White paper drafted under the European Markets in Crypto-Assets Regulation (EU) 2023/1114 for FFG W7HTSC136

The crypto-asset Nesa referred to in this white paper is a crypto-asset other than EMTs and ARTs, and will be issued or represented on the Nesa network. The total supply will amount to 1,000,000,000 units.

Nesa is an L1 AI infrastructure network that enables privacy-preserving AI inference through end-to-end encrypted computation. The network allows AI models to be executed on encrypted data without disclosure of inputs, outputs, or intermediate computation.

The crypto-asset supports the operation of the network by enabling payment of inference fees, staking for network security, and participation in protocol governance, thereby aligning economic incentives among users, developers, and infrastructure providers.

The crypto-asset does not grant any legally enforceable or contractual rights or obligations to its holders or purchasers. Any functionalities accessible through the underlying technology are purely technical or operational in nature and do not confer rights comparable to ownership, profit participation, governance, or similar entitlements known from traditional financial instruments.

As defined in Article 3(9) of Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on Markets in Crypto-Assets – amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937 – a utility token is “a type of crypto-asset that is only intended to provide access to a good or a service supplied by its issuer”. This crypto-asset does not qualify as a utility token, as its intended use goes beyond providing access to a good or a service supplied solely by the issuer.

NESA LABS INC is seeking admission to trading on Payward Global Solutions LTD ("Kraken") platform in the European Union in accordance with Article 5 of Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on Markets in Crypto-Assets, and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937. The admission to trading is not accompanied by a public offer of the crypto-asset.

The primary business activity consists of providing AI inference and compute coordination services to developers and applications. Revenue is generated through inference and network usage fees, which are paid for the execution of AI workloads on the network. These fees are collected for facilitating encrypted inference, coordinating decentralized compute resources, and maintaining network security and performance. The Nesa network supports a global ecosystem of decentralized AI projects and developers by providing secure compute coordination, model deployment, and inference settlement. In parallel, the organization works with enterprises and regulated industries through production-grade integrations, while abstracting blockchain complexity away from end users.

Not applicable.

Since Nesa's registration less than years ago, the business has operated as an early-stage technology and infrastructure company focused on the development of a privacy-preserving AI inference network.

During this period, the activities have been primarily dedicated to research and development, protocol engineering, security testing, and ecosystem preparation. Expenditures have been mainly related to personnel, infrastructure, research, and operational costs necessary to develop and test the network. Nesa has generate 2 million US-Dollar since inception despite the network operating in development and testnet phases and not yet reaching full commercial deployment.

The financial position has been supported primarily through VC investing/ token financing. These funds have been allocated to product development, operational expansion, and preparation for mainnet launch and commercialization. Material changes in financial position during this period are attributable to fundraising events, increased development activity, and scaling of the technical team and infrastructure.

As the network transitions toward mainnet launch and broader adoption, Nesa expects to begin generating operating revenue through network usage and AI inference fees. At present, the financial condition reflects the characteristics of a growth-stage infrastructure provider, with a focus on long-term platform development rather than short-term profitability.

Nesa AI is a Layer-1 blockchain network designed to provide infrastructure for privacy-preserving artificial intelligence (“AI”) inference. The network enables AI models to be executed on encrypted data through end-to-end encrypted computation. Inputs, outputs, and intermediate computational states are not disclosed to unauthorized parties during inference execution.

The Nesa protocol combines distributed ledger technology with cryptographic mechanisms to facilitate verifiable AI inference in a decentralized environment. The architecture is designed to ensure reproducibility of results across participating nodes and to provide technical guarantees regarding the integrity and confidentiality of computation.

The crypto-asset NES is intended to support the technical operation of the Nesa network. In particular, the crypto-asset is designed to:

- enable payment of network fees associated with AI inference and related transactions;

- serve as a staking mechanism contributing to network security, validation, and participation in consensus processes; and

- enable participation in protocol-level governance mechanisms, where implemented within the technical framework of the network.

The economic design of the crypto-asset is intended to align incentives among network participants, including users, developers, validators, and infrastructure providers.

