Nestor Protocol — Executive Overview¶
What Is the Nestor Protocol?¶
The Nestor Protocol is an institutional-grade smart contract infrastructure for the issuance, distribution, and settlement of digital securities in private markets. Built on the ERC-3643 standard and deployed on the Avalanche C-Chain, it provides the complete technology stack for tokenising real-world assets through a Luxembourg securitisation structure.
The protocol was purpose-built for regulated private markets — not retail crypto. Every token is permissioned, every transfer is compliant, and every deposit is independently attested.
Three-Layer Architecture¶
Layer 1 — Securitisation (Luxembourg)¶
The legal foundation is Nestor Exchange S.a.r.l., a Luxembourg-regulated entity operating the NESTOR SECURITISATION FUND in compliance with MiFID II (2014/65/EU).
The fund structure supports: - Bankruptcy-remote, orphan-entity-protected compartments - Both "true sale" and "synthetic" securitisations - Multi-currency operations with G-SIB banking relationships - Full statutory reporting (AML6, SARs, CRS, FATCA, FATF)
Supported asset types include: - Private equity and credit funds - Real estate funds, REITs, and property club deals - Infrastructure investments - Commodities and certificated commodity funds - Art, collectibles, music rights, IP rights, and future cash flows - Liquid government debt (ETFs, repos, treasuries) - Crypto funds and crypto ETFs
Layer 2 — Tokenisation (Smart Contracts)¶
Nine audited smart contracts form the operational core, organised around three token types:
| Token | Purpose | Function |
|---|---|---|
| NestorOnChainAssetToken | Represents the fund or note itself | Digital twin of the underlying asset with full specification, issuance data, and lifecycle status |
| NestorFundDepositToken | 1:1 FIAT-backed deposit | Settlement layer — represents an investor's FIAT contribution, attested daily by independent fund accountant (CreaTrust Luxembourg) |
| NestorDigitalSecurityToken | Transferable digital security | Investor-facing token representing future cash flows, purchasable with deposit tokens, transferable between permissioned parties |
Supporting infrastructure: - ERC20 Swaps — Convert USDC/USDT to/from institutional deposit tokens, enabling managers to accept stablecoins while offloading de-peg and liquidity risk - FX Swaps — Instant atomic currency conversion between deposit tokens at spot or forward rates, with 8 currencies supported - Automated Fee Collection — Programmable management and performance fees collected at transfer, swap, and FX conversion - Compliance Modules — Upgradable ERC-3643 compliance governing all token transfers under MiFID II rules
Layer 3 — Distribution¶
The protocol enables managers to distribute tokenised securities through: - Private placement agents - Global wealth advisors - Private banks - Digital security exchanges
Investor onboarding supports OnChainId verification, direct KYC/AML subscription, and reliance letters. Distribution agents can manage subscriptions, capital calls, cash distributions, and portfolio compositions for their investor base.
Multi-Currency Infrastructure¶
Eight institutional deposit tokens are deployed, each 1:1 backed by FIAT held at G-SIB banking providers in Luxembourg:
| Currency | Ticker | Description |
|---|---|---|
| USD | nxUSD | U.S. Dollar |
| EUR | nxEUR | Euro |
| GBP | nxGBP | British Pound Sterling |
| CHF | nxCHF | Swiss Franc |
| HKD | nxHKD | Hong Kong Dollar |
| SGD | nxSGD | Singapore Dollar |
| JPY | nxJPY | Japanese Yen |
| AED | nxAED | Emirati Dirham |
Each deposit token is independently attested by CreaTrust Luxembourg (PERMISSIONED_FUND_ACCOUNTANT) through daily IBAN balance verifications published on-chain.
Participant Roles¶
The protocol enforces clear separation of duties through seven permissioned roles:
| Role | Function |
|---|---|
| PROTOCOL_ADMIN | Smart contract owner/deployer. Cannot custody tokens. |
| PROTOCOL_TREASURY | Lifecycle management of all tokens. FIAT deposit and redemption operations at G-SIB. |
| PERMISSIONED_CUSTODIAN | Custody of protocol tokens. |
| PERMISSIONED_INVESTOR | Accredited/professional clients (MiFID II). KYC/AML verified. |
| PERMISSIONED_MANAGER | Fund managers and GPs issuing tokens and processing payments. |
| PERMISSIONED_FUND_ACCOUNTANT | Independent balance attestations (CreaTrust Luxembourg). |
| PERMISSIONED_TRANSFER_AGENT | Independent transfer authority (planned). |
Security and Audit¶
The smart contract suite received a comprehensive security audit from Hacken.io:
- Security Score: 10/10
- Code Quality Score: 10/10
- Overall Security Rating: 100%
The protocol is open source under the MIT Licence, originally developed by DEFYCA Labs S.a.r.l. and now maintained by Nestor Exchange OÜ.
The API infrastructure runs on confidential compute clusters with ISO-27001 and SOC-2 compliance, communicating with on-chain contracts through a GraphQL/Neo4J chain service.
Deployed Infrastructure¶
All contracts are live on the Avalanche C-Chain:
| Contract | Purpose |
|---|---|
| NestorFundDepositToken | Deposit token factory |
| NestorOnChainAssetToken | Asset representation |
| NestorDigitalSecurityToken | Investor securities |
| NestorPermissionsManager | Role-based access control |
| NestorTreasuryManager | Token minting, transfer, burn |
| NestorTransferManager | DvP settlement and P2P trading |
| NestorERC20ConverterManager | Stablecoin on/off ramp |
| NestorAttestationManager | Proof-of-reserve attestations |
| NestorFXSwap | Multi-currency FX conversion |
Why Nestor Protocol?¶
For Managers and GPs: - Tokenise funds with full MiFID II compliance from day one - Automate capital calls, distributions, and fee collection - Access multi-currency settlement infrastructure without building it - Distribute to global investor base through permissioned network
For Distribution Partners: - Plug into a live, audited protocol with institutional banking relationships - Offer investors access to tokenised private market securities - Manage subscriptions, capital calls, and distributions for your client base - Multi-currency settlement removes FX friction from cross-border distribution
For Investors: - Transparent, on-chain proof of reserve for every deposit - Permissioned, compliant secondary market for digital securities - Multi-currency access — invest in the currency of your choice - Low-minimum entry to institutional-grade private market offerings
Contact¶
- Protocol Admin: protocol_admin@nestor.exchange
- Website: nestor.exchange
- Community: chat.nestor.exchange
- Documentation: docs.nestor.exchange/protocol
Nestor Protocol Documentation v1.0 Nestor Exchange OÜ — Registry: 17303259 — Tallinn, Estonia