VERSO

Introduction

An increasing number of companies and ecosystems are embedding financial service products, such as bank accounts or wallets, insurance, savings, and lending products into their user journey, appealing to customers with convenience and usability, while adding new revenue lines to nonfinancial companies and increasing stickiness at the same time.

Venture Capitalists, Angela Strange at Andreessen Horowitz and Matt Harris at Bain Capital Ventures, have for years encouraged their companies to consider embedded finance as a key monetization lever, “making every company a fintech company”.

Embedded finance is still a nascent industry sector and over the last 3 years, we have seen different types of participants emerging:

1. Ecosystem builders: non-financial companies looking to leverage their users and reach to generate additional value from added financial services to their products.

2. Connectors: companies focusing on the connectivity part, such as open-banking APIs.

3. Infrastructure providers: bank-like technology companies looking to embed financial processes natively into other companies.

Banks and e-wallets play a crucial role in this as many financial products require an underlying personal financial account. A direct link between product and account is paramount to reduce friction and cost associated with the distribution and settlement of financial products. This is particularly true for microfinance. For example, a $100 microloan should be linked to a specific financial account to streamline disbursement and repayments. Similarly for a 3-day travel insurance, a direct link to a financial account significantly reduces cost for premium collection and claim disbursements. The rise of decentralized finance (DeFi), a rapidly growing sector, solves many of the challenges when connecting financial products (e.g. loans) with financial accounts (e.g. e-wallet), but retail adoption within broader ecosystems is still far away.

Embedded finance is a subject of much debate and requires gradual steps while taking all ecosystem participants into consideration: from governments and regulators to regulated entities such as: banks, e-wallets, consumer businesses and apps.

Verso is a decentralized marketplace for the regulated financial service industry. It bridges the gap between traditional finance (CeFi) and DeFi by standardizing how financial products get distributed and connected to consumers via regulated e-wallets and bank accounts. Verso enables existing regulated financial service providers, such as lenders or insurance providers, to distribute microfinance products at scale while at the same time providing DeFi products an onramp into the retail space. Banks, e-wallets and other participants can connect to Verso and dynamically retrieve financial products personalized to their users, all without complex integrations and counterparty risks. Verso is community-governed by its ecosystem participants and uses its own token (Verso token) to incentivize behavior that shapes the Verso ecosystem in the long-term while protecting its reputation as a trusted distribution network for the regulated financial service industry.

Verso is based in Switzerland with a distributed team across America, Europe and Asia. Together with Wallet Engine, a founding member of the Verso network, strategic partners, and reputed advisors, Verso is set to accelerate the distribution of inclusive financial products to retail consumers across geographies.

VERSO FINANCE

Verso is a decentralized marketplace standardizing how financial products are created, distributed and settled. It addresses fundamental distribution challenges which have been inhibiting the mass-adoption of meaningful financial products by retail consumers. This mainly revolves around microfinance products and innovative decentralized financial products. The underlying challenges needs to be addressed taking each of the following ecosystem participants into consideration:

• Financial Service providers

• Financial Institutions and wallet providers

• Decentralized financial products

Verso has been designed for traditional and decentralized finance (DeFi) alike while taking into account the difference in regulatory requirements across jurisdictions. Ecosystem participants require the Verso token (VSO) to access network services and to contribute towards the continuous improvement via community governance.

Financial Service Providers

Traditional financial institutions are challenged with distributing microfinance products in a cost-efficient manner. Microfinance is a vast market opportunity, but the cost to acquire customers and to settle potential claims often exceeds the margin of these products. As a result, financial institutions that want to offer microfinance products need to use third-parties and leverage their sales channels to “upsell” a microfinance product. As an example, an insurance company may offer a 3-day travel insurance through a third-party remittance company that services migrant workers, with the product being offered as an add-on option every time these migrant workers send money back home. This is a risky business strategy as it depends on third parties, other industries and the competitive edge and longevity of those partners.

