Cycles Network

Peer-to-Peer Clearing System

Peer-to-peer mutual credit clearing network settling debts through cyclical offsetting without requiring cash.

Type	Peer-to-Peer Clearing System
Region	Global
Status	Active
Links	Website

M69 Score

M69 Alignment2.7

Weakly aligned

1.02.03.04.05.0

Monetary Sovereignty2.9

Issuance (3x) + Stability (2x) + Fiat Indep. (2x)

Civilizational Durability2.3

Sovereignty + Governance + Resilience

Universal Adoption2.5

Traction (2x) + Inclusivity

Iss Mod3x

3.8

Stability2x

1.4

Fia Ind & Int2x

3.0

Traction2x

2.3

Sovereignty

2.7

Governance

1.9

Resilience

2.2

Inclusivity

3.0

Scored against the Money2069 Manifesto — see methodology. Higher = more aligned.

Key Findings

Strongest category: Issuance Model (3.8)Cycles' design where credit emerges organically from real economic obligations, with supply that both expands (overdraft facilities) and contracts (set-off clearing), is deeply aligned with M69's vision of debt-free, activity-linked money creation. The MTCS algorithm's ability to discharge obligations without creating new money is a genuinely novel contribution to monetary infrastructure.

Weakest category: Spending Power Stability (1.2)Cycles fundamentally cannot score well here because it is a clearing protocol, not a currency. It has no native unit of account, no price stability target, and no purchasing power preservation mechanism. This is a structural mismatch with the M69 framework rather than a design failure -- the project simply occupies a different layer of the monetary stack.

The privacy architecture (ZK-TEE) is a standout featurethat earns strong marks on sovereignty and inclusivity. The design principle that obligation graphs must never be publicly revealed -- enabling private clearing for the first time outside of bank clearing clubs -- is both technically sophisticated and deeply aligned with M69's privacy-as-right principle.

The gap between vision and reality is the project's central tension.The whitepaper envisions empowering SMEs and communities worldwide, but the first application (Cycles Prime) serves institutional crypto trading firms. The protocol design is permissionless and egalitarian, but the current implementation is permissioned and exclusive. This gap may close over time but is significant today.

Governance is the most critical gap for M69 alignment.With all decisions controlled by Informal Systems and no public governance structure, the project has no mechanism to prevent capture or protect its founding principles. For a protocol that aspires to be public financial infrastructure, the absence of governance is more concerning than its early-stage traction.

Big takeaway: Cycles represents one of the most intellectually original approaches to monetary infrastructure in the crypto space, but it is too early, too institutional, and too governance-light to score well on M69 alignment today.If the team executes on the whitepaper's community-focused vision, deploys the Cycles Chain publicly with decentralized governance, and builds tools for SMEs and local currencies (rather than only serving trading firms), this score could improve dramatically. The protocol's architecture is well-suited for M69 alignment -- it just needs to grow into it.

Detailed Rating Breakdown

Framework v0.2-alpha · Rated 2026-04-12

Cycles Protocol is an open, decentralized clearing, settlement, and issuance protocol developed by Informal Systems (Toronto, Canada), led by Cosmos co-founder Ethan Buchman. Published as a whitepaper in November 2024 (v0.5), Cycles reimagines payment systems through the lens of graph theory and obligation networks, enabling "atomic multilateral settlement" that clears debt across multiple participants simultaneously with minimal liquidity. The protocol is built on a dedicated Cosmos-SDK blockchain (the "Cycles Chain") with a ZK-TEE privacy architecture using the open-source Quartz framework for encrypted computation. Cycles Prime, the first application built on the protocol, launched as a limited pilot for institutional trading firms in mid-2025, with $2.3M in pre-seed funding from CMCC Global, Maven 11, and Nascent. From an M69 alignment perspective, Cycles presents a fundamentally different approach to monetary infrastructure. Rather than issuing a new currency with spending power stability targets, Cycles is a clearing and settlement layer that can work with any currency or credit instrument. This makes it a powerful enabler of debt-free economic coordination and local currency composability -- core M69 values -- but means it scores poorly on categories that expect a specific monetary unit with price stability mechanisms. The protocol's strong privacy design (ZK-TEE), non-custodial architecture, open-source ethos, and explicit vision for empowering SMEs and communities align well with M69's sovereignty and inclusivity commandments. However, its pre-launch status, institutional-first go-to-market strategy, narrow pilot user base, and absence of a native unit of account or spending power stability mechanism create significant gaps in traction, fiat independence, and stability scoring.

