SMLY-description-1.1.html

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<p><img src="smiley-rgb_smileycoin-w.png" style="width:90.0%" /></p>
<h1 class="unnumbered unlisted"
id="crypto-asset-white-paper-for-smileycoin-smly">Crypto-asset white
paper for SmileyCoin (SMLY)</h1>
<h1 id="general-information">General information</h1>
<h2 id="table-of-content">00. Table of content</h2>
<h2 id="date-of-notification">01. Date of notification</h2>
<p>Not applicable: this document has not been notified to any competent
authority.</p>
<h3
id="statement-in-accordance-with-article-63-of-regulation-eu-20231114">02.
Statement in accordance with Article 6(3) of Regulation (EU)
2023/1114</h3>
<p>This document has not been notified to or approved by any competent
authority in any Member State of the European Union. It is not a
crypto-asset white paper notified under Regulation (EU) 2023/1114.
SmileyCharity is solely responsible for its content.</p>
<p>This document is published by SmileyCharity for information.
SmileyCharity is not the issuer of SMLY, does not offer SMLY to the
public, does not seek its admission to trading and does not operate a
trading platform for crypto-assets.</p>
<h3
id="compliance-statement-in-accordance-with-article-66-of-regulation-eu-20231114">03.
Compliance statement in accordance with Article 6(6) of Regulation (EU)
2023/1114</h3>
<p>This document follows the structure of Annex I to Regulation (EU)
2023/1114 but is not submitted under Title II of that Regulation. To the
best of the knowledge of the management body, the information presented
in this document is fair, clear and not misleading and the document
makes no omission likely to affect its import.</p>
<h3
id="statement-in-accordance-with-article-65-points-a-b-c-of-regulation-eu-20231114">04.
Statement in accordance with Article 6(5), points (a), (b), (c), of
Regulation (EU) 2023/1114</h3>
<p>The crypto-asset referred to in this crypto-asset white paper may
lose its value in part or in full, may not always be transferable and
may not be liquid.</p>
<h3
id="statement-in-accordance-with-article-65-point-d-of-regulation-eu-20231114">05.
Statement in accordance with Article 6(5), point (d), of Regulation (EU)
2023/1114</h3>
<p>FALSE; SMLY is not a utility token; see D.6</p>
<h3
id="statement-in-accordance-with-article-65-points-e-and-f-of-regulation-eu-20231114">06.
Statement in accordance with Article 6(5), points (e) and (f), of
Regulation (EU) 2023/1114</h3>
<p>The crypto-asset referred to in this white paper is not covered by
the investor compensation schemes under Directive 97/9/EC of the
European Parliament and of the Council or the deposit guarantee schemes
under Directive 2014/49/EU of the European Parliament and of the
Council.</p>
<h3
id="warning-in-accordance-with-article-67-second-subparagraph-of-regulation-eu-20231114">07.
Warning in accordance with Article 6(7), second subparagraph, of
Regulation (EU) 2023/1114</h3>
<p>Warning: This summary should be read as an introduction to the
crypto-asset white paper. The prospective holder should base any
decision to purchase this crypto-asset on the content of the crypto-
asset white paper as a whole and not on the summary alone. The offer to
the public of this crypto-asset does not constitute an offer or
solicitation to purchase financial instruments and any such offer or
solicitation can be made only by means of a prospectus or other offer
documents pursuant to the applicable national law. This crypto-asset
white paper does not constitute a prospectus as referred to in
Regulation (EU) 2017/1129 of the European Parliament and of the Council
or any other offer document pursuant to Union or national law.</p>
<h3 id="characteristics-of-the-crypto-asset">08. Characteristics of the
crypto-asset</h3>
<p>This white paper has been prepared by Styrktarfélagið Broskallar,
using the registered foreign name SmileyCharity, to provide information
about SmileyCoin and its use in the SmileyProject. SmileyCharity is
responsible for the content of this document. It does not seek admission
to trading. The following particulars identify SmileyCharity as its
preparer and as an organisation materially involved in the educational
activities described.</p>
<p>SmileyCoin (SMLY) is the native crypto-asset of the SmileyCoin
blockchain, introduced in 2014 through research and development at the
University of Iceland to reward educational achievement in SmileyTutor,
formerly tutor-web. Its founding purpose was to investigate and support
educational incentives, rather than promise financial returns.
SmileyTutor is an open-source learning environment grounded in a
programme of peer-reviewed research. Studies support the educational
value of the learning system and separately report that SMLY reward
levels influenced exercise participation; they do not establish that
cryptocurrency rewards alone caused improved learning
outcomes.[D-1–3][D-2][D-3]</p>
<p>SmileyCharity, registered in Iceland as Styrktarfélagið Broskallar,
uses SmileyTutor and SMLY to support educational access in disadvantaged
communities. Through participating schools and community libraries,
students receive access to learning devices and local assistance, earn
SMLY through educational activities, and may spend their rewards through
participating SmileyStores. Under the established virtual-store model,
local purchases are facilitated by programme representatives and
reimbursed by SmileyCharity in local currency. Research describing
operations in Kenyan communities and refugee camps reported that the
programme had reached 5,000 students by June 2024.[D-4]</p>
<p>The blockchain, the educational allocation administered by the
SmileyCoinFund, and SmileyCharity’s activities are distinct. The
blockchain records transfers and applies protocol rules, while the Fund
supports educational rewards and SmileyCharity administers its own
programmes and funding. SMLY holdings and protocol-directed allocations
do not replace the fiat funding needed to purchase goods and operate the
charity. An independent evaluation reported in 2024 rated the charitable
programme highly for relevance, coherence, efficiency and effectiveness,
while identifying sustainability, governance, financing and outcome
measurement as areas requiring further attention. Long-term impact was
not rated.[D-5] Initiatives including SmileyTrees and SmileyKuku are
testing approaches to greater financial sustainability; self-sufficiency
has not been established.</p>
<p>Educational purpose and documented use do not eliminate crypto-asset
risks. Access to programme goods and services depends on local
arrangements, eligibility, funding and continued operation. Programme
reference valuations are neither guaranteed market prices nor a general
right to redeem SMLY for fiat currency. SMLY may lose some or all of its
value, become illiquid or cease to be transferable. Neither the research
nor the independent evaluation constitutes regulatory approval, a
blockchain security audit or a promise of investment returns.</p>
<p>Through the EduChain R&amp;D project, SmileyCoin were also made
available on the BNB chain through a smart contract. These 1 bn BNB.SMLY
correspond exactly to 1 bn SMLY on the original SMLY blockchain, held in
cold storage. This whitepaper represents both SMLY and BNB.SMLY.</p>
<p>The 1bn BNB.SMLY are set up in token contract
0xe015f8C012e932F13184061F3ffd956E9000A6CD and a 1-1 swap mechanism
against SMLY is made available on Hybrix.io. There is no guarantee that
this swap mechanism will operate indefinitely.</p>
<h3
id="information-about-the-quality-and-quantity-of-goods-or-services-to-which-the-utility-tokens-give-access-and-restrictions-on-the-transferability">09.
Information about the quality and quantity of goods or services to which
the utility tokens give access and restrictions on the
transferability</h3>
<p>Not applicable (see D.6)</p>
<h3
id="key-information-about-the-offer-to-the-public-or-admission-to-trading">10.
Key information about the offer to the public or admission to
trading</h3>
<p>This document is published by SmileyCharity for information. It has
not been notified to any competent authority, and SmileyCharity does not
seek admission to trading.</p>
<p>SmileyCoin (SMLY) is a decentralized, open-market digital currency.
Currently there is no centralized entity conducting an offer to the
public. The SmileyCharity does not issue or control the supply of
SmileyCoin. This whitepaper should enhance transparency regarding the
use of SmileyCoin, including listing and trading on platforms operated
by other parties.</p>
<p>Given its central rôle in the SmileyProject, the SmileyCharity has
large holdings of SmileyCoin.</p>
<p>SmileyCharity may sell part of its holdings to fund its charitable
activities. Any such sales will be made only through crypto-asset
service providers authorised under Regulation (EU) 2023/1114, at
prevailing market prices, and the proceeds will be applied to the
charitable purposes in A.13. SmileyCharity does not promote SMLY as an
investment.</p>
<table>
<tbody>
<tr>
<td style="text-align: left;">Total offer amount</td>
<td style="text-align: left;">Not applicable</td>
</tr>
<tr>
<td style="text-align: left;">Total number of tokens to be offered to
the public</td>
<td style="text-align: left;">Not applicable</td>
</tr>
<tr>
<td style="text-align: left;">Subscription period</td>
<td style="text-align: left;">Not applicable</td>
</tr>
<tr>
<td style="text-align: left;">Minimum and maximum subscription
amount</td>
<td style="text-align: left;">Not applicable</td>
</tr>
<tr>
<td style="text-align: left;">Issue price</td>
<td style="text-align: left;">Not applicable</td>
</tr>
<tr>
<td style="text-align: left;">Subscription fees (if any)</td>
<td style="text-align: left;">Not applicable</td>
</tr>
<tr>
<td style="text-align: left;">Target holders of tokens</td>
<td style="text-align: left;">Not applicable</td>
</tr>
<tr>
<td style="text-align: left;">Description of offer phases</td>
<td style="text-align: left;">Not applicable</td>
</tr>
<tr>
<td style="text-align: left;">CASP responsible for placing the token (if
any)</td>
<td style="text-align: left;">Not applicable</td>
</tr>
<tr>
<td style="text-align: left;">Form of placement</td>
<td style="text-align: left;">Not applicable</td>
</tr>
<tr>
<td style="text-align: left;">Admission to trading</td>
<td style="text-align: left;">Not sought by SmileyCharity (see E.1 and
E.33)</td>
</tr>
</tbody>
</table>
<p><strong>References for General Introduction</strong></p>
<ol type="1">
<li>Stefansson, G. and Lentin, J. (2017). “From Smileys to Smileycoins:
Using a Cryptocurrency in Education.” <em>Ledger</em>, 2, 38–54. DOI:
10.5915/LEDGER.2017.103.</li>
<li>Stefansson, G. (2004). “The tutor-web: An educational system for
classroom presentation, evaluation and self-study.” <em>Computers &amp;
Education</em>, 43(4), 315–343.</li>
<li>Jonsdottir, A. H., Bjornsdottir, A. and Stefansson, G. (2017).
“Difference in Learning Among Students Doing Pen-and-Paper Homework
Compared to Web-Based Homework in an Introductory Statistics Course.”
<em>Journal of Statistics Education</em>, 25(1), 12–20. DOI:
10.1080/10691898.2017.1291289.</li>
<li>Stefansson, G., Jonsdottir, A. H., Gunnarsson, B. and Lentin, J.
(2024). “On-chain Services for Education in Slums and Refugee Camps.”
