
projects in this area in the near future.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 18

7.2 Market trends
After the FTX crash in 2022, a significant number of crypto traders started looking fordecentralized solutions to trade with. This was seen as a natural response considering the highlevel of trust and transparency offered by decentralized exchanges. In addition, many users
were concerned of the risks of hacks and loss of funds on centralized exchanges. As a result,
DEX trading gained significant momentum, and trading volumes on decentralized platforms
began to show stable growth.
Despite the initial skepticism, decentralized exchanges are becoming closer to centralized onesin terms of functionality and user experience (UX). More and more DEX platforms are offeringfeatures usually found in CEXes, such as limit orders, margin, and futures trading.
●

There is also an increasing level of regulation of cryptocurrencies by regulatory bodies
such as the SEC and CFTC, especially centralized exchanges and stablecoins. This ispushing users towards DeFi, as it offers more flexibility and freedom in trading,borrowing, and lending. DeFi is also gaining popularity as it is seen as a more secureand transparent way to transact value without intermediaries.

The following trends can also be noted in DeFi:●

Emergence of Cross-Chain DeFi: DeFi protocols are increasingly exploring cross-chain
solutions that allow users to move their assets between different blockchain networks.
This is important because it increases liquidity and reduces the risk of being locked intoa single blockchain.

●

Growth of NFTs: Non-fungible tokens (NFTs) have exploded in popularity in recent years,
and this trend is expected to continue. DeFi protocols are increasingly integrating NFTs
into their platforms, allowing users to use them as collateral, earn interest on them, and
more.

●

Increasing Focus on Security: As DeFi continues to grow, security has become anincreasingly important concern. DeFi projects are investing heavily in security measures
such as audits, bug bounties, and insurance to protect users' funds from hacks andexploits.

7.3 Market size & opportunity
We define TAM (Total Addressable Market) as the total fees earned by all types of crypto
exchanges because it is the main source of revenue for trading platforms.
The daily average trading volume on crypto markets according to Coinmarketcap is around $45
billion, the yearly amount is approximately $16.5 trillion. The average commission is 0.3% (Theaverage fee, cents to a few dollars.). Therefore, the TAM can be estimated as $49.5 billion.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 19

We define SAM (Serviceable Available Market) as the total fees earned by cross-chain
protocols.
Annual volume of cross-chain operations is estimated at $1-4 trillion. The average market fee inthis case is 1%. With this calculation, the SAM amounts to $10-40 billion. By 2027, according toforecasts, the volume of the cross-chain transactions market will reach $4-12 trillion, whichcorresponds to a SAM of $40-120 billion.

8. Competition
8.1 Competitive analysis
In considering the competitive landscape for our product, it's essential to view competition in a
broad sense. Users have various options to perform cross-chain token swaps, both centralized
platforms and decentralized. Here is a list of alternative solutions that users might consider
when looking to exchange tokens between different blockchains:●

Centralized exchanges (CEXs)

Users can trade tokens on centralized platforms like Binance, Coinbase, Kraken, and others.
Although these platforms support various blockchains, users need to trust the centralized entitywith their funds and personal information.
●

Bridges and wrapped tokens

Users can convert native tokens into wrapped tokens on another blockchain. This requires
trusting a custodian to hold the original tokens and using bridge services to facilitate the swap●

Cross-chain DEXs

Platforms like THORSwap, Hashflow, or Symbiosis have their own unique features andecosystems, offering users a variety of options for their cross-chain trading needs. The primarydrawback of these protocols is the introduction of trusted entities, like oracles for cross-chain
messaging. These trusted entities are the main vector of attacks on these protocols making
them vulnerable to hacks.
●

DeFi Aggregators

Projects like OpenOcean allow to perform cross-chain swaps using third-party DeFi protocols,
inheriting trust assumptions of underlying protocols. While allowing the user to choose an
optimal swap route in terms of price, they usually don’t provide the user with a clear estimationof security risks and price slippage risks.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 20

●

Multi-chain wallets

Wallets like Exodus or Atomic Wallet support multiple blockchains and offer built-in exchangefeatures. Users can easily swap tokens between different networks, but they may not always get
the best exchange rates or the lowest fees.