The project does not involve the granting of ownership, profit-participation rights, or legal claims against the project entity or its contributors. Instead, it centres on the creation of a technical environment in which the NES crypto-asset may serve as a governance and utility input for certain protocol processes. The long-term evolution of the NES system, including the scope of available features, the decentralisation roadmap, governance procedures, and the operational continuity of the infrastructure, may vary based on technical, economic, and regulatory considerations. All future developments remain subject to change.

The Nesa project is at an early stage of development. As a comparatively young technology initiative, the historical development period to date has been limited in duration. Consequently, the number of completed milestones remains proportionate to the project’s lifecycle stage.

Future milestones are subject to technical, operational, regulatory, and market-related uncertainties. While certain objectives have been identified, their precise timing, scope, and implementation remain dependent on ongoing development progress and external factors. No assurance can be given that forward-looking milestones will be achieved within a specific timeframe or in the form currently envisaged.

Past milestones:

During the initial phase, the project focused on conceptualisation and structuring. This included the development of the core vision of a Layer-1 AI infrastructure network designed to enable privacy-preserving inference, as well as the formation of the core team and organisational setup. In parallel, the foundational technical architecture was defined and early-stage protocol components were designed and implemented. The structuring of the token model and economic framework was undertaken concurrently with technical development.

Financing activities were conducted to secure the resources necessary for research, engineering, and operational build-out. Resource allocation was directed towards protocol development, cryptographic research, infrastructure preparation, and ecosystem development. Technical development progressed simultaneously with conceptual refinement, including the design of mechanisms intended to enable encrypted AI inference within a blockchain-based environment.

In addition to technical progress, the project initiated research activities in fields relevant to privacy-preserving computation and AI infrastructure. Public-facing structures were established, including communication channels and branding initiatives aimed at ecosystem development and stakeholder engagement. The project also pursued visibility through certifications, recognitions, and awards, where applicable, to strengthen technological credibility and public awareness.

Future milestones:

Looking forward, a significant anticipated milestone is the introduction and activation of the NES token within the operational network environment. This step is expected to enable the use of the crypto-asset for inference fee payments, staking mechanisms contributing to network security, and the implementation of protocol-level incentive structures.

Further anticipated developments include continued enhancement of the protocol’s scalability and performance, expansion of network participation.

All future developments described above constitute forward-looking statements based on current expectations. They are inherently subject to risks and uncertainties, including technological challenges, funding constraints, regulatory changes, and evolving market conditions. No assurance can be given that any projected milestone will be achieved in whole or in part, or within any particular timeframe.

Nesa AI project has reportedly secured external financing during its early development phase.

According to available information, an eight-figure amount in aggregate is stated to have been raised through funding rounds involving venture capital investors active in the digital asset sector. These financing activities are described as supporting the establishment and continued development of the project.

Not applicable, as this white paper serves the purpose of admission to trading and is not associated with any fundraising activity for the crypto-asset project.

The purpose of seeking admission to trading is to enable the crypto-asset to be listed on a regulated platform in accordance with the applicable provisions of Regulation (EU) 2023/1114 and Commission Implementing Regulation (EU) 2024/2984. The white paper has been drawn up to comply with the transparency requirements applicable to trading venues.

Holder restrictions are subject to the rules applicable to the crypto-asset service provider, as well as to any additional restrictions such provider may impose.

The token is intended to be listed on the trading platform operated by Payward Global Solutions LTD ("Kraken"). Access to this platform depends on regional availability and user eligibility under Kraken’s terms and conditions. Investors should consult Kraken’s official documentation to determine whether they meet the requirements for account creation and token trading.

The costs involved in accessing the trading platform depend on the specific fee structure and terms of the respective crypto-asset service provider. These may include trading fees, deposit or withdrawal charges, and network-related gas fees. Investors are advised to consult the applicable fee schedule of the chosen platform before engaging in trading activities.

Not applicable, as this white paper is written to seek admission to trading, not for the initial offer to the public.

MiCA-compliant crypto-asset service providers shall have strong measures in place in order to manage conflicts of interests. Due to the broad audience this white paper is addressing, potential investors should always check the conflicts-of-interest policy of their respective counterparty.

Not applicable, as this white paper is written to seek admission to trading, not for the initial offer to the public.