<em>International Journal of Learning and Teaching</em>, 10(6),
697–702.</li>
<li>Nielsen, K. D., Stefánsdóttir, S. L., Hussein, B. A., Birgisdóttir,
V. L. and Ingvarsdóttir, A. (2024). <em>Final Evaluation Report:
SmileyCharity in Kenya</em>. Independent evaluation commissioned by
Iceland’s Ministry for Foreign Affairs. <strong>An evaluation report,
not a peer-reviewed journal article.</strong></li>
</ol>
<h2
id="part-a-information-about-the-offeror-or-the-person-seeking-admission-to-trading">Part
A – Information about the offeror or the person seeking admission to
trading</h2>
<p>SmileyCharity prepares this document for information, describing
SmileyCoin and its educational use. It has not been notified to any
competent authority, and SmileyCharity does not seek admission to
trading. SmileyCharity’s particulars are provided below in the form set
out in Annex I to Regulation (EU) 2023/1114.</p>
<h3 id="a.1-name">A.1 Name</h3>
<p>Styrktarfélagið Broskallar (registered foreign name:
SmileyCharity)</p>
<h3 id="a.2-legal-form">A.2 Legal form</h3>
<p>Non-profit association with cross-border activities
(Almannaheillafélag með starfsemi yfir landamæri), subject to Act
No. 110/2021 on Public Benefit Associations and registered under Act
No. 119/2019 on the Registration Obligation of Public Benefit
Associations Operating Across Borders.</p>
<h3 id="a.3-registered-address">A.3 Registered address</h3>
<p>Lundi 9, 200 Kópavogur, Iceland</p>
<h3 id="a.4-head-office">A.4 Head office</h3>
<p>Lundi 9, 200 Kópavogur, Iceland</p>
<h3 id="a.5-registration-date">A.5 Registration date</h3>
<p>2015-10-13</p>
<h3 id="a.6-legal-entity-identifier">A.6 Legal entity identifier</h3>
<p>636700LQMUJ4E4WR0417</p>
<h3
id="a.7-another-identifier-required-pursuant-to-applicable-national-law">A.7
Another identifier required pursuant to applicable national law</h3>
<p>Icelandic registration number (kennitala): 531015-0290</p>
<h3 id="a.8-contact-telephone-number">A.8 Contact telephone number</h3>
<p>+354-695-8264</p>
<h3 id="a.9-e-mail-address">A.9 E-mail address</h3>
<p>education.in.a.suitcase@gmail.com</p>
<h3 id="a.10-response-time-days">A.10 Response time (Days)</h3>
<p>030</p>
<h3 id="a.11-parent-company">A.11 Parent company</h3>
<p>Not applicable.</p>
<h3 id="a.12-members-of-the-management-body">A.12 Members of the
management body</h3>
<p>The Business Register certificate dated 20 May 2025 records the
following board, elected on 28 March 2025:</p>
<table>
<colgroup>
<col style="width: 17%" />
<col style="width: 44%" />
<col style="width: 38%" />
</colgroup>
<thead>
<tr>
<th>Name</th>
<th>Business address</th>
<th>Function</th>
</tr>
</thead>
<tbody>
<tr>
<td>Gunnar Stefánsson</td>
<td>c/o Styrktarfélagið Broskallar, Lundi 9, 200 Kópavogur, Iceland</td>
<td>Chair of the board; Executive Director; holder of procuration</td>
</tr>
<tr>
<td>Anna Helga Jónsdóttir</td>
<td>Department of Mathematics, University of Iceland, Reykjavík,
Iceland</td>
<td>Board member</td>
</tr>
<tr>
<td>Guðrún Geirsdóttir</td>
<td>c/o Styrktarfélagið Broskallar, Lundi 9, 200 Kópavogur, Iceland</td>
<td>Board member</td>
</tr>
<tr>
<td>Sigríður Björk Gunnarsdóttir</td>
<td>c/o Styrktarfélagið Broskallar, Lundi 9, 200 Kópavogur, Iceland</td>
<td>Board member</td>
</tr>
</tbody>
</table>
<p>The certificate also records Gunnar Bjarni Ragnarsson and Kristín
Rafnar as alternate board members. It states that the association’s
signing authority rests with a majority of the board.</p>
<h3 id="a.13-business-activity">A.13 Business activity</h3>
<p><strong>Purpose and principal activities</strong></p>
<p>SmileyCharity is an Icelandic non-profit association whose registered
purpose is to support and empower students in impoverished areas through
access to education, food and other necessities. Its principal
activities include obtaining grants and donations, providing learning
equipment, and supporting educational participation through partner
schools and community libraries.</p>
<p>Through the SmileyProject, including activities known as Education in
a Suitcase, participating students obtain access to SmileyTutor,
formerly tutor-web, and local educational support. Students can earn
SmileyCoin (SMLY) through educational activities and use their rewards
under participating SmileyStore arrangements. These activities aim to
reduce barriers to education and support progression towards further
study, including university.</p>
<p><strong>Research and operational basis</strong></p>
<p>The educational platform and its use of cryptocurrency rewards have
been described in peer-reviewed research. Stefansson and Lentin (2017)
[A-1] document the introduction and early educational use of SMLY;
Stefansson and colleagues (2024)[A-2] describe blockchain services
supporting educational activities and participating stores in Kenyan
communities and refugee camps. These publications document the
development and use of the technologies; they do not establish
guaranteed educational outcomes, financial returns or future programme
availability.</p>
<p>Under the established virtual-store model, local programme
representatives facilitate eligible purchases and SmileyCharity provides
local-currency reimbursement under the programme’s arrangements. Access
depends on eligibility, local implementation, available funding and
continued operation. This model is distinct from physical stores
purchasing and reselling products directly for SMLY.</p>
<p><strong>Relationship to other project participants</strong></p>
<p>SmileyCharity’s charitable activities are distinct from the operation
of the SmileyCoin blockchain and the administration of the educational
allocation by the SmileyCoinFund. SmileyTutor names the educational
platform; SmileyTutor NGO is a separate non-profit association
registered in Iceland (ID no. 570426-1330). SmileyInvest is a separate
private limited company established to purchase SMLY on cryptocurrency
markets in support of the broader project. Their activities and
resources should not be treated as activities or assets of SmileyCharity
merely because they support related objectives.</p>
<p>The technologies originated in research and development at the
University of Iceland. That research relationship does not itself
establish University responsibility for SmileyCharity’s obligations or a
guarantee of SMLY’s value.</p>
<p>Further information about the project, participating organisations
and funding arrangements is provided in D.4 and G.5. Relevant interests
are disclosed in E.38.</p>
<p>SmileyCharity publishes this document for information. It is not the
issuer, offeror or person seeking admission to trading of SMLY.
SmileyCharity is not a crypto-asset service provider, does not provide
any crypto-asset services as defined in Article 3(1)(16) of that
Regulation, and does not intend to do so. SMLY is currently traded on
three venues that are not operated by authorised crypto-asset service
providers: Hybrix, DEXOMY and PancakeSwap (see I.3). SmileyCharity does
not operate or control these venues and has no contractual agreements
with them; see E.38 on occasional liquidity provision.</p>
<p>In a letter dated 11 May 2023 (ref. 2304061), the Financial
Supervisory Authority of the Central Bank of Iceland assessed SMLY as a
virtual asset under Act No. 140/2018. On the facts then described, it
concluded that neither SmileyCharity nor Smiley Invest ehf. was a
virtual asset service provider, noting in particular that neither entity
issued or marketed the asset. The letter predates the application of
Regulation (EU) 2023/1114. It did not address admission to trading, an
offer to the public, or SmileyCharity’s possible sales of its holdings,
so it should not be read as covering the activities described in this
document.</p>
<h3 id="a.14-parent-company-business-activity">A.14 Parent company
business activity</h3>
<p>Not applicable.</p>
<h3 id="a.15-newly-established">A.15 Newly established</h3>
<p>FALSE</p>
<h3 id="a.16-financial-condition-for-the-past-three-years">A.16
Financial condition for the past three years</h3>
<p>SmileyCharity’s activities are funded principally through grants and
donations. Its registered purpose identifies computer equipment, food
and other necessities for students as principal expenditure categories.
Programme delivery, including local-currency reimbursements under
virtual-store arrangements, depends on the availability and conditions
of funding.</p>
<p>SMLY holdings and protocol-directed receipts are distinct from cash
available to meet operating costs and programme commitments. Their
capacity to finance expenditure depends on actual use or realisation and
cannot be inferred solely from the quantity of tokens held or an
internal programme reference valuation.</p>
<p>SmileyCharity holds SMLY and therefore has an economic interest in
its usability, liquidity and market accessibility. The quantities and
accounting treatment of its holdings should be read together with the
financial information in this section. The educational allocation
administered by the SmileyCoinFund is described separately in G.5 and
should not be presented as an asset available to SmileyCharity without
an established entitlement. Related conflicts of interest are addressed
in E.38.</p>
<p><strong>Styrktarfélagið Broskallar: three-year summary, 2023 to 2025
(ISK)</strong></p>
<table>
<colgroup>
<col style="width: 25%" />
<col style="width: 25%" />
<col style="width: 25%" />
<col style="width: 25%" />
</colgroup>
<thead>
<tr>
<th style="text-align: left;">Item</th>
<th style="text-align: left;">2023</th>
<th style="text-align: left;">2024</th>
<th style="text-align: left;">2025</th>
</tr>
</thead>
<tbody>
<tr>
<td style="text-align: left;"><strong>Income: grants and
donations</strong></td>
<td style="text-align: left;">29,985,377</td>
<td style="text-align: left;">40,532,580</td>
<td style="text-align: left;">14,756,802</td>
</tr>
<tr>
<td style="text-align: left;">Income: other material sources</td>
<td style="text-align: left;">None</td>
<td style="text-align: left;">None</td>
<td style="text-align: left;">None</td>
</tr>
<tr>
<td style="text-align: left;">Interest income and indexation (finance
income)</td>
<td style="text-align: left;">152,827</td>
<td style="text-align: left;">129,243</td>
<td style="text-align: left;">116,384</td>
</tr>
<tr>
<td style="text-align: left;"><strong>Programme expenditure</strong>
(grants awarded)</td>
<td style="text-align: left;">21,000,988</td>
<td style="text-align: left;">33,445,582</td>
<td style="text-align: left;">19,601,242</td>
</tr>
<tr>
<td style="text-align: left;"><strong>Administrative
expenditure</strong> (other operating costs)</td>
<td style="text-align: left;">4,537,388</td>
<td style="text-align: left;">3,289,017</td>
<td style="text-align: left;">2,605,430</td>
</tr>
<tr>
<td style="text-align: left;">Total operating expenditure</td>
<td style="text-align: left;">25,538,376</td>
<td style="text-align: left;">36,734,599</td>
<td style="text-align: left;">22,206,672</td>
</tr>
<tr>
<td style="text-align: left;">Net finance items</td>
<td style="text-align: left;">+88,047</td>
<td style="text-align: left;">+86,754</td>
<td style="text-align: left;">+29,774</td>
</tr>
<tr>
<td style="text-align: left;"><strong>Surplus / (deficit)</strong></td>
<td style="text-align: left;"><strong>4,535,048</strong></td>
<td style="text-align: left;"><strong>3,884,735</strong></td>
<td style="text-align: left;"><strong>(7,420,096)</strong></td>
</tr>
<tr>
<td style="text-align: left;"><strong>Cash and bank
balances</strong></td>
<td style="text-align: left;">8,238,052</td>
<td style="text-align: left;">12,122,531</td>
<td style="text-align: left;">18,704,924</td>
</tr>
<tr>
<td style="text-align: left;"><strong>Total assets</strong></td>
<td style="text-align: left;">8,239,724</td>
<td style="text-align: left;">12,124,459</td>
<td style="text-align: left;">18,704,924</td>
</tr>
<tr>
<td style="text-align: left;"><strong>Liabilities</strong></td>
<td style="text-align: left;">0</td>
<td style="text-align: left;">0</td>
<td style="text-align: left;">14,000,561</td>
</tr>
<tr>
<td style="text-align: left;"><strong>Accumulated funds / net
assets</strong></td>
<td style="text-align: left;">8,239,724</td>
<td style="text-align: left;">12,124,459</td>
<td style="text-align: left;">4,704,363</td>
</tr>
<tr>
<td style="text-align: left;"><strong>Restricted funding</strong></td>
