We’re excited to announce AQ1, an stable, decentralized ERC-721-based reserve asset. Serving as the Aliquo protocol’s governance token, AQ1 are 1,000 NFTs collateralized 1:1 with a 0,1% stake in a protocol reserve that accumulates the earnings from royalties over secondary sales of AQ1. For further understanding, read the AQ1 documentation.

Meet AQ1

During the past year, we’ve been researching what we generically defined as ‘‘stratified NFTs’’, on which, in simple terms, sought to draw a structurally viable and economically sustainable concept of layered-designed non-fungible tokens: in addition to the NFTs’ visual output (i.e., the first layer; apparent to the beholder), such ‘‘stratified NFTs’’ are designed to contain financial attributes (i.e., the second layer; intrinsic to the beholder). After a year of carving out our vision, the result becomes synthesized through AQ1 — the Aliquo-native token.

To materialize theory into practice, Aliquo makes AQ1 possible by comprising existing mechanisms widely adopted by the crypto market. Through leveraging NFT royalties as a stream to provide protocol-owned liquidity, coupled with a token-gated community, decentralized organization, and multi-signature wallet, Aliquo presents AQ1, an ERC-721 token structured on underlying financial features: Royalties as Liquidity (RaL), Reserve-Backed, Proof of Value (PoV), Protocol Ensured Value (PEV), Non-Inflationary, Auto-Compound, and Free-Floating.

Key Features

Royalties as Liquidity (RaL): By default, AQ1 has 10% of royalties over secondary sales. 100% of the earnings captured is accured in the AQ1 Vault. Through a royalty-fueled flywheel mechanism, Aliquo instantly adds the profit earned from royalties over secondary sales of the entire token supply of AQ1 back to the principal amount of the token, providing a long-term, virtuous cycle of compounding the backed floor price of AQ1 itself.

Reserve-Backed: Each AQ1 is collateralized 1:1 by a 0,1% stake in the AQ1 Vault (100%/1,000). AQ1 Vault accrues ETH, WETH, and Blur Pool from royalties over secondary sales of AQ1, which are fully employed to collateralize the backed floor price of AQ1 itself.

AQ1 Vault, the protocol reserve to which the earnings from royalties over secondary sales of AQ1 are allocated, is fractionalized with a theoretical ratio of 1:1 between the vault’s assets value (100%) and the NFT supply cap (1,000).

Proof of Value (PoV): Proof of Value (PoV) is the method to audit the backed floor price of AQ1. It works as a due diligence process where anyone can verify the AQ1 Vault’s assets value that is collateralizing the backed floor price of AQ1 in the root, tracking it on block explorers.

Non-Inflationary: AQ1 is non-inflationary, having a hard-capped supply of 1,000 NFTs. This means after the entire token supply of AQ1 is minted, the smart contract perpetually shutdowns the token emission. Immutable, the supply cap is embedded in the smart contract code and anyone can verify it.

Protocol Ensured Value (PEV): 100% of the holdings of AQ1 Vault is employed to collateralize the backed floor price of AQ1. Assuming the fact that Aliquo does not sell funds from the AQ1 Vault’s balance sheet and there’s no new token issuance after the 1,000 AQ1 become minted, the protocol ensures that the backed floor price of AQ1 is always collateralized 1:1 by a 0,1% stake in the AQ1 Vault (1,000/100%), not falling below.

Free-Floating: AQ1 is free-floating, meaning that each NFT is free to trade above 0,1% of the AQ1 Vault’s assets value, at a premium.

Auto-Compound: AQ1 are 1,000 auto-compound ERC-721 tokens. The core of the auto-compound interest of AQ1 occurs by increasing and leveraging the backed floor price of the NFTs themselves, automatically adding earnings from royalties over secondary sales to their backed floor price — with the resulting compounded backed floor price of each NFT becoming principal for the next cycle.

Governance Token: AQ1 serves as the Aliquo’s governance token via Aliquo DAO. The DAO governs Aliquo and maintains the consistency of AQ1 by controlling Aliquo Treasury. The membership of Aliquo DAO is based on anyone holding at least one AQ1, meaning AQ1 token-holders are the decision-makers of Aliquo. In other words, AQ1 is an ERC-721 governance token that dictates Aliquo by AQ1 token-holders issuing and voting on governance proposals via Aliquo DAO.

On-Chain Storage

AQ1 is generated and stored on-chain. No third-party servers become utilized to store the metadata and visual output of each AQ1; the Ethereum blockchain is the data store.

Visual Output

At the time of minting AQ1, a randomly generated string of 36 binary numbers made up of 0 and 1, divided into 6 rows, becomes engraved on each AQ1 visual output. Like a fingerprint, no two strings are the same, thus, no two AQ1 are the same — every AQ1 is 1/1.

Aliquo Flywheel

Aliquo introduces a flywheel mechanism that makes the protocol collect 100% of earnings from royalties over secondary sales of Aliquo-native NFTs, of which 100% of the earnings become employed to back the floor price of the NFTs themselves. This creates the Aliquo Flywheel.

1. The increased trading of AQ1 leads to increased earnings from royalties over secondary sales;

2. Increased earnings from royalties over secondary sales increase the vault’s balance sheet and, subsequently, increase the value of the 0,1% stake in the vault backing the floor price of AQ1;

3. The increase of the backed floor price of AQ1 generates, proportionally, leveraged earnings from royalties in each trade of AQ1 on the secondary market;

4. The circle is completed and repeated in a perpetual loop.

Conclusion

Fully ETH-backed, we aim that AQ1 can function as a decentralized reserve asset that captures its liquidity and accrues as backed value, enabling the token to retain or increase its purchasing power over time, rather than depreciate; the primary fundamental of a reserve asset. Through AQ1, Aliquo provides a new, permissionless option to mitigate financial risk, with equal access to everyone.

Although designed for Aliquo, we intend that the token model design of AQ1 is applicable to a wide variety of NFT projects and DeFi protocols. We encourage anyone interested in collaborating or discussing to connect with us. If you are interested in taking AQ1 as a starting point, we’d love to see other projects adapting and enhancing our vision.

The fair public launch of AQ1 will occur in the next couple weeks. Follow us on Twitter to stay tuned for the announcement.

For further reading: Whitepaper, Documentation