Not applicable, as this white paper is written to seek admission to trading, not for the initial offer to the public.

At the time of publication of this white paper, the NES crypto-asset has not yet been technically generated or deployed on the Nesa network. Accordingly, the crypto-asset does not currently possess any operational or technical functionality.

Any intended or future functionalities of the NES crypto-asset are described separately in Section F.3 (Planned Application of Functionalities). Such functionalities remain subject to technical implementation, security validation, and compliance with applicable legal and regulatory requirements.

The NES crypto-asset is designed to serve as the token of the Nesa network after TGE. Its primary functionality is to enable the operation of the protocol by facilitating the payment of network fees associated with AI inference and related on-chain transactions. Users of the network are required to utilize NES for settlement of such computational services within the protocol environment.

In addition, the crypto-asset is intended to function as a staking mechanism. Network participants may lock NES tokens in order to contribute to network security, validation processes, and overall protocol integrity. Staking is designed to align economic incentives between participants and the stability of the network.

The NES token further supports the distribution of protocol-level incentives, including rewards to validators, infrastructure providers, and other eligible network participants contributing computational resources or protocol services.

The functionality of the crypto-asset is strictly limited to its use within the technical framework of the Nesa protocol. It does not grant any ownership, repayment, profit participation, or other legally enforceable rights against any issuer or affiliated entity.

The crypto-asset referred to herein is a crypto-asset other than EMTs and ARTs and will be available on NESA network. The crypto-asset will be fungible.

The crypto-asset constitutes a digital representation recorded on distributed-ledger technology and does not confer ownership, governance, profit participation, or any other legally enforceable rights. Any functionalities associated with the token are limited to potential technical features within the relevant platform environment. Such functionalities do not represent contractual entitlements and may depend on future development decisions, technical design choices, and operational conditions. The crypto-asset does not embody intrinsic economic value; instead, its value, if any, is determined exclusively by market dynamics, such as supply, demand, and liquidity in secondary markets.

No such services are currently known to be provided by the issuer. However, it cannot be excluded that additional services exist or may be offered in the future outside the scope of Regulation (EU) 2023/1114.

The crypto-asset does not grant any legally enforceable or contractual rights or obligations to its holders or purchasers.

Any functionalities accessible through the underlying technology are of a purely technical or operational nature and do not constitute rights comparable to ownership, profit participation, governance, or similar entitlements known from traditional financial instruments.

Accordingly, holders do not acquire any legally enforceable claim against the issuer of the crypto-asset or any third party.

As the crypto-asset does not confer any legally enforceable rights or obligations, there are no applicable procedures or conditions for their exercise.

Any interaction or functionality that may be available within the project’s technical infrastructure – such as participation mechanisms or protocol-level features – serves operational purposes only and does not create, evidence, or constitute any contractual or statutory entitlement.

As the crypto-asset does not confer any legally enforceable rights or obligations, there are no conditions or mechanisms for modifying such rights or obligations.

Adjustments to the technical protocol, smart contract logic, or related systems may occur in the ordinary course of development or maintenance.

Such changes do not alter the legal position of holders, as no contractual rights exist and no rights arise under applicable law or regulation. Holders should not interpret technical updates or governance-related changes as amendments to legally binding entitlements.

Information on the future offers to the public of crypto-assets were not available at the time of writing this white paper (2026-02-08).

Not applicable, as this white paper is written to seek admission to trading, not for the initial offer to the public.

The crypto-assets themselves are not subject to any technical or contractual transfer restrictions and are generally freely transferable. However, crypto-asset service providers may impose restrictions on buyers or sellers in accordance with applicable laws, internal policies or contractual terms agreed with their clients.

For the crypto-asset in scope, the supply will be limited to 1000000000 units. The protocol is designed with an inflationary issuance mechanism under which new units will be created over time until the maximum supply is reached. This issuance follows a decreasing inflation schedule, meaning that the rate of newly created units is designed to decline progressively over time until the total maximum supply is attained.

Applicable law likely depends on the location of any particular transaction with the token.

Competent court likely depends on the location of any particular transaction with the token.