<td style="text-align: left;">Not disclosed</td>
<td style="text-align: left;">Joyland nursery rebuild funds, amount not
stated</td>
<td style="text-align: left;">Joyland nursery rebuild funds, amount not
stated. The 14,000,561 of income received in advance is a Ministry for
Foreign Affairs grant, recognised in proportion to eligible costs.</td>
</tr>
<tr>
<td style="text-align: left;"><strong>Outstanding programme
commitments</strong></td>
<td style="text-align: left;">None disclosed</td>
<td style="text-align: left;">None disclosed</td>
<td style="text-align: left;">None disclosed. The only liability is the
income received in advance.</td>
</tr>
<tr>
<td style="text-align: left;"><strong>SMLY quantity</strong></td>
<td style="text-align: left;">Not stated in the 2024 report</td>
<td style="text-align: left;">About 9.1 billion at year-end. 1 billion
was returned to the SmileyTutor project.</td>
<td style="text-align: left;">About 9.7 billion at year-end. 1.5 billion
was returned to the SmileyTutor project.</td>
</tr>
<tr>
<td style="text-align: left;"><strong>SMLY carrying value</strong></td>
<td style="text-align: left;">Not stated</td>
<td style="text-align: left;">Not stated. No SMLY asset is on the
balance sheet.</td>
<td style="text-align: left;">Not stated. No SMLY asset is on the
balance sheet.</td>
</tr>
<tr>
<td style="text-align: left;"><strong>Accounting policy</strong></td>
<td style="text-align: left;">Historical cost. Grants and donations are
recognised as income when received.</td>
<td style="text-align: left;">Same as 2023</td>
<td style="text-align: left;">Historical cost. Grants and donations are
recognised when received, but the Ministry grant is recognised in
proportion to eligible costs.</td>
</tr>
<tr>
<td style="text-align: left;"><strong>Source of financial
statements</strong></td>
<td style="text-align: left;">Comparative column in the 2024 report</td>
<td style="text-align: left;">2024 annual report, signed by the board on
21 March 2025</td>
<td style="text-align: left;">2025 annual report, signed by the board on
13 April 2026</td>
</tr>
<tr>
<td style="text-align: left;"><strong>Audit / review
status</strong></td>
<td style="text-align: left;">The email notifications show the separate
2023 report was e-signed on 31 May 2024, including by the auditor. The
audit opinion itself was not supplied.</td>
<td style="text-align: left;">Audited by Gæðaendurskoðun slf (Sveinbjörn
Sveinbjörnsson). Unmodified opinion, dated 21 March 2025.</td>
<td style="text-align: left;">Audited by Gæðaendurskoðun slf (Sveinbjörn
Sveinbjörnsson). Unmodified opinion, dated 13 April 2026.</td>
</tr>
</tbody>
</table>
<p><strong>Table A-1. SMLY balances of the main SmileyCharity addresses,
11 October 2026, 20:14 GMT</strong></p>
<table>
<colgroup>
<col style="width: 2%" />
<col style="width: 30%" />
<col style="width: 13%" />
<col style="width: 16%" />
<col style="width: 36%" />
</colgroup>
<thead>
<tr>
<th>#</th>
<th>Address</th>
<th>Balance (M SMLY)</th>
<th>Cumulative (M SMLY)</th>
<th>Purpose</th>
</tr>
</thead>
<tbody>
<tr>
<td>1</td>
<td>BPVuYwyeJiXExEmEXHfCwPtRXDRqxBxTNW</td>
<td>255</td>
<td>255</td>
<td>Address donated to AMI and UNICEF</td>
</tr>
<tr>
<td>2</td>
<td>BDwfNiAvpb4ipNfPkdAXcPGExWHeeMdRcK</td>
<td>589</td>
<td>844</td>
<td>Coinbase donations, unused</td>
</tr>
<tr>
<td>3</td>
<td>BEaZDZ8gCbbP1y3t2gPNKwqZa76rUDfR73</td>
<td>589</td>
<td>1,433</td>
<td>Coinbase donations, unused</td>
</tr>
<tr>
<td>4</td>
<td>B4gB18iZWZ8nTuAvi9kq9cWbavCj6xSmny</td>
<td>589</td>
<td>2,022</td>
<td>Coinbase donations, unused</td>
</tr>
<tr>
<td>5</td>
<td>BGFEYswtWfo5nrKRT53ToGwZWyuRvwC8xs</td>
<td>95</td>
<td>2,117</td>
<td>General grants to charities</td>
</tr>
<tr>
<td>6</td>
<td>B7WWgP1fnPDHTL2z9vSHTpGqptP53t1UCB</td>
<td>589</td>
<td>2,706</td>
<td>Coinbase donations, unused</td>
</tr>
<tr>
<td>7</td>
<td>BEtL36SgjYuxHuU5dg8omJUAyTXDQL3Z8V</td>
<td>532</td>
<td>3,238</td>
<td>SmileyKuku</td>
</tr>
<tr>
<td>8</td>
<td>BQaNeMcSyrzGkeKknjw6fnCSSLUYAsXCVd</td>
<td>589</td>
<td>3,826</td>
<td>Coinbase donations, unused</td>
</tr>
<tr>
<td>9</td>
<td>BDLAaqqtBNoG9EjbJCeuLSmT5wkdnSB8bc</td>
<td>91</td>
<td>3,918</td>
<td>Universal basic income (UBI)</td>
</tr>
<tr>
<td>10</td>
<td>BQTar7kTE2hu4f4LrRmomjkbsqSW9rbMvy</td>
<td>512</td>
<td>4,430</td>
<td>SmileyTree awards</td>
</tr>
<tr>
<td>11</td>
<td>BQSw6xtymFRXiKt5HmBYFLURwKuoBser8G</td>
<td>0</td>
<td>4,430</td>
<td>Aggregator for address 9</td>
</tr>
<tr>
<td>12</td>
<td>BPj18BBacYdvEnqgJqKVRNFQrw5ka76gxy</td>
<td>195</td>
<td>4,625</td>
<td>Primary donations address</td>
</tr>
<tr>
<td>13</td>
<td>BTARnErpE4BYuMDcQnSKzAPnA4n5GJSdNv</td>
<td>273</td>
<td>4,898</td>
<td>Secondary donations address</td>
</tr>
<tr>
<td>14</td>
<td>BThD5Nh2NachLHCjPgXj4cRQf4ZtBBwy7i</td>
<td>27</td>
<td>4,924</td>
<td>SmileyCharity wallet used for transfers to and from the Hybrix swap
service (SmileyCharity’s own funds; not a market-making account)</td>
</tr>
<tr>
<td>15</td>
<td>BHKfg78zmtgLvoM5x7tcLvWxJC22q2JHFE</td>
<td>178</td>
<td>5,103</td>
<td>SmileyCharity’s contribution to the Hybrix pools</td>
</tr>
<tr>
<td>16</td>
<td>BDKdA9AkMvcQSHeMKy5ua6TJ4PnCK4vsQd</td>
<td>3,546</td>
<td>8,648</td>
<td>Cold storage (spendable)</td>
</tr>
<tr>
<td>17</td>
<td>BSWCvqnes2LBafFuB3cNwucQUVkcjt1z88</td>
<td>1,002</td>
<td>9,650</td>
<td>Reserve locked for BNB.SMLY (not spendable)</td>
</tr>
<tr>
<td></td>
<td><strong>Total, all addresses</strong></td>
<td><strong>9,650</strong></td>
<td></td>
<td></td>
</tr>
<tr>
<td></td>
<td><strong>Total excluding BNB.SMLY reserve</strong></td>
<td><strong>8,648</strong></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>
<p>Note that item 16 (BDKdA9AkMvcQSHeMKy5ua6TJ4PnCK4vsQd) is a classical
cold storage for safety reasons, whereas item 17
(BSWCvqnes2LBafFuB3cNwucQUVkcjt1z88) is the 1 bn reserve to back
BNB.SMLY, also in cold storage, but not considered spendable.</p>
<p>Balances were taken from the public block explorer
(blocks.smileyco.in) using the script getBalances.sh and rounded to the
nearest million SMLY. The SmileyCoinFund multisig address
(3JT9LAzuMChCifVoQQK18BQV9z4BzpbQVH), which held about 7,500 M SMLY at
the same time, is not controlled by SmileyCharity alone and is not
included.</p>
<p>Continued programme delivery depends on funding, local partners and
access to the necessary technical and organisational expertise. The
independent evaluation reported in 2024 identified sustainability,
governance, financing and outcome measurement as areas requiring further
attention; see D.4. Initiatives such as SmileyKuku and SmileyTrees seek
to improve sustainability, but anticipated income, unawarded grants and
proposed activities are not established financial resources.</p>
<p>In addition, SmileyCharity has had smaller amounts of SmileyCoin on
exchanges such as ismynt (now closed) and on Dexomy (currently about 44
M SMLY).</p>
<h3 id="a.17-financial-condition-since-registration">A.17 Financial
condition since registration</h3>
<p>Not applicable: SmileyCharity is not newly established. Financial
information for the relevant three-year period is provided in A.16.</p>
<p><strong>References for Part A</strong></p>
<p>[A-1] Stefansson, G. and Lentin, J. (2017). “From Smileys to
Smileycoins: Using a Cryptocurrency in Education.” <em>Ledger</em>, 2,
38–54. DOI: 10.5915/LEDGER.2017.103.</p>
<p>[A-2]. Stefansson, G., Jonsdottir, A. H., Gunnarsson, B. and Lentin,
J. (2024). “On-chain Services for Education in Slums and Refugee Camps.”
<em>International Journal of Learning and Teaching</em>, 10(6),
697–702.</p>
<h2
id="part-b-information-about-the-issuer-if-different-from-the-offeror-or-person-seeking-admission-to-trading">Part
B – Information about the issuer, if different from the offeror or
person seeking admission to trading</h2>
<p><strong>Applicability and distinction between project
participants</strong></p>
<p>This white paper does not identify a person or undertaking as the
issuer of native SmileyCoin (SMLY). SmileyCharity is identified in Part
A as the preparer of this document and as an organisation conducting
educational and charitable activities involving SMLY; that
identification does not, by itself, establish issuer status.</p>
<p>The project history described in D.4 and G.5 distinguishes the
original creation of SMLY and its initial educational allocation from
subsequent generation of coins under the blockchain’s consensus rules
and transfers of already-created coins through grants, educational
rewards and other transactions. Software development, administration of
an educational allocation, receipt of protocol-directed allocations and
distribution of existing SMLY are distinct activities and should not be
treated as interchangeable.</p>
<p>The absence of an identifiable issuer reflects the origin of both the
educational platform and the crypto-asset in open academic research
rather than in a corporate project. The learning environment in which
SMLY is earned was designed from the outset as a freely accessible,
open-source and open-content system with no commercial components,
developed by a consortium of academic contributors across several
countries [B-1]. Its architecture, licensing and absence of
institutional ownership were documented before the crypto-asset existed
[B-2]. SmileyCoin was introduced in 2014 as a reward mechanism within
that platform, as described by Stefansson and Lentin (2017), cited in
D.4. These publications provide historical and technical context for why
no single person or undertaking stands in the position of issuer; they
do not by themselves determine issuer status under Regulation (EU)
2023/1114, and the project’s origins before that Regulation do not
establish the absence of an identifiable issuer.</p>
<p>The Financial Supervisory Authority’s letter of 11 May 2023,
reference 2304061, assessed the activities described to it under
Icelandic Act No. 140/2018. Its conclusion concerning SmileyCharity and
Smiley Invest ehf. was a historical assessment under that legislation,
not a determination of issuer status under MiCA. See A.13.</p>
<p>SmileyCharity has assessed the applicability of Part B and concludes
that no person or undertaking can be identified as the issuer of native
SMLY. The genesis block was mined on 2014-11-13 as part of academic
research at the University of Iceland. Since then, new SMLY has been
generated only under the blockchain’s consensus rules, through blocks
produced by independent miners, and no legal person controls issuance.
B.1 is therefore reported as TRUE and fields B.2 to B.12 as not
applicable.</p>
<p>BNB.SMLY was developed as an extension of SMLY, corresponding to
moving existing SMLY, owned by the SmileyCharity, to run on an alternate
chain (the BNB Smart Chain).</p>
<p>The contract was deployed by Hybrix, which holds the owner role (see
B.1 and H.6). The full supply was minted directly to SmileyCharity. The
tokens on the new chain therefore have an exact matching number of
tokens held in cold storage on the native chain. Because the native
reserve matches the BNB.SMLY supply, it is technically possible for the
reserve holder to convert all outstanding BNB.SMLY back into native
SMLY. However, no formal redemption mechanism exists, holders have no
enforceable right to conversion, and conversion currently depends on
third-party services and on the reserve holder (see G.1, G.14 and I.3).
SmileyCharity treats BNB.SMLY as a representation of existing native
SMLY rather than a new issuance. This is SmileyCharity’s own assessment,
not a regulatory determination. The reasons for this implementation lie
in research and development for education: A research project (EduChain)
was set up in part to investigate the feasibility of using a blockchain
to host drills, allocate drill items and store grades, all using
on-chain operations. As parts of this project, experiments were
conducted on multiple chains, but BNB.SMLY was the final output of the
project. The BNB.SMLY technical implementation is described in H.6.</p>
<h3
id="b.1-issuer-different-from-offeror-or-person-seeking-admission-to-trading">B.1
Issuer different from offeror or person seeking admission to
trading</h3>
<p>TRUE; No identifiable issuer; native SMLY launched in 2014 without a
controlling entity; the BNB.SMLY contract owner role is held by the
deployer address of Hybrix, the contractor that designed the contract.