8.2 Differentiation
Differentiation from substituting solutions:Category

How STON.fi is different

Centralized exchanges (CEXs)●●●

Atomic transactions
Trustless
Guaranteed rates

Bridges●●●

No long-term exposure of bridged assets to security risks
TrustlessWide range of assets

Cross-chain DEXs●●

TrustlessWide range of assets

DeFi Aggregators●●

Trustless
No price slippage

Multi-chain wallets●●

Trustless
Lower fees

Table 1. STON.fi differentiation

9. Regulatory environment
Neither the company nor the owners can access the user's assets. The token swap protocols of
STON.fi are ownerless and non-custodial. Therefore, AML and KYC regulations do not apply.
Behind the STON.fi protocols, there's a Decentralized Autonomous Organisation (DAO), themembers of which vote for the protocol's strategy (the principles of its work, fee rates, etc.) andmanage the Treasury (e.g., issue grants) in a decentralized way.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 21

10. Milestones & timeline
10.1 Current state
At the current state, STON.fi is an AMM DEX built on the TON blockchain.
In creating the DEX we achieved the following main features:●

Made it possible to directly swap Toncoin for any token on the TON blockchain.

●

Liquidity providing.

●Integrated all the most popular wallets from the TON ecosystem.

●

Created a Software Development Kit (SDK) that enables any project or product to easily
integrate DEX functionality into their application.

●

Started a bug bounty program.

●

Published the source code of DEX core smart contracts.

●

Launched STON token.

Our current focus is on developing the cross-chain RFQ-based DEX.
Cross-chain technology will enable our protocol to provide seamless cross-network operations
between the TON and TRON networks initially, allowing for the transfer of assets and data
between the two networks.
We aim to create a seamless and interconnected decentralized finance landscape that will begoverned by our STON token.

10.2 Traction
Since STON.fi launched in November 2022, we have made significant progress in various fields:●

Made a lot of partnerships and integrations with other projects from the TON ecosystem.

●

Built a large and active community around our product. Over 80,000 community
members actively participate in discussions, provide feedback, and support the growth of
our protocol.

●

Started an incentives program. About 40,000 people participated through our Telegram
bot in our activities.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 22

10.3 Roadmap
Q2 2023●●

STON token launch.
Integrated swaps in wallet. Swaps with STON.fi available in the major wallet in TON
ecosystem.

Q3 2023●

Cross-chain swap TON <-> TRC20 USDT. Swaps between TON and TRON USDT will
be available on DEX without bridges and wrapped tokens.

Q4 2023●●●

EVM chains: Ethereum, BNB, Polygon, etc. Integrate more networks in the
cross-chain protocol.
DAO launch. Launch DAO governance platform.
Referral system. Launch a referral program for user acquisition.

2024●

Telegram Web Application. Develop a native bot in Telegram with user-friendly UI toprovide all Telegram users with the full cross-chain utility of a STON.fi DEX.

11. Marketing strategy
11.1 Go-to-market plan
STON.fi is currently operating as a TON-based DEX, allowing users to trade TON-based assets
and add them to liquidity pools. Our upcoming plans include introducing TON-TRON cross-chain
swaps, which will expand our reach to additional customer segments interested in exchanging
TON and TRON-based assets. Following this, we aim to further extend our platform byintegrating other blockchains.
2023 go-to-market plan overview: focusing on the TRON blockchain
1. Market and customer research●

Conduct further thorough research on the TON and TRON blockchain ecosystems andtheir respective user bases.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 23

●

Identify target customer segments, such as end users, liquidity providers, anddevelopers, as well as their specific needs, preferences, and potential use cases
focused on TON-TRON cross-chain swaps.

2. Product development and testing●●●Continue to develop the product, focusing on seamless integration of TON-TRON
cross-chain swaps.
Conduct extensive testing of the cross-chain swaps feature to ensure security, reliability,
and user-friendliness.
Develop and introduce a cross-chain SDK for developers.

3. Marketing●●●

Develop and implement a comprehensive marketing strategy and a promotion plantargeting TON and TRON blockchain users.
Leverage social media, content marketing, and public relations to build awareness andgenerate buzz around the upcoming cross-chain swap feature.
Collaborate with influencers and thought leaders in the TON and TRON ecosystems topromote the STON.fi DEX.

