NIL TOKEN WHITE PAPER

N°

FIELD

CONTENT

The NIL Token may lose its value in part or in full, may not always be transferable and may not be liquid.

The NIL Token is not covered by the deposit guarantee schemes under Directive 2014/49/EU of the European Parliament and of the Council.

SUMMARY

The admission to trading of the NIL Token does not constitute an offer or solicitation to purchase financial instruments, or an admission to trading of financial instruments and any such offer, solicitation or admission can be made only by means of a prospectus or other offer documents pursuant to the applicable national law.

This 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 EU or national law.

The NIL Token qualifies as a utility token under Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets (“MiCA”).

Key Information about the Quality and Quantity of the Goods or Services to which the Utility Tokens give Access

Restrictions on Transferability.

The NIL Token will be freely transferable.

The Nillion Association (“Association”) seeks admission of the NIL Token on multiple trading platforms (“Exchanges”) in order to support the launch of the Network.

§      Trading Platform Risk: When NIL Token holders buy or sell the NIL Token on the Exchanges, the Association does not serve as a contractual party to the future NIL Token holder. Consequently, any legal relationship concerning these trading platforms is subject to their own terms and conditions. The Association assumes no responsibility for the operations, services, or outcomes associated with these Exchanges.

§      Delisting Risk: The Association cannot guarantee that the NIL Token will remain listed or tradeable on any Exchanges. Delisting could significantly hinder the ability of NIL Token holders to buy, sell, or otherwise transact in NIL Tokens. In the event of delisting, NIL Token holders may face challenges in finding alternative markets or counterparties willing to trade NIL Tokens, which could adversely impact the NIL Token’s liquidity and market value.

§      Insufficient Depth Risk: There can be no assurance as to the depth or sustainability of the secondary market (if any) in the NIL Tokens, which will affect their liquidity and market price.

§      Failure of the Trading Platform Risk: Disruptions at trading platforms and potential consequences of a trading platform’s failure could adversely affect the value of NIL Tokens. Trading platforms operate websites on which users can trade crypto-assets for fiat currencies, such as U.S. Dollars and Euros, or other crypto-assets. Trades on these trading platforms can be unrelated to transfers of the crypto-assets between users via the respective crypto-asset network if the trading platform co-mingles funds and does not offer a unique wallet address for each user. For example, co-mingling refers to a lack of segregation of user assets and is a common practice among many trading platforms. These trading platforms might not provide a unique wallet for each user and as a result, might have one or more large wallets composed of the assets of several users, comingled. This results in a centralization of a large amount of assets in a single location and could therefore increase the amount of damage or theft that can be done from a negative situation such as a hack. As a result, sometimes crypto-assets traded on trading platforms are recorded on the trading platform’s internal ledger only, and each internal ledger entry for a trade will correspond to an entry for an offsetting trade in government currency or other crypto-asset. To sell crypto-assets on a trading platform, a user will transfer crypto-assets (using the crypto-assets network) from himself or herself to the trading platform. Conversely, to buy crypto-assets on a trading platform a user will transfer fiat currency or other crypto-assets to the trading platform. After completing the transfer of crypto-assets or fiat currency, the user will execute its trade and receive either the crypto-assets (using the crypto-assets network) or the fiat currency back into its account.

§      Bankruptcy Risk: The Exchanges may go bankrupt, which may result in substantial or even total losses for the NIL Token holder.

§      Withdrawing Partners Risk: This is the risk that the Association faces in its business relationships with one or more third parties. The feasibility of the Network as a whole depends strongly on the collaboration and functioning of services provided by several third parties and other crucial partners. Loss or changes in the project’s leadership or key partners can lead to disruptions, loss of trust, or project failure. The Association cannot guarantee that the Network as a whole will be successfully developed and deployed.

§      Third Party Risk: Third parties can elect to support NIL Tokens on their Exchanges without any authorization or approval by the Association or anyone else. As a result, NIL Token support on any third-party platform does not imply any endorsement by the Association that such third-party services are valid, legal, stable or otherwise appropriate.

§      Network not Operated by the Association Risk: The Network is neither operated nor controlled by the Association. When a NIL Token holder interacts with the Network, they are engaging directly with the Network and potentially with third parties that have no relationship to the Association. This means the Association does not oversee or manage these interactions, nor does it assume responsibility for any outcomes that may arise.