Issuance Model3x

3.8

Code	Question	Score
IM-01	Is issuance permissionless?Cycles is designed as a platform where any participant can create obligations, extend credit (repayment acceptances), and any smart contract can function as an overdraft facility (lending/issuance protocol). The whitepaper states every account is a node in the obligation graph and can become a liquidity source. Issuance of new credit instruments is permissionless by design on the Cycles Chain via CosmWasm smart contracts. [1]	4
IM-02	Is new supply created through debt?Cycles explicitly embraces debt as a fundamental building block. The protocol's core mechanism is "overdraft with issuance" -- new monetary units are created when a lending/overdraft facility extends credit to clear obligations. However, set-off (the most basic clearing mode) discharges debt without creating any new money. The system is designed to minimize the amount of new money needed via graph optimization, but where new supply is created, it is through credit extension. [1]	2
IM-03	Is issuance tied to measurable real-world economic activity?Issuance in Cycles is directly tied to real-world economic activity in a strong sense: obligations represent actual invoices, trade credits, and real economic debts between firms. The graph optimization runs over actual economic obligations. However, this is not an algorithmic index-linked mechanism but rather organic credit creation driven by real commercial activity. [1][2]	4
IM-04	Does the issuance model have a supply cap or hard ceiling?Cycles has no hard supply cap, which is by design. Supply of credit/clearing capacity expands and contracts based on the obligation graph -- when debts are cleared via set-off, effective supply contracts; when new overdraft facilities issue credit, supply expands. The MTCS algorithm optimizes to minimize the amount of new liquidity needed. This is elastic by design but lacks defined upper/lower bounds or circuit breakers. [1]	4
IM-05	Can supply contract (burn/redemption) as well as expand?Yes. The core mechanism of Cycles -- multilateral set-off -- is fundamentally a contraction mechanism. It discharges obligations without creating new money. When debts are cleared via cycles in the graph, the effective money supply contracts. Repayment of overdraft facilities also contracts supply. This is automatic and built into the protocol's core operation. [1]	5

Spending Power Stability2x

1.4

Code	Question	Score
SPS-01	What mechanism does the protocol use to target spending power stability?Cycles is not a currency with a stability target. It is a clearing protocol that works with any currency or credit instrument (USDC, ATOM, mutual credit, etc.). There is no mechanism to target spending power stability of any native unit because there is no native unit of account designed for price stability. The protocol optimizes debt clearing, not price stability. [1]	1
SPS-02	What basket or benchmark is used to measure spending power?No basket or benchmark exists. Cycles does not define a unit of account with a purchasing power target. Obligations are denominated in whatever currency the parties choose (USD, EUR, USDC, ATOM, etc.). [1]	1
SPS-03	How transparent and verifiable is the stability measurement?Not applicable -- there is no stability measurement. The protocol's ZK proofs verify correctness of the clearing algorithm, not price stability. [1]	1
SPS-04	What is the protocol's historical deviation from its stability target?No stability target exists, so no track record of stability can be measured. The protocol is also pre-launch (Cycles Prime is in limited pilot). [1]	1
SPS-05	Does the protocol distinguish between short-term volatility and long-term purchasing power drift?No distinction is made because the protocol does not target price stability at any timescale. However, the whitepaper does distinguish between the Unit of Account function and the Medium of Exchange function, noting these are conceptually separate. This is a theoretical awareness rather than an implemented mechanism. [1]	2
SPS-06	Is the stability mechanism accessible globally?The Cycles network is accessible globally as a testnet/experimental system, but practical access is limited by the need for ICP tokens and technical knowledge. No geographic restrictions exist in principle, though the Cycles Prime pilot is limited to institutional trading firms. [1]	3

