Summary

Part A: Information about the offeror or the person seeking admission to trading

Part B: Information about the issuer, if different from the offeror or person seeking admission to trading

Part C: Information about the operator of the trading platform in cases where it draws up the crypto-asset white paper

Part D: Information about the crypto-asset project

Part E: Information about the offer to the public of crypto-assets or their admission to trading

Part F: Information about the crypto-assets

Part G: Information on the rights and obligations attached to the crypto-assets

Part H: Information on the underlying technology

Part I: Information on the risks

Part J: Information on the sustainability indicators in relation to adverse impact on the climate and other environment-related adverse impacts

This crypto-asset white paper has not been approved by any competent authority in any Member State of the European Union. The person seeking admission to trading of the crypto-asset is solely responsible for the content of this crypto-asset white paper.

Warning

This summary should be read as an introduction to the crypto-asset white paper.

The prospective holder should base any decision to purchase this crypto-asset on the content of the crypto-asset white paper as a whole and not on the summary alone.

The offer to the public of this crypto-asset does not constitute an offer or solicitation to purchase financial instruments and any such offer or solicitation can be made only by means of a prospectus or other offer documents pursuant to the applicable national law.

This crypto-asset white paper does not constitute a prospectus as referred to in Regulation (EU) 2017/1129 of the European Parliament and of the Council or any other offer document pursuant to Union or national law.

Type: Utility token

Purpose: Access and payment for decentralized computing services within the ZkCloud ecosystem, including the generation and verification of zero-knowledge proofs.

Blockchain: The ZkCloud network is built on Cosmos SDK with CometBFT.

Supply: 1 billion $PROOF initial supply, with approximately 3% annual inflationary tokenomics.

Transferability: The $PROOF tokens are fully transferable between eligible holders unless otherwise restricted by applicable laws or platform rules.

1. Zero-knowledge proof generation services, allowing organizations and developers to verify data securely and privately.

2. Proof verification services for ensuring data integrity and authenticity. Developer and infrastructure tools for integrating zero-knowledge protocols in blockchain projects.

The quantity of services available per token is dynamic and depends on network usage rates and pricing mechanisms. Additional services or tools may require variable token amounts based on service demand and resource allocation.

$PROOF tokens are fully transferable unless restrictions are imposed under applicable legal or regulatory frameworks. However, always confirm that your wallet supports $PROOF tokens before purchase, or you may risk permanent loss of tokens.

Holders must comply with all relevant laws regarding token transfers and use on any potential future exchanges/trading platforms or within jurisdictions where restrictions may apply.

The primary objective of the public offer is to provide broader access to $PROOF tokens, enabling more users to engage with and benefit from the ZkCloud network. This initiative aims to drive adoption and increase user participation within the decentralized computing power marketplace.

Should admission to trading be successful in the near future, the need for Gevulot Oy to offer $PROOF tokens in exchange for payment from the public may diminish.

• Improving network infrastructure to enhance scalability and performance.

• Expanding partnerships with compute providers.

• Enhancing security features to ensure long-term sustainability.

In addition, Gevulot Oy may distribute $PROOF tokens via airdrops to incentivize early or large-scale adopters and increase ecosystem engagement. Airdrops under this white paper will be subject to Markets in Crypto-Assets Regulation (EU) 2023/1114 ("MiCA"), as airdrops requiring personal data or resulting in any form of benefit for the offeror are not considered “free” offers under MiCA.

The primary reason for seeking admission to trading is to enhance liquidity and accessibility for $PROOF holders. Admission to trading is expected to create a more efficient marketplace for decentralized compute power by allowing tokens to be easily bought and sold on recognized centralized exchanges ("CEXs") and platforms operated by crypto-asset service providers ("CASPs").

This increased accessibility should foster a more dynamic ecosystem, attracting new participants to the ZkCloud network. Furthermore, admission to trading on reputable platforms should enhance transparency, credibility, and trust in $PROOF, supporting broader adoption and facilitating the formation of new partnerships within the decentralized computing space.

The actual legal nature of crypto-assets — and subsequently the identification of $PROOF's 'issuer' — depends on multiple factors, which should always be analyzed primarily based on their economical and functional properties in order to determine the relevant financial law(s) that should be applied to said crypto-asset. Hence, firstly, it should be highlighted, that the $PROOF tokens themselves will technically not have an 'issuer' in terms of applicable legislation.

Conversely to traditional financial assets, which are typically created by a centralized issuer, crypto-assets have the unique ability of being generated not only through centralized issuers, but also through completely decentralized processes that were not previously possible. If a crypto-asset is generated via these decentralized protocols — where no single party has control over the process of issuing said crypto-asset (even indirectly) — technically it will not have an identifiable issuer that financial legislation of the EU could directly be applied to. Although this statement is already true in itself, the concept does benefit from some additional clarification.

While typically these kinds of disclosure documents are drafted and published by the actual issuers of financial instruments, MiCA seems to acknowledge the unique nature of crypto-assets — particularly those generated through decentralized protocols, where no single entity can be pinpointed as the issuer — as can be seen via examining Recital 22 of MiCA, which states that if a crypto-asset has no identifiable issuer, it should not fall within the scope of Titles II, III or IV of MiCA, wherein most of the provisions concerning issuers are located.

