Proof of Authenticity

Unikura's Proof of Authenticity is a decentralized system for appraising physical assets, built with reference to the Proof of Stake scheme of blockchain technology.

NFTs for Real-World Assets

The uniqueness of an NFT is established by its TokenID. This is a unique identifier on the blockchain, distinguishable from other tokens, like a barcode that cannot be duplicated or removed. This unique characteristic, combined with the special advantages brought by tokenization, makes NFTs suitable not only for the digital economy of the blockchain but also for many other existing assets. At Unikura, we specialize in tokenization services particularly for physical assets, focusing on movable assets called collectibles. Specifically, we focus on assets, such as trading cards, luxury fashion items, luxury watches, luxury sneakers, and fine art.

What is Unikura's Proof of Authenticity ver.1.0?

Unikura's Proof of Authenticity ver.1.0 (PoA) is a protocol where a decentralized network of appraisers evaluates various aspects of a physical asset using a scoring method to ensure its value and to certify that the physical asset is stored correctly. This protocol solves the issue of having to rely on a single, centralized entity, as was the case traditionally. It guarantees that physically backed tokens(Phygital NFT) can indeed be exchanged for their original physical assets, fostering trust in the authenticity and exchangeability of these assets.

Unikura's Proof of Authenticity comprises the following entities:

• Proposer: Unikura

• Blockchain: Currently adopting the Ethereum Network

• RWA Validators: Individuals and corporate appraisers accredited by Unikura, possessing certain skills in authenticity determination

• Committee: Consists of RWA Validators and the Proposer, responsible for making the final assessment decisions.

In PoA (Proof of Authenticity), the evaluation of the location and legitimacy of physical assets is determined through voting by management nodes, known as validators. Generally, in consensus formation based on voting, the risk of inappropriate consensus increases with a higher proportion of malicious validators. Therefore, in PoA, the system aims to motivate correct voting among validators by rewarding those who contribute to the correct consensus and penalizing those who do not.

Unlike PoS (Proof of Stake), where the right to generate blocks is typically granted based on the amount of stake held, PoA introduces a variable trust index for voting, weighted by the credit rating of the validators, especially when no proprietary tokens are issued. This approach allows for a nuanced evaluation of votes based on the credibility of each validator.

Unikura's Proof of Authenticity Protocol

The authentication flow of Unikura's Proof of Authenticity (PoA)

1. Asset Submission: The owner of a physical asset submits it for authenticity along with relevant details and documentation.

2. Initial Review by Proposer: Unikura, as the proposer, conducts an initial review of the submitted asset to ensure it meets basic criteria for the PoA process.

3. Assignment to Validators: The asset is then assigned to RWA (Real-World Asset) Validators. These are individuals or entities accredited by Unikura, skilled in determining the authenticity of physical assets.

4. Evaluation and Voting by Validators: The RWA Validators independently assess the asset. They evaluate various aspects like condition, authenticity, and provenance. Based on their assessment, they vote on the legitimacy and value of the asset.

5. Consensus Formation: The votes are aggregated to form a consensus. If a certain percentage of validators agree on the asset’s value and authenticity, the asset is considered authenticated.

6. Recording on Blockchain: Once authenticated, the details of the asset, along with its evaluation, are recorded on the blockchain (e.g., Ethereum Network). This step ensures transparency and immutability of the asset’s authentication record.

7. Rewards and Penalties: Validators who contributed to the correct consensus are rewarded, while those who did not face penalties. This system incentivizes accuracy and honesty in the evaluation process.

8. Final Approval by Committee: In some cases, a final review by the Evaluation Committee, comprising RWA Validators and the Proposer, is conducted for additional verification.

9. Issuance of PoA Certificate: After successful authentication, a Proof of Authenticity certificate is issued, which serves as a digital representation of the asset’s authenticity and value on the blockchain.

10. Asset Tokenization (if applicable): The authenticated asset can then be tokenized, representing its ownership and value in the form of a digital token on the blockchain, ready for trade or other transactions.

This process ensures that physical assets are rigorously evaluated and their authenticity securely recorded on the blockchain, providing trust and transparency in the digital representation of real-world assets.