Fiat Independence & Interoperability2x

3.0

Code	Question	Score
FI-01	What is the protocol's unit of account?Cycles does not define its own unit of account. Obligations are denominated in whatever unit the parties agree upon -- USD, EUR, USDC, ATOM, or any other currency. The whitepaper explicitly notes that multiple units of account are left for future work. The system is unit-of-account agnostic by design. This means it does not borrow its unit from fiat, but it also does not create a sovereign alternative. [1]	3
FI-02	What is the fiat composition of the protocol's collateral or reserves?Cycles has no protocol-level reserves or collateral. It is a clearing protocol, not a collateralized stablecoin. Individual overdraft facilities may use any collateral (crypto, fiat, or none for mutual credit). The protocol itself is collateral-agnostic. In practice, Cycles Prime's initial pilot uses existing crypto assets (likely including stablecoins). [1][2]	3
FI-03	Does the protocol depend on fiat banking infrastructure to function?The core protocol runs entirely on-chain (Cosmos blockchain with CosmWasm smart contracts). No banking relationships are required for the clearing mechanism itself. However, for real-world trade credit clearing, firms need to reconcile off-chain invoices and accounting, which may involve fiat banking. The protocol itself does not depend on banks. [1]	4
FI-04	Are the protocol's price feeds and oracles fiat-denominated?When multi-currency clearing occurs, the protocol needs price oracles to compare obligation values across currencies. The whitepaper mentions oracle prices for converting between currencies (e.g., BTC to USD) but does not specify whether these are fiat-denominated. In practice, most price feeds in crypto are USD-denominated. [1]	2
FI-05	What happens to the protocol if the primary fiat currency it references collapses or depegs?Since Cycles is currency-agnostic and works with any denomination, a collapse of any single fiat currency would not break the protocol. Obligations denominated in that currency would be affected, but the clearing mechanism itself would continue functioning with other currencies. The protocol is structurally resilient to individual fiat failures. [1]	4
FI-06	Does the project have a credible transition path from fiat-dominated adoption to fiat-independent operation?The whitepaper envisions a path where communities can issue their own currencies and mutual credit systems on the Cycles platform, reducing fiat dependence. However, no concrete transition plan with milestones exists. The initial Cycles Prime pilot is targeting crypto trading firms, not fiat-independent communities. [1][2]	2
FI-07	Can local or sectoral currencies be denominated in or settle against this currency?This is a core strength. The whitepaper explicitly describes Cycles as a platform for diverse currencies, mutual credit systems, and community credit protocols to interoperate. The architecture supports any number of currencies settling through the same obligation graph. References to Sardex, WIR, and Sarafu mutual credit networks as models. However, no local currencies have actually been deployed on Cycles yet. [1][2]	3
FI-08	Does the protocol define open standards for interoperability with other monetary systems?The whitepaper defines a formal language of Obligations, Acceptances, Tenders, and Settlement Records as a universal framework for describing payment systems. IBC (Inter-Blockchain Communication) provides interoperability with the Cosmos ecosystem. The protocol is designed for interchain settlement via ICA (Interchain Accounts). This constitutes an open interoperability specification, though no independent implementations exist yet. [1]	3