The crypto-asset in scope will be implemented on the Nesa network following the standards described below.

The Nesa network uses a Layer-1 blockchain protocol designed for decentralized and verifiable AI inference. It incorporates on-chain smart contracts for result verification and aggregation, a commit-reveal transaction structure for secure inference execution, and verifiable random functions (VRFs) for committee and task selection. The protocol defines standardized execution environments ensuring reproducible AI model runs across network participants.

Nesa employs distributed ledger technology to coordinate AI inference across a globally distributed set of nodes. The system integrates privacy and cryptographic primitives, including encrypted execution workflows and Zero-Knowledge proofs to confirm result correctness without exposing raw data. The network uses a containerized AI execution framework to standardize runtime environments for model inference tasks.

Consensus within the Nesa blockchain is achieved through validator-based agreement on the canonical state of the ledger and inclusion of transactions into blocks. Validators are responsible for block validation, state transition verification, and finalization of ledger updates. Participation in validation is designed to be linked to staking of the native token once live, thereby economically aligning validator incentives with network security.

Miners, by contrast, are responsible for executing AI inference tasks and submitting computation results to the network. Miners do not participate in block production, transaction validation, or ledger finalization and therefore are not part of the consensus mechanism. Their role is operational (computational service provision) rather than consensus-forming.

Consensus-related selection mechanisms include the use of verifiable random functions (VRFs) and cryptographic commit-reveal procedures to support integrity and coordination of inference-related submissions.

The incentive structure is designed to allocate native token rewards to different categories of network participants once the token is operational. Validators are expected to receive staking-related rewards for participating in consensus and securing the ledger. Miners are intended to receive compensation for executing AI inference tasks. Model contributors and other infrastructure participants may also receive protocol-level rewards where applicable.

Network users are expected to pay fees for AI inference and related transactions. Such fees are intended to be denominated and settled in the native token following its activation. At the time of this white paper, these mechanisms are not yet operational.

The distributed ledger functions as a decentralized state machine recording transactions, staking operations, and inference-related submissions. Validators maintain the integrity of the ledger through block validation and state finalization. The ledger supports smart contracts used for coordination of inference requests, submission commitments, verification logic, and reward distribution.

1. Regulatory and Compliance

Regulatory frameworks applicable to crypto-asset services in the European Union and in third countries are evolving. Supervisory authorities may introduce, interpret, or enforce rules that affect (i) the eligibility of this crypto-asset for admission to trading, (ii) the conditions under which a crypto-asset service provider may offer trading, custody, or transfer services for it, or (iii) the persons or jurisdictions to which such services may be provided. As a result, the crypto-asset service provider admitting this crypto-asset to trading may be required to suspend, restrict, or terminate trading or withdrawals for regulatory reasons, even if the crypto-asset itself continues to function on its underlying network.

2. Trading venue and connection risk

Trading in the crypto-asset depends on the uninterrupted operation of the trading venues on which it is listed and, where applicable, on its technical connections to external liquidity sources or venues. Interruptions such as system downtime, maintenance, faulty integrations, API changes, or failures at an external venue can temporarily prevent order placement, execution, deposits, or withdrawals, even when the underlying blockchain is functioning. In addition, trading platforms in emerging markets may operate under differing governance, compliance, and oversight standards, which can increase the risk of operational failures or disorderly market conditions.

3. Market formation and liquidity conditions

The price and tradability of the crypto-asset depend on actual trading activity on the venues to which the service provider is connected, whether centralised exchanges (CEXs) or decentralised exchanges (DEXs). Trading volumes may at times be low, order books thin, or liquidity concentrated on a single venue. In such conditions, buy or sell orders may not be executed in full or may be executed only at a less favourable price, resulting in slippage.

Volatility: The market price of the crypto-asset may fluctuate significantly over short periods, including for reasons that are not linked to changes in the underlying project or protocol. Periods of limited liquidity, shifts in overall market sentiment, or trading on only a small number of CEXs or DEXs can amplify these movements and lead to higher slippage when orders are executed. As a result, investors may be unable to sell the crypto-asset at or close to a previously observed price, even where no negative project-specific event has occurred.