Because the contract has a fixed supply, cannot be upgraded and cannot
be minted or burned, this role gives no control over issuance, supply or
holders’ tokens. Hybrix is therefore not an issuer. SmileyCharity
received the entire supply. It is not the issuer and does not seek
admission to trading.</p>
<h3 id="b.2-name">B.2 Name</h3>
<p>N/A; The crypto-asset was originally created as a research project at
the University of Iceland in 2014 and adapted to become a part of the
SmileyProject run by the SmileyCharity. However, none of these entities
are considered to be issuers of the crypto-asset in the sense of MiCA
regulations.</p>
<h3 id="b.3-legal-form">B.3 Legal form</h3>
<p>N/A; Due to the nature of the decentralized network, the crypto-asset
does not have a management body as defined in Article 3(1), point (27),
of Regulation (EU) 2023/1114.</p>
<h3 id="b4.-registered-address">B4. Registered address</h3>
<p>N/A; Due to the explanation given in field B.3 the crypto-asset
issuer does not have a registered address.</p>
<h3 id="b.5-head-office">B.5 Head office</h3>
<p>N/A; Due to the explanation given in field B.3 the crypto-asset
issuer does not have a head office.</p>
<h3 id="b.6-registration-date">B.6 Registration date</h3>
<p>N/A; The first block on the network was mined on 2014-11-13 but there
is no official issuer in the sense of MiCA regulations.</p>
<h3 id="b.7-legal-entity-identifier">B.7 Legal entity identifier</h3>
<p>N/A</p>
<h3
id="b.8-another-identifier-required-pursuant-to-applicable-national-law">B.8
Another identifier required pursuant to applicable national law</h3>
<p>N/A</p>
<h3 id="b.9-parent-company">B.9 Parent company</h3>
<p>N/A; The crypto-asset and its decentralized network are not operated
by a legal entity and thus do not have a parent company.</p>
<h3 id="b.10-members-of-the-management-body">B.10 Members of the
management body</h3>
<p>N/A; Due to the nature of the decentralized network, the crypto-asset
does not have a management body as defined in Article 3(1), point (27),
of Regulation (EU) 2023/1114.</p>
<h3 id="b.11-business-activity">B.11 Business activity</h3>
<p>N/A</p>
<h3 id="b.12-parent-company-business-activity">B.12 Parent company
business activity</h3>
<p>N/A</p>
<p><strong>References for Part B</strong></p>
<p>[B-1] Constantinescu, D. and Stefansson, G. (2010). “On building a
web-based university.” <em>US-China Education Review</em>, 7(12),
89–97.</p>
<p>[B-2] Stefansson, G. (2004). “The tutor-web: An educational system
for classroom presentation, evaluation and self-study.” <em>Computers
&amp; Education</em>, 43(4), 315–343. DOI:
10.1016/j.compedu.2003.09.004.</p>
<h2
id="part-c-information-about-the-operator-of-the-trading-platform-in-cases-where-it-draws-up-the-crypto-asset-white-paper-and-information-about-other-persons-drawing-the-crypto-asset-white-paper-pursuant-to-article-61-second-subparagraph-of-regulation-eu-20231114">Part
C – Information about the operator of the trading platform in cases
where it draws up the crypto-asset white paper and information about
other persons drawing the crypto-asset white paper pursuant to Article
6(1), second subparagraph, of Regulation (EU) 2023/1114</h2>
<p><strong>Applicability and preparer</strong></p>
<p>This document is published by SmileyCharity for information. It has
not been notified to any competent authority, and SmileyCharity does not
seek admission to trading.</p>
<p>It is prepared by Styrktarfélagið Broskallar, registered foreign name
SmileyCharity, ans includes a description of native SmileyCoin (SMLY)
and the BNB.SMLY representation described in General information
subsection 08. SmileyCharity’s identifying particulars, management body
and charitable activities are disclosed in Part A.</p>
<p>No trading-platform operator is identified as drawing up this
version. The operator-specific fields C.1–C.12 are therefore treated as
not applicable to this version. This treatment does not mean that SMLY
or BNB.SMLY is unavailable for trading or that trading-platform
obligations do not apply.</p>
<h3 id="c.1-name">C.1 Name</h3>
<p>Not applicable to this version: no trading-platform operator is
identified as drawing up the white paper. See the applicability
statement at the beginning of Part C.</p>
<h3 id="c.2-legal-form">C.2 Legal form</h3>
<p>Not applicable to this version: no trading-platform operator is
identified as drawing up the white paper. See the applicability
statement at the beginning of Part C.</p>
<h3 id="c.3-registered-address">C.3 Registered address</h3>
<p>Not applicable to this version: no trading-platform operator is
identified as drawing up the white paper. See the applicability
statement at the beginning of Part C.</p>
<h3 id="c.4-head-office">C.4 Head office</h3>
<p>Not applicable to this version: no trading-platform operator is
identified as drawing up the white paper. See the applicability
statement at the beginning of Part C.</p>
<h3 id="c.5-registration-date">C.5 Registration date</h3>
<p>Not applicable to this version: no trading-platform operator is
identified as drawing up the white paper. See the applicability
statement at the beginning of Part C.</p>
<h3 id="c.6-legal-entity-identifier">C.6 Legal entity identifier</h3>
<p>Not applicable.</p>
<h3
id="c.7-another-identifier-required-pursuant-to-applicable-national-law">C.7
Another identifier required pursuant to applicable national law</h3>
<p>Not applicable to this version: no trading-platform operator is
identified as drawing up the white paper. See the applicability
statement at the beginning of Part C.</p>
<h3 id="c.8-parent-company">C.8 Parent company</h3>
<p>Not applicable to this version: no trading-platform operator is
identified as drawing up the white paper. See the applicability
statement at the beginning of Part C.</p>
<h3 id="c.9-reason-for-crypto-asset-white-paper-preparation">C.9 Reason
for crypto-Asset white paper Preparation</h3>
<p>Not applicable in relation to a trading-platform operator: no such
operator is identified as drawing up this version. SmileyCharity’s
reasons for preparing the white paper are explained in the supplementary
preparer information accompanying C.14.</p>
<p>SmileyCoin is used in the SmileyProject, operated by SmileyCharity.
Both SmileyCharity and the SmileyCoinFund regularly donate SMLY to
SmileyTutor for educational rewards, typically a combined 0.5–1.5
billion SMLY once or twice per year, in varying shares. SmileyCharity
separately receives protocol-directed allocations (G.5).</p>
<p>The SmileyCoin is a part of the SmileyProject for education in slums
and refugee camps. The SmileyProject is operated by the SmileyCharity
and receives donations from the SmileyCoinFund. The knowledge of this
structure is important to potential offerors and trading platforms.</p>
<h3 id="c.10-members-of-the-management-body">C.10 Members of the
Management body</h3>
<p>Not applicable in relation to a trading-platform operator.
SmileyCharity’s management body is disclosed separately in A.12.</p>
<h3 id="c.11-operator-business-activity">C.11 Operator business
activity</h3>
<p>Not applicable: no trading-platform operator is identified as drawing
up this version. SmileyCharity’s charitable activities and its
relationships with other project participants are described in A.13.</p>
<h3 id="c.12-parent-company-business-activity">C.12 Parent company
business activity</h3>
<p>Not applicable in relation to a trading-platform operator. See the
applicability statement at the beginning of Part C.</p>
<h3
id="c.13-other-persons-drawing-up-the-crypto-asset-white-paper-according-to-article-61-second-subparagraph-of-regulation-eu-20231114">C.13
Other persons drawing up the crypto-asset white paper according to
Article 6(1), second subparagraph, of Regulation (EU) 2023/1114</h3>
<p>No person is identified in this white paper as drawing up the white
paper under an arrangement of the kind referred to in Article 6(1),
second subparagraph.</p>
<p>This document is published by SmileyCharity for information. It has
not been notified to any competent authority, and SmileyCharity does not
seek admission to trading. This white paper has been prepared by
Styrktarfélagið Broskallar, registered foreign name SmileyCharity,
Icelandic registration number 531015-0290, LEI 636700LQMUJ4E4WR0417,
with registered address Lundi 9, 200 Kópavogur, Iceland. Its
identification here does not, by itself, establish that it acts under
such an arrangement.</p>
<h3
id="c.14-reason-for-drawing-the-white-paper-by-persons-referred-to-in-article-61-second-subparagraph-of-regulation-eu-20231114">C.14
Reason for drawing the white paper by persons referred to in Article
6(1), second subparagraph, of Regulation (EU) 2023/1114</h3>
<p>Not applicable on the arrangements identified in this version. See
C.13.</p>
<p><strong>Supplementary information: reasons for preparation by
SmileyCharity</strong></p>
<p>SmileyCharity prepares this document to provide a structured account
of SmileyCoin’s characteristics, educational applications, participating
organisations, funding arrangements and material risks. It is intended
to support informed assessment by prospective holders, programme
partners and trading platforms.</p>
<p>The document brings together the research background and operational
context of SMLY while distinguishing the blockchain from the educational
platform, the SmileyCoinFund and SmileyCharity’s charitable activities.
Stefansson and Lentin (2017) describe the introduction and early
educational use of SmileyCoin.[C-1] This research helps explain why the
educational context is material to understanding the project; it does
not determine regulatory classification, establish an exemption from
white-paper requirements or guarantee financial returns.</p>
<p>The relevant organisational and funding distinctions are described in
A.13, A.16, D.4 and G.5. SmileyCharity holds SMLY and consequently has
an economic interest in its usability, liquidity and market
accessibility; related interests are addressed in E.38. Preparation by a
charitable organisation should not be understood as an independent
assessment of the crypto-asset.</p>
<p><strong>References for Part C</strong></p>
<p>[C-1] Stefansson, G. and Lentin, J. (2017). “From Smileys to
Smileycoins: Using a Cryptocurrency in Education.” Ledger, 2, 38–54.
DOI: 10.5915/LEDGER.2017.103.</p>
<h2 id="part-d-information-about-the-crypto-asset-project">Part D –
Information about the crypto-asset project</h2>
<p>This Part describes the SmileyCoin crypto-asset project, its
documented educational applications and the persons and resources
involved in implementation. It distinguishes native SMLY and the
BNB.SMLY representation from SmileyProject, the educational and
charitable programme operated by SmileyCharity. Participation in that
programme does not constitute control over all transactions or uses of
either crypto-asset.</p>
<p>Native SMLY and BNB.SMLY are not traded on any recognized
Crypto-Asset Service Provider (CASP). Each is traded on two exchanges,
native SMLY on Hybrix (hybrix.io) and DEXOMY (dexomy.com) whereas
BNB.SMLY is traded on Hybrix (hybrix.io) and PancakeSwap
(https://pancakeswap.finance/).</p>
<h3 id="d.1-crypto-asset-project-name">D.1 Crypto-asset project
name</h3>
<p><strong>SmileyCoin</strong></p>
<p>SmileyCoin is used within SmileyProject, SmileyCharity’s educational
and charitable programme. The crypto-asset project and the charitable
programme are related but are not interchangeable.</p>
<h3 id="d.2-crypto-assets-name">D.2 Crypto-assets name</h3>
<p><strong>SmileyCoin</strong>, comprising native SmileyCoin on the
SmileyCoin blockchain and the BNB-chain representation referred to in
this document as BNB.SMLY. The actual ticker on the BNB-chain is simply
<strong>SMLY</strong>.</p>
<h3 id="d.3-crypto-asset-abbreviation-ticker">D.3 Crypto-asset
abbreviation (ticker)</h3>
<p><strong>SMLY</strong> - native SmileyCoin.</p>
<p><strong>BNB.SMLY</strong> -the designation used in this document for
the BNB-chain representation. The actual ticker on the BNB-chain is
simply <strong>SMLY</strong>.</p>
<h3 id="d.4-crypto-asset-project-description">D.4 Crypto-asset project
description</h3>
<p><strong>Background: educational purpose, research and operational
context</strong></p>
<p><strong>SmileyCoin (SMLY)</strong> is the original native
crypto-asset of the SmileyCoin blockchain. It was introduced in 2014
through research and development at the University of Iceland as a
mechanism for rewarding educational achievement in
<strong>SmileyTutor</strong>, formerly known as
<strong>tutor-web</strong>. Its founding purpose was to investigate and
support educational incentives, rather than to promise financial returns
to purchasers. The development, initial classroom deployment, student
adoption and early experiences with cryptocurrency rewards are described
by Stefansson and Lentin (2017).[D-1]</p>
<p><strong>SmileyTutor</strong> is an open-source learning environment,
with particular emphasis on mathematics and statistics. It combines
exercises, feedback and adaptive question allocation to support learning
rather than merely assess existing knowledge. Its development rests on a
research programme documented in peer-reviewed publications beginning
with Stefansson (2004).[D-2] A repeated randomised crossover study
conducted in an introductory statistics course between 2011 and 2014
found that students in the 2014 experiment achieved higher test scores
after completing tutor-web homework than after completing pen-and-paper
homework (Jonsdottir, Bjornsdottir and Stefansson, 2017).[D-3] This
evidence concerns the educational system and should not be interpreted
as showing that cryptocurrency rewards alone caused those learning
gains. Research on SmileyCoin separately reports evidence that reward
magnitude influenced the number of exercise attempts in the studied
setting.[D-1]</p>
<p>The claim that the learning environment produces learning, rather
than merely measuring it, rests on a sequence of peer-reviewed analyses
that predate the crypto-asset. Analysis of responses to repeated drill
items, including items containing randomly generated numbers that cannot
be answered from memory, showed a statistically significant increase in
the probability of a correct answer between a student’s first and second
encounter with an item; for the random-number items the proportion
correct rose from 67 % to 82 % [D-9]. The same data were used to show
that classical item-response models designed for testing do not fit a
dynamic drilling environment because they omit a learning term, and a
model including such a term estimated the first-to-second-attempt
improvement at roughly 62 % to 86 % for a typical item [D-10, D-11].
These results concern the educational system in Icelandic university
courses between 2003 and 2009. They indicate that improvement within the
drilling system, the same system whose grades now trigger SMLY rewards,
reflects learning and not only memorised answers. They do not establish
that any particular level of reward is necessary or sufficient for that
learning, and they are not evidence of any financial characteristic of
SMLY.</p>
<p><strong>SmileyCharity</strong>, legally registered in Iceland as
<strong>Styrktarfélagið Broskallar</strong>, was established in 2015 to
support educational access for students in disadvantaged communities.
Through its <strong>SmileyProject</strong>, participating schools and
community libraries—called <strong>SmileyLibraries</strong>—provide
access to learning devices, SmileyTutor and local support.