Traction2x

2.3

Code	Question	Score
TR-01	Is the project still active?Yes, actively developing. Whitepaper published November 2024, Cycles Prime pilot launched mid-2025, pre-seed funding closed 2025, arxiv paper published July 2025. Active development on Quartz (last commit October 2025). [1][2][3]	4
TR-02	How long has the project been in existence?The Cycles concept has been developed within Informal Systems (founded 2019) with research roots going back to 2020-2021 (referenced academic papers by Fleischman, Dini, Littera). The whitepaper was published November 2024. As a distinct protocol, it is approximately 1.5-2 years old counting from initial public work, but the Cycles Prime app launched only in 2025. [1][2]	2
TR-03	How many active users does the project have?Cycles Prime is in limited pilot with a small number of institutional trading firms. No public user count is available. The pilot offers "personalized onboarding" suggesting a very small number of participants (likely single digits to low tens). [1]	1
TR-04	How many businesses or organizations accept the project's currency?Cycles does not have its own currency that businesses accept. As a clearing protocol, it serves institutional participants. The Cycles Prime pilot serves prime brokers, OTC desks, exchanges, and trading firms, but the exact number of participating firms is not disclosed. Likely fewer than 10 in initial pilot. [1]	1
TR-05	Is the currency used as a unit of account?Cycles does not have its own currency or unit of account. Obligations in the system are denominated in whatever unit parties choose. There is no Cycles-native currency being used as a unit of account by anyone. [1]	1
TR-06	Is the founder or core team still actively working on the project?Ethan Buchman (Cosmos co-founder, CEO of Informal Systems) is actively leading the project. He has given multiple public talks and interviews about Cycles in 2024-2025. The Informal Systems team of approximately 60 employees supports the project. [1][2]	5
TR-07	What partner organizations or institutions support or integrate the project?Investors include CMCC Global, Maven 11, Nascent, Cygni Capital, BKCM, and CMT Digital. The Interchain Foundation provided early funding. Academic collaboration with Paolo Dini (LSE), Andrew Miller (UIUC). Multiple investor firms acknowledged in whitepaper. [1][2]	3
TR-08	Is the project covered or recognized by credible external sources?Covered by Cointelegraph, CryptoNews, The Paypers, HackerNoon, and CryptoRank. Whitepaper published on arxiv. Academic references to prior work by Fleischman and Dini in peer-reviewed journals. Reviewed at Science of Blockchain Conference 2024. [1][2]	4
TR-09	Is adoption organic — not dependent on subsidies, incentives, or mandates?Too early to assess. The pilot program provides personalized onboarding and product input, which is standard for enterprise pilots but not incentive-driven adoption. No token incentives or yield farming mechanisms appear to exist. The value proposition (capital efficiency in clearing) suggests organic utility-driven adoption. [1]	3
TR-10	What is the growth trend over the past 12 months?The project has grown from whitepaper publication (Nov 2024) to Cycles Prime pilot launch and pre-seed funding close (mid-2025). Quartz framework reached v0.5.1. Forward momentum is clear but from a very low base. [1][2]	3
TR-11	Does the project have a coherent narrative and cultural identity that drives long-term commitment?Strong founding narrative rooted in centuries of clearing house history, explicit references to mutual credit traditions (Sardex, WIR, Sarafu), and a clearly articulated mission to democratize access to clearing. The tagline "Respect the Graph" serves as a cultural identifier. Buchman's vision is intellectually compelling and draws on deep monetary history. However, community is nascent and identity is still forming. [1][2]	3

Sovereignty

2.7

Code	Question	Score
SO-01	Can any single entity shut down the project?Cycles is designed as a Cosmos blockchain with BFT consensus, making it resistant to single-entity shutdown. However, currently Informal Systems controls the development and the Cycles Prime pilot. The blockchain is not yet publicly deployed with an independent validator set. In the current pilot stage, Informal Systems could effectively shut it down. [1][2]	2
SO-02	Is the project's core infrastructure permissionless and self-hostable?Quartz is open-source (Apache 2.0) with 61 stars on GitHub. The cycles-sandbox repo is also public. The protocol is designed to run on a permissionless Cosmos chain. However, the Cycles Chain itself is not yet publicly deployed, and the Cycles Prime app appears to be a hosted service. Core protocol components are open-source but the full stack is not yet self-hostable. [1][2]	3
SO-03	Is the project subject to the jurisdiction of a single nation-state?Informal Systems is incorporated in Toronto, Canada. The team is distributed across Canada, Switzerland, Austria, the US, and the UK. Multiple jurisdictions are involved but the primary legal entity is Canadian. [1][2]	3
SO-04	Does the project control or custody user funds?The protocol is designed to be non-custodial. Users submit encrypted intents (obligations, tenders, acceptances) to the blockchain. The TEE processes them but does not hold funds -- it computes settlement flows and produces ZK proofs. On-chain assets remain under user control via smart contract accounts. However, Cycles Prime as a hosted service may have custodial elements in its current pilot form. [1]	3
SO-05	Is the project resilient to key-person risk?Heavily dependent on Ethan Buchman as visionary founder and CEO. The whitepaper has 5 authors (Buchman, Dini, Ahmed, Miller, Fleischman), and Informal Systems has approximately 60 employees, providing some distribution of knowledge. However, Buchman's departure would significantly impact the project. [1][2]	2
SO-06	Does the project depend on any third-party service that could be revoked?The protocol depends on the Cosmos ecosystem infrastructure (Tendermint/CometBFT consensus, IBC protocol). It also depends on Intel SGX for the TEE component of its privacy architecture. SGX availability is controlled by Intel. The ZK proof layer provides a fallback if TEE is compromised, but the primary privacy model relies on hardware TEE. [1]	3
SO-07	Can the project be censored — can specific users or transactions be blocked?The privacy architecture is designed so that obligation graph data is encrypted and only the TEE can see it. The blockchain itself (Cosmos BFT) does not inherently have censorship capability at the protocol level. However, during pilot phase, Cycles Prime operates as a permissioned service with select trading firms, which is inherently censorable. [1][2]	3
SO-08	Does the protocol protect transaction privacy as a monetary right?Privacy is a core design principle. The ZK-TEE architecture ensures obligation graphs are never revealed. Users submit encrypted intents; the TEE decrypts, computes, and re-encrypts results. ZK proofs verify correctness without revealing data. Each user only sees their own set-off notices. The whitepaper discusses shielded pools for balance privacy as future work. This is a strong privacy-by-design approach. [1]	4
SO-09	Does the technology enforce the project's monetary rules such that governance cannot silently override them?The clearing algorithm (MTCS) runs in a TEE with ZK proof verification on-chain. Settlement records must be atomically verified by the smart contract. The ZK proof ensures balanced flows and correct encryption. This provides strong technological enforcement of the clearing rules. However, the protocol is still early-stage, and the smart contract code for the Cycles Chain is not yet publicly auditable (Quartz is the framework, but the specific Cycles smart contracts are not fully open). [1][2]	3