This distinction is crucial, because in the realm of decentralized crypto-assets, their creation and distribution processes may be entirely automated and managed by decentralized networks, without any sort of central authority towards whom these regulatory obligations could be directed. This decentralized nature means that the regulatory focus shifts from identifying an issuer to monitoring and regulating the entities that bring these assets to the market. Thus, the absence of a traditional 'issuer' in the context of decentralized crypto-assets should not undermine any regulatory objectives. As the actual technical issuance of crypto-assets seems to have been correctly identified as a convoluted process, where a single regulatory subject may be difficult or impossible to identify, MiCA is focused on the entities involved in the offering, or facilitating the trading of, these so-called “issuerless” assets; the entities that bring these sorts of crypto-assets to the market should be held accountable for their actions within these markets, which should subsequently result in increased consumer protection and market integrity. This approach allows for the regulation of activities that impact the market and investors without necessitating the identification of a single (central) issuer, which may not exist in many decentralized frameworks, such as the ZkCloud ecosystem.

In light of the aforementioned considerations, it should be duly noted that the actual issuance of the $PROOF tokens occurs automatically via decentralized protocols without any centralized party directly responsible for or controlling the process in any way, shape, or form. These kinds of crypto-assets — sometimes referred to as “layer-1 crypto-assets” — act as an independent base architecture for a decentralized network, and are typically responsible for fundamental operations and the consensus mechanism(s) of the network. Even though Gevulot has acted as the primary developer of the ZkCloud network, no entity possesses the ability of independently influencing the issuance/creation of the $PROOF tokens, which is solely performed by the ZkCloud network completely independently as a distributed network. Therefore, while the ZkCloud network itself acts as the technical originator of the tokens, from a regulatory perspective, the ZkCloud network cannot be classified as a legal issuer under conventional definitions typically applied to financial assets.

More thorough information on the technical functionalities of the ZkCloud network and the issuance of the $PROOF tokens can be found within Part H of this white paper. This distinction further emphasizes the decentralized nature of the ZkCloud ecosystem, where the regulatory focus should shift towards the entities that offer, or facilitate the trading of, these tokens rather than on any single entity acting as a traditional issuer.

In conclusion, because the $PROOF tokens are generated by the ZkCloud network through its consensus mechanism, there is no identifiable legal or regulatory 'issuer' of $PROOF.

In the near future, the ZkCloud network's mainnet will be launched to fully realize the decentralized compute marketplace. Following the mainnet's launch, potential future milestones are aimed at ongoing enhancements for network scalability, the introduction of new services for $PROOF holders, and the expansion of partnerships with compute providers to strengthen the ecosystem. While the aforementioned test networks may continue to operate temporarily alongside the mainnet, the long-term goal of Gevulot Oy is to concentrate all resources on ZkCloud network's public mainnet for global accessibility and utility.

In terms of non-financial resources, a dedicated team of developers, engineers, and project managers within Gevulot has been fully allocated to the ongoing development of the ZkCloud network, ensuring the continuous progress towards the launch and expansion of the ZkCloud network's public mainnet. These resources, consisting of both financial and non-financial contribution, demonstrate Gevulot's strong commitment to the success of $PROOF and the ZkCloud network.

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The primary reason for the public offer is to provide broader access to the $PROOF tokens, enabling more users to interact with, and benefit from, the ZkCloud network. This initiative is aimed at driving adoption and increasing user participation within the decentralized computing power marketplace. However, if admissions to trading are successful in the near future, there may not be a reason for Gevulot to provision an offer of $PROOF in exchange for payment from the public.

If any funds are raised through this offer, they will mostly be allocated toward the continued development of the ZkCloud ecosystem. This includes investments in the network infrastructure to improve scalability and performance, as well as the expansion of partnerships with compute providers. Additionally, a portion of the funds will be used to enhance security features and ensuring the long-term sustainability of the platform.

In the future, Gevulot Oy may also consider distributing $PROOF tokens through airdrops as part of the public offer under this white paper. These airdrops allow for targeted distribution of $PROOF, which may be used, for example, to incentivize early and/or large-scale adopters, and foster increased ecosystem engagement. Therefore, it is important to note that under MiCA, airdrops may not always be considered “free” public offers and could still be subject to all obligations under Title II of MiCA, which is why all airdrops that Gevulot may provision in the future with $PROOF should be viewed as being provisioned under this white paper.

According to MiCA, a crypto-asset is not deemed to be “offered for free” if participants are required to provide personal data in exchange for the crypto-asset, or if the offeror receives any form of fees, commissions, or monetary or non-monetary benefits. Since most airdrops require participants to submit personal data, such distributions might still qualify as regulated offers, necessitating compliance with relevant disclosure and reporting requirements.