<strong>SmileyGuides</strong>, normally teachers or librarians, assist
participating students. Students earn SMLY through educational
activities and can withdraw earned rewards to their own wallets.</p>
<p>Participating <strong>SmileyStores</strong> provide opportunities to
spend these rewards on items such as learning devices, food, school
supplies, sanitary products and connectivity. Under the established
virtual-store model, students transfer SMLY to a designated store
address and a SmileyGuide facilitates the corresponding purchase.
SmileyCharity provides local-currency reimbursement under the
programme’s arrangements. On-chain store registration and transaction
records support payment verification and reconciliation; they do not, by
themselves, prove that physical goods have been delivered. The technical
implementation and its use in Kenyan communities and refugee camps are
described by Stefansson and colleagues (2024), who reported that the
programme had reached 5,000 students by June 2024.[D-4] By 11 October
2026, 9,496 users in African and Lebanese SmileyLibraries had used the
system since first recorded use, and 3,670 had been active in the
preceding twelve months (Tables D-1 and D-2).</p>
<p>SmileyCoin’s blockchain and the charitable programme are distinct.
The blockchain records transfers and applies its consensus and issuance
rules. SmileyCharity administers its own educational activities, funding
and participating-site arrangements; these activities do not constitute
control over all uses of SMLY. The blockchain was initially derived from
Litecoin source code and subsequently incorporated multiple
proof-of-work algorithms and features supporting educational
applications.[D-1][D-4]</p>
<p>The <strong>SmileyCoinFund</strong> administers the remaining
educational allocation originating from the initial premine through a
multisignature arrangement and a governing mandate. It has provided SMLY
grants to support SmileyTutor rewards. Separately, SmileyCharity
receives <strong>protocol-directed allocations</strong> of newly
generated SMLY through designated addresses, referred to within the
project as <strong>income streams</strong>. The protocol also allocates
newly generated coins to miners and qualifying holder addresses. These
mechanisms and their historical development are described in the
SmileyCoin research publications.[D-1][D-4] Token holdings and
protocol-generated allocations are distinct from the fiat funding needed
to purchase goods and operate the charitable programme.</p>
<p>An independent evaluation conducted by <strong>Verkís and a Kenyan
evaluation specialist</strong>, commissioned by Iceland’s Ministry for
Foreign Affairs and reported in 2024, assessed SmileyCharity’s Education
in a Suitcase activities over 2017–2023. It rated relevance, coherence,
efficiency and effectiveness <strong>Highly Satisfactory</strong>, while
rating sustainability <strong>Adequate to Satisfactory</strong>. It
recommended stronger institutional governance, diversified financing and
improved outcome measurement. Long-term impact was not rated because it
was considered too early to assess.[5] This evaluation concerns the
charitable programme, not regulatory approval of SMLY or an audit of
blockchain security.</p>
<p>Work towards greater financial sustainability includes
<strong>SmileyTrees</strong> and <strong>SmileyKuku</strong>, which
combine supervised agricultural education with trials of local
production and trade using SMLY. Proposed expansion of these activities
and physical SmileyStores is intended to test whether they can reduce
dependence on charitable reimbursement; financial self-sufficiency has
not been established. Separate supporting initiatives include
<strong>SmileyInvest</strong>, a private limited company established to
purchase SMLY on exchanges, and <strong>SmileyTutor NGO</strong>, whose
planned advertising-funded app model would use advertising income to
purchase SMLY for educational rewards. These arrangements are described
separately in the project, funding and conflict-of-interest
disclosures.</p>
<p><strong>Native SMLY and the BNB-chain representation</strong></p>
<p>Native SMLY is recorded and transferred on the SmileyCoin blockchain.
General information subsection 08 also identifies a BNB-chain
representation, referred to as BNB.SMLY, at contract address
<code>0xe015f8C012e932F13184061F3ffd956E9000A6CD</code>.</p>
<p>SmileyCharity holds 1,000,000,000 native SMLY in cold storage as a
reserve corresponding to the 1,000,000,000 BNB.SMLY in existence (see
G.5 and H.6). A 1:1 swap between the two is offered by Hybrix, a third
party. These arrangements are separate from the native blockchain’s
mining and issuance rules. Transfers of BNB.SMLY depend on the BNB Smart
Chain and the token contract. Conversion to native SMLY also depends on
the Hybrix pool or, as a fallback, on SmileyCharity’s own decisions
about the reserve.</p>
<p>The stated conversion ratio does not establish a guaranteed market
price or uninterrupted conversion availability. Educational uses
documented for native SMLY should not be understood as demonstrating
direct acceptance of BNB.SMLY by SmileyTutor or participating
SmileyStores.</p>
<p>SmileyProject participants normally work solely with native SMLY. Use
of BNB.SMLY is completely optional but allows for experiments with swaps
using pools using newer technology, such as PancakeSwap.</p>
<p><strong>Educational purpose and documented use do not eliminate
crypto-asset risks.</strong> Availability of programme goods and
services depends on eligibility, local arrangements, funding, stock and
continued operation. Programme reference valuations are not guaranteed
market prices or a general right to exchange SMLY for fiat currency.
SMLY may lose some or all of its value, become illiquid or cease to be
transferable. Neither the research findings nor the charitable purpose
should be understood as a promise of investment returns.</p>
<p><strong>Implementation and decision-making</strong></p>
<p>SmileyCharity’s board and executive management are responsible for
the association’s activities, not for all activity on the SmileyCoin
network. The SmileyCoinFund administers its educational allocation under
its separate mandate and signature arrangements. Software maintenance,
network validation, educational-platform operation and local programme
delivery are distinct implementation functions. The persons responsible
for those functions, and separately for BNB.SMLY custody and conversion
arrangements, are identified in D.5.</p>
<p>Third-party conversion and liquidity services. As of 11 October 2026,
a 1:1 swap between native SMLY and BNB.SMLY is available through Hybrix
(hybrix.io), and BNB.SMLY can be exchanged through liquidity pools on
PancakeSwap. Both are independent third-party services. SmileyCharity
does not operate them, cannot guarantee that they will remain available
or liquid, and has not verified their regulatory status. Admission to
trading is not sought on either service through this white paper.</p>
<h1 id="note-on-student-and-user-counts">Note on student and user
counts</h1>
<p>Figures for the number of students using the
tutor-web/SmileyLibraries system appear in several places in this
document and in the cited publications. They differ because they were
tallied at different dates, over different windows (cumulative since
first recorded use versus the trailing twelve months), and with
different inclusion rules (some counts include Iceland and unattributed
locations, others exclude them). None of the figures is a correction of
another; each is a snapshot. The authoritative source for current
numbers is the public statistics page at
https://libraries.tutor-web.net/. The two tables below were taken from
that page on 11 October 2026 at 09:43 GMT. Iceland and one row with an
unassigned country code have been removed, so the row numbering in the
source is not reproduced here. “MSMLY” denotes millions of SMLY paid out
as learning rewards to users in that country.</p>
<p>Not every site that has used the system remains active: Ethiopia,
Ghana and The Gambia appear in the cumulative table but recorded no
activity in the trailing twelve months. Lebanon and Tanzania, by
contrast, began use within the last year, so their cumulative and
twelve-month figures are identical. Kenya accounts for the overwhelming
majority of users, answers and rewards in both windows.</p>
<p><strong>Table D-1. Usage by country since first recorded use (Iceland
and unknown locations removed). Source:
https://libraries.tutor-web.net/, retrieved 11 October 2026, 09:43
GMT.</strong></p>
<table>
<colgroup>
<col style="width: 12%" />
<col style="width: 8%" />
<col style="width: 26%" />
<col style="width: 12%" />
<col style="width: 16%" />
<col style="width: 14%" />
<col style="width: 8%" />
</colgroup>
<thead>
<tr>
<th style="text-align: left;">Country</th>
<th style="text-align: left;">Users</th>
<th style="text-align: left;">SmileyLibraries</th>
<th style="text-align: left;">Answers</th>
<th style="text-align: left;">First use</th>
<th style="text-align: left;">Last use</th>
<th style="text-align: left;">MSMLY</th>
</tr>
</thead>
<tbody>
<tr>
<td style="text-align: left;">BF</td>
<td style="text-align: left;">14</td>
<td style="text-align: left;">1</td>
<td style="text-align: left;">217</td>
<td style="text-align: left;">2022-02-07</td>
<td style="text-align: left;">2026-02-19</td>
<td style="text-align: left;">0.00</td>
</tr>
<tr>
<td style="text-align: left;">ET</td>
<td style="text-align: left;">167</td>
<td style="text-align: left;">7</td>
<td style="text-align: left;">128,604</td>
<td style="text-align: left;">2022-07-07</td>
<td style="text-align: left;">2025-08-19</td>
<td style="text-align: left;">32.17</td>
</tr>
<tr>
<td style="text-align: left;">GH</td>
<td style="text-align: left;">30</td>
<td style="text-align: left;">1</td>
<td style="text-align: left;">34,902</td>
<td style="text-align: left;">2023-07-07</td>
<td style="text-align: left;">2025-03-27</td>
<td style="text-align: left;">7.32</td>
</tr>
<tr>
<td style="text-align: left;">GM</td>
<td style="text-align: left;">18</td>
<td style="text-align: left;">1</td>
<td style="text-align: left;">2,579</td>
<td style="text-align: left;">2024-09-01</td>
<td style="text-align: left;">2025-01-10</td>
<td style="text-align: left;">0.25</td>
</tr>
<tr>
<td style="text-align: left;">KE</td>
<td style="text-align: left;">9,071</td>
<td style="text-align: left;">56</td>
<td style="text-align: left;">35,344,836</td>
<td style="text-align: left;">2020-12-09</td>
<td style="text-align: left;">2026-10-11</td>
<td style="text-align: left;">9,012.04</td>
</tr>
<tr>
<td style="text-align: left;">LB</td>
<td style="text-align: left;">56</td>
<td style="text-align: left;">1</td>
<td style="text-align: left;">200,322</td>
<td style="text-align: left;">2025-11-11</td>
<td style="text-align: left;">2026-10-10</td>
<td style="text-align: left;">42.45</td>
</tr>
<tr>
<td style="text-align: left;">TG</td>
<td style="text-align: left;">17</td>
<td style="text-align: left;">1</td>
<td style="text-align: left;">9,821</td>
<td style="text-align: left;">2024-09-14</td>
<td style="text-align: left;">2026-04-29</td>
<td style="text-align: left;">0.29</td>
</tr>
<tr>
<td style="text-align: left;">TZ</td>
<td style="text-align: left;">16</td>
<td style="text-align: left;">1</td>
<td style="text-align: left;">668</td>
<td style="text-align: left;">2026-03-05</td>
<td style="text-align: left;">2026-10-09</td>
<td style="text-align: left;">0.07</td>
</tr>
<tr>
<td style="text-align: left;">UG</td>
<td style="text-align: left;">107</td>
<td style="text-align: left;">4</td>
<td style="text-align: left;">166,321</td>
<td style="text-align: left;">2024-10-22</td>
<td style="text-align: left;">2026-10-07</td>
<td style="text-align: left;">6.75</td>
</tr>
<tr>
<td style="text-align: left;"><strong>Total</strong></td>
<td style="text-align: left;"><strong>9,496</strong></td>
<td style="text-align: left;"><strong>73</strong></td>
<td style="text-align: left;"><strong>35,888,270</strong></td>
<td style="text-align: left;">2020-12-09</td>
<td style="text-align: left;">2026-10-11</td>
<td style="text-align: left;"><strong>9,101.34</strong></td>
</tr>
</tbody>
</table>
<p><strong>Table D-2. Usage by country in the twelve months to 11
October 2026 (Iceland and unknown locations removed). Same source and
retrieval time.</strong></p>
<table>
<colgroup>
<col style="width: 12%" />
<col style="width: 8%" />
<col style="width: 26%" />
<col style="width: 12%" />
<col style="width: 16%" />
<col style="width: 14%" />
<col style="width: 8%" />
</colgroup>
<thead>
<tr>
<th style="text-align: left;">Country</th>
<th style="text-align: left;">Users</th>
<th style="text-align: left;">SmileyLibraries</th>
<th style="text-align: left;">Answers</th>
<th style="text-align: left;">First use</th>
<th style="text-align: left;">Last use</th>
<th style="text-align: left;">MSMLY</th>
</tr>
</thead>
<tbody>
<tr>
<td style="text-align: left;">BF</td>
<td style="text-align: left;">11</td>
<td style="text-align: left;">1</td>
<td style="text-align: left;">131</td>
<td style="text-align: left;">2026-02-03</td>
<td style="text-align: left;">2026-02-19</td>
<td style="text-align: left;">0.00</td>
</tr>
<tr>
<td style="text-align: left;">KE</td>