§      Legal and Regulatory Compliance Risk: Cryptocurrencies and blockchain-based technologies are subject to evolving regulatory landscapes worldwide. Regulations vary across jurisdictions and may be subject to significant changes. This could lead to changes with respect to trading of the NIL Token and increase the Association’s costs and/or obligations in admitting the NIL Token for trading. Changes in laws or regulations may negatively impact the value, legality, or functionality of the NIL Token. Non-compliance can result in investigations, enforcement actions, penalties, fines, sanctions, or the prohibition of the trading of the NIL Token impacting its viability and market acceptance. The Association could also be subject to private litigation.

§      Operational Risk: Any failure to develop or maintain effective internal control or any difficulties encountered in the implementation of such controls, or their improvement could harm the business of the Association, causing disruptions, financial losses, or reputational damage.

§      Industry Risk: The Association is and will be subject to all of the risks and uncertainties associated with any new venture, visionary projects, including the risk that the Association will not be able to realize its purpose or vision about the Project. Other projects may have the same or a similar vision as the Association. Many such other projects are profit-oriented, substantially larger and have considerably greater financial, technical and marketing resources than the Association does, and thus may attract more participants than the Network initiated by the Association.

§      Reputational Risk: The Association faces the risk of negative publicity, whether due, without limitation, to operational failures, security breaches, or association with illicit activities, which can damage the Association’s reputation and, by extension, the value and acceptance of the NIL Token.

§      Competition Risk: There are a number of other crypto-assets and projects, and other competitors may enter the market at any time. The effect of new or additional competition on the NIL Tokens or their market prices cannot be predicted or quantified. Competitors may have significantly greater financial and legal resources than the Association and there is no guarantee that the Association will be able to compete successfully, or at all, with such competitors. Moreover, increased competition may severely impact the profitability and creditworthiness of the Association.

§      Unanticipated Risk: In addition to the risks included in this section, there might be other risks that cannot be foreseen. Additional risks may also materialize as unanticipated variations or combinations of the risks discussed within this section.

§      Liquidity Risk: The NIL Token may suffer from low liquidity, making it difficult to buy or sell large amounts without affecting the market price, which could lead to significant losses, especially in fast-moving market conditions.

§      Valuation of Crypto-Asset Risk: The valuation of crypto-assets depends on future expectations for the value of the network, number of transactions and the overall usage of the crypto-asset. This means that a significant amount of the value in NIL Tokens may be speculative and could lead to increased volatility. NIL Token holders could experience significant gains, losses and/or volatility depending on the valuation of NIL Tokens. Valuation may also vary significantly by geography, as local exchanges are not necessarily compatible with all crypto-assets and it may be difficult to move in and out of any specific market. As a result, geographic arbitrage can have a considerable effect on valuation. Momentum pricing of crypto-assets has previously resulted, and may continue to result, in speculation regarding future appreciation or depreciation in the value of such assets, further contributing to volatility and potentially inflating prices at any given time. As a result, pricing of crypto-assets may change due to shifting holder confidence in future outlook of the asset class. These dynamics may impact the value of NIL Tokens.

§      Scam Risk. This is the risk of loss resulting from a scam or fraud suffered by NIL Token holders from other malicious actors. These scams include – but are not limited to – phishing on social networks or by email, fake giveaways, identity theft of the Association or its management body, creation of fake NIL Tokens, offering fake NIL Token airdrops, among others.

§      Anti-Money Laundering/Counter-Terrorism Financing Risk: This is the risk that crypto-asset wallets holding NIL Token or transactions in NIL Token may be used for money laundering or terrorist financing purposes or identified to a person known to have committed such offenses.

§      Taxation Risk: The taxation regime that applies to the trading of NIL Token by either individual holders or legal entities will depend on each NIL Token holder’s jurisdiction. The Association cannot guarantee that the holding of NIL Token, the reception of the NIL Token, conversions of fiat currency against NIL Token, or conversions of other crypto-assets against NIL Token, will not incur tax consequences. It is the NIL Token holder’s sole responsibility to comply with all applicable tax laws, including, but not limited to, the reporting and payment of income tax, wealth tax or similar taxes arising in connection with the appreciation and depreciation of the NIL Token.