For clarity, the term “airdrop” refers to the distribution of crypto-assets, often at no direct financial cost, to a specific group of recipients. These recipients may be selected based on factors such as their previous activity on the network, ownership of other related assets, or participation in marketing or promotional campaigns. While airdrops are typically used to incentivize early adoption, reward loyal users, or attract new participants to a blockchain ecosystem, they often require recipients to provide certain data, such as wallet addresses, email information, or other identifiers.

The primary reason for seeking the admission to trading of $PROOF is to enhance liquidity and accessibility for the $PROOF token holders, which should consequently result in creating a more efficient marketplace for decentralized compute power in the process. If successful, admission to trading should enable the $PROOF tokens to be more easily bought and sold on recognized centralized exchanges (“CEXs”) and other platforms of crypto-asset service providers (“CASPs”), creating a more dynamic and active ecosystem by attracting new participants to the ZkCloud network.

Additionally, being admitted to trading on reputable platforms should provide even greater transparency and trust in the $PROOF token, contributing to its credibility within the broader sectors of decentralized computing and finance. The increased visibility and liquidity resulting from being admitted to trading may also support the expansion of the ZkCloud ecosystem by facilitating more partnerships with compute providers and generally encouraging for broader adoption.

The initial supply from the genesis block is approximately 1 billion $PROOF tokens. Following the network's launch, new $PROOF tokens are issued through block rewards, with an annual inflation rate of approximately 3%. Please note that these figures are intended as guidelines and represent current projections based on the ZkCloud network's tokenomics model. While no changes to these parameters are currently known or planned, they may be subject to slight adjustments in the future.

A portion of these tokens that are generated through the genesis block are distributed without monetary compensation to early contributors who played a key role in the network's development. This form of early allocation recognizes their contributions to building the decentralized infrastructure of the ZkCloud network, without negatively affecting the network's natural economic flow in the future.

There are no plans to conduct a private sale of $PROOF tokens, and no official issue price has been determined. In the future, $PROOF may potentially be listed on CEXs and/or CASPs. However, such listings, including any potential listing prices, will always depend on separate negotiations with trading platforms and the prevailing market conditions at that time. Furthermore, it should be heavily emphasized that listing on any trading platform is neither guaranteed nor confirmed.

However, it should also be noted that if $PROOF is successfully admitted to trading in the near future, Gevulot may, instead of offering $PROOF tokens for sale in exchange for funds and/or crypto-assets, opt to distribute tokens via airdrops in the future. These airdrops may form part of the public offer by requiring participants to provide personal data or fulfill specific conditions in exchange for receiving tokens.

Contrary to the public offer, admission to trading will be sought for the entire inflating supply of $PROOF, starting from the initial supply of approximately 1,000,000,000 crypto-assets.

As a part of these AML/CFT measures, holders from high-risk countries are excluded from purchasing $PROOF from Gevulot. These high-risk countries include, but are not limited to, North Korea, Iran, Syria, Russia, and any other countries identified by international regulatory bodies as having significant money laundering or terrorism financing concerns.

Additionally, in the United States, only accredited investors are eligible for participation of $PROOF's public offer and allowed to purchase $PROOF from Gevulot, although each buyer's investor status must be documented in written form and verified by Gevulot before any transaction is to be completed.

1. Pre-listing phase: There is no private pre-public sale planned during this phase or any phase. Any public offer sales that may occur are subject to ad hoc negotiations based on current market dynamics and specific agreements with purchasers. No listings on trading platforms are guaranteed nor likely at the time of the genesis block's generation. Admissions to trading, if successful, are anticipated to take place no earlier than 30 days after the generation of the genesis block. However, possible airdrop campaigns may begin already during this phase of the offer.

2. Post-listing phase: This phase depends entirely on the successful admission of $PROOF tokens to one or more trading platforms. Once listed, any subsequent public offer sales shall consider the prevailing market value on these platforms in addition to market conditions and buyer-specific terms. While listing prices will ultimately be shaped by platform-specific rules and negotiations, the goal is to ensure that token distribution supports both fair pricing and enhanced network engagement.

Payment methods if admitted to trading: Additionally, if $PROOF is successfully admitted to trading, the CASP operating the trading platform will have its own rules governing the purchase and sale of $PROOF, as required under Article 76 of MiCA. These operating rules may influence the methods of payment and the price of purchase of $PROOF on each platform that it is admitted to trading on.

Since the network will likely not initially support Inter-Blockchain Communication, standard Cosmos-based wallets may not be compatible for receiving $PROOF tokens at launch. Buyers and recipients will therefore need to use their ZkCloud wallet address to hold the tokens until future updates potentially enable broader compatibility with other Cosmos-based wallets and networks.

The transfer process is facilitated via the ZkCloud network, which guarantees transparency and traceability for all transactions. Upon Gevulot's confirmation of payment, or eligibility for an airdrop, and the buyer's, or airdrop recipient's, confirmation of wallet address, the $PROOF tokens will be sent to the wallet address provided to Gevulot.

It is the responsibility of the buyer, or airdrop recipient, to make sure that the provided wallet address is accurate and capable of receiving $PROOF tokens to avoid any loss of funds/tokens.

Purchased crypto-assets will be transferred to holders without undue delay after payment has been successfully received and verified. Holders will receive confirmation of the transaction and transfer details once the process is completed.

