InvArch: An Intellectual Property & Decentralized Development Network For Web 3.0

ABSTRACT: Innovation in today’s world suffers from a society that lacks trust and decentralized communications. As a result, many actors refrain from sharing their ideas even though they lack the means to actualize them. In tandem, skilled actors lack access to a channel where they can leverage those skills in business partnerships in the same sense that a financial actor can leverage capital for equity.

This paper introduces the conception for a network that utilizes intellectual property tokens as a means for individuals to tokenize and protect their intellectual property with the same functionality as non-fungible tokens. This allows these new tokens to be leveraged in business and financial transactions, similar to their underlying parent.

Decentralized Autonomous Organizations allow for smart contracts to regulate the operations and governance of partnerships on the blockchain. Skills are leveraged, just as they are on employment boards. However, the difference is that the opportunity in exchange for them is a Decentralized Entrepreneurial Venture. This gives access to equity and entrepreneurship rather than a typical job opportunity.

We believe that by eliminating the barriers of trust through blockchain technology and providing a network to serve as a gateway to better utilize this new technology, innovation will be able to scale and occur at practical yet impressive rates.

1. Preface

The nature of this document is to provide an overview of the technical “vision” and intentions for development that may be taken, with an elaboration as to why these intentions are practical and significant.

This document includes the underlying architecture of the protocol together with ideas and arguments that may be taken to improve the network. Assumably, this structure will be used as the starting point for an initial proof-of-concept. A final “version 1.0” would be dependent on this beta protocol together with any unforeseen concepts proven that are determined to be required for the project to reach its goals.

1.1. Ethereum as a Smart Contract and Decentralized Application Platform. Ethereum was proposed in 2013 by programmer Vitalik Buterin. [1] In 2014, development was crowdfunded, and the network went live on 30 July 2015. The platform allows developers to deploy permanent and immutable decentralized applications onto it, with which users can interact. The problem, however, has been scalability due to proof of work consensus and interoperability between blockchains.

1.2. Polkadot as a Heterogeneous Multi-Chain Framework. Polkadot is the brainchild of Dr. Gavin Wood, who is one of the co-founders of Ethereum and the inventor of the Solidity smart contract language. Dr. Wood started working on his idea to “design a sharded version of Ethereum ‘’ in mid-2016 and released the first draft of the Polkadot white paper in October. This introduced an ecosystem of interoperable and scalable blockchains known as “parachains.” [2]

1.3. Nominated Proof of Stake (NPoS). Nominated Proof-of-Stake is the process of selecting validators to be allowed to participate in the consensus protocol. [4] NPoS is a variation of Proof-of-Stake and used in Substrate-based Blockchains such as Kusama, Polkadot, or inevitably, InvArch.

1.4. Non-fungible Tokens (NFTs). A non-fungible token is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable. NFTs can be used to represent items such as photos, videos, audio, and other types of digital files. [3]

1.5. Decentralized Finance (DeFi). Decentralized finance is a blockchain-based form of finance that does not rely on central financial intermediaries such as brokerages, exchanges, or banks to offer traditional financial instruments, and instead utilizes smart contracts on blockchains.

2. Introduction

Unfortunately, the reality is that there currently isn’t a platform where intellectual property and individual skills can securely connect. Without this medium, ideas have no blanket protection while being shared, work provides no guarantee after being contributed, and startups have limited exposure. In order to remedy this lack of immediate protection, centralized entities and systems are responsible for arbitration.

As a result of these advancements, the world has determined ways to secure currencies, data, creative art, and real-world assets as digital tokens. Still, the problem is that this new form of tokenized security is only available towards assets that already exist in either a physical or digital state. Currently, blockchain technology only provides security for tangible assets.

InvArch is an intuitive and cutting-edge blockchain protocol that bridges the gap between ideas and creation; connecting a world of thinkers, creators, and finance under one ecosystem, allowing innovation to flourish. This is achieved through the tokenization of ideas, fractionalizing their ownership, and providing a secure and transparent ecosystem where users can connect, collaborate, and form partnerships.

2.1. Protocol, Implementation, and Network. The network is constructed using the Substrate framework. The node is made of FRAME Pallets that serve as building blocks for the protocol’s runtime, implementation, and networking structure. [8]

3. Summary

InvArch is a network for intellectual property tokenization and decentralized development. Unlike past blockchains that have focused primarily on investment finance services and the tokenization of physical asset classes, InvArch provides security and utility for abstract datasets.