Governance

1.9

Code	Question	Score
GO-01	How are decisions about the project made?No public governance process exists. Decisions are made internally by Informal Systems' team under Ethan Buchman's leadership. No governance forum, DAO, or community decision-making structure has been established. The project is in pre-launch stage where centralized decision-making is typical. [1][2]	2
GO-02	Who has voting or decision-making power, and how is that power distributed?Decision power is held by Informal Systems leadership and investors. No token-based governance exists. No public governance participation mechanism.	1
GO-03	Is the governance process — and the monetary mechanism itself — transparent and publicly auditable?The whitepaper is publicly available and the clearing algorithm (MTCS) is described in academic publications. Quartz framework is open-source. However, governance processes are opaque, the Cycles Chain smart contracts are not fully public, and there is no on-chain governance mechanism. The clearing mechanism logic is theoretically auditable via the published papers. [1][2]	2
GO-04	Can governance be captured by a small group or hostile actor?Governance is already controlled by a small group (Informal Systems leadership and investors). There is no decentralized governance to capture. This is expected for a pre-launch project but represents a current weakness. [1]	2
GO-05	How are upgrades and changes to the protocol or project proposed and executed?No formal upgrade process exists. Changes are driven by the Informal Systems development team. The open-source Quartz framework allows community contributions in theory, but the core protocol changes are centrally managed. [1]	2
GO-06	Is there a separation between governance over monetary policy and governance over operational decisions?No separation exists. The protocol does not define monetary policy per se (it is a clearing protocol), but all protocol parameters are controlled by the development team without distinction between categories.	1
GO-07	Does the project have a constitution, charter, or set of immutable principles?The whitepaper articulates clear design principles (privacy-preserving, permissionless, atomic multilateral settlement, minimize intermediaries). These serve as de facto founding principles but are not formalized as a constitution or charter with governance protection. The vision is well-articulated but not formally enshrined. [1]	3
GO-08	Can the project's issuance rules be changed, and are monetary policy changes subject to stronger constraints than operational changes?The protocol does not have fixed issuance rules -- issuance emerges from individual overdraft facilities and credit protocols deployed as smart contracts. Any entity can create their own overdraft facility with their own rules. The base clearing protocol (MTCS) has clear mathematical rules but these are not protected by special governance constraints; they could be changed by the development team. [1]	2