§      Interest Rate Change Risk: Changes in interest, foreign exchange rates, and increases in volatility can increase credit and market risks and may also affect the value of the NIL tokens. General movements in local and international markets and factors that affect market climate, and the crypto-asset holder sentiment could affect the level of trading and, therefore, the market price of NIL tokens.

§      Market Abuse Risk: The markets of crypto-assets is growing rapidly. These markets are local, national and international and include a broadening range of crypto-assets and participants. Significant trading may occur on systems and platforms with minimum predictability. Any sudden, rapid change in demand and supply of any crypto-assets, especially those with a small market capitalization or small unit price, could cause significant price volatilities. The characteristic of crypto-assets and the underlying infrastructure could be used by certain market participants to exploit arbitrage opportunities through schemes such as front-running, spoofing, pump-and-dump and fraud across different systems, platforms or geographic locations. Any market abuse, and a loss of holder confidence in NIL Tokens, may adversely impact the value of NIL Tokens.

§      Legal and Regulatory Risk: There is also a lack of regulatory harmonization and cohesion globally which could lead to diverging regulatory frameworks globally and/or an evolution of crypto-asset rules in the future. While NIL Tokens do not create or confer any contractual or other obligations against any party, certain regulators may nevertheless qualify the NIL Token as a security or other financial instrument under their applicable law. This could lead to significant changes with respect to the NIL Token, how the NIL Token is structured, how the NIL Token is purchased and sold, and other issues, and would greatly increase the Association’s costs in creating and facilitating transactions in the NIL Token. Such regulation could lead to the NIL Token losing functionality and/or depreciating partially or fully in value, subject the Seller and its affiliates, directors, and officers to potential penalties, including federal civil and criminal penalties, or make the NIL Token illegal or impossible to use, buy, or sell in certain jurisdictions. Further, a regulator could take action against the Association if it views the NIL Token as an unregistered offering of securities or the Association’s operations otherwise as a violation of existing law. Any of these outcomes would negatively affect the value and functionality of the NIL Token and/or could cause the Association to cease operations.

§      Suitability Risk: (i) The Network will be deployed on an “as is” and “as available” basis, with reasonable level of care, without warranties of any kind, and the Association expressly disclaims all implied warranties as to the NIL Token, the Network including, without limitation, implied warranties of merchantability, fitness for a particular purpose, title and non- infringement; (ii) the Association does not warrant that the NIL Token and/or, the Network are reliable, current or error-free, meet the NIL Token’s requirements, or that defects in the NIL Token, the Network will be corrected; and (iii) the Association cannot and does not warrant that the NIL Token, the software code of the NIL Token smart contracts, or the delivery mechanism for NIL Token or the Network, are free of viruses or other harmful components.

§      Software Weakness Risk: The NIL Token holder understands and acknowledges that the involved software and technology supporting the Network are young technologies, which is why there is no warranty that the process for receiving, using, and holding the NIL Token will be uninterrupted or error-free and that there is an inherent risk that the underlying blockchain, the smart contracts thereon, as well as any related technologies or concepts could contain weaknesses, vulnerabilities or bugs causing, inter alia, the complete loss of Tokens or their functionality.

§      Withdrawing Partner Risk: The NIL Token holder understands and accepts that the feasibility of the Network as a whole depends strongly on the collaboration of service providers and other crucial partners. The NIL Token holder therefore understands that there is no assurance that the Network as a whole will be successfully implemented.

§      Technology Risk: The NIL Token holder is aware that the Association or any third party may propose to migrate the developed software codes of the Network to another underlying distributed-ledger protocol, standard or technology in the future. If the NIL Token holder fails to effectuate such migration, the functionality of the NIL Token may get lost. The Association shall not be responsible or liable for any damages, losses, costs, fines, penalties or expenses of whatever nature, whether or not reasonably foreseeable by the Association and the NIL Token holder, which the NIL Token holder, may suffer, sustain, or incur, arising out of or relating to the NIL Token holder’s failure to effectuate such migration of its NIL Token to another protocol or technology identified by the Association.