4. Counterparty and service provider dependence

The admission of the crypto-asset to trading may rely on several external parties, such as connected centralised or decentralised trading venues, liquidity providers, brokers, custodians, or technical integrators. If any of these counterparties fail to perform, suspend their services, or apply internal restrictions, the trading, deposit, or withdrawal of the crypto-asset on the listing crypto-asset service provider can be interrupted or halted.

Quality of counterparties: Trading venues and service providers in certain jurisdictions may operate under regulatory or supervisory standards that are lower or differently enforced than those applicable in the European Union. In such environments, deficiencies in governance, risk management, or compliance may remain undetected, which increases the probability of abrupt service interruptions, investigations, or forced wind-downs.

Delisting and service suspension: The crypto-asset’s availability may depend on the internal listing decisions of these counterparties. A delisting or suspension on a key connected venue can materially reduce liquidity or make trading temporarily impossible on the admitting service provider, even if the underlying crypto-asset continues to function.

Insolvency of counterparties: If a counterparty involved in holding, routing, or settling the crypto-asset becomes insolvent, enters restructuring, or is otherwise subject to resolution measures, assets held or processed by that counterparty may be frozen, become temporarily unavailable, or be recoverable only in part or not at all, which can result in losses for clients whose positions were maintained through that counterparty. This risk applies in particular where client assets are held on an omnibus basis or where segregation is not fully recognised in the counterparty’s jurisdiction.

5. Operational and information risks

Due to the irrevocability of blockchain transactions, incorrect transaction approvals or the use of wrong networks or addresses will typically make the transferred funds irrecoverable. Because trading may also rely on technical connections to other venues or service providers, downtime or faulty code in these connections can temporarily block trading, deposits, or withdrawals even when the underlying blockchain is functioning. In addition, different groups of market participants may have unequal access to technical, governance, or project-related information, which can lead to information asymmetry and place less informed investors at a disadvantage when making trading decisions.

6. Market access and liquidity concentration risk

If the crypto-asset is only available on a limited number of trading platforms or through a single market-making entity, this may result in reduced liquidity, greater price volatility, or periods of inaccessibility for retail holders.

1. Insolvency of the issuer

As with any commercial entity, the issuer may face insolvency risks. These may result from insufficient funding, low market interest, mismanagement, or external shocks (e.g. pandemics, armed conflicts). In such a case, ongoing development, support, and governance of the project may cease, potentially affecting the viability and tradability of the crypto-asset.

2. Legal and regulatory risks

The issuer operates in a dynamic and evolving regulatory environment. Failure to comply with applicable laws or regulations in relevant jurisdictions may result in enforcement actions, penalties, or restrictions on the project’s operations. These may negatively impact the crypto-asset’s availability, market acceptance, or legal status.

3. Operational risks

The issuer may fail to implement adequate internal controls, risk management, or governance processes. This can result in operational disruptions, financial losses, delays in updating the white paper, or reputational damage.

4. Governance and decision-making

The issuer’s management body is responsible for key strategic, operational, and disclosure decisions. Ineffective governance, delays in decision-making, or lack of resources may compromise the stability of the project and its compliance with MiCA requirements. High concentration of decision-making authority or changes in ownership/control can amplify these risks.

5. Reputational risks

The issuer’s reputation may be harmed by internal failures, external accusations, or association with illicit activity. Negative publicity can reduce trust in the issuer and impact the perceived legitimacy or value of the crypto-asset.

6. Counterparty dependence

The issuer may depend on third-party providers for certain core functions, such as technology development, marketing, legal advice, or infrastructure. If these partners discontinue their services, change ownership, or underperform, the issuer’s ability to operate the project or maintain investor communication may be impaired. This could disrupt project continuity or undermine market confidence, ultimately affecting the crypto-asset’s value.

1. Valuation risk

The crypto-asset does not represent a claim, nor is it backed by physical assets or legal entitlements. Its market value is driven solely by supply and demand dynamics and may fluctuate significantly. In the absence of fundamental value anchors, such assets can lose their entire market value within a very short time. Historical market behaviour has shown that some types of crypto-assets – such as meme coins or purely speculative tokens – have become worthless. Investors should be aware that this crypto-asset may lose all of its value.

