Earlier this week, NODO published an article that highlighted how Patricia’s recent move to introduce a native token is sparking distrust in Nigeria’s crypto market. PTK, the token, was announced last week Friday as a defacto currency that replaces customers’ BTC and fiat balances. Hanu Fejiro, Patricia’s CEO, has said the company is taking this direction as it seeks to recover losses from a breach that affected some customers’ BTC and fiat assets in its custody.

Inflamed by Patricia’s initial communication of the token as a stablecoin, Nigeria’s tech ecosystem responded negatively to the announcement, with several folks labelling the move as a rug-pull strategy. Their main concerns were around the lack of a public whitepaper or evidence of being listed on any blockchain network or crypto exchange.

Patricia has now brought some answers to the table. In a whitepaper released yesterday, the company outlined the reason, scope and process of rolling out its native token. In this article, we outline five main things you should know about PTK.

Read also: https://nodo.xyz/news/opinion/patrica-token-crypto-distrust

PTK whitepaper: Here’s what you should know

PTK is not on-chain: Patricia’s token is not hosted on a blockchain network. Technically, this means it is not a stablecoin—at least not yet. However, the whitepaper hints that PTK may soon get its stablecoin status, as the company is “currently engaged in ongoing discussions with Paxos” concerning that. Paxos is a New York-based company that builds regulated blockchain and digital asset solutions.

PTK will be issued as a debt tool: PTK is an internal token that serves as a debt management tool for its holders. Owners of PTK essentially hold the promise that Patricia will pay them the value of their PTK in USDT, a globally accepted stablecoin. This conversion is based on Patricia’s valuation of its token at $1 or 1 USDT. According to the whitepaper, a smart contract will ensure that customers can gradually withdraw more of their PTK to USDT as Patricia Technologies makes more profit.

Issued PTK will be a summation of users’ fiat and BTC assets: According to Patricia, the tokens issued per user will be equal to the dollar value of their BTC and fiat assets combined. For users, this means that on migration to Patricia Plus, their BTC, USD, and NGN wallets will be empty, but other assets like ETH, DOGE, and XRP will remain unaffected and accessible. Customers who have filled out Patricia’s asset recovery form will be prioritized for withdrawals, the company said.

PTK can be traded/invested: According to Patricia, PTK’s holders will be able to invest some of their tokens and make profits, if they so choose. However, only the Patricia Plus app will have this investment interface, and only PTK tokens will be traded there. “Integration of additional assets is currently under strategic review,” reads the whitepaper.
PTK will be launched on other exchanges: While PTK will initially be launched as a debt management tool to compensate users, Patricia says it hopes to take the token to other exchanges in a public relaunch. Per the whitepaper, Patricia will build on the trust accrued from repaying users’ assets to relaunch the PTK on other exchanges for users to buy, trade, and invest.

Speaking about how the tokens will be funded, Hanu Fejiro said Patricia has already started some fundraising activities which have been successful and has made revenues from some trading activity. “Patricia has been profitable from the second month we became operational. Even in the wake of this breach, we are still making money. Only our retail app was affected. Our OTC desk has grown at least x5 in the last three months. Several of our customers have moved from retail to OTC. We have built very solid relationships with large ticket institutions and partners who use our trading desk,” he said in a chat with NODO.

While Patricia’s moves may seem unconventional for many Nigerians, several crypto exchanges have made similar moves in the past, in response to losses via hacks. Bitfinex, a global crypto exchange issued BFX tokens in August 2016 after losing bitcoins to hackers, but was able to fully compensate all BFX holders by the next year. The BFX tokens were redeemed at $1.

Other crypto exchanges that have made similar moves include Dragon Ex, which issued a DB token worth over $7 million after a 2019 hack, and CoinFlex, which sought $47 million from the market after an investor failed to pay a huge debt. CoinFlex promised investors in its new rvUSD coin a 20% interest.

While Fejiro acknowledges the market’s aggressive reaction to Patricia’s latest moves, he maintains confidence in his company’s ability to repay users completely. “With PTK, we are presenting a promise to our customers that we will clear out our debt. We are confident we’ll repay our users over time,” he said.