<td style="text-align: left;">3,515</td>
<td style="text-align: left;">50</td>
<td style="text-align: left;">8,312,021</td>
<td style="text-align: left;">2025-10-12</td>
<td style="text-align: left;">2026-10-11</td>
<td style="text-align: left;">2,000.32</td>
</tr>
<tr>
<td style="text-align: left;">LB</td>
<td style="text-align: left;">56</td>
<td style="text-align: left;">1</td>
<td style="text-align: left;">200,322</td>
<td style="text-align: left;">2025-11-11</td>
<td style="text-align: left;">2026-10-10</td>
<td style="text-align: left;">42.45</td>
</tr>
<tr>
<td style="text-align: left;">TG</td>
<td style="text-align: left;">7</td>
<td style="text-align: left;">1</td>
<td style="text-align: left;">4,144</td>
<td style="text-align: left;">2025-11-12</td>
<td style="text-align: left;">2026-04-29</td>
<td style="text-align: left;">0.22</td>
</tr>
<tr>
<td style="text-align: left;">TZ</td>
<td style="text-align: left;">16</td>
<td style="text-align: left;">1</td>
<td style="text-align: left;">668</td>
<td style="text-align: left;">2026-03-05</td>
<td style="text-align: left;">2026-10-09</td>
<td style="text-align: left;">0.07</td>
</tr>
<tr>
<td style="text-align: left;">UG</td>
<td style="text-align: left;">65</td>
<td style="text-align: left;">4</td>
<td style="text-align: left;">93,263</td>
<td style="text-align: left;">2025-10-19</td>
<td style="text-align: left;">2026-10-07</td>
<td style="text-align: left;">3.59</td>
</tr>
<tr>
<td style="text-align: left;"><strong>Total</strong></td>
<td style="text-align: left;"><strong>3,670</strong></td>
<td style="text-align: left;"><strong>58</strong></td>
<td style="text-align: left;"><strong>8,610,549</strong></td>
<td style="text-align: left;">2025-10-12</td>
<td style="text-align: left;">2026-10-11</td>
<td style="text-align: left;"><strong>2,046.65</strong></td>
</tr>
</tbody>
</table>
<h3
id="d.5-details-of-all-persons-involved-in-the-implementation-of-the-crypto-asset-projects">D.5
Details of all persons involved in the implementation of the
crypto-asset projects</h3>
<p>Implementation responsibilities are distributed among the persons and
organisations identified below. Their inclusion describes their
respective activities and does not, by itself, determine issuer status
or imply responsibility for other’ obligations. Historical research
affiliations are distinguished from current operational
responsibilities.</p>
<table>
<colgroup>
<col style="width: 21%" />
<col style="width: 13%" />
<col style="width: 24%" />
<col style="width: 28%" />
<col style="width: 12%" />
</colgroup>
<thead>
<tr>
<th>Type of person</th>
<th>Full name</th>
<th>Business address</th>
<th>Domicile of company</th>
<th>Function</th>
</tr>
</thead>
<tbody>
<tr>
<td>Other person involved in implementation</td>
<td>Gunnar Stefánsson</td>
<td>Lundi 9, 200 Kópavogur, Iceland</td>
<td>Iceland</td>
<td>Founder and CEO of SmileyCharity</td>
</tr>
<tr>
<td>Other person involved in implementation</td>
<td>Professor Anna Helga Jónsdóttir</td>
<td>Department of Mathematics, University of Iceland</td>
<td>Iceland</td>
<td>Co-founder of SmileyCharity</td>
</tr>
<tr>
<td>Development team</td>
<td>Hybrix</td>
<td>Utrecht, Netherlands</td>
<td>Netherlands</td>
<td>Holds contract ownership role (no power over supply or
transfers)</td>
</tr>
<tr>
<td>Development team</td>
<td>Other contractors</td>
<td>N/A</td>
<td>Not available</td>
<td>Other international contractors who develop SmileyCoin and
SmileyTutor</td>
</tr>
<tr>
<td>Development team</td>
<td>Content developers and programmers</td>
<td>N/A</td>
<td>Not available</td>
<td>Various students participate in development projects through R&amp;D
grants</td>
</tr>
<tr>
<td>Other person involved in implementation</td>
<td>SmileyGuides</td>
<td>At each of 58 sites across Africa (*)</td>
<td>Not available</td>
<td>Lead the local SmileyProject implementations</td>
</tr>
<tr>
<td>Other person involved in implementation</td>
<td>Node operators</td>
<td>Global</td>
<td>Not available</td>
<td>Maintain blockchain</td>
</tr>
</tbody>
</table>
<p>(*) Taken from the second table on the dynamic stats site at
https://libraries.tutor-web.net/</p>
<p>The native blockchain also depends on independent miners and node
operators. These participants are not, solely by participating in the
network, employees or representatives of SmileyCharity. The preparer
does not maintain a complete register of permissionless network
participants.</p>
<p>BNB.SMLY was one of multiple outputs from a research project,
EduChain, operated by the University of Iceland but implemented by
Hybrix as a contractor, generating BNB.SMLY for SmileyCharity which
instead put up the reserve native SMLY coins. The BNB.SMLY initiation
process is described in H.6.</p>
<p>The BNB.SMLY contract (0xe015f8C012e932F13184061F3ffd956E9000A6CD)
was deployed by Hybrix on Jan-23-2025 at 09:08:36 AM UTC from a standard
token-generator template. Its entire supply of 1,000,000,000 BNB.SMLY
was minted once, at deployment. The contract has no minting function
after deployment and no upgrade mechanism, and it cannot pause
transfers, block addresses or charge transfer fees. The contract owner
(0xd6b7EA5A3FA066D1a2f4bff166Dedef5aC315677) can only transfer or give
up ownership. That role carries no power over balances, supply or
contract logic.</p>
<h3 id="d.6-utility-token-classification">D.6 Utility Token
Classification</h3>
<p>FALSE;</p>
<p><strong>Native SMLY: proposed classification - not a utility
token.</strong></p>
<p>The native SMLY is not only intended to provide access to goods or
services supplied by an issuer. Its described functions include
transferable educational rewards and peer-to-peer payments, including
transactions with participating third parties. Educational applications
are material uses of SMLY, but do not by themselves determine its legal
classification.</p>
<p><strong>BNB.SMLY: proposed classification – not a utility
token.</strong> BNB.SMLY is a transferable token that corresponds to
native SMLY held in reserve. It is not intended to provide access only
to a good or service supplied by an issuer. No identifiable issuer
supplies goods or services in exchange for it, and holding it does not
give access to SmileyTutor or SmileyStore services. It also confers no
profit-sharing, dividend, revenue or governance rights.</p>
<h3
id="d.7-key-features-of-goodsservices-for-utility-token-projects">D.7
Key Features of Goods/Services for Utility Token Projects</h3>
<p>Not applicable to native SMLY on the classification stated in D.6.
Nevertheless, its documented educational reward and payment uses, the
participating-store arrangements and their limitations are disclosed in
D.4 and D.8. Those descriptions do not establish an unconditional
entitlement for every holder to receive goods or services.</p>
<p>Not applicable to BNB.SMLY on the classification stated in D.6.
BNB.SMLY does not give access to any goods or services.</p>
<h3 id="d.8-plans-for-the-token">D.8 Plans for the token</h3>
<p><strong>Past development</strong></p>
<p>SmileyCoin was introduced in 2014 for educational reward
applications. SmileyCharity was established in 2015. Research published
in 2017 describes the introduction and early use of cryptocurrency
rewards, while the 2024 publication describes on-chain services
supporting educational activities and participating stores. See D.4,
references D-1 and D-4.</p>
<p>These dates describe historical milestones and publications; they do
not establish that every current functionality existed at launch.</p>
<p><strong>Established applications</strong></p>
<p>Native SMLY is used for educational rewards in SmileyTutor and for
payments under participating SmileyStore arrangements. Under the
established virtual-store model, local representatives facilitate
eligible purchases and SmileyCharity provides local-currency
reimbursement. Continued availability depends on programme funding,
eligibility, local partners and technical operation.</p>
<p><strong>Pilots and proposed development</strong></p>
<p>SmileyKuku and SmileyTrees test supervised agricultural learning and
local production and trade using SMLY. Proposed expansion of physical
SmileyStores seeks to create additional opportunities to buy and sell
locally produced goods. These activities are intended to test whether
some programme transactions can become less dependent on charitable
reimbursement; financial self-sufficiency has not been demonstrated.</p>
<p>SmileyTutor NGO, a separate non-profit association (ID no.
570426-1330), proposes an advertising-funded app model in which
advertising income would fund purchases of SMLY for educational rewards.
This is a proposed funding model, not an established source of revenue
or a guarantee of continued token purchases.</p>
<p>Plans are subject to funding, technical capacity, participating-site
agreements and evaluation of results. No guaranteed completion dates or
investment returns are represented by these descriptions.</p>
<p>Implementation of each of the new initiatives is planned by the
SmileyCharity. The timeline is completely dependent on grants and
donations.</p>
<p>Development of the educational platform has continued alongside the
crypto-asset. The 2018 release of the learning environment added
exercises built on live data from national statistical offices and on
data entered by students themselves, together with structured peer
review of student-authored material; the same publication describes the
SMLY reward as a two-step scheme (a small reward for a passing grade and
a larger reward for an excellent grade) and notes preliminary evidence
that the amount offered affects student behaviour in the expected
direction [D-12]. Plans described in that publication for registering
charities and coupon providers on the blockchain were subsequently
implemented as the on-chain services described in reference [D-4].
Continued development of the platform is a research activity and is not
a commitment regarding the crypto-asset.</p>
<h3 id="d.9-resource-allocation">D.9 Resource allocation</h3>
<p>Implementation uses several distinct categories of resources:</p>
<p><strong>Charitable operating resources.</strong> SmileyCharity
obtains grants and donations and applies resources to educational
equipment, programme support, eligible purchases and administration.
Historical financial information, funding restrictions and liabilities
are disclosed in A.16. That financial information is not a consolidated
budget for every organisation or technical activity described in this
white paper.</p>
<p><strong>Educational SMLY allocation.</strong> The SmileyCoinFund
administers the remaining educational allocation originating from the
initial premine under its mandate and multisignature arrangements.
Transfers supporting educational rewards are distinct from
SmileyCharity’s fiat operating expenditure. See G.5.</p>
<p><strong>Protocol-directed allocations.</strong> Native SMLY issuance
includes allocations to miners, designated SmileyCharity addresses and
qualifying holder addresses under the protocol rules described in G.5.
These are allocations of newly generated crypto-assets, not guaranteed
fiat income or a consolidated project budget.</p>
<p><strong>Personnel and infrastructure.</strong> Implementation depends
on software development, educational-content development, platform
hosting, learning devices, connectivity and local programme support.
Responsibilities are identified in D.5. Separate organisations’ staff,
assets and resources should not be treated as available to SmileyCharity
without an established arrangement.</p>
<p><strong>BNB.SMLY backing arrangements.</strong> Native 1 bn SMLY
designated as backing for 1 bn BNB.SMLY are distinct from resources
available for educational grants or operating expenditure. The reserve
balance of 1 bn native SMLY is intended to support possible off-market
conversion from BNB.SMLY to native SMLY, should this be required.</p>
<p>The present white paper does not provide a consolidated, costed
allocation of future resources across these activities. Anticipated
grants, advertising income and pilot revenues are not treated as
committed funding.</p>
<h3 id="d.10-planned-use-of-collected-funds-or-crypto-assets">D.10
Planned use of Collected funds or crypto-Assets</h3>
<p>No funds or crypto-assets are being collected from purchasers through
an offer described in this version of the white paper. Accordingly, no
allocation of offer proceeds is presented.</p>
<p>This does not mean that the participating organisations receive no
funding or crypto-assets. SmileyCharity’s grants, donations and holdings
are addressed in A.16, and the educational allocation, protocol-directed
receipts and other implementation resources are described in D.9 and
G.5.</p>
<p><strong>References for Part D</strong></p>
<p>[D-1] Stefansson, G. and Lentin, J. (2017). “From Smileys to
Smileycoins: Using a Cryptocurrency in Education.” <em>Ledger</em>, 2,
38–54. DOI: 10.5915/LEDGER.2017.103.</p>
<p>[D-2] Stefansson, G. (2004). “The tutor-web: An educational system
for classroom presentation, evaluation and self-study.” <em>Computers
&amp; Education</em>, 43(4), 315–343.</p>
<p>[D-3] Jonsdottir, A. H., Bjornsdottir, A. and Stefansson, G. (2017).
“Difference in Learning Among Students Doing Pen-and-Paper Homework
Compared to Web-Based Homework in an Introductory Statistics Course.”