4. Partnerships and integrations●●

Continue to establish strategic partnerships with key players in the TON and TRON
ecosystems, such as token issuers, infrastructure and applications developers, wallet
providers, and other DeFi projects.
Work closely with developers to support the integration of the STON.fi DEX into theirprojects, leveraging the SDK and open-source code.

5. Launch and onboarding●●

Roll out the TON-TRON cross-chain swaps feature and provide support materials to
educate users on its benefits and usage.
Offer incentives, such as limited-time promotions or rewards, to encourage users to try
the cross-chain swaps feature and provide liquidity.

6. Post-launch support and improvement●●●

Collect feedback from users and monitor the performance of the new cross-chain swaps
feature to identify areas for improvement.
Provide customer support to address any issues or concerns that users may have.
Continue to develop the platform's features and improve user experience based on user
feedback and market trends.

7. Community building and transition to DAO governance

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 24

●●●Continue to develop an engaged community around the STON.fi platform.
Launch DAO and encourage users and community to participate in decision-making
processes through the DAO governance model.
Organize offline and online events to educate users on the platform's features andempower them to contribute to its future development.

8. Ongoing marketing and growth initiatives●●

Continue to promote STON.fi through various channels, targeting new customer
segments and expanding its reach within the DeFi space.
Monitor the competitive landscape and adapt marketing strategies to maintain and growthe platform's user base and market share.

9. Expansion to additional blockchains●●

After successfully implementing and introducing to the market the TON-TRON
cross-chain swaps, begin working on integrating additional blockchains, such as Polygon
and other EVM-compatible networks.
Promote the expanded cross-chain trading capabilities to attract users and liquidity
providers from these new ecosystems.

11.2 Promotion strategy
The promotion strategy includes now and will include in the future the following key elements:●

Content marketing

Create informative and engaging content to educate users about DeFi, DEXs, and the benefitsof using STON.fi's cross-blockchain trading solution, as well as content targeting specificsegments like end-users, liquidity providers, and developers. This includes blog posts, articles,interactive long reads, and tutorials.
●

Social media marketing and community management

Leverage social media platforms like Telegram, Twitter, Reddit, and Discord to engage with thecommunity, share updates, and provide customer support. Participate in discussions andanswer questions to establish STON.fi as a thought leader in the industry.
●

Influencer marketing

Partner with prominent crypto influencers to review and endorse STON.fi, increasing brandvisibility and credibility among the target audience.
●

PR and media outreach

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 25

Share important product updates with prominent crypto media outlets to gain coverage andreach a broader audience.
●

Event sponsorship and participation

Attend and sponsor industry offline and online events, conferences, webinars, and hackathons
to engage with the community and demonstrate STON.fi's expertise in the field.
●

Strategic partnerships

Form partnerships with reputable projects within the TON and other blockchain ecosystems tofurther drive adoption and integrate STON.fi into their platforms.
●

Referral and incentive programs

Implement referral programs and incentives for users who bring new participants to the platform,
creating a network effect and promoting organic growth.
●

Search engine optimization

Optimize the STON.fi website for search engine visibility to reach potential users actively
searching for blockchain trading solutions.
●Search engine marketing and targeted advertising

Research and, when possible due to regulation, run targeted paid advertising campaigns.

12. Challenges and risks●

Regulatory challenges

As a decentralized financial product, STON.fi may face regulatory restrictions in different
jurisdictions.
●Competition

The DeFi and DEX space is highly competitive, with many established and emerging players.
●

Security risks

As with any financial product, especially in the crypto space, there are potential security risks,such as hacks or exploits.
●

User adoption

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 26

It may be a challenge to convince users to try and adopt STON.fi, especially those who are new
to the DeFi space or already using other platforms.
●

Technical challenges

Implementing cross-chain functionality and integration with different blockchains, such as
TRON, Polygon, and others, can be technically challenging, and any issues or delays could
impact user experience and adoption.
●

Market volatility

The cryptocurrency market volatility can create uncertainty for users and affect the value of
assets traded on the platform.
●

Governance risks

As a DAO-governed platform, decision-making and platform development could be slower orless efficient than a centralized model, and there is a risk of disagreements within thecommunity affecting the platform's growth and direction.
How we are going to address these challenges and risks:

Challenges
and risksWays to mitigate

Regulatory
challenges

Regulatory compliance Stay informed about regulatory changes and work closelywith legal experts to ensure compliance in different jurisdictions.