2. Market volatility risk

Crypto-asset prices can fluctuate sharply due to changes in market sentiment, macroeconomic conditions, regulatory developments, or technology trends. Such volatility may result in rapid and significant losses. Holders should be prepared for the possibility of losing the full amount invested.

3. Liquidity and price-determination risk

Low trading volumes, fragmented trading across venues, or the absence of active market makers can restrict the ability to buy or sell the crypto-asset. In such situations, it is not guaranteed that an observable market price will exist at all times. Spreads may widen materially, and orders may only be executable under unfavourable conditions, which can make liquidation costly or temporarily impossible.

4. Asset security risk

Loss or theft of private keys, unauthorised access to wallets, or failures of custodial or exchange service providers can result in the irreversible loss of assets. Because blockchain transactions are final, recovery of funds after a compromise is generally impossible.

5. Fraud and scam risk

The pseudonymous and irreversible nature of blockchain transactions can attract fraudulent schemes. Typical forms include fake or unauthorised crypto-assets imitating established ones, phishing attempts, deceptive airdrops, or social-engineering attacks. Investors should exercise caution and verify the authenticity of counterparties and information sources.

6. Legal and regulatory reclassification risk

Legislative or regulatory changes in the European Union or in the Member State where the crypto-asset is admitted to trading may alter its legal classification, permitted uses, or tradability. In third countries, the crypto-asset may be treated as a financial instrument or security, which can restrict its offering, trading, or custody.

7. Absence of investor protection

The crypto-asset is not covered by investor-compensation or deposit-guarantee schemes. In the event of loss, fraud, or insolvency of a service provider, holders may have no access to recourse mechanisms typically available in regulated financial markets.

8. Counterparty risk

Reliance on third-party exchanges, custodians, or intermediaries exposes holders to operational failures, insolvency, or fraud of these parties. Investors should conduct due diligence on service providers, as their failure may lead to the partial or total loss of held assets.

9. Reputational risk

Negative publicity related to security incidents, misuse of blockchain technology, or associations with illicit activity can damage public confidence and reduce the crypto-asset’s market value.

10. Community and sentiment risk

Because the crypto-asset’s perceived relevance and expected future use depend largely on community engagement and the prevailing sentiment, a loss of public interest, negative coverage or reduced activity of key contributors can materially reduce market demand.

11. Macroeconomic and interest-rate risk

Fluctuations in interest rates, exchange rates, general market conditions, or overall market volatility can influence investor sentiment towards digital assets and affect the crypto-asset’s market value.

12. Taxation risk

Tax treatment varies across jurisdictions. Holders are individually responsible for complying with all applicable tax laws, including the reporting and payment of taxes arising from the acquisition, holding, or disposal of the crypto-asset.

13. Anti-money-laundering and counter-terrorist financing risk

Wallet addresses or transactions connected to the crypto-asset may be linked to sanctioned or illicit activity. Regulatory responses to such findings may include transfer restrictions, reporting obligations, or the freezing of assets on certain venues.

14. Market-abuse risk

Due to limited oversight and transparency, crypto-assets may be vulnerable to market-abuse practices such as spoofing, pump-and-dump schemes, or insider trading. Such activities can distort prices and expose holders to sudden losses.

15. Legal ownership and jurisdictional risk

Depending on the applicable law, holders of the crypto-asset may not have enforceable ownership rights or effective legal remedies in cases of disputes, fraud, or service failure. In certain jurisdictions, access to exchanges or interfaces may be restricted by regulatory measures, even if on-chain transfer remains technically possible.

16. Concentration risk

A large proportion of the total supply may be held by a small number of holders. This can enable market manipulation, governance dominance, or sudden large-scale liquidations that adversely affect market stability, price levels, and investor confidence.

As this white paper relates to admission to trading of the crypto-asset, the risk description below reflects general implementation risks typically associated with crypto-asset projects and relevant for the crypto-asset service provider. The party admitting the crypto-asset to trading is not involved in the project’s implementation and does not assume responsibility for its governance, funding, or execution.