§      Suitability Risk: (i) The Network will be deployed on an “as is” and “as available” basis, with reasonable level of care, without warranties of any kind, and the Association expressly disclaims all implied warranties as to the NIL Token and the Network without limitation, implied warranties of merchantability, fitness for a particular purpose, title and non- infringement; (ii) the Association does not warrant that the NIL Token and/or, the Network are reliable, current or error-free, meet the NIL Token’s requirements, or that defects in the NIL Token, the Network will be corrected; and (iii) the Association cannot and does not warrant that the NIL Token the software code of the NIL Token smart contracts, or the delivery mechanism for NIL Token or the Network, are free of viruses or other harmful components.

§      Network Attacks and Forks Risk: The NIL Token holder understands and accepts that, as with other blockchains, the blockchain used for the Network could be susceptible to consensus-related attacks, including but not limited to double-spend attacks, majority validation power attacks, censorship attacks, and byzantine behavior in the consensus algorithm or be subject to forks. Any successful attack or fork presents a risk to the Network, the expected proper execution and sequencing of NIL Token-transactions and the expected proper execution and sequencing of contract computations as well as the token balances in the wallet of the NIL Token holder.

§      Theft / Cybercrime Risk: The NIL Token holder understands and accepts that, while best efforts are made to reduce potential software attacks on the Network, other involved software, other technology components and/or platforms may be exposed to attacks by hackers or other individuals that could result in theft or loss of the NIL Token. Digital assets are inherently subject to the risk of cybercrime.

§      Software Weakness Risk: The involved software in the Network are young technologies, which is why there is no warranty that the process for receiving, using, and holding the NIL Token will be uninterrupted or error-free and that there is an inherent risk that the underlying blockchain, the smart contracts thereon, as well as any related technologies or concepts could contain weaknesses, vulnerabilities or bugs causing, inter alia, the complete loss of NIL Token or its functionality.

§      Technical Risks Related to Crypto-Assets: There are a number of technical risks to which holders of crypto-assets are exposed including, but not limited to, Flaws in the code, Forks in the underlying protocols, Double Spend and 51% attacks.

PART A – INFORMATION ABOUT THE PERSON SEEKING ADMISSION TO TRADING

6300 Zug, Switzerland

PART D – INFORMATION ABOUT THE CRYPTO-ASSET PROJECT

§      Petnet: The Petnet facilitates “blind computation”, enabling data processing without revealing its content. This Network layer is essential for applications requiring secure handling of sensitive information and is made up of separate clusters of Nodes (i.e., a subset of Nodes) that support various uses cases for the Network.

§      nilChain: The nilChain is the Network component that manages resources, such as NIL Token rewards (notably, gas fees), stake in NIL Token, and governance, as well as enabling inter-cluster coordination.

Thus, the nilChain serves as a means of interacting, coordinating and managing the Petnet. Both are intertwined by default and the Petnet cannot be used without the nilChain. Users interact with the Network by settling gas fees to the Network.

The Network is run by independent node operators (“Nodes”). Each Node maintains the Network by providing storage space, computing power or transaction validation to the Network or some combination of these. In return, the Network rewards the Nodes with gas fees in NIL Token.

Utility Token Projects

§      To access the permissionless computation and storage;

§      To participate to the consensus mechanism of the Network; and

§      To participate to the governance mechanism of the Network (“Nillion Community Governance”).

§      Mainnet launch and Token Generation Event (TGE): 2025-02-19

§      Current Market Cap: 400 million USD (approx. 387.5 million EUR)

PART E – INFORMATION ABOUT THE ADMISSION OF THE CRYPTO-ASSET TO TRADING

In addition, the Association imposes its own restrictions in agreements it enters into with Exchanges, requesting the Exchanges to exclude persons or entities located in the United States, Russia, China, or any other jurisdiction subject to comprehensive sanctions, as well as anyone listed on sanctions lists maintained by the EU, UN, UK, or US (“Prohibited Persons”).

1.     A compatible digital wallet or account on supported exchange;

2.     Internet access;

3.     A device (computer or mobile) to manage digital wallet/private key and/or account on exchange to carry out transactions.

Consequently, any changes to fee structures or the introduction of new costs are solely at the discretion of these platforms.