For crypto-assets distributed via airdrops, transfers will be carried out without undue delay once the holder's eligibility has been confirmed. Eligible recipients will be notified of the airdrop allocation and transfer details accordingly.

1. Creation of a ZkCloud wallet:

Purchasers must create a compatible ZkCloud wallet to store and manage their $PROOF tokens. Since the Inter-Blockchain Communication functionality may not be available at launch, standard Cosmos-based wallets may not initially be compatible with $PROOF.

The purchaser must have internet access to interact with the ZkCloud network for transactions, including sending or receiving tokens, checking balances, and managing their wallet.

Purchasers and recipients are responsible for securing their wallet credentials, including private keys or recovery phrases. Losing access to these credentials may result in the permanent loss of tokens, as there is no recovery process for lost private keys.

While initial compatibility is limited to ZkCloud wallets, future updates are aimed at enabling interoperability with other Cosmos-based wallets, with further compatability outside Cosmos-technology being pursued as well. Purchasers should stay informed about updates to the ZkCloud network that may affect wallet compatibility or security practices.

1. Ownership and Financial Incentives

Investors in Gevulot: External investors who own equity in Gevulot may hold financial stakes that—while not sufficient to confer majority control—still incentivize particular strategies or outcomes for the company. For instance, investors might prefer to prioritize short-term value creation over the longer-term objectives of the ZkCloud network. Although minority ownership typically limits direct influence on operational decisions, investors can influence management through their board representation or ongoing dialogue. The project's governance and transparency measures are designed to ensure that no single investor or small group of investors can unduly shape the ZkCloud roadmap in ways that conflict with the broader network's interests.

Equilibrium Group Oy and minority ownership: Among the minority shareholders of Gevulot is Equilibrium Group Oy, a company in which Teemu Päivinen holds an ownership interest and serves on the board. Notably, Mr. Päivinen also sits on the board of Gevulot Oy and is its Chief Executive Officer. Although this structure could theoretically give rise to a conflict of interest—by virtue of Mr. Päivinen's dual roles across two interconnected entities—this risk is mitigated by the fact that Equilibrium Group's stake in Gevulot remains a minority interest. In other words, neither Mr. Päivinen nor Equilibrium Group Oy possesses a controlling vote or decisive influence over Gevulot's corporate matters. Gevulot's governance protocols, such as board oversight and transparent decision-making procedures, are designed to ensure that business strategies and major operational choices serve the broader interests of the ZkCloud network and its stakeholders, rather than any single shareholder's objectives.

Token Holdings: Certain team members, advisors, and contributors may hold a portion of the overall $PROOF token supply. Although the project's governance framework is structured to mitigate any undue influence, one theoretical concern is that personal financial interests could become tied to $PROOF's market performance. In such scenarios, decisions or recommendations might be shaped—consciously or unconsciously—by the prospect of immediate financial gain rather than the longer-term interests of the ZkCloud ecosystem.

Early Access and Privileged Information: By virtue of their direct involvement in ZkCloud, insiders sometimes gain advanced knowledge of technical updates, partnership details, or other sensitive information that could impact the token's value. Even though specific policies and protocols are designed to ensure equitable dissemination of such information, it is recognized across the industry that disparity in timing or depth of insight can theoretically lead to imbalances among token holders.

Decision-Making Impact: In the context of forming strategic partnerships, calibrating token metrics, or selecting listing venues, individuals with significant token allocations might—in some hypothetical situations—be motivated to pursue short-term market gains. While ZkCloud's governance aims to balance both immediate and long-term benefits, it is an industry-wide observation that certain stakeholders can, under less rigorous controls, prioritize actions that favor near-term value appreciation at the expense of enduring project growth.

2. Token Distribution and Allocation

Founders' and Team Allocations: A significant portion of the $PROOF token supply may be reserved for founders, core team members, or initial investors. While vesting schedules are commonly employed to discourage premature liquidation, these allocations can theoretically create incentives for influencing market price or liquidity before tokens fully vest. Although rigorous checks and balances are in place within ZkCloud, it is generally acknowledged in the industry that team-controlled tokens could give rise to perceptions of unequal influence on market dynamics.

Advisor and Partner Allocations: Advisors, along with select partners, may receive a portion of $PROOF tokens as part of their remuneration. In principle, such allocations are designed to align advisor interests with the project's success. Nonetheless, there exists a hypothetical risk that advisors could be inclined to provide guidance favoring short-term market gains over balanced, long-term strategies. While ZkCloud has instituted policies to prevent such scenarios, it mirrors an industry-wide concern where token-based compensation can raise questions about impartiality.

Market Perception vs. Actual Utility: Even if the ZkCloud ecosystem is built around tangible value—namely decentralized computing services—market participants may still assign speculative value to the $PROOF token based on sentiment or external commentary from founders or team members. This can result in market valuations that do not necessarily correlate with the token's fundamental utility. Although transparent communication and realistic expectations are guiding principles for ZkCloud, it is recognized that broader industry forces can introduce temporary misalignments between perceived and actual utility.