Briefly stated, InvArch may be compared to a hybrid between a professional networking platform and a variation of an intellectual property authenticator — rather than individuals leveraging skills and employers offering a salary in a job application, users can leverage skills and offer equity in a venture opportunity.

3.1. Philosophy. By connecting great ideas with skills and resources from around the globe, InvArch provides the foundation for new decentralized marketplaces and businesses to emerge, extending access and opportunity through a variety of startups, apps, and services. InvArch allows all actors and resources of the product/business development process to connect, grow, and operate on one blockchain.

Innovation shouldn’t be limited to instances where skills, ingenuity, and capital are all present. Access shouldn’t be discriminatory, great ideas don’t originate based on prejudice.

3.2. Vision. While it is broadly anticipated that the blockchain will evolve far beyond its initial inception, it is expected to transform the landscape of the startup ecosystem. Great ideas will arise in abundance, and new opportunities will emerge in tandem. Revolutionary innovations will not be able to be shut out or censored, and the world will have a foundation for combating its problems.

4. Novelty. InvArch approaches ideas (intellectual property) as a set of non-fungible components. Intellectual Property Sets (IP Sets) represent the idea. Intellectual Property Tokens (IP Tokens) represent the non-fungible components of an idea. Lastly, Intellectual Property Ownership (IP Ownership) tokens are ways of representing fractional (i.e. percentage-based) ownership over an idea.

5. Architecture

This section is designed to give a brief overview of the platform as a whole. A more thorough exploration of the system is given in the following section afterward.

5.1. InvArch and Polkadot. The InvArch blockchain and platform will be built utilizing the Substrate development framework, and the underlying Rust programming language. [5] The intention behind these decisions is to have the InvArch blockchain be deployed to the Polkadot network’s multi-chain ecosystem and parachain relay.

5.1.1. Parachains. A parachain is an application-specific data structure that is globally coherent and validatable by the validators of the Relay Chain. Most commonly a parachain will take the form of a blockchain, but there is no specific need for them to be actual blockchains.

The InvArch blockchain will be seeking this development path to utilize the benefits of shared security, fast transaction speeds, and interoperability. [1]

5.2 Intellectual property Sets. In context, an IP Set is viewed as an idea, which consists of one or more components (IP Tokens) that help to strengthen and describe that idea.

For example, a 3D rendering of a flux capacitor prototype could be stored as an IP Token representing an STL file. Additionally, an XML file explaining the relation between a flux capacitor’s different components could also be stored as an IP Token in the “Flux Capacitor” IP Set, these two files exist and help to strengthen and expand on the idea for building a flux capacitor.

5.3. Intellectual Property Tokens. Utilizing the InvArch Blockchain, users will be able to tokenize their ideas or intellectual property (IP) in the form of non-fungible tokens called IPTs. An IP Token (IPT) is a part of a set and can be thought of as a component of an idea. Either by itself or in combination with other IP Tokens, it serves to strengthen the foundation for an idea. IP Tokens represent a unique digital asset. IP Tokens are stored using IPFS, which is a decentralized storage protocol that securely stores files off-chain and provides a unique hash or CID which is used to query the data.

5.4. Intellectual Property Ownership. Intellectual property tokens will be able to have their ownership divided among multiple addresses or owners. IP Ownership (IPO) is a form of fractional ownership over an IP Set. A finite and preset number of fungible IPTOs may be assigned to a single intellectual property set. The value of a single IPO will be determined by the total amount of the network’s native currency bonded to the IP Set, divided by the total number of IPO tokens. To ensure that no single actor can have a 51% hold over a project, IPO can be distributed within the following ranges:

𝑓 + 𝑡 = 10000 | 0 ≤ 𝑓 ≤ 6600 | 3400 ≤ 𝑡 ≤ 10000

Among the Founders, out of however much IPO is decided to be allocated, no single participant can have more than 50% (Max. 3300) of the allocated IPO. No single co-founder can have a higher stake than the founder. The distribution algorithm for the founder’s distribution is:

𝑓(𝑂) / 𝑝(𝑛) ≥ 𝑝(𝑂)

Where 𝑓(𝑂) represents the founder’s total IPOwnership tokens, 𝑝(𝑛) represents the number of co-founders, and 𝑝(𝑂) represents a co-founder’s IPOwnership tokens. This statement must pass to form a DEV, and changes that break this statement cannot be implemented. * Voting Weight IPO acts as a governance token over a DEV. Holders have the right to propose development changes, financing strategies, report misconduct, and vote on status consensus reports. Every DEV has 10,000 votes, with an IPO representing a single vote. The more IPO a participant has, the more voting weight they have.

