The Novat | Tokenovate

FAQs

The Novat is a programmable, tokenised settlement protocol that enables instant, legally-final and auditable settlement across traditional and digital custodial systems.

It solves settlement inefficiency in capital markets. Traditional settlement is slow (often T+2 or more), trapping liquidity, amplifying systemic risk, and making asset mobilisation across custodial chains difficult. The Novat delivers atomic, auditable T+0 transfers.

It uses a “mint-settle-burn” lifecycle to represent an asset temporarily on-chain for the duration of the settlement workflow.

Mint: A Novat is created when the underlying security is immobilised at a custodian.
Settle: The Novat is transferred once, evidencing the novation of the obligation.
Burn: The Novat is extinguished once the custodian or Central Securities Depository (CSD) updates its ledger, preventing circulation or reuse.

Unlike circulating tokens or synthetic assets, the Novat is self-extinguishing (“mint-settle-burn”), ensuring no parallel ledgers and full legal alignment with the underlying registry.

Reduced settlement risk, lower capital costs, real-time liquidity, faster collateral mobility, and end-to-end auditability.

Yes. It’s designed under English law principles of property and contract, ensuring enforceable, final transfers compliant with financial collateral regulations.

No. The Novat is not a circulating token or a parallel record of title. It acts as a temporary representation of an asset, functioning as a settlement instruction that is extinguished once final title is recorded off-chain.

The Novat is designed to pass three critical tests for tokenised settlement:

1. Legal Enforceability: It fits within existing frameworks of contract and property law and aligns with financial collateral regimes.
2. Settlement Finality: It delivers atomic, irrevocable, and enforceable T+0 settlement, synchronised with CSD/custodial records.
3. Liquidity Optimisation: It ensures assets remain available for trading and reuse because ownership stays anchored in the authoritative record of title.

The Novat does not replace authoritative records. It operates as a synchronisation mechanism. Asset immobilisation, book-entry updates, and confirmations flow through existing messaging standards like SWIFT or ISO 20022. The blockchain serves as a coordination layer, ensuring on-chain transfers are given effect through corresponding updates to off-chain registers of title.

The Novat embeds contractual logic directly into settlement instructions through integration with the Common Domain Model (CDM). The CDM provides a machine-readable, unambiguous representation of financial products and lifecycle events, ensuring settlement occurs in strict accordance with the underlying contract (e.g., in a margin call, applying haircuts and eligibility checks).

It is implemented through Tokenovate’s UTXO-based blockchain architecture. The protocol specifically utilises Bitcoin SV (BSV), which is deemed best suited due to its unbounded block capacity, proof-of-work neutrality, and UTXO model, which provides transparent provenance and scalability for high-volume settlement.

Legal and beneficial ownership remain anchored in the existing legal and custodial records. The custodian or CSD ledger remains the ultimate record of title. The Novat functions as a digital twin during transit, bridging the gap between immobilisation and final crediting.

The self-extinguishing nature of the Novat is crucial. Once the custodian or CSD updates its record of title, the Novat is burned, confirming that the underlying settlement is legally effective and that no residual claim exists in the token itself. This process provides dual assurance of both operational and legal finality.