3. Project Governance

Control Over Protocol Upgrades: In developing and maintaining the ZkCloud network, the core team or affiliated entities typically hold the expertise and authority to implement protocol changes. Although such upgrades are intended to enhance functionality or security, they may also affect token economics or other system parameters. Even with a transparent governance approach, the centralization of technical control could theoretically benefit certain stakeholders over others if protocol changes are not subject to broad community consensus.

Internal Decision-Making: Where governance structures concentrate decision-making power in a small number of key participants, there is a possibility—however remote—that these insiders might set strategic directions aligning more closely with their own interests than those of the wider ZkCloud community. By contrast, a governance model that solicits community input and maintains checks and balances can diminish the perceived or actual risk of decision-making being steered by a select few.

Transparency and Communication: Openness in governance discussions and decision-making processes is a cornerstone of trust within decentralized projects. If these discussions occur behind closed doors or without accessible records, community members may be left unaware of pivotal choices affecting the ZKC token and the network's trajectory. Even if no actual conflict exists, a lack of clear communication can create suspicions of hidden agendas or preferential treatment, underscoring the importance of consistent, public updates.

4. Professional and Business Relationships

Advisors with Dual Roles: Certain external advisors may hold equity positions in Gevulot Oy (the offeror) or maintain personal allocations of $PROOF. Although the presence of such dual interests can help align advisor goals with the project's success, there is a hypothetical risk that professional counsel could be—knowingly or otherwise—affected by the individual's financial stake. ZkCloud's objective governance processes aim to ensure that advisory input remains impartial and in the best interest of the network.

Vendors and Service Providers: Companies providing specialized services to ZkCloud (e.g., marketing, public relations, or software solutions) may receive compensation partially or wholly in $PROOF. While this incentivizes high-quality work and a stronger commitment to ZkCloud's prosperity, there is a theoretical concern that vendors may focus on short-term token appreciation rather than the broader, long-term benefits of objective service delivery. The project's vendor agreements seek to align compensation structures with mutually beneficial performance outcomes.

External Partnerships: ZkCloud may enter into joint ventures or other alliances to enhance its range of services. In some instances, external partners might acquire or hold $PROOF in anticipation of the network's ongoing development, creating potential overlaps between partnership objectives and individual partner incentives. The ZkCloud team mitigates these concerns through transparent collaboration agreements, with the aim of ensuring that any decisions remain balanced between individual partner benefits and the collective interests of the ZkCloud ecosystem.

5. Mitigation Measures

Transparent Token Allocation: ZkCloud seeks to establish a clear, publicly available framework for token allocation, including detailed outlines of lock-up periods and vesting schedules. By ensuring that team members, advisors, and other stakeholders follow predictable release schedules, the project aims to discourage any efforts toward market manipulation or short-term, opportunistic behavior. These disclosures also allow external observers to monitor how tokens are distributed and to whom, thereby fostering a higher level of trust and accountability.

Clear Governance Policies: Where appropriate, the ZkCloud governance model emphasizes open participation and well-defined processes for conflict resolution. For instance, key protocol upgrades or major strategic decisions may be subject to community consultation or advisory input. By formalizing these procedures, the project reduces the likelihood of unilateral decision-making and helps align outcomes with the best interests of the broader ecosystem.

Information Access and Disclosure: To minimize any real or perceived advantage for insiders, ZkCloud commits to issuing timely, simultaneous updates on significant developments—such as technical changes, partnerships, or risk disclosures—to all stakeholders. By ensuring that material information is shared publicly rather than through private channels, the network seeks to promote an even playing field and counter any suggestion of selective or preferential access.

Advisory Code of Conduct: Professionals and advisors involved in the ZkCloud ecosystem—particularly those holding $PROOF tokens or equity in affiliated entities—are expected to adhere to clear ethical standards. These standards reinforce objectivity in providing strategic, legal, and technical recommendations, and may include explicit contractual provisions designed to mitigate the potential for conflicts of interest. Through this approach, the project bolsters stakeholder confidence that advisors' guidance will remain impartial and driven by the network's long-term success. By identifying the above scenarios in which conflicts of interest could theoretically arise, the ZkCloud team and Gevulot Oy strive to foster transparency and maintain trust among all stakeholders. Although such considerations are common within emerging blockchain projects, proactively addressing and mitigating any risks remains a critical component of safeguarding fairness, promoting long-term sustainability, and ensuring alignment with relevant regulatory standards for the $PROOF token ecosystem.

Users define the amount of compute resources and time required for their transactions, and once the transaction is registered on the network, the corresponding amount of $PROOF is automatically deducted from their account. This includes both the amount used to gain access to the computing services and the transaction fee necessary to process the transaction on the network.

Beyond its role as an access-method for computing services, $PROOF also incentivizes network participants — particularly compute providers — to contribute resources to the network. This ensures the availability and scalability of compute power based on demand. In the future, $PROOF may be further utilized as the network grows, unlocking access to additional features and services within the ZkCloud ecosystem.

However, the exact timeline may be subject to adjustments depending on external factors, such as the progress of listing negotiations with various platforms. A gradual rollout of features may occur, with core functionalities becoming available first, followed by additional services as the network and ecosystem expand.