Delays, failures, or changes in the implementation of the project as outlined in its public roadmap or technical documentation may negatively impact the perceived credibility or usability of the crypto-asset. This includes risks related to project governance, resource allocation, technical delivery, and team continuity.

Key-person risk: The project may rely on a limited number of individuals for development, maintenance, or strategic direction. The departure, incapacity, or misalignment of these individuals may delay or derail the implementation.

Timeline and milestone risk: Project milestones may not be met as announced. Delays in feature releases, protocol upgrades, or external integrations can undermine market confidence and affect the adoption, use, or value of the crypto-asset.

Delivery risk: Even if implemented on time, certain functionalities or integrations may not perform as intended or may be scaled back during execution, limiting the crypto-asset’s practical utility.

As this white paper relates to admission to trading of the crypto-asset, the following risks concern the underlying distributed ledger technology (DLT), its supporting infrastructure, and related technical dependencies. Failures or vulnerabilities in these systems may affect the availability, integrity, or transferability of the crypto-asset.

1. Blockchain dependency risk

The functionality of the crypto-asset depends on the continuous and stable operation of the blockchain(s) on which it is issued. Network congestion, outages, or protocol errors may temporarily or permanently disrupt on-chain transactions. Extended downtime or degradation in network performance can affect trading, settlement, or the usability of the crypto-asset.

2. Smart contract vulnerability risk

The smart contract that defines the crypto-asset’s parameters or governs its transfers may contain coding errors or security vulnerabilities. Exploitation of such weaknesses can result in unintended token minting, permanent loss of funds, or disruption of token functionality. Even after external audits, undetected vulnerabilities may persist due to the immutable nature of deployed code.

3. Wallet and key-management risk

The custody of crypto-assets relies on secure private key management. Loss, theft, or compromise of private keys results in irreversible loss of access. Custodians, trading venues, or wallet providers may be targeted by cyberattacks. Compatibility issues between wallet software and changes to the blockchain protocol (e.g. network upgrades) can further limit user access or the ability to transfer the crypto-asset.

Outdated or vulnerable wallet software:

Users relying on outdated, unaudited, or unsupported wallet software may face compatibility issues, security vulnerabilities, or failures when interacting with the blockchain. Failure to update wallet software in line with protocol developments can result in transaction errors, loss of access, or exposure to known exploits.

4. Network security risks

Attack risks: Blockchains may be subject to denial-of-service (DoS) attacks, 51% attacks, or other exploits targeting the consensus mechanism. These can delay transactions, compromise finality, or disrupt the accurate recording of transfers.

Centralisation concerns: Despite claims of decentralisation, a relatively small number of validators or a high concentration of stake may increase the risk of collusion, censorship, or coordinated network downtime, which can affect the resilience and operational reliability of the crypto-asset.

5. Bridge and interoperability risk

Where tokens can be bridged or wrapped across multiple blockchains, vulnerabilities in bridge protocols, validator sets, or locking mechanisms may result in loss, duplication, or misrepresentation of assets. Exploits or technical failures in these systems can instantly impact circulating supply, ownership claims, or token fungibility across chains.

6. Forking and protocol-upgrade risk

Network upgrades or disagreements among node operators or validators can result in blockchain “forks”, where the blockchain splits into two or more incompatible versions that continue separately from a shared past. This may lead to duplicate token representations or incompatibilities between exchanges and wallets. Until consensus stabilises, trading or transfers may be disrupted or misaligned. Such situations may be difficult for retail holders to navigate, particularly when trading platforms or wallets display inconsistent token information.

7. Economic-layer and abstraction risk

Mechanisms such as gas relayers, wrapped tokens, or synthetic representations may alter the transaction economics of the underlying token. Changes in transaction costs, token demand, or utility may reduce its usage and weaken both its economic function and perceived value within its ecosystem.

8. Spam and network-efficiency risk

High volumes of low-value (“dust”) or automated transactions may congest the network, slow validation times, inflate ledger size, and raise transaction costs. This can impair performance, reduce throughput, and expose address patterns to analysis, thereby reducing network efficiency and privacy.