Competition

Competitive differentiation Continuously improve the platform's features, user
experience, and cross-chain capabilities to stay ahead of the competition. Focus on
unique selling points, such as seamless integration with Telegram and an emphasis onserving unbanked and underbanked users.

Security risks

Robust security measures Implement and maintain strict security measures to protect
users' assets. Regularly conduct external audits and penetration tests.

User
adoption

Marketing and education efforts Develop targeted marketing campaigns to attract
new users and raise awareness of STON.fi's features and benefits. Provide educational
resources to help users understand the platform and the advantages it offers overcompetitors.

Technical
challenges

Technical expertise Continue building a strong technical team to address thechallenges of implementing cross-chain functionality and integrating with various
blockchains. Continuously improve the platform's performance and scalability to ensure
a seamless user experience.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 27

Challenges
and risksWays to mitigate

Marketvolatility

Risk management Develop strategies to mitigate the impact of market volatility on theplatform and its users. Offer educational resources to help users understand andmanage the risks associated with trading cryptocurrencies.

Governancerisks

Efficient governance Establish clear governance processes and mechanisms toensure efficient decision-making within the DAO. Encourage active participation fromthe community. Address potential disagreements by promoting open communicationand transparency in decision-making processes.

Table 2. Challenges and risks

13. STON.fi tokenomics
The protocol introduces the utility token STON on TON Blockchain integrated into the coremechanics of the protocol. STON token also allows its holders to participate in the protocol
governance and vote through long-term staking.
The STON token has a deflationary model, so token supply is limited to initial minting and STON
minter smart contract guarantees that minting of additional tokens in the future is prohibited. The
STON tokens will be burned over time, reducing total supply. The additional utility of STON
token, such as fees reduction for token holders is determined via DAO governance process.
More details on token redistribution over time can be found in Section 13.3.

13.1 Initial allocation
The initial supply of STON is 100M tokens. It is distributed among all key areas with a main
focus on providing tokens to the community via DAO:●DAO Allocation: 50% of STON tokens. Includes DAO-governed treasury, incentives
program, marketing activities, and operations.

●

Team & Advisors: 19% of STON tokens. Distributed to founders, team, and advisors.

●

Investors: 31% of STON tokens. Distributed to pre-seed investors and private roundinvestors.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 28

Figure 1. STON token distribution chart

13.1.1 STON token vesting
A lock-up is a period of time, when an individual receiving the tokens is not allowed to sell ortransfer them. At the end of the lock-up period, the share of tokens specified in the “Initialunlock” column is immediately vested. The remaining tokens are linearly unlocked over thevesting period that starts immediately after the lock-up period.

Category

TokensPercent

Lock-up

Initial unlock

Vesting

DAO Treasury

20,000,000

20%

0

100%

stakedIncentives

10,000,000

10%

0

0

60

Marketing

10,000,000

10%

0

20%

36

Operations

10,000,000

10%

0

40%

60

Pre-seed

21,000,000

21%

12

0

24

Team

14,000,000

14%

24

0

24

Private Sale

10,000,000

10%

12

0

24

Advisors

5,000,000

5%

12

0

24

Table 3. STON vesting

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 29

The emission chart of STON token:

Figure 2. STON emission chart

13.1.2 Distribution●

DAO Treasury — 20M tokens, staked. This is the share provided to cover the initiatives
to modernize the protocol. The share is staked for a period of 24 months, after which it
can be partially unstaked and used at DAO discretion.

●

Incentives — 10M tokens, linear vesting over 5 years. DAO-controlled token pool thatcan be used to boost protocol usage. Might include referral incentives, liquidity mining,fee compensation and other mechanics at DAO discretion.

●

Marketing — 10M tokens, 2M tokens immediately available, 8M tokens are vested over 3
years. Token reserve for marketing activities operated by DAO. Includes airdrops,
marketing campaigns, etc.

●

Operations — 10M tokens, 4M tokens immediately available, 6M tokens are vested over
5 years. Funding of operational activities for protocol development and maintenance.
Includes liquidity provision to CEXs and DEXs.

●

Pre seed — 21M tokens, 12-months lock-up and linear vesting over 2 years. The shareof STON.fi pre-seed investors.

●

Team — 14M tokens, 2-year lock-up and linear vesting over 3 years. The share of
STON.fi founders, employees and future employees.

