Firmo: Secure, Unique and Efficient Smart Derivatives

About a decade ago, Bitcoin started the whole cryptocurrency craze. It brought decentralization and transparency to digital transactions. Then, Ethereum introduced smart contracts. This facilitated market entrance for a bounty of new projects. Now, Firmo is taking the next step for smart financial contracts (or smart derivatives). Its objective is to provide a means to create smart derivatives that are unique, efficient, and secure

from Firmo technical paper

Modernizing Financial Systems

The future of applications is not limited to a single blockchain. Currently, blockchain integration is of growing importance because of the recent trend to verticalize. The financial sector requires some of the most complex applications of smart contracts. A modern solution has presented itself in Firmo.

Smart Contracts Fall Short of the Financial Sector

Ethereum revolutionized cryptocurrency applications, but it was not built for financial contracts. This is important because the financial sector has special functions, as well as, unique regulations. Firmo starts with the problems of the financial sector and finds the solutions needed to connect the blockchain to traditional business models operating in this demanding environment.

Financial tools are often elaborate. As blockchains and the cryptocurrency market gain acceptance, demand for traditional business applications grow. Decentralized (trustless) and transparent smart contracts have shown their advantages. Firmo enters the picture by enabling them to meet the complexities of the financial sector. It offers a secure and practical solution for merging the best aspects of the old and new.

Smart Derivatives: A Modern Financial Solution

A derivative is a financial instrument used to secure prices over time. Smart contracts, like those on Ethereum, are not always suited for financial applications. On the other hand, smart derivatives involve securing these contracts for financial applications. Some of these applications include loans, options, swaps, and futures. The triad of events that govern smart derivatives are transfers, time intervals, and a set of conditions

Firmo, through its FirmoLang, offers a solution for the world of finance that would mitigate price volatility and improve transactions. Its modern financial tools allow participants to move beyond tokenization. It adds security with a better programming language that borrows from the logistical applications of airplane and train enterprises. All this is easily adaptable for existing ERC20 projects.

FirmoLang

The FirmoLang is more than a stable and secure solution for smart contracts. It is an out-of-the-box solution of exotic smart derivatives for both experienced and inexperienced developers. And at the core of the technology, is the capability to operate any coding format. This is how Firmo can connect the various cryptographic platforms.

Security

The Bitcoin wiki describes its programming language as purposely non-Turing complete. In contrast, the Ethereum white paper states that it is a “fully fledged Turing-complete programming language”.

Bug Repellent

Two research efforts show that Turing completeness is a disadvantage in the cryptocurrency market. Atzei, N., et al. in “A survey of attacks on Ethereum smart contracts” (2017 published in dl.acm.org), concluded that there is no way to patch an “immutable bug” in Turing complete programs. Luu, L. et al. in “Making Smart Contracts Smarter” (2016), found Ethereum contracts to be vulnerable to attack. This includes the infamous TheDAO $50 million hack. Lacking the ability to patch the bug, the Ethereum Foundation needed to hard-fork a solution. I recall this debuggable argument from some of my earliest days researching the technology behind Bitcoin.

The Firmo protocol is not in the business of exterminating bugs. Rather, it advances cryptotech to the next logical step. By running a static causal check it exposes security risks prior to running on the blockchain. This allows innovation of smart derivatives with the luxury of security prior to implementation. And of course, there is the ability to patch future vulnerabilities. Security measures include proof-of-authenticity for verifying non-trusted transactions.

from Firmo technical paper

Applications

The FirmoLang can work with any blockchain that uses a scripting language. Firmo beta has been implemented for forward contracts. These types of contracts secure raw material by requiring buyers to physically settle an asset at a specific future date. Future and forward contracts are closely related in terms of price application. Another application is zero coverage. It is useful for permission and trust-based transactions that do not involve collateral. Other applications include automated swaps for multiparty contracts, escrow, collateral, and margin calls. A specific example of an external data feed application is an Oracle integration for airline tickets.

Predicting Populations

What blockchain technology has brought with it is the potential to use decentralized and transparent digital ledgers for natural computations. Turing computers are not well suited for natural computation. In 2008,
MacLennan, B.J. in “Natural computation and non-Turing models of computation”, examined how computational models are domain dependent in regard to their application. Population distributions are domain dependent on natural computation models, and thus, unsuited for Turing machines (TM).

According to Hogarth, M. in “Non-Turing Computers and Non-Turing Computability” (1994), TMs are associated with common sense Newtonian spacetime models of the world. To be applicable to our real world, close-world simulations are used in solving real problems. However, sometimes it is the rules of the close-world that enable TMs to solve otherwise Turing unsolvable problems.

FirmoLang is a non-Turing complete programming language. The Firmo technical paper details why it is an improvement over current solutions: “Solidity perform well in large and complex environments with multiple agents and vectors”. Not surprising since the Central Limit Theorem postulates the tendency toward natural distribution as the sample size increases. Thus, solutions provided by Ethereum’s Solidity, like TMs modeling close worlds, are incomplete and even misleading. FirmoLang offers the missing piece of the smart derivative puzzle.

from Firmo technical paper

Users and the Firmo Protocol

The potential users of Firmo are a wide range of individuals, exchanges, and financial institutions. Both experienced and novice developers can make contracts using either FirmoLang or templates. Compiling is done through the Ethereum Virtual Machine (and additional compilers). Execution occurs on the Ethereum blockchain using ERC20 tokens. This four-step protocol allows Firmo to provides a solution to eliminate intermediaries, such that, individual users can initiate trades, exchanges can offer financial products, and financial institutions can reduce costs and improve products

from Firmo technical paper

The Firmo Team specializes in blockchain and financial technology. Their developers are experienced on multiple platforms. You can contact the team on Firmo Telegram. They are more than happy to answer questions.

The Firmo technical paper is cited throughout. Also visit the contest hosted by @originalworks.

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