<em>Journal of Statistics Education</em>, 25(1), 12–20. DOI:
10.1080/10691898.2017.1291289.</p>
<p>[D-4] Stefansson, G., Jonsdottir, A. H., Gunnarsson, B. and Lentin,
J. (2024). “On-chain Services for Education in Slums and Refugee Camps.”
<em>International Journal of Learning and Teaching</em>, 10(6),
697–702.</p>
<p>[D-5] Nielsen, K. D., Stefánsdóttir, S. L., Hussein, B. A.,
Birgisdóttir, V. L. and Ingvarsdóttir, A. (2024). <em>Final Evaluation
Report: SmileyCharity in Kenya</em>. Independent evaluation commissioned
by Iceland’s Ministry for Foreign Affairs. <strong>An evaluation report,
not a peer-reviewed journal article.</strong></p>
<p>[D-6] Taken from https://coinmarketcap.com/academy/glossary/coinbase
viewed on October 9, 2026</p>
<p>[D-7] Described in subsection “The coinbase, difficulty and mining
strategy” of cryptocurrency teaching material “Cryptocurrency and the
Smileycoin”, specifically
https://tutor-web.net/comp/crypto251.0/lec01200/sl01220 viewed on
October 9, 2026</p>
<p>[D-8] Antonopoulos, A.M. (2010). Mastering Bitcoin. O’Reilly,
282pp.</p>
<p>[D-9] Sigurdardottir, A. J. and Stefansson, G. (2009). “Greining á
framförum nemenda innan vefkerfis sem býður upp á gagnvirk krossapróf”
[Analysis of student progress within a web-based quiz system; in
Icelandic with English summary]. <em>Tímarit um raunvísindi og
stærðfræði</em>, 6(1), 23–32.</p>
<p>[D-10] Stefansson, G. and Sigurdardottir, A. J. (2009). “Interactive
quizzes for continuous learning and evaluation.” In <em>JSM Proceedings,
Section on Statistical Education</em>. Alexandria, VA: American
Statistical Association, 4577–4591.</p>
<p>[D-11] Stefansson, G. and Sigurdardottir, A. J. (2011). “Web-assisted
education: From evaluation to learning.” <em>Journal of Instructional
Psychology</em>, 38(1), 47–60.</p>
<p>[D-12] Jonsdottir, A. H., Lentin, J., Calian, V., Hafsteinsson, E. K.
and Stefansson, G. (2021). “Using real data for statistics education in
an open-source learning environment.” <em>Teaching Statistics</em>,
43(1), 5–12. DOI: 10.1111/test.12237.</p>
<h2
id="part-e-information-about-the-offer-to-the-public-of-crypto-assets-or-their-admission-to-trading">Part
E – Information about the offer to the public of crypto-assets or their
admission to trading</h2>
<p><strong>Applicability of this Part</strong></p>
<p>This document is prepared by SmileyCharity for information,
concerning native SmileyCoin (SMLY) and the BNB-chain representation
designated BNB.SMLY. As stated in Parts A and C, SmileyCharity is
neither conducting an offer to the public nor seeking admission to
trading.</p>
<p>No subscription process, offer price, purchaser allocation or
placement arrangement is established by this document. References to
“not applicable” in the offer-specific fields below relate to that
scope; they do not imply that transactions involving either
representation are outside applicable law.</p>
<p>Existing third-party trading, educational reward distributions,
programme reimbursements and conversion between native SMLY and BNB.SMLY
are distinct activities. They should not be treated as interchangeable
with an offer or admission covered by this document.</p>
<p>SmileyCharity holds SMLY and may sell part of its holdings. Actual or
proposed sales, associated communications and any listing or conversion
arrangements must be assessed on their own facts. Existing circulation,
decentralised operation and charitable objectives do not, by themselves,
establish an exemption from applicable requirements.</p>
<h3 id="e.1-public-offering-or-admission-to-trading">E.1 Public offering
or admission to trading</h3>
<p>Not applicable: SmileyCharity neither offers SMLY to the public nor
seeks its admission to trading through this document. See the
applicability statement at the beginning of Part E.</p>
<h3 id="e.2-reasons-for-public-offer-or-admission-to-trading">E.2
Reasons for public offer or admission to trading</h3>
<p>Not applicable: no offer to the public or admission to trading is
sought through this document. SmileyCharity has large holdings of
SmileyCoin. The coin is already traded on open markets. It is in
SmileyCharity’s general interest to make publicly available information
about SmileyCoin and SmileyCharity may sell SmileyCoin through available
market providers.</p>
<p>SmileyCharity’s reasons for preparing the document are otherwise
described in C.14.</p>
<p><strong>Supplementary context.</strong> SmileyCoin’s introduction and
early use as an educational reward mechanism are described by Stefansson
and Lentin (2017).[E-1] This historical purpose is distinguished from
purchases and sales on secondary markets. The research does not
establish current liquidity, regulatory approval or investment
returns.</p>
<p>A secondary-market purchase does not, by itself, constitute a
donation to SmileyCharity or establish that the proceeds will finance
educational activities.</p>
<p>SmileyCharity does not operate a trading platform and cannot
guarantee that any CASP will admit SMLY.</p>
<h1 id="e.3e.11">E.3–E.11</h1>
<table>
<colgroup>
<col style="width: 50%" />
<col style="width: 50%" />
</colgroup>
<thead>
<tr>
<th style="text-align: left;">Field</th>
<th style="text-align: left;">Proposed replacement</th>
</tr>
</thead>
<tbody>
<tr>
<td style="text-align: left;"><strong>E.3 Fundraising
target</strong></td>
<td style="text-align: left;">Not applicable: no fundraising through an
offer is conducted under this version. Programme funding is described
separately in A.16 and D.9–D.10.</td>
</tr>
<tr>
<td style="text-align: left;"><strong>E.4 Minimum subscription
goals</strong></td>
<td style="text-align: left;">Not applicable: no subscription process is
established by this version.</td>
</tr>
<tr>
<td style="text-align: left;"><strong>E.5 Maximum subscription
goals</strong></td>
<td style="text-align: left;">Not applicable: no subscription process is
established by this version.</td>
</tr>
<tr>
<td style="text-align: left;"><strong>E.6 Oversubscription
acceptance</strong></td>
<td style="text-align: left;">Not applicable: no subscriptions are
accepted under this version.</td>
</tr>
<tr>
<td style="text-align: left;"><strong>E.7 Oversubscription
allocation</strong></td>
<td style="text-align: left;">Not applicable: no purchaser-allocation
mechanism is established by this version.</td>
</tr>
<tr>
<td style="text-align: left;"><strong>E.8 Issue price</strong></td>
<td style="text-align: left;">Not applicable: no issue or offer price is
set by this version.</td>
</tr>
<tr>
<td style="text-align: left;"><strong>E.9 Currency or crypto-assets
determining the issue price</strong></td>
<td style="text-align: left;">Not applicable: no issue or offer price is
set by this version.</td>
</tr>
<tr>
<td style="text-align: left;"><strong>E.10 Subscription
fee</strong></td>
<td style="text-align: left;">Not applicable: no subscription process is
established by this version. Other transaction costs are addressed in
E.36.</td>
</tr>
<tr>
<td style="text-align: left;"><strong>E.11 Offer price determination
method</strong></td>
<td style="text-align: left;">Not applicable to an offer under this
version. Third-party transaction prices depend on the relevant market or
transaction arrangements. Programme reference valuations and the stated
BNB.SMLY conversion ratio are not guaranteed secondary-market
prices.</td>
</tr>
</tbody>
</table>
<h3 id="e.12-total-number-of-offeredtraded-crypto-asset">E.12 Total
number of offered/traded crypto-asset</h3>
<p>No specific quantity is designated for an offer or admission to
trading under this version.</p>
<p><strong>Supplementary supply information.</strong> Native SMLY’s
issuance schedule and stated maximum supply (48 bn SMLY) are further
detailed in G.12. Total generated supply, circulating supply,
educational allocations, reserve holdings and quantities available for
trading are different measures.</p>
<p>D.4 describes a reported arrangement under which one billion BNB.SMLY
correspond to one billion native SMLY held in cold storage. The reserve
and represented tokens must be distinguished in any combined
economic-supply presentation to avoid double counting. These quantities
do not constitute an offer allocation under this document.</p>
<h3 id="e.13-targeted-holders">E.13 Targeted holders</h3>
<p>ALL; No purchaser category is targeted. Educational beneficiaries are
not, merely by participating in the programme, a target market for
purchasing crypto-assets.</p>
<h3 id="e.14-holder-restrictions">E.14 Holder restrictions</h3>
<p>This version establishes no offer-specific eligibility conditions.
Acquisition, holding, transfer and use remain subject to applicable law
and relevant service-provider terms.</p>
<p>Educational-programme eligibility, trading-platform eligibility and
technical transfer restrictions are separate matters. Participation in
SmileyTutor or a SmileyStore programme does not establish eligibility to
use a trading platform.</p>
<h3 id="e.15-reimbursement-notice">E.15 Reimbursement notice</h3>
<p>Not applicable: no subscription funds are collected under this
version. This does not exclude statutory or contractual remedies arising
from an actual transaction.</p>
<h3 id="e.16-refund-mechanism">E.16 Refund mechanism</h3>
<p>Not applicable to a subscription under this version.</p>
<h3 id="e.17-refund-timeline">E.17 Refund timeline</h3>
<p>Not applicable to a subscription under this version.</p>
<h3 id="e.18-offer-phases">E.18 Offer phases</h3>
<p>Not applicable: no phased offer is established by this version.</p>
<h3 id="e.19-early-purchase-discount">E.19 Early purchase discount</h3>
<p>Not applicable: no early-purchase arrangement is established by this
version.</p>
<h3 id="e.20-time-limited-offer">E.20 Time-limited offer</h3>
<p>Not applicable: no offer is established by this version.</p>
<h3 id="e.21-subscription-period-beginning">E.21 Subscription period
beginning</h3>
<p>Not applicable: no subscription period is established.</p>
<h3 id="e.22-subscription-period-end">E.22 Subscription period end</h3>
<p>Not applicable: no subscription period is established.</p>
<h3
id="e.23-safeguarding-arrangements-for-offered-fundscrypto--assets">E.23
Safeguarding arrangements for offered funds/crypto- Assets</h3>
<p>Not applicable to subscription proceeds: none are collected under
this version.</p>
<p>SmileyCharity holds the reserve in cold storage, nobody else controls
it, and holders have no rights to it.</p>
<h3 id="e.24-payment-methods-for-crypto-asset-purchase">E.24 Payment
methods for crypto-asset purchase</h3>
<p>No purchase-payment method is established under this version. For
third-party purchases or swaps, accepted payment assets, supported
networks and settlement conditions depend on the relevant provider or
arrangement.</p>
<h3 id="e.25-value-transfer-methods-for-reimbursement">E.25 Value
transfer methods for reimbursement</h3>
<p>Not applicable to a subscription under this version.</p>
<h3 id="e.26-right-of-withdrawal">E.26 Right of withdrawal</h3>
<p>No offer-specific withdrawal procedure is established by this
version. The existence and scope of statutory withdrawal rights or other
remedies depend on the actual transaction and applicable law. Nothing in
this document waives or restricts mandatory rights.</p>
<h3 id="e.27-transfer-of-purchased-crypto-assets">E.27 Transfer of
purchased crypto-assets</h3>
<p>No purchaser-delivery arrangement is established under this
version.</p>
<p>In third-party transactions, a credit to an account with a custodial
provider is distinct from an on-chain transfer to a wallet controlled by
the purchaser. Native SMLY and BNB.SMLY operate on different networks.
The receiving wallet or service must support the relevant representation
and network. Conversion between them is a separate operation.</p>
<h3 id="e.28-transfer-time-schedule">E.28 Transfer time schedule</h3>
<p>No purchaser-delivery schedule is established under this version.
Third-party processing times depend on provider procedures, network
conditions and confirmation requirements. No guaranteed transfer or
conversion time is represented here.</p>
<h3 id="e.29-purchasers-technical-requirements">E.29 Purchaser's
technical requirements</h3>
<p>No subscription-specific technical requirements are established under
this version.</p>
<p>For self-custody of native SMLY, users require compatible SmileyCoin
wallet software and secure management and backup of private keys. For
BNB.SMLY, users require a wallet supporting the relevant BNB-chain token
contract and access to the host network’s transaction-fee asset.</p>
<p>Both representations use the symbol SMLY, as explained in D.2–D.3.