Leveraging these new forms of tokenized assets, users will be able to establish partnerships with other individuals and users who provide hard skills and/or resources that their intellectual property set (IP Set) is missing to come to fruition.

5.5. Decentralized Entrepreneurial Ventures. Creators of intellectual property sets will be able to bond them using the DEV Pallet. This Pallet is responsible for taking ownership over an IP Set, establishing roles and terms for a venture, and recording the application process for agreeing. Users will be able to leverage ownership over their IP Set, and therefore parallel value, in the venture.

Governance rules, general development timelines, and partnership terms are defined at this time. As an alternative to offering skills in return for employment on a job board, users can provide their skills in return for equity and entrepreneurship through the InvArch blockchain.

5.6. Multi-Layer Governance. Project management and development sometimes require different levels of governance. In some cases, it may be optimal to only allow certain individuals (usually specialized in their background) in a DEV to have a say over a decision. In other cases, it may be optimal to allow all IPO token holders to be able to participate in a decision to address a deadlock or dispute within a DEV. Other decisions may be best if all working members in a DEV, regardless of their role, have a say over a decision. The DAO Pallet will provide the logic for customizing and layering different governance mechanisms throughout a single venture.

Participation in decision-making within a DEV is democratic, meaning that voting takes place and decisions are decided based on group consensus. Consensus can be reached using different rules, but the most common margins are 51% and 67% majorities. To participate in a voting procedure (which usually takes place over a period of anywhere from 24 to 72 hours), a user must have some amount of the voting DEV’s IPO tokens. The percentage of IPO that a participant wields is equivalent to their voting weight.

5.7. Development Work Logs. Whether the work is recorded and reflected via video recording, a file with programming code, or anything in between, these progress reports are stored and made visible to the participants in a DEV. This is a way of recording and monitoring work progress for all to see and can be required to be submitted on a weekly or bi-week basis. This is also a way of protecting those who submit the updates, as this permanently stores their work for reference and proof of existence.

5.8. Project Deliverables. The Deliverables pallet handles the logic for assessing the work submitted using the Development Work Log. Upon certain development milestones being completed and group consensus signing off on the results, IP Ownership tokens can be administered to the submitter of the work. For example: Say a user was being allocated 2,000 IPO tokens for their participation in a DEV. Their work consisted of 2 development milestones. The first milestone could administer 1,000 IPO upon completion and consensus. The second milestone would administer the remaining 1,000 IPO. Additionally, in the future, users can choose to only reveal or expose IPTs within an IP Set as needed for each milestone.

5.9. Decentralized KYC. The chain will integrate with a pre-existing decentralized KYC protocol. This will ensure the identity and integrity of participants in a DEV and serve as a way of enforcing compliance and preventing bad actors from existing within the system, as their actions would be known and their identity unique and verifiable. It would be a poor decision to commit acts of blackmail or intellectual property theft over the InvArch network, considering the identity of anyone who does these things would be known and their interactions with intellectual property recorded.

5.10. Smart Contracts. To expand upon the functionality and capabilities of the network, InvArch will also provide smart contract functionality using Ink! Smart Contracts. to deploy and execute WebAssembly Smart Contracts. It has its smart contract language, specially designed to write contracts that optimize for correctness, conciseness, and efficiency [6].

6. Protocol

The protocol can be roughly broken down into three parts: the main relay chain, 2nd order parachains, and the DEV parachain. The combination of the relay chain with the subsequent parachains is what gives the InvArch blockchain utility.

6.1. Parachain Design. InvArch will be joining the Polkadot ecosystem, pursuing a parachain slot and connecting to the Polkadot relay chain. The InvArch parachain is an application-specific data structure focused on intellectual property & development progress storage, which is globally systematic and validatable by the validators of the Polkadot relay chain.

6.2. Intellectual Property Contracts. Smart contracts are instructions of code that enforce a contract of operations and proceedings between parties. This has been implemented in blockchain technology in instances such as land-asset management and payment transactions, to name a few. Just as these actions are controlled by a smart contract, intellectual property will be tokenized in the same sense as patents are enforced by a series of contracts.

6.2.1 Tokenization. To mint an intellectual property token, a user will provide various predetermined data fields. When you upload an idea or file, a canonical version is mapped to the token that lives on the blockchain and it can’t be touched or altered.

6.2.2. Validation. Each token minted has a unique identifier. They’re not directly interchangeable with other tokens 1:1. For example, 1 VARCH is the same as another VARCH. This isn’t the case with IPTs. Each token has an owner and this information is easily verifiable.