Resilience

2.2

Code	Question	Score
RE-01	Has the project survived a major crisis or adversarial event?The protocol has not been deployed in production. Cycles Prime is in limited pilot. No crisis has been faced because no live system exists at meaningful scale. [1]	1
RE-02	Does the project have redundancy in its critical infrastructure?The whitepaper describes sharing the TEE private key across multiple TEEs for redundancy. The Cosmos blockchain provides validator redundancy via BFT consensus. IBC provides interchain redundancy. However, these are design intentions; the production deployment has not demonstrated actual redundancy. [1]	3
RE-03	Can the project recover from a catastrophic failure?The protocol is designed so that obligation data is posted on-chain (encrypted). Open-source code (Quartz) could be used to rebuild. However, no disaster recovery plan is documented, and recovery would depend on Informal Systems' team. [1][2]	2
RE-04	Is the project's design simple enough to be maintained and understood long-term?The core concept (graph-based debt clearing) is elegant and well-described. The MTCS algorithm has published academic foundations. However, the full implementation (ZK-TEE sidecar, encrypted intents, Cosmos chain, IBC interop) is complex. The whitepaper is 27 pages with substantial mathematical formalism. Domain expertise in graph theory, cryptography, and distributed systems is required. [1]	3
RE-05	Is the project dependent on a specific technology that could become obsolete?Built on Cosmos SDK (well-established, widely-used). Depends on Intel SGX for TEE (hardware dependency), though the whitepaper discusses AMD SEV as an alternative and ZK proofs as a TEE-independent fallback. Rust-based implementation on a major stack. Technology risk is moderate -- SGX dependency is the main concern. [1][2]	3
RE-06	How does the project handle economic stress (bank runs, liquidity crises, collateral crashes, inflation/deflation shocks)?The protocol's core value proposition is precisely to handle liquidity stress -- MTCS reduces liquidity requirements by approximately 50% according to simulation data. The whitepaper cites real-world evidence from Slovenia's clearing program (683M EUR cleared in 2012). However, this is theoretical/simulated; no live stress test has occurred. The protocol does not have explicit circuit breakers or emergency mechanisms. [1][2]	2
RE-07	Does the project have sustainable funding for long-term maintenance?Informal Systems raised $5.3M Series A (2023) and Cycles raised $2.3M pre-seed (2025). Combined approximately $7.6M in funding. Informal Systems has approximately 60 employees. No protocol-level revenue model is documented yet. Funding appears sufficient for 1-3 years at current burn rate but depends on future fundraising. [1][2]	3
RE-08	Can the system operate across extreme latency, disconnected networks, and multi-century timescales?The batch clearing model (daily, weekly, monthly epochs) is inherently latency-tolerant. The protocol does not require real-time consensus for clearing -- obligations accumulate and are cleared periodically. This design is well-suited for high-latency environments. However, no explicit multi-century or interplanetary design consideration exists. [1]	3
RE-09	Is the system designed for a world where AI agents are primary economic actors?The protocol uses smart contract accounts (CosmWasm) where every node in the graph is a programmable smart contract. AI agents could submit obligations, tenders, and acceptances via standard blockchain interfaces. The batch processing model is well-suited for programmatic interaction. However, the protocol was not explicitly designed with AI agents in mind. [1]	3