The NIL Token qualifies as a crypto-asset within the meaning of MiCA, as it a digital representation of the right to access the Network and participate in the consensus mechanism of the Network and the Nillion Community Governance. The NIL Token can be transferred and stored using distributed ledger technology (“DLT”).

According to the article 3 (1) (9) of MiCA, the consultation[2] and the guidelines[3], utility tokens present the following characteristics enable holders to get access to a good, application or service supplied by the issuer or are required to interact with a DLT’s ecosystem, i.e. it facilitates practical/functional utilization within a DLT-based ecosystem. [4]

The NIL Token is the native token of the Network, and facilitates NIL Token holders’ interaction with the Network, enabling them to access permissionless computation and storage. The NIL Token displays the following functionalities:

§      Facilitate Interaction with the Network:

§    Gas Fee Functionality: Interactions with the Network require the payment of gas fees in NIL Token to the Network.

§    Staking: The operation of the Network relies on validation by Nodes providing computing resources to the Network. Nodes require a stake in NIL Token to effectively act as validators, as in other proof-of-stake mechanisms.

§    Delegated Staking: NIL Token holders can delegate (“Delegators”) their NIL Token to Nodes (i.e., staking their NIL Token to a particular Node) to support the security of the Network.

§      Facilitate Governance of the Network:

§    Governance Functionality: NIL Token holders can access and participate in the governance consensus mechanism of the Network and propose and vote on future Network developments.

§      Access the permissionless computation and storage;

§      Participate to the consensus mechanism of the Network; and

§      Participate to the governance mechanism of the Nillion Community Governance.

The functionalities of the NIL Token (see section F.02) enable NIL Token holders to (i) access secure storage and (ii) compute on stored data without compromising security.

Platform

Austria
Belgium
Bulgaria

Croatia
Cyprus
Czechia
Denmark
Estonia
Finland

France

Germany
Greece
Hungary

Iceland
Ireland
Italy

Latvia
Liechtenstein
Lithuania
Luxembourg
Netherlands
Norway
Poland
Portugal
Romania
Sweden

Slovakia
Slovenia

Spain

Moreover, to the fullest extent permissible by applicable laws, the Association is not liable for any damages arising from the holding, use, transfer, or interactions involving NIL Tokens and the Network. This limitation applies to all forms of damages, including direct, indirect, incidental, punitive, and consequential damages.

By holding and using the NIL Token, users can consume a common service / good provided by the Nillion Network which will be deployed by the Nillion Association, thus from an economic perspective, a service indirectly provided by the issuer of the NIL Token. This is in line with the definition of a utility token in that it is intended to provide access to a service supplied by its issuer.

The Exchanges in accordance with applicable laws and internal policies and terms may impose restrictions to buyers and sellers of NIL Tokens on the Exchanges themselves.

Any dispute relating to the White Paper and/or the NIL Token shall be governed by and construed and enforced in accordance with the laws of Switzerland without regard to conflict of law rules or principles (whether of Switzerland or any other jurisdiction) that would cause the application of the laws of any other jurisdiction, irrespective of whether the Tokens qualify as right or property under the applicable law.

Any dispute relating to the White Paper and/or the NIL Token shall be exclusively resolved by the ordinary courts of Zug, Switzerland.

§      Gas Fee: Users pay gas fees in NIL Tokens for interactions with the Network. Fees are determined by the type of interaction, network congestion, and the work involved.

§      Reward Mechanism for Nodes: Nodes are rewarded with NIL Tokens for operating and contributing to the Network.

The energy consumption for the validation of transactions and the maintenance of the integrity of the distributed ledger of transactions for the period is estimated to be lower than 500’000 kWh.

As the Network is not live at the time of the present notification, the information provided above covers the period from 2024-02-19 to 2025-02-19 based on the anticipated number of nodes (Assumed Number of Nodes being 42) to be operated from 2024-02-19 to 2025-02-19 and their energy consumption (Assumed Energy Consumption per Node: 1,845.6 kWh to 2,014.8 kW per Node).

and Applicable Fees

§      Gas Fee: Users pay gas fees in NIL Tokens for interactions with the Network. Fees are determined by the type of interaction, network congestion, and the work involved.

§      Reward Mechanism for Nodes: Nodes are rewarded with NIL Tokens for operating and contributing to the Network.

which the Disclosed

Information Relates