# Protocol

The first problem the Project has to solve is the objectivity of the collateral data. This part is handled by the Protocol, i.e. it is formalized within the on-chain entities of any blockchain by means of NFT mechanics.

Let's remember Collateralized debt obligations (CDOs): the ones and credit default swaps (CDSs) which ignited the flames of the 2007-2009 crisis. Why?

Most importantly reason: it was not clear what was behind these "securities" and what was behind their ratings Even if they were the highest, i.e. AAA, what was the effect of the floating rates on which the loans were based, on which these CDOs were in turn based? But why exactly?

Because no collateralization mechanisms have been yet created for complex financial instruments. Part of their principles, however, are inherent in the established, though still "raw" DeFi market. Let us try to clarify and thereby reveal the key purpose of Envelop (NIFTSY) and its token.