Inclusivity

3.0

Code	Question	Score
IN-01	Can anyone in the world participate regardless of nationality, wealth, or status?The protocol is designed to be permissionless and open to anyone. The whitepaper explicitly positions Cycles as democratizing clearing capabilities previously restricted to banks and large institutions. However, Cycles Prime's current pilot is limited to institutional trading firms, not open to the general public. The protocol design is open but the current implementation is restricted. [1][2]	3
IN-02	What is the minimum cost to start using the project?Not yet determinable. The protocol will run on a Cosmos chain with transaction fees. Cosmos chains typically have low fees. The whitepaper mentions ZK proof generation costs and fee payment mechanisms. For the Cycles Prime pilot, costs are not publicly disclosed. [1]	3
IN-03	Does the project actively serve underbanked or financially excluded populations?The whitepaper explicitly identifies SMEs and underbanked populations as key beneficiaries. References to Kenya's Sarafu blockchain mutual credit, Sardinia's Sardex, and the late payment crisis affecting small firms. Buchman discusses how Cycles empowers communities to build their own payment and credit systems. However, the current pilot targets institutional crypto trading firms, not underbanked communities. [1][2]	3
IN-04	Does the project distribute economic benefits — including seigniorage — broadly, or concentrate them among insiders?The protocol is designed so that clearing benefits (reduced debt, improved liquidity) flow to all network participants proportionally. The MTCS algorithm optimizes for maximum debt discharge across all participants. No seigniorage accrues to insiders from the clearing process itself. However, equity ownership in Informal Systems is concentrated among founders and investors (CMCC Global, Maven 11, Nascent). No token distribution exists yet. [1]	3
IN-05	Does the project treat all participants equally under the same rules?The clearing algorithm treats all participants equally -- MTCS optimizes across the entire graph without preferential treatment. All nodes in the obligation graph are equivalent. However, in the current Cycles Prime pilot, access is restricted to select institutional firms, creating unequal access at the application layer even if the protocol layer is equal. [1][2]	3
IN-06	Does the project require identity documentation or surveillance to participate?The protocol is designed for pseudonymous participation. Users submit encrypted intents; even the TEE only sees the obligation graph, not real-world identities. On-chain addresses are pseudonymous. The Cycles Prime pilot likely requires some form of institutional KYC, but the base protocol does not require identity documentation. [1]	3
IN-07	Does the project have mechanisms to prevent wealth concentration over time?The protocol does not have explicit anti-concentration mechanisms like demurrage or progressive fees. However, the clearing mechanism is inherently egalitarian -- it optimizes to clear the most debt for all participants. Overdraft facilities could in theory charge interest, which would tend toward concentration, but this depends on the specific credit protocols deployed. [1]	3

Frequently Asked Questions

What is Cycles Protocol and what problem does it solve?

How is money created in Cycles Protocol?

Cycles is designed as a platform where any participant can create obligations, extend credit (repayment acceptances), and any smart contract can function as an overdraft facility (lending/issuance protocol). The whitepaper states every account is a node in the obligation graph and can become a liquidity source. Issuance of new credit instruments is permissionless by design on the Cycles Chain via CosmWasm smart contracts.

How does Cycles Protocol maintain stable spending power?

Cycles is not a currency with a stability target. It is a clearing protocol that works with any currency or credit instrument (USDC, ATOM, mutual credit, etc.). There is no mechanism to target spending power stability of any native unit because there is no native unit of account designed for price stability.

Is Cycles Protocol independent from fiat currencies?

Cycles does not define its own unit of account. Obligations are denominated in whatever unit the parties agree upon -- USD, EUR, USDC, ATOM, or any other currency. The whitepaper explicitly notes that multiple units of account are left for future work.

Who controls Cycles Protocol and can it be shut down?

Cycles is designed as a Cosmos blockchain with BFT consensus, making it resistant to single-entity shutdown. However, currently Informal Systems controls the development and the Cycles Prime pilot. The blockchain is not yet publicly deployed with an independent validator set.

How widely adopted is Cycles Protocol today?

Cycles Prime is in limited pilot with a small number of institutional trading firms. No public user count is available. The pilot offers "personalized onboarding" suggesting a very small number of participants (likely single digits to low tens).

Is Cycles Protocol still active and growing?

Yes, actively developing. Whitepaper published November 2024, Cycles Prime pilot launched mid-2025, pre-seed funding closed 2025, arxiv paper published July 2025. Active development on Quartz (last commit October 2025).

What are the main risks or weaknesses of Cycles Protocol?

Weakest category: Spending Power Stability (1.2): Cycles fundamentally cannot score well here because it is a clearing protocol, not a currency. It has no native unit of account, no price stability target, and no purchasing power preservation mechanism. This is a structural mismatch with the M69 framework rather than a design failure -- the project simply occupies a different layer of the monetary stack.

What makes Cycles Protocol unique from an M69 perspective?

Strongest category: Issuance Model (3.8): Cycles' design where credit emerges organically from real economic obligations, with supply that both expands (overdraft facilities) and contracts (set-off clearing), is deeply aligned with M69's vision of debt-free, activity-linked money creation. The MTCS algorithm's ability to discharge obligations without creating new money is a genuinely novel contribution to monetary infrastructure.

How is Cycles Protocol's M69 Score calculated?

Cycles Protocol scores 2.7/5.0 overall. Pillar scores: Monetary Sovereignty 2.9, Civilizational Durability 2.3, Universal Adoption 2.5. Strongest: Issuance Model (3.8). Weakest: Spending Power Stability (1.4).