They live on InvArch and can be leveraged on any InvArch-based IP market. In other words, if you own an IP Set You can easily prove you own it and verify its authenticity against a duplicate by referencing the timestamp of its components (IPTs). Furthermore, upon the chain’s alpha version, reverse image search and plagiarism detecting mechanisms will be in place to bolster the integrity of IPTs and avoid possible future conflicts between parties (which still, would be easily disputable by referencing the timestamp of an IPT and comparing it against a duplicate’s). No outside entity can manipulate it in any way. Users can sell an IP Set (i.e. 100% of its IPO tokens), and in some cases, this will earn the original creator resale royalties. Users can hold an IP Set forever, resting comfortably knowing their asset is secured on InvArch.

6.2.3. Transaction Routing. There are DeFi applications that let you borrow money by using collateral. For example, you collateralize 100 VARCH so you can borrow 150 USDC (a stable coin). This guarantees that the lender gets paid back — if the borrower doesn’t pay back the USDC, the collateral is sent to the lender. However, not everyone has enough crypto to use as collateral.

Projects can explore using IP Ownership (IPO) as collateral instead. By putting this up as collateral, you can access a loan with the same ruleset. If you don’t pay back the VARCH, your IPTO will be sent to the lender as collateral.

6.3. Decentralized Entrepreneurial Contracts. A DEV is an internet-native operation that’s collectively owned and managed by its members. They have built-in treasuries that no one has the authority to access without the approval of the group. Decisions are governed by proposals and voting to ensure everyone in the organization has a voice.

No single actor can authorize spending based on their whims and no chance of manipulating the books. Everything is out in the open and the rules around spending are baked into the DEV via its code.

Starting an organization with someone that involves funding and money requires a lot of trust in the people involved, but it’s difficult to trust an unknown entity. With DEVs you don’t need to trust anyone else in the group, just the DEV’s code and terms, which are 100% transparent and verifiable by anyone.

6.3.1. Venture Consensus. DEVs are more permissionless than regular DAOs, but still quite open. Any prospective member can submit a proposal to join the DEV, usually offering a tribute of some value in the form of tokens or work. Shares represent direct voting power and ownership of an IPT. Members can exit at any time with their proportionate share of the treasury.

This means that DEVs don’t need a central authority. Instead, the group makes decisions collectively and payments are authorized automatically when votes pass. This process can be viewed similarly to multi-signature cryptocurrency wallets. Just as a 2–3 signature rule requires a ⅔ majority to sign off on the transaction for it to go through, DEVs will manage their funds through a mirrored process.

This is possible because smart contracts are tamper-proof once they go live on InvArch. You can’t just edit the code (the DEV terms) without people noticing because everything is public.

6.3.2. Venture Bonding. At inception, a DEV will require two things; An IP Set and VARCH tokens to bond to the ownership of the IPT. The value per share of ownership is determined by the bonding process:

V = Tn / F

The value of a single IPO is equal to the total number of tokens (Tn) divided by the number of fractionalized ownership (F).

For example, if a user minted an IP Set for InvArch and used it to form a DEV. If the user chooses to bond 1,000 VARCH, and there is a total supply of 10,000 InvArch IPTO, then a single IPTO would be worth 10 VARCH.

When a DEV is proposed and IPO is offered as equity, a user may request that its future partners also bond VARCH to the venture. Following the example prior, if the InvArch DEV was formed by bonding 1,000 VARCH, but is seeking two equal co-founders, then there would be a bonding requirement equal to this initial amount, i.e. 1,000 VARCH.

Subsequently, the value of an individual IPTO would abide by the following:

V = P(Tn) / F

Where the total number of participants (P) is shown. The Listings Pallet will handle the logic for integrating with off-chain DEXs or order books. This may be replaced by integrating with a pre-existing protocol.

6.3.3. Venture Unbonding. In the event a DEV is concluded or otherwise dissolved, then the IPTO will be unbonded and liquidated following the inverse function of the bonding process:

L = F(V) / Tn

The total liquidation value (L) is equal to the number of IPTO (F) multiplied by the value per token (V) and divided by the total number of VARCH bonded to the DEV.

6.4. Networking. DEV communications and feeds will be generated via network algorithms designed to pull relevant opportunities and connections. Otherwise, communications and records will be privately secured on the chain.

7. Tokenomics

The VARCH token is the native token of the InvArch network. It is required for many necessary functions on the chain such as paying gas fees, participating in on-chain governance, minting intellectual property sets, and forming decentralized ventures, among many others.