9. Front-end and access-interface risk

If users rely on centralised web interfaces or hosted wallets to interact with the blockchain, service outages, malicious compromises, or domain expiries affecting these interfaces may block access to the crypto-asset, even while the blockchain itself remains fully functional. Dependence on single web portals introduces a critical point of failure outside the DLT layer.

10. Decentralisation claim risk

While the technical infrastructure may appear distributed, the actual governance or economic control of the project may lie with a small set of actors. This disconnect between marketing claims and structural reality can lead to regulatory scrutiny, reputational damage, or legal uncertainty – especially if the project is presented as ‘community-governed’ without substantiation.

None.

Consensus within the Nesa blockchain is achieved through validator-based agreement on the canonical state of the ledger and inclusion of transactions into blocks. Validators are responsible for block validation, state transition verification, and finalization of ledger updates. Participation in validation is designed to be linked to staking of the native token once live, thereby economically aligning validator incentives with network security.

Miners, by contrast, are responsible for executing AI inference tasks and submitting computation results to the network. Miners do not participate in block production, transaction validation, or ledger finalization and therefore are not part of the consensus mechanism. Their role is operational (computational service provision) rather than consensus-forming.

Consensus-related selection mechanisms include the use of verifiable random functions (VRFs) and cryptographic commit-reveal procedures to support integrity and coordination of inference-related submissions.

The incentive structure is designed to allocate native token rewards to different categories of network participants once the token is operational. Validators are expected to receive staking-related rewards for participating in consensus and securing the ledger. Miners are intended to receive compensation for executing AI inference tasks. Model contributors and other infrastructure participants may also receive protocol-level rewards where applicable.

Network users are expected to pay fees for AI inference and related transactions. Such fees are intended to be denominated and settled in the native token following its activation. At the time of this white paper, these mechanisms are not yet operational.

The energy consumption associated with this crypto-asset is aggregated of multiple contributing components, primarily the underlying blockchain network and the execution of token-specific operations. To determine the energy consumption of a token, the energy consumption of the underlying blockchain network Nesa AI is calculated first. A proportionate share of that energy use is then attributed to the token based on its expected activity level within the network (e.g. transaction volume, contract execution).

The Functionally Fungible Group Digital Token Identifier (FFG DTI) is used to determine all technically equivalent implementations of the crypto-asset in scope.

Estimates regarding hardware types, node distribution, and the number of network participants are based on informed assumptions, supported by best-effort verification against available empirical data. Unless robust evidence suggests otherwise, participants are assumed to act in an economically rational manner. In line with the precautionary principle, conservative estimates are applied where uncertainty exists – that is, estimates tend towards the higher end of potential environmental impact.

To determine the proportion of renewable energy usage, the locations of the nodes are to be determined using public information sites, open-source crawlers and crawlers developed in-house. If no information is available on the geographic distribution of the nodes, reference networks are used which are comparable in terms of their incentivization structure and consensus mechanism. This geo-information is merged with public information from Our World in Data, see citation. The intensity is calculated as the marginal energy cost wrt. one more transaction. Ember (2025); Energy Institute - Statistical Review of World Energy (2024) - with major processing by Our World in Data. “Share of electricity generated by renewables - Ember and Energy Institute” [dataset]. Ember, “Yearly Electricity Data Europe”; Ember, “Yearly Electricity Data”; Energy Institute, “Statistical Review of World Energy” [original data]. Retrieved from https://ourworldindata.org/grapher/share-electricity-renewables.

To determine the GHG Emissions, the locations of the nodes are to be determined using public information sites, open-source crawlers and crawlers developed in-house. If no information is available on the geographic distribution of the nodes, reference networks are used which are comparable in terms of their incentivization structure and consensus mechanism. This geo-information is merged with public information from Our World in Data, see citation. The intensity is calculated as the marginal emission wrt. one more transaction. Ember (2025); Energy Institute - Statistical Review of World Energy (2024) - with major processing by Our World in Data. “Carbon intensity of electricity generation - Ember and Energy Institute” [dataset]. Ember, “Yearly Electricity Data Europe”; Ember, “Yearly Electricity Data”; Energy Institute, “Statistical Review of World Energy” [original data]. Retrieved from https://ourworldindata.org/grapher/carbon-intensity-electricity Licenced under CC BY 4.0.