A better way to distribute microfinance products is to offer them directly, either inside an e-wallet or as part of a mobile banking experience. Leveraging either of these options removes the settlement complexity, such as premium payment and claim disbursements in the case of an insurance product, or as a disbursement and repayment account, in the case of a short-term loan. However, in most cases this is not a viable strategy either as it requires multiple individual agreements and integrations between financial service providers and different e-wallet and digital banks. In summary, financial service providers are facing the following challenges:

(Problems)

• Cost of user acquisition is greater than product margin

• Overhead associated with complex settlement process

• Different integration standards across partners

• Complexity of the landscape

Verso improves the unit economics for microfinance by standardizing how financial products are distributed and through the use of distributed ledger technology and smart contracts to remove intermediaries and the necessity for various counterparty agreements, giving users new opportunities without upfront investment.

Verso Ecosystem

The Verso ecosystem serves as a market layer connecting licensed financial institutions offering regulated financial products (CeFi), decentralized financial products (DeFi), and consumers who interact with digital wallets or digital banks.

Financial institutions want to offer new world products to an ever growing pool of consumers online but depending on the kind of licenses they hold, and the jurisdiction they hold them in, they may be restricted in terms of what kind of products they can provide and to whom they can actually provide the products. Traditional broadcast marketing channels are ineffective when only certain categories of consumers within them are eligible.

Wallet providers are in the advantageous position of having ongoing relationships with consumers, the regulatory principles that they operate under dictate a continuous KYC relationship, and the stickiness of wallets provided through apps result in longer term relationships. The consumer insight enjoyed through this relationship puts wallet providers in the perfect position to offer tailored product offerings, while ensuring focused marketing with no efforts wasted interacting with non-eligible consumers. In addition, they can conveniently offer DeFi products, which might otherwise be too complicated for their users to access. Consumers enjoy the results of product marketing that is tailored to their circumstance, and the stickiness with their digital wallet increases further.

Verso is a new decentralized platform that allows tailored product offerings to consumers with digital wallets of any kind, in a targeted, compliant and responsible manner. Verso provides financial service providers with access to previously inaccessible consumers, and allows those consumers access to exciting new product offerings through whichever wallet they already happen to use.

The Verso Token (VSO) is used for granting access to the platform, and is also used for the marketing, placement, and conversion of products. The products themselves are based on legal regulatory relationships between the financial service providers directly with the consumers, so they are settled in USDC to allow for stability over the period of the product contract.

Validators ensure that compliant products are made available, and that those products are only displayed to appropriate consumers. They will also set up the related product smart contracts, and power any required transaction signing. They may also have a role in generating new VSO in the future.

Consider a licensed insurance provider in Ireland offering basic mobile phone insurance, their license from the Irish financial regulator allows them to provide insurance services to consumers located in Ireland, and also to Irish citizens around the world. Traditional marketing services work for them in Ireland but they have no effective way of offering their services to the Irish abroad in a targeted manner.

The insurance provider submits the product to Verso to advertise to anyone with Irish citizenship, the participation pool is then credited with VSO, and validators verify the product from a compliance aspect. Depending on the regulations relevant to the product, the financial institution itself may need to be verified (KYB) as well as the suggested target markets (e.g. non-EU loan products may not be advertised in the EU). Validators then categorize the product and set up the smart contracts between the interested parties, which manage and control the allocation and distribution of VSO from the participation pool.

A leading wallet provider in Australia can then see the product in the marketplace and fetch and display it to consumers who hold an Irish passport. Wallet providers often have access to a wider set of consumer data including personal details such as location, interests and financial status. This scenario is typical for wallet providers everywhere, who have a more intimate longer term relationship with their customers. At the end of the product campaign that wallet provider will be entitled to a share of the fetch bonus, as well as a conversion bonus for every successful product sale.

The Irish insurance company has increased their target consumer base significantly and the Australian wallet provider has increased their transaction volume while improving customer loyalty. This new business was made possible by the Verso Network. As part of the Verso community, both now also have the opportunity to act as Validators, and can earn VSO. What VSO they hold allows them to shape the marketplace going forward. That community will define future pricing structures and reward structures, as well as new product offerings.