●

Private sale — 10M tokens, 1-year lock-up and linear vesting over 2 years. The share of
STON.fi private round investors.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 30

●Advisors — 5M tokens, 1-year lock-up and linear vesting over 2 years. The share of
STON.fi current and future advisors.

13.2 Staking
In addition to the primary STON token, the protocol introduces two special tokens:●

ARKENSTON: Soul-bound non-fungible governance token.

●

GEMSTON: Treadable fungible engagement token.

Figure 3. STON token staking
When staking STON tokens, they are locked for a period from 3 up to 24 months. Upon staking,
the ARKENSTON soul-bound NFT that allows to participate in DAO is minted on staker’s wallet.
The staking reward in the form of GEMSTON tokens is also minted and immediately funded to
staker’s wallet.
The voting power granted by ARKENSTON and the amount of GEMSTON tokens depend on
the amount of STON staked and the duration of lock-up period.
The staking contract allows to restake already staked STON to prolong staking period. The
voting power of ARKENSTON will be updated to match the new lock-up period. The user will
also receive GEMSTON for the extension of staking period.

13.2.1 ARKENSTON
ARKENSTON is a governance token that grants its holder the right to participate in thedecision-making process of the STON.fi protocol.
The ARKENSTON tokens are funded to staker’s wallet in the form of soul-bound NFT on TON
Blockchain, so these tokens can’t be transferred to another wallet. The ARKENSTON tokens
represent voting power and allow token holders to propose, discuss, and vote on changes to theprotocol's parameters, such as fee structures, new features, upgrades, or changes to theunderlying smart contracts. By holding governance tokens, users can actively shape thedirection and governance of the protocol.
The voting power of ARKENSTON is calculated according to the following equation:
STON.fi Whitepaper v. 0.6 / Aug 2023

Page 31(𝑇𝑐 − 𝑇0 + 𝑡)

𝑉𝑜𝑡𝑖𝑛𝑔 𝑃𝑜𝑤𝑒𝑟 = 𝑋 * 𝑏where 𝑋 is the amount of staked STON, 𝑡 is lock-up duration in seconds, 𝑇𝑐 is the current
timestamp in seconds, 𝑇0 is the origin timestamp in seconds, 𝑏 is exponent base ( 𝑏 > 1 ) and𝑉𝑜𝑡𝑖𝑛𝑔 𝑃𝑜𝑤𝑒𝑟 is the amount of funded ARKENSTON. In the user's interface, the voting power isexpressed as the share of total voting power.
The above mechanic allows users who stake at later dates to receive more voting power thus
relative voting power of older stakes effectively decays exponentially as new stakes are
introduced in the system.
In the context of a DAO, exponential decay refers to a mechanism that gradually reduces theinfluence or voting power of individual participants over time.
Exponential decay is introduced to ensure that the decision-making process remains dynamic
and responsive to changing circumstances, while also preventing abuse of the decision-making
system by ensuring that the voters participating in DAO have long-term exposure to the value of
STON token.
The staking contract allows to incentivize holders of ARKENSTON tokens in an arbitrary token
proportionally to the voting power of ARKENSTON. These mechanics might be enabled in the
future at STON.fi DAO discretion.
The exponent base 𝑏 is calculated such that the voting power of a stake decreases 4 times eachyear and can be found by solving the following equation.
𝑙𝑛 ( 𝑏 ) = 𝑙𝑛 ( 4 ) ⁄ ( 3600 * 24 * 365 + 6 * 3600 )The exponent base 𝑏 is equal to:𝑏 ~ 1. 000000043929018416

13.2.1.1 Examples
Let's consider 𝑇0 = 0 and 3 users staking 100 STON at different 𝑇𝑐 for different 𝑡 (month isequal to 2629800 seconds in this example):●

User1 stakes at 𝑇𝑐 = 0 for 𝑡 = 24 𝑚𝑜𝑛𝑡ℎ𝑠 and receives 1576 voting power●User2 stakes at 𝑇𝑐 = 12 𝑚𝑜𝑛𝑡ℎ𝑠 for 𝑡 = 12 𝑚𝑜𝑛𝑡ℎ𝑠 and receives 1576 voting power●