Additionally, the network incorporates dynamic incentives for compute providers to ensure adequate compute capacity during periods of high demand. This is achieved through a compute fee subsidy, which is minted alongside regular block rewards. As users pay more in compute fees, additional subsidies are minted by the network, incentivizing more compute providers to contribute resources.

The $PROOF token operates on a decentralized network, utilizing a consensus mechanism that ensures both security and scalability. The token is divisible, allowing for fractional transactions, and plays a critical role in maintaining the ZkCloud ecosystem by enabling payments for computing services and incentivizing network participants.

While $PROOF currently functions as a utility token, providing access to network services, its future characteristics may evolve to include additional functionalities as the network expands.

Furthermore, as the ZkCloud ecosystem evolves, purchasers/holders of $PROOF may gain access to future services and functionalities, enhancing the utility of the $PROOF token over time. As the ZkCloud network scales, $PROOF may be used to unlock premium features or interact with decentralized applications that integrate with the ZkCloud platform. This ensures that purchasers are not only able to benefit from the immediate use of the network but also from the broader development of the ecosystem.

Obligations of the Purchaser: In order to maintain the integrity and security of the ZkCloud network, purchasers/holders are expected to abide by a set of obligations. These include using the network in accordance with the platform's terms of service and refraining from any malicious activities that could harm the network or its participants. Specifically, purchasers are prohibited from engaging in actions such as Distributed Denial-of-Service ("DDoS") attacks, hacking attempts, or deploying harmful code. Any activities intended to disrupt the operation of the network or compromise the security of other users are strictly forbidden. Purchasers are also required to comply with all relevant laws and regulations when using the ZkCloud network.

Purchasers of $PROOF have multiple ways to exercise their rights, specifically in accessing and interacting with the ZkCloud network. These methods include both direct access via a ZkCloud network address and third-party services if such methods end up being supported by the network:

1. Access via ZkCloud Address Creation: To interact with the network, token holders must typically first create a unique ZkCloud network address. This address serves as the primary means for managing and storing $PROOF tokens within the network. It is required for both sending and receiving $PROOF as well as for staking and accessing network services. Future updates to the network may enable additional methods to interact with the ZkCloud network, such as integrations with other Cosmos-based wallets or other compatible platforms.

2. Access via Third-Party Wallets and RPC API Providers: Token holders can access the ZkCloud network through compatible third-party wallets that support $PROOF tokens. Additionally, they may use Remote Procedure Call ("RPC") API providers to interact with the network in a streamlined way, allowing them to send transactions, pay for compute services, and manage their accounts efficiently. Typically, no special technical expertise is required to use these kinds of services, and thus they should offer a convenient method for general users to exercise their rights in connection with holding $PROOF.

3. Direct Access via Full Node Operation: For users with more technical experience, another option is to run a full node on the ZkCloud network. By doing so, they can interact directly with the ZkCloud network without relying on third-party services. This provides full control over their transactions and participation in the network, including validating transactions and accessing real-time data from the network. However, running a full node requires more advanced setup and maintenance compared to utilizing the aforementioned third-party services.

Conditions for Exercising Rights: To access the ZkCloud network, token holders must comply with the network's terms of service and any relevant legal or regulatory requirements. Users must also ensure the security of their private keys and access credentials, which are essential for safeguarding their tokens. Engaging in any illegal or malicious activity, such as hacking, DDoS attacks, or unauthorized access attempts, is strictly forbidden. Violations of these conditions, or any other misuse or otherwise malicious activity, may result in penalties, including restricted access to the ZkCloud network and any connected services.

Any such modifications would require a consensus among validators to upgrade the network; a process typically initiated to improve network functionality or address emerging needs. As this is a decentralized governance mechanism, the specific changes or impacts on the rights of token holders cannot be predetermined by any central entity. The nature of the changes will depend on the scope and goals of the network upgrade decided upon by the validator community.

Holders of $PROOF tokens should be aware that while their rights may evolve with future network upgrades, such changes will always require broad consensus among the validators, ensuring transparency and alignment with the best interests of the entire network.

The quantity of services available to token holders is directly tied to the amount of $PROOF tokens they hold, as these tokens are used to gain access to computing time and resources of the network. The more tokens a user holds, the greater the computing capacity they can access. This sort of token-use system ensures flexibility in usage, allowing users to scale their network usage up or down based on their specific computing needs.

Additionally, as the ZkCloud ecosystem grows, the token may grant access to other networks or services that adopt ZkCloud tokens for zk-computing tasks. This could potentially expand the scope of services available to token holders beyond the ZkCloud network, providing further utility and versatility for the tokens.

1. Defining Compute Requirements: Users log into the ZkCloud platform or compatible third-party applications, where they can define the amount of compute resources they require, such as processing power and compute time. The platform provides users with options to customize their compute needs based on the specific tasks they wish to perform, such as zero-knowledge computations.

2. Initiating Transactions: Once the compute resources are defined, the user submits a transaction on the ZkCloud network. The transaction, along with the associated compute task, is registered on the network.