At genesis, 1 billion VARCH tokens will be minted. InvArch has a target annual inflation rate of 5%. As would be required, VARCH has an uncapped token supply.

The purpose of inflation within the InvArch network is to pay for the continuing need to incentivize security. The primary security budget is to pay for a parachain slot on an ongoing basis and to incentivize collators to provide block production services to support the InvArch network. Of the 5% inflation, 1% will go towards incentivizing collators and 1.5% will go to the parachain bond reserve to accumulate on-chain funds to pay for a parachain slot in perpetuity. The remaining 2.5% will go to users that stake their VARCH tokens and help power the collator selection process.

Fees on InvArch related to transactions and smart contract execution will be handled in two ways. 80% of the spent fees will be burned, which acts as a deflationary force and accrues value which is passed on to existing VARCH holders based on the rate the network is being utilized. 20% of the fees will go to the on-chain treasury which can be allocated via on-chain governance to projects and initiatives which further the adoption of and engagement with the network.

At genesis, the VARCH tokens will be allocated as follows; seed funding: 10% (100,000,000 VARCH), strategic funding: 5% (50,000,000 VARCH), parachain bond fundraising: 20% (200,000,000 VARCH), parachain bond reserve: 0.5% (5,000,000 VARCH), ecosystem & community growth: 15.5% (155,000,000 VARCH), protocol development: 10% (100,000,000 VARCH), treasury: 5.5% (55,000,000 VARCH), liquidity programs: 5% (50,000,000 VARCH), developer incentive: 4.5% (45,000,000 VARCH), partners and team: 19% (190,000,000 VARCH), team growth: 5% (50,000,000 VARCH).

Seed funding: ​​Subject to a 24-month vesting schedule with a 3-month cliff and equal vesting in months 4–24.

Strategic funding: Subject to a 12-month vesting schedule with a 2-month cliff and equal vesting in months 3–12.

Parachain bond fundraising: Tokens under the network’s control to be used to pay for the Polkadot (DOT) tokens required for the InvArch parachain slot in years 1–6. These payments may take the form of interest payments to borrow DOT for the required parachain bond or rewards for crowd loan participants. These funds will act as a backstop to ensure that our parachain slot is funded for years 1–6. Unused funds can be used for other InvArch protocol adoption initiatives.

Parachain bond reserve: Tokens for parachain bond purposes. Part of the inflation supply goes into this fund and the idea is ultimately for this reserve to hold enough DOT to secure a parachain slot in perpetuity.

Protocol development: Tokens to be used by the InvArch network for protocol development and other programs.

Ecosystem growth: Funds allocated towards ambassador programs and other community initiatives.

Liquidity programs: Tokens for liquidity programs to incentivize growth and adoption on InvArch. This allocation will help accelerate activity in the InvArch ecosystem.

Developer incentive: Funds to be used as incentives for developers and projects that are early InvArch adopters. Subject to vesting (2-year monthly linear vest). Unused tokens can be allocated to other community initiatives.

Partners and team: Founders, InvArch team members, and Partners. Subject to a 4-year vesting schedule from network launch with a 1-year cliff and monthly vesting thereafter.

Team growth: Future employee token incentive pool. Future issues from this pool will be subject to a 4-year vesting schedule from the network launch or grant date (whichever is later) with a 1-year cliff and monthly vesting thereafter.

8. Conclusion

We have provided an overview one may follow to author a scalable, and interoperable network for utilizing intellectual property in various forms of business and financial transactions.

Under the said protocol, participants work in enlightened self-interest to create an overall system that can be extended in an exceptionally free manner and without the barriers of trust and theft found in many business instances.

We have issued a rough outline of the network architecture and development that it would take, including the nature of the participants, their economic incentives, and the processes under which they must engage.

We have identified a basic design and discussed its strengths and limitations; accordingly, we have further directions which may further utility and erase those limitations and yield further ground towards a truly decentralized innovation ecosystem.

8.1 References. Thanks to everyone for their help along the way. All errors are my own.

[1] Vitalik Buterin. Ethereum: A next-generation smart contract and decentralized application platform. ethereum/wiki/wiki/White-Paper, 2013.

[2] Gavin Wood. Polkadot: Vision For A Heterogeneous Multi-Chain Framework.

[3] Vitalik Buterin. Ethereum 2.0 mauve paper. 2016

[4] Andrew Winterfield. DPOS.

[5] Substrate. Substrate Developer Network.

[6] Parity Substrate.




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