User3 stakes at 𝑇𝑐 = 24 𝑚𝑜𝑛𝑡ℎ𝑠 for 𝑡 = 5 𝑚𝑜𝑛𝑡ℎ𝑠 and receives 2803 voting power

As we can see, users with the later stake date receive exponentially more voting power thus
decreasing the relative voting power of previous stakes.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 32

13.2.1.2 Efficient calculation of exponent𝑘

The exponentiation algorithm operates on binary-represented integer numbers and thus uses 2- ary exponentiation algorithm is implemented according to the following formula:𝑥30[𝑙𝑜𝑔2( 𝑥 )](𝑏 = ∏ 𝑠𝑔𝑛 (

∑

𝑖=0

𝑛=0

𝑖

𝑛
𝑥
2
2 ( ⎡⎢ 𝑛 ⎤⎥ 𝑚𝑜𝑑2 ) ( ⎡⎢ 𝑛 ⎤⎥ 𝑚𝑜𝑑2 ) ) * 𝑏( 𝑖 )
⎣2 ⎦
⎣2 ⎦

𝑏( 𝑖 ) =(𝑏( 𝑖 − 1 ) *𝑏( 𝑖 − 1 )
18

10

18

18

,

)

The value of the 𝑏( 0 ) is calculated from 𝑏 by multiplying it by 10𝑏( 0 ) = 𝑏 * 10)and turning it into an integer.

= 1000000043929018416

Due to the finite size of the array of exponentiation the described above function will work
correctly for values of exponent less than 68 years.

13.2.2 GEMSTONGEMSTON is an engagement token used to incentivize active participation in the STON.fi
protocol.
The GEMSTON tokens are funded to staker’s wallet in the form of fungible tokens on TON
Blockchain and can be freely transferred, traded, or held at staker’s discretion.
The number of GEMSTON that are rewarded is calculated according to the following equation:
𝑌 = 𝑋 * 𝑚𝑖𝑛(𝑡, 𝑇) / 𝑇
where 𝑋 is the amount of staked STON, 𝑡 is lock-up duration in seconds, 𝑇 is number of
seconds in the 2-year period and 𝑌 is the amount of funded GEMSTON. So, the longer the
lock-up period, the more rewards and voting power are provided:
Lock period

GEMSTON per STON

3 months

0.125

6 months

0.25

12 months

0.5

24 months

1

Table 4. STON token rewards amount depending on lockup duration

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 33

The supply of GEMSTON tokens is theoretically unlimited and STON.fi DAO is motivated to
introduce various mechanics that permanently remove GEMSTON tokens from circulation andincrease demand for these tokens.
We deliberately don’t provide detailed description of possible use cases for GEMSTON tokens
with a goal to engage the community in open discussion of GEMSTON utility.

13.3 Protocol Fees
Protocol fees are deducted from all trades on the STON.fi DEX. Specific mechanics depend on
protocol type (RFQ or AMM) and the blockchains of trade.
STON.fi protocol implements a means to automatically convert all collected fees to STON
tokens on TON Blockchain and redistribute them according to DAO decisions. The architectureof fee distribution smart contracts is demonstrated below:

Figure 4. Fee distribution chart
The following smart contracts are used for fee distribution:●

Fee converter: receives protocol fees in various tokens and converts them to the STON
token using RFQ DEX and liquidity pools on STON.fi AMM DEX.

●

Fee distributor: collects all fees in the form of STON token on TON Blockchain anddistributes them to one or multiple destinations in accordance with DAO-controlledparameters.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 34●Burn contract: burns all incoming STON tokens thus reducing supply and increasing
demand for these tokens.

●

Other destinations: The Fee Distributor contract might transfer part of the fees to othersmart contracts at DAO discretion effectively allowing to extend the protocol with various
mechanics like staking rewards, liquidity mining, etc.

13.4 Deflationary model of STON token
STON token has a deflationary model, which refers to an economic model where the supply of
tokens gradually decreases over time. This reduction in supply is achieved via buyback andburning of tokens.
STON tokens buyback is a process of converting all protocol fees to STON tokens from theopen market. Part of these bought-back tokens is burned, effectively reducing the circulating
supply and making remaining tokens more valuable.
The combination of token buybacks and burning aims to achieve a deflationary effect byreducing total supply of tokens over time and thus increasing demand.