3. Token Deduction: Upon registration of the transaction, the appropriate amount of $PROOF tokens is automatically deducted from the holder's account. This deduction covers both the compute fees and any additional transaction fees required to process the transaction on the network.

4. Accessing Services: After the transaction is confirmed, users gain access to the compute services they requested. The ZkCloud network dynamically allocates compute providers based on availability and the user's specified requirements, ensuring efficient execution of the requested services.

There are no additional barriers to redemption, and the process is seamless, with the network automatically handling the transaction and resource allocation.

Once $PROOF is successfully admitted to trading, prospective holders can purchase and trade $PROOF within those trading platforms as well.

Unlike dynamic supply adjustment protocols that respond directly to changes in demand, the ZkCloud network follows a fixed inflationary model to ensure predictable token issuance. This means that new $PROOF tokens are generated on a regular basis as part of block rewards, regardless of immediate market conditions or demand fluctuations.

The protocol's 3% inflation rate may be revised in the future through network governance proposals, though no such changes are currently planned. These governance mechanisms, if implemented, would allow token holders and validators to collectively decide on potential modifications to the inflation parameters to better reflect evolving network and market conditions.

By maintaining a steady supply increase, the protocol seeks to balance token availability and long-term utility within the decentralized compute marketplace. Additionally, as demand for $PROOF grows with increased network adoption, the impact of inflation on the overall token supply and price dynamics may diminish due to higher circulating volume and ecosystem integration.

Other inflationary mechanisms might be added to the protocol in the future via protocol updates.

The ZkCloud network is built using the Cosmos SDK, which provides a modular and adaptable framework for developing decentralized applications. The Cosmos SDK enables interoperability with other networks in the Cosmos ecosystem, facilitating seamless communication and data transfer between different networks. This enhances the scalability and flexibility of the ZkCloud network.

For consensus, the ZkCloud network uses the CometBFT (formerly Tendermint) consensus algorithm. CometBFT is a high-performance, Byzantine Fault Tolerant ("BFT") consensus protocol that ensures secure and reliable transaction validation across the network. This technology enables the ZkCloud network to achieve fast transaction finality, high throughput, and strong security guarantees, making it suitable for handling the decentralized compute marketplace that ZkCloud supports.

The ZkCloud network serves as the underlying distributed ledger technology ("DLT") for creating, transferring, and storing $PROOF, ensuring both scalability and security for the ecosystem.

The ZkCloud network has been developed using the Cosmos SDK; a highly modular framework that enables the creation of custom networks with interoperability capabilities. This architecture ensures that the ZkCloud network can communicate with other Cosmos-based networks and similar distributed ledgers, enhancing scalability and cross-network interactions.

The consensus mechanism employed by the ZkClould network is CometBFT (formerly Tendermint); a Byzantine Fault Tolerant ("BFT") consensus protocol. CometBFT ensures that the network achieves fast transaction finality, maintains high security standards, and supports high throughput. For data transfer and storage, ZkCloud utilizes the InterPlanetary File System ("IPFS"). IPFS is a distributed file storage protocol that allows for decentralized and secure data sharing, ensuring data integrity and efficient content addressing without reliance on centralized servers.

In the future, ZkCloud network will likely implement Inter-Network Communication ("IBC"); a protocol designed for seamless cross-chain asset transfers within the Cosmos ecosystem. IBC will allow the ZkCloud network to connect with other networks and distributed ledgers within the Cosmos network, enabling cross-chain token transfers, communication, and bridging between various different ecosystems.

The $PROOF tokens can be securely held, stored, and transferred using a variety of wallets that are compatible with the Cosmos ecosystem. This includes popular Cosmos-based wallets that support $PROOF, enabling users to manage their assets across multiple platforms.

In addition, users have the option to generate their own wallets using the ZkCloud Command Line Interface ("CLI") tool, providing advanced users with more control over their assets. This CLI tool allows users to interact directly with the ZkCloud network, enabling secure management and transfer of tokens through a flexible and customizable interface.

There are no specific minimum hardware requirements for holding, storing, or transferring $PROOF tokens. Users can access the ZkCloud network and their wallets via standard computers or devices that meet typical internet access and security standards. For users looking for enhanced security, hardware wallets or cold storage solutions compatible with Cosmos-based tokens can be used to safeguard their assets.

The ZkCloud network utilizes CometBFT; a well-established Proof of Stake ("PoS") consensus mechanism that is based on the Tendermint protocol. CometBFT ensures that transactions on the ZkCloud network are securely validated by a decentralized network of validators. Validators are chosen based on the number of tokens that are delegated to them, and they are rewarded for validating blocks and maintaining the security of the network.

In the Proof of Stake model, validators are required to “stake” a portion of their tokens as collateral, which incentivizes them to act honestly and secure the network. If validators behave maliciously or attempt to disrupt the network, they risk losing their staked tokens.

CometBFT also provides Byzantine Fault Tolerance ("BFT"), which ensures that the network remains secure and functional even if a portion of the validators act maliciously or experience failures. This combination of PoS and BFT makes CometBFT highly secure and efficient for the various distinct needs that ZkCloud network's users may have.