User Experience

Financial Service Providers access the Verso Portal to define products and campaigns for placement, as well as to review ongoing product statistics and performance. They can view the status of the various reward pools for their campaign.

Validators are a subset of Financial Service Providers, so their Verso Portal access credentials will also allow them to access validator functionality. They can opt to take part in the validation of a certain product or campaign, as well as register their findings and their vote. They can also monitor and manage their validation bonuses.

When Wallet Providers or Banks access the portal it offers them a list of the products available for them to fetch. They can also monitor the progress of already fetched products, as well as managing their conversion and fetch bonuses.

Consumer related personal data is not exposed to the Verso Portal. Verso furnishes the Financial Service Provider and Wallet Providers/Banks with secure APIs to populate the product smart contract which encompasses the product.

Consumer UI is completely flexible, giving the Wallet Provider full responsibility for UE. This is desirable since it is the Wallet Provider or the Bank who holds the ongoing relationship with the consumer. This allows the customer to ‘feel at home’, with new products being offered with the same look and feel that they are accustomed to. White label wallet providers can offer the same products through various different wallets that have a very different look and feel tailored to their consumer communities. The customer journey is driven by elegant API’s that are invisible to the consumer.

VERSO Token Model

VSO is Verso Network’s native token being issued on the Avalanche C-Chain. VSO is a utility token to access network services and reward network service providers. In addition, VSO tokens are required to participate in community governance to continuously develop the Verso ecosystem.

Token Specs

Token Ticker VSO

Token Type ERC20 - Burnable

Token Supply 100,000,000

Blockchain Avalanche C-Chain

Contract Address TBA

Token Utility

The Verso token (VSO), is an ERC-20 standard-based utility token created on the Avalanche chain. The token grants users the access to Verso financial platform and its services. The token is required for product funding, validator rewards, voting and processing product fetching. In addition to VSO, stable coins are used as well depending on the implemented use case.

Staking

VSO token can be staked in 2 different ways. First, by becoming a financial product validator where a stake (collateral) is needed in order to ensure fair behavior among the validators. Second, in order to participate in the governance process a stake towards a proposal is required in order to allow the participants to cast their votes.

Governance

Once mature, Verso will gradually transition to community governance, allowing the community to decide the future of the network. VSO token holders may stake their VSO to vote on or propose new ideas to improve the Verso network. Some of such decisions could be:

• New product types

• Addition or removal of product parameters

• Data sharing

• Adjustment to product placement price and related allocations

• Approval of new Validators

• Any future actions to be taken on the tokens in the Ecosystem Development Pool

Governance voting is performed by issuing a VIP (Verso Implementation Proposal). Once the VIP is ready for voting all the interested parties (most likely financial product providers and wallet providers) vote by staking their tokens in favor or against the proposal. In other words, the more VSO tokens a single entity stakes, the more voting power they possess.

Validator Rewards

To become a product validator and earn VSO rewards a certain amount of work is required to be performed. In addition to that, to become a validator it is necessary to stake 1 million VSO tokens (at the initial public sale price of $0.05 that is $50,000 worth of tokens as collateral).

Each quorum member must have a set minimum amount of staked tokens, and their votes are equal. This will even out the voting power for validation, unlike the governance staking where more tokens equals more voting power.

Once a product has been entered into the smart contract a voting round is started allowing the participants a fixed time period to approve or reject the submitted product. Depending on the outcome of the vote a product is approved and available for distribution. If the product is rejected the VSO tokens deposited for the “Fetch and Conversion”- bonuses are returned to the Financial Institution. In either case the validators are rewarded with VSO tokens for performing the voting and regulatory checks ensuring the quality of the products in distribution.

It is important to note that in case of illicit behavior of one of the validators, his validator bonus is burned along with an equal amount from his staked collateral. In case the collateral falls below the 1 million VSO mark, it needs to be topped-up again prior to performing additional validations.