14. STON.fi DAO
The DAO Governance allows DAO members to create and vote on proposals related to the
STON.fi protocol updates, adding new networks, fee models, and asset additions/removals.
The STON.fi protocol becomes more flexible and responsive to market demands. Additionally,
incorporating governance ensures that changes are made transparently and democratically.

14.1 Principles
As with any organization that is 'built to last', the DAO sets forth a set of inalienable principles
that guide overall strategy along with the individual activities of members.
●

Transparency: provides open communication channels to ensure all stakeholders canaccess information and participate in decision-making processes.

●

Decentralization: aims to distribute decision-making power across its members, avoiding
centralization of power and control.

●

Accountability: holds its members and decision-makers accountable for their actions,with processes for addressing violations or conflicts of interest.

●

Flexibility: aims to adapt and evolve as the DEX protocol and its ecosystem change.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 35●

Efficiency: aims to structure to make decisions in a timely and efficient manner.

●

Sustainability: aims to ensure the long-term sustainability and growth of the STON.fi
protocol and its ecosystem.

14.2 DAO GovernanceMembers of the organization will decide on the development of STON.fi. The organization aims
to promote the growth and development of the platform and its community.
The governance process will be voted on by STON token stakers. STON.fi Development LLC
will be responsible for the direct development of the project with token compensation from theDAO.
DAO members may vote for the following changes:●

Asset Listing/Delisting. To list a new asset, users need to make a special proposal. If
the proposal gets enough votes, the token will be added to the protocol●

Support new blockchain. A community can add a new blockchain to the protocol byvoting. The new blockchain needs software that connects it to STON.fi protocol, andSTON.fi Development LLC is responsible for developing this software.

●

Protocol Updates. Community members can propose new protocol features throughvoting. If the proposal is approved, STON.fi Development LLC will be responsible fordeveloping and implementing the new features.

14.3 Governance processThis section describes our perspective on how the governance process operates. Please notethat the final implementation may vary in subsequent versions of this document.
Furthermore, it is important to consider that the governance process may undergo modifications
based on user proposals.
1. Request for proposal (RFP). The governance process usually starts with a request for
proposal (RFP). The RFP outlines a proposal for a change or improvement. The request
can range from a small change to a major strategic shift.
2. Check the Request by voting members. Once the RFP is received to the DAO
platform, it is reviewed by voting members and evaluates the proposal and determines if
it aligns with the organization's mission, vision, and values.
3. Governance Proposal. If the proposal is approved, the DAO members create agovernance proposal. This proposal includes a detailed plan for implementation, theSTON.fi Whitepaper v. 0.6 / Aug 2023

Page 36expected outcomes, and the resources required.
4. Voting period. The proposal is presented to all DAO members for voting on the DAO
platform. There are two kinds of votes, for or against. The voting period typically lasts fora specified period, such as two weeks or a month.
5. Voting result. After the voting period, the result will be announced. If the proposal
receives the required number of votes, it will be accepted. If it does not receive enoughvotes, it is rejected.
6. Implementation of proposal. After the proposal is accepted, the organization orcommunity can implement the changes.

15. Contacts●

Viacheslav Baranov (CEO, co-founder, linkedin)●

Mike Fedorov (CBO, co-founder, linkedin)●

Stanislav Bazylevich (COO, co-founder, linkedin)●

Andrey Fedorov (CMO, linkedin)

16. Conclusion
In this whitepaper, we have covered the business strategy and technical details of implementing
and bringing to market a new version of STON.fi—zero-trust cross-chain DEX.
Our approach addresses critical issues of most existing cross-chain solutions by eliminatinginteroperability issues, enhancing security, and reducing transactional risks and costs. This isachieved by implementing an RFQ-based cross-chain exchange that relies on Hashed Timelock
Contracts (HTLC) to atomically execute cross-chain swaps. This approach eliminates the needfor additional trusted entities and offers a combination of deep liquidity and price stability, usuallyassociated with RFQ-based exchanges, alongside the uncompromising security typically foundin intrachain DEXs.
Details on further development of the platform and additional information are published on thewebsite ston.fi and on the documentation portal at docs.ston.fi.

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 37

Appendix A1: RFQ protocol message flowchart

Figure A1.1. RFQ protocol message flowchart

STON.fi Whitepaper v. 0.6 / Aug 2023

Page 38