1. Transaction Fees: Validators receive a portion of the fees paid by users for processing transactions on the ZkCloud network. Every transaction incurs a fee, which is paid in $PROOF tokens and helps compensate validators for their efforts in securing the network. The specific fee structure is yet to be finalized, but it will be designed to provide fair compensation while ensuring affordable transaction costs for users.

2. Block Rewards: In addition to transaction fees, validators are also rewarded through block rewards. These rewards are distributed to validators each time a new block is added to the network, serving as an additional incentive to participate in the validation process. The exact amount and distribution method for block rewards will be determined as the network reaches final development stages.

This distributed ledger technology enables the issuance, transfer, and storage of $PROOF tokens through the ZkCloud network. Each transaction, whether it involves transferring tokens or accessing network services, is recorded directly into the distributed ledger, ensuring transparency, security, and immutability. Validators are responsible for verifying transactions and adding them to the network. This decentralized model ensures that no single entity controls the ledger, maintaining the integrity and security of the system.

Additionally, the network incentivizes validators to operate the necessary hardware through transaction fees and block rewards, as determined by the PoS consensus rules. These mechanisms ensure that the ZkCloud network remains scalable and secure, while facilitating the seamless issuance, transfer, and storage of the $PROOF tokens.

Depending on the jurisdiction, investors may also face legal uncertainties or restrictions regarding participation in the offering, particularly in countries with stringent crypto regulations.

In such cases, legal and regulatory risks could arise from changes in government policies that target crypto-asset issuers, increasing the complexity of compliance. Furthermore, any reliance on internal controls or governance structures within affiliated entities could introduce risks related to inadequate oversight, fraud, or insufficient risk management.

Financial Stability: If the issuer experiences financial difficulties or fluctuations in revenue, this could jeopardize the project's development or continuity.

Business Activities: Mismanagement or strategic misalignment could adversely affect project delivery, particularly if the issuer ventures into risky or unrelated business areas.

Legal Compliance: Regulatory changes could expose the issuer to fines, penalties, or restrictions, especially if the issuer operates across different jurisdictions with conflicting laws.

Internal Control Mechanisms: Weaknesses in governance, such as insufficient oversight or unclear decision-making structures, could create vulnerabilities in risk management and operational effectiveness.

There are also risks related to the regulatory status of $PROOF, particularly in jurisdictions where the legal classification of crypto-assets remains uncertain. Future regulation may impose restrictions on trading, holding, or using $PROOF, limiting its utility and liquidity.

Lastly, there is a risk of loss due to technical issues such as bugs, network attacks (e.g., 51% attacks), or errors in smart contracts that could lead to token loss or compromise of the network.

Technical Vulnerabilities: Smart contracts or network protocols may have bugs, exploitable code, or security flaws, which could lead to theft, unauthorized access, or data breaches.

Poorly designed token models, such as inflationary supply structures or governance tokens that centralize control, may undermine the asset's long-term viability.

The risk of cyberattacks, including theft of funds through hacking or exploiting contract weaknesses, is a persistent threat in the crypto space.

Regular code audits, industry-standard security protocols, and insurance mechanisms are critical to reducing these risks.

Additionally, reliance on third-party tools such as IPFS for decentralized storage and future integration with IBC for cross-chain transactions poses risks if these technologies encounter bugs, security vulnerabilities, or performance issues.

Security risks also exist in the form of potential attacks on the network, including DDoS attacks, smart contract vulnerabilities, or attacks aimed at compromising validators.

System Security: Network networks may be vulnerable to security breaches, including 51% attacks, which could compromise the integrity of transactions or assets.

As user activity increases, the technology may struggle to scale efficiently, leading to congestion, higher transaction fees, or longer processing times.

Distributed systems may have weaknesses, including consensus algorithm flaws or vulnerabilities in the underlying codebase.

Additionally, reliance on third-party tools such as the InterPlanetary File System ("IPFS") for decentralized storage and future integration with IBC for cross-chain transactions poses risks if these technologies encounter bugs, security vulnerabilities, or performance issues.

Security risks also exist in the form of potential attacks on the network, including distributed denial of service ("DDoS") attacks, smart contract vulnerabilities, or attacks aimed at compromising validators.

System Security: Network networks may be vulnerable to security breaches, including 51% attacks, which could compromise the integrity of transactions or assets.

As user activity increases, the technology may struggle to scale efficiently, leading to congestion, higher transaction fees, or longer processing times.

Distributed systems may have weaknesses, including consensus algorithm flaws or vulnerabilities in the underlying codebase.

To address security concerns, the ZkCloud network undergoes regular security audits of its codebase, including the smart contracts and consensus protocols, to identify and patch vulnerabilities before they can be exploited. Furthermore, the use of IPFS for decentralized storage and the planned integration with IBC are both based on widely adopted and audited technologies within the network ecosystem, which helps to reduce the risks associated with their use.

The network's governance structure also allows for upgrades and modifications to be implemented through decentralized decision-making, ensuring that any issues can be addressed quickly and efficiently through community consensus.

General information