Evaluation of the Legitimacy of Physical Assets

The consensus on the legitimacy of an asset is not formed through a simple binary vote of whether it is an authentic product produced by the brand (real) or a counterfeit (fake). Instead, for each category, appraisers individually assess designated points of appraisal, assigning a condition rating from 1 to 10 and collecting comments on any observations. Based on these inputs from each validator, the legitimacy of the Real World Asset (RWA) is evaluated using a specific calculation logic. This process determines whether to approve or reject the tokenization of the asset.

Unikura Grade

The Unikura Grade is a unique score that evaluates the legitimacy of the physical asset and its management state for an NFT, rated on a scale from 1 to 10. While the evaluation of the physical asset is calculated based on the input results from multiple validators, the Unikura Grade, recorded as meta information on the NFT, is represented by a single score. This is done to make it easy to understand the legitimacy of the physical asset and its management situation at a glance.

The guidelines for each state from 1 to 10 are as follows in the table below.

Unikura Grade	10	9	8	7	6	5	4	3	2	1
	Brand new (S+)	Like New (S-)	Very Good Condition (A+)	Good Condition (A-)	Average (B+)	Slightly Below Average (B-)	Slightly Inferior (C+)	Inferior (C-)	Poor (D+)	Very Poor (D-)
Trading card	No edge whitening No surface scratches No sun damage	Some whitening, almost like new	Some whitening or minor scratches, not noticeable	Some whitening or minor scratches, barely noticeable	Slightly noticeable whitening, or scratches	Noticeable whitening, or scratches	Very noticeable whitening or scratches Card is bent	Very noticeable whitening or scratches Card is bent Slightly torn in places	・Very noticeable whitening and scratches ・Card is bent ・Very torn in places	・Very noticeable whitening and scratches ・Card is bent ・Very torn in places ・Has graffiti markings
Brand Items Sneakers	Completely new　 *There may be slight dirt or damage to the box or storage bag.	Unused condition with discoloration due to display. *There may be missing accessories.	Very good condition with almost no signs of use.	In good condition with minor signs of use and scratches.	Good condition overall but slightly noticable scratches can be seen.	Good condition overall but noticable scratches can be seen.	Many scratches can be seen as a result of everyday use.	Many scratches, stain, rip as a result of everyday	Very noticeable scratches, stain, rip and odor as a result of everyday and long-term use.	Very noticeable , stain, rip and odor as a result of everyday and long-term use.
Watches	Unused and in the same condition as purchased	Like new, unused. Old stock, minimal stain present	Used, with almost no stains or blemishes. Glass, hands, dial, case, and movement in very good condition. Movement moderately maintained. Polished watches are also acceptable.	Light scratches and stains. Glass, hands, dial, case, and movement in very good condition. No deep dents or cracks. No parts replaced during repair. Movement maintained as needed. May have been polished.	Noticeable scratches and stains. Fully functional. Glass may have been replaced. No dents. May have been polished. May include non-original parts.	Very noticeable scratches and stains. Fully functional. Glass may have been replaced. No dents. Movement may require repair depending on the situation.	Strong signs of use and scratches. May not function perfectly in some cases. There might be distortion in the case. May have been polished. May include non-original parts.	Strong signs of use and scratches. May not function perfectly in some cases. There might be distortion in the case. Dial, hands, and/or glass may need replacement. May have been polished. May include non-original parts.	Parts missing or malfunctioning. Suitable for partial use. May include non-original parts.	Junk item

RWA-Physical Assets Subject to PoA by Unikura

• Trading Card (Single cards, Graded cards)

• Luxury Fashion (Bags)

• Luxury Sneakers

• Luxury Watches

• Fine Art (Flat artworks by certain artists)

Currently, PoA targets items from specific brands within the above categories. The target categories will be periodically expanded based on research results, the development of evaluation logic, and the availability of qualified validators.

Product authenticity and compensation

At Unikura, the authenticity of physical assets that have undergone Proof of Authentication and have been tokenized into NFTs is guaranteed. In the unlikely event of an authenticity issue, Unikura will compensate the NFT holder up to the NFT purchase amount(Compensation in the currency at the time of purchase at the price of purchase).

*This PoA will be upgraded from time to time, forming and maintaining the overall picture as this version 1.0.