Users must therefore verify the network and, for BNB.SMLY, the contract
identity rather than rely on the ticker alone.</p>
<p>Third-party providers may impose additional account, identification
and technical requirements. Loss of keys or use of an unsupported
destination or network may cause permanent loss.</p>
<h3 id="e.30-crypto-asset-service-provider-casp-name">E.30 Crypto-asset
service provider (CASP) name</h3>
<p>No CASP is identified as appointed to place crypto-assets under this
version.</p>
<h3 id="e.31-casp-identifier">E.31 CASP identifier</h3>
<p>Not applicable to a placing CASP under this version; see E.30.</p>
<h3 id="e.32-placement-form">E.32 Placement form</h3>
<p>NTAV; Not applicable: no placement arrangement is established by this
version.</p>
<h3 id="e.33-trading-platforms-name">E.33 Trading platforms name</h3>
<p>At the date of this document, SMLY is not admitted to trading on any
trading platform for crypto-assets operated by a crypto-asset service
provider authorised under Regulation (EU) 2023/1114. SmileyCharity does
not seek admission to trading. Whether to admit SMLY is a decision for a
platform operator, which makes its own assessment, including of whether
SMLY has an identifiable issuer. A platform may use this document as a
source of information for that assessment.</p>
<h3 id="e.34-trading-platforms-market-identifier-code-mic">E.34 Trading
platforms Market identifier code (MIC)</h3>
<p>Not applicable (see E.33).</p>
<h3 id="e.35-trading-platforms-access">E.35 Trading platforms
access</h3>
<p>Access to third-party trading and swap services depends on current
availability, supported representation, eligibility conditions and
applicable law.</p>
<p>Centralised services may require registration and identity
verification. Wallet-connected services require compatible software,
network connectivity and interaction with the relevant contracts or
liquidity pools.</p>
<p>Support for native SMLY does not establish support for BNB.SMLY, or
vice versa. Continued listing, deposits, withdrawals, conversion and
execution at a particular price are not guaranteed.</p>
<h3 id="e.36-involved-costs">E.36 Involved costs</h3>
<p>No subscription fee is established under this version. Third-party
acquisition, transfer, custody, sale or conversion may nevertheless
involve network fees, trading fees, withdrawal charges, custody charges,
conversion charges, spreads and price slippage.</p>
<p>Native-network transaction fees are denominated in SMLY. BNB.SMLY
transactions incur host-network fees, normally payable in BNB.
Conversion between the representations may involve additional
charges.</p>
<p>Actual costs depend on the provider, transaction and network
conditions. No uniform fee schedule or maximum total cost is represented
in this document.</p>
<h3 id="e.37-offer-expenses">E.37 Offer expenses</h3>
<p>Not applicable: no offer is conducted under this version.
Document-preparation and project operating expenditure are distinct from
purchaser transaction charges and expenses associated with any future
offer or admission.</p>
<h3 id="e.38-conflicts-of-interest">E.38 Conflicts of interest</h3>
<p><strong>SmileyCharity</strong></p>
<p>SmileyCharity prepares this document and holds substantial quantities
of SMLY. A.16 reports approximately 9.65 billion SMLY, including
approximately 1.0 bn locked as the BNB.SMLY reserve (Table A-1).
SmileyCharity holds the reserve in cold storage, nobody else controls
it, and holders have no rights to it.</p>
<p>SmileyCharity consequently has an economic interest in SMLY’s
usability, liquidity and market accessibility. Its charitable status
does not make this document an independent assessment of the
crypto-asset. Sales to finance activities may affect market prices and
create tensions between programme-financing needs and the interests of
other holders.</p>
<p><strong>Overlapping roles</strong>: Gunnar Stefánsson is Chair and
Executive Director of SmileyCharity, a co-developer of SmileyCoin and
SmileyTutor, and a member of the SmileyCoinFund board. He founded
SmileyInvest. He has traded SMLY in the past (Stefansson and Lentin,
2017 [E-1]) but does not currently hold SMLY personally. Anna Helga
Jónsdóttir is a board member of SmileyCharity and a co-developer of
SmileyTutor.</p>
<p><strong>SmileyCoinFund</strong></p>
<p>The SmileyCoinFund administers the remaining educational allocation
originating from the initial premine under its mandate and
multisignature arrangements. Decisions concerning grants and
distributions can affect the quantities available to recipients and
potentially to markets. Authority to administer or authorise transfers
from the allocation should not be confused with personal beneficial
ownership.</p>
<p><strong>SmileyInvest</strong></p>
<p>SmileyInvest is a separate private limited company established to
purchase SMLY on cryptocurrency markets in support of the broader
project. Its holdings and purchasing activity create economic exposure
to SMLY. Purchases may influence demand and prices, but do not establish
a guaranteed price floor, continuous liquidity or an obligation to
purchase from a particular holder.</p>
<p>Since the founding of SmileyInvest its founder (Gunnar Stefánsson)
has not made any SmileyCoin purchases or sales and no longer holds
SmileyCoin personally.</p>
<p><strong>SmileyTutor NGO</strong></p>
<p>The planned advertising-funded app model described in D.8 would use
advertising income to purchase SMLY for educational rewards. This is a
proposed funding arrangement, not a guaranteed source of continuing
market demand. Purchases and subsequent reward distributions may affect
market conditions.</p>
<p><strong>Liquidity provision</strong></p>
<p>For a few years before 2020, automated trading bots provided
liquidity for SMLY on certain exchanges. They used SMLY to narrow
spreads and meet exchange liquidity requirements (Stefansson and Lentin,
2017 [E-1]). Such programs are no longer operated and the corresponding
exchanges (C-CEX and Cryptopia) had closed by 2020. Reported trading
volume during that period may therefore not reflect independent market
demand. SmileyTutor NGO’s planned conversion and liquidity role is
described in D.8.</p>
<p><strong>Different participant interests</strong></p>
<p>Persons purchasing SMLY for educational rewards may benefit from
lower acquisition prices, whereas persons selling holdings may benefit
from higher prices. Students and programme operators may prioritise
predictable access to goods and services rather than resale value. These
interests need not remain aligned.</p>
<p><strong>BNB.SMLY</strong></p>
<p>SmileyCharity holds the BNB.SMLY reserve and received the entire
BNB.SMLY supply, so it has an economic interest in BNB.SMLY as well as
native SMLY. Hybrix holds the contract owner role, which gives no power
over supply or transfers, and operates the 1:1 swap pool.</p>
<p>Holding SMLY or BNB.SMLY does not, by itself, confer shares in
SmileyInvest or ownership of SmileyCharity’s assets. A secondary-market
purchase does not automatically transfer its proceeds to educational
programmes.</p>
<p>BNB.SMLY was one of multiple outputs from a research project,
EduChain, operated by the University of Iceland but implemented by
Hybrix as a contractor, generating BNB.SMLY for SmileyCharity which
instead put up the reserve native SMLY coins. The BNB.SMLY initiation
process is described in H.6.</p>
<p><strong>Pools</strong></p>
<p>SMLY and BNB.SMLY are traded through liquidity pools on Hybrix and
PancakeSwap (DEXOMY pools are currently closed). Each pool is run by its
own smart contract or algorithm, which sets prices from the assets in
the pool. DEXOMY also runs an order book. None of these venues are
operated by a crypto-asset service provider authorised under Regulation
(EU) 2023/1114, and SmileyCharity does not operate or control any of
them.</p>
<p>From 2023 to 2025, SmileyCharity and Smiley Invest ehf. occasionally
provided liquidity to these pools, usually after accepting one-off
requests from the venue operators. These requests created no contract or
obligation, and SmileyCharity receives no payment from any venue.
Deposits were made at the pool’s current ratio, so they did not move the
pool price.</p>
<p>As of Oct 13, 2026 SmileyCharity has no orders on the DEXOMY order
book.</p>
<p>As of Oct 13, 2026, SmileyCharity holds liquidity positions of 178 M
SMLY in Hybrix pools and 40 M in BNB.SMLY PancakeSwap pools, and
SmileyCharity holds the related tokens. This constitutes about 2.3% of
the charity’s total SmileyCoin holdings.</p>
<p>As of Oct 13, 2026, Smiley Invest ehf. holds no native SMLY liquidity
positions.</p>
<p>From the date of this white paper, SmileyCharity will provide
liquidity only under a written policy approved by its board. Under the
policy, it acts passively, sets no price targets and does not trade
against its own positions. The policy will set a maximum number of SMLY
across all pools. SmileyCharity publishes any material change to its
positions without delay (Art. 88), and insiders are not allowed to trade
around such changes (Art. 89).</p>
<h3 id="e.39-applicable-law">E.39 Applicable law</h3>
<p>SmileyCharity is an Icelandic association subject to applicable
Icelandic law.</p>
<p>The law applicable to particular purchases, sales, custody
arrangements, conversions and claims concerning this document depends on
the relevant facts, mandatory legal rules and any valid contractual
terms. Decentralised network operation does not place transactions or
participants outside the law.</p>
<h3 id="e.40-competent-court">E.40 Competent court</h3>
<p>No offer-specific jurisdiction agreement is established by this
version. Jurisdiction over a dispute depends on the parties, the nature
of the claim, applicable jurisdiction rules and any valid contractual
agreement.</p>
<p>SmileyCharity’s establishment in Iceland may provide a basis for
proceedings before Icelandic courts, subject to the applicable rules.
This statement does not establish exclusive Icelandic jurisdiction or
restrict mandatory rights to bring proceedings elsewhere.</p>
<p>Disputes involving the SmileyCoinFund, trading providers or BNB.SMLY
arrangements require separate consideration of the responsible persons
and applicable terms.</p>
<p><strong>References for Part E</strong></p>
<p><strong>[E-1]</strong> Stefansson, G. and Lentin, J. (2017). “From
Smileys to Smileycoins: Using a Cryptocurrency in Education.”
<em>Ledger</em>, 2, 38–54. DOI: 10.5915/LEDGER.2017.103.</p>
<h2 id="part-f-information-about-the-crypto-assets">Part F – Information
about the crypto-assets</h2>
<h3 id="f.1-crypto-asset-type">F.1 Crypto-asset type</h3>
<p><strong>Native SMLY:</strong> Proposed classification as a
crypto-asset other than an asset-referenced token or an e-money token.
Native SMLY is the transferable native asset of the SmileyCoin
blockchain, used for payments, educational rewards and network
transaction fees.</p>
<p>Native SMLY does not purport to maintain a stable value by reference
to an official currency or another asset. Programme reference valuations
used in educational activities are distinct from a general
price-stabilisation or redemption commitment.</p>
<p>Its proposed treatment as not being a utility token is explained in
D.6: its intended functions are not limited to access to goods or
services supplied by an issuer.</p>
<p><strong>BNB.SMLY:</strong> A token representation on a separate
blockchain, described in D.4 as backed by native SMLY and associated
with a stated 1:1 conversion arrangement.</p>
<h3 id="f.2-crypto-asset-functionality">F.2 Crypto-asset
functionality</h3>
<p><strong>Native-network functionality</strong></p>
<p>Native SmileyCoin (SMLY) can be held and transferred between
compatible addresses on the SmileyCoin blockchain. It is used for
peer-to-peer payments and payment of native-network transaction fees.
Transfers depend on valid authorisation, network processing and the
applicable protocol rules.</p>
<p><strong>Educational rewards</strong></p>
<p>SmileyTutor, formerly tutor-web, uses native SMLY to reward
educational activities. Eligible users can earn rewards under the
platform’s rules and withdraw them to compatible wallets. Educational
reward distributions transfer existing SMLY; they are distinct from the
generation of new coins by the blockchain.</p>
<p>Stefansson and Lentin (2017) describe the introduction and early
educational use of SmileyCoin.[F-1] This research supports the account
of its educational reward function; it does not establish guaranteed
learning outcomes, future availability or financial returns.</p>
<p>Whether a reward is triggered depends on the platform’s internal
grading scheme and item-allocation algorithm, not on any rule of the
SmileyCoin protocol. The grading scheme determines when a drill set
counts as completed to a given standard, and the allocation algorithm
determines the difficulty of the items a student must answer to reach
that standard; both are parameters of the learning environment that have
been changed experimentally over time [F-3]. A change to either can
therefore alter the quantity of SMLY earned per unit of study without
any change to the blockchain. Holders should not infer from past reward
levels that any particular quantity of SMLY will be distributed for a
given educational achievement in the future.</p>
<p><strong>Participating-store payments</strong></p>
<p>Under the established virtual SmileyStore arrangements, eligible
students transfer native SMLY to designated store addresses. Local
programme representatives facilitate purchases, and SmileyCharity
provides local-currency reimbursement under the programme’s
arrangements. Availability depends on eligibility, funding,
participating providers and local implementation.</p>
<p><strong>Service discovery and supporting records</strong></p>
<p>The native blockchain supports registration of service information,
including participating-store information that compatible wallet
software can display. Blockchain transactions support payment
verification and reconciliation. Registration and payment records do
not, by themselves, ensure delivery of goods or performance of an
off-chain service. These applications are described by Stefansson and
colleagues (2024).[F-2]</p>
<p><strong>BNB.SMLY functionality</strong></p>
<p>BNB.SMLY provides a separately recorded token representation that can
be transferred using compatible host-network wallets and applications.
Conversion between BNB.SMLY and native SMLY is a separate process
dependent on the backing and conversion arrangements described in
D.4.</p>
<p>Native SMLY’s educational integrations and protocol-directed
allocations should not be assumed to apply directly to BNB.SMLY. In
particular, this document does not establish direct acceptance of
BNB.SMLY by SmileyTutor or participating SmileyStores.</p>
<p><strong>Limitations</strong></p>
<p>Holding either representation does not, by itself, establish
eligibility for charitable assistance or an unconditional entitlement to
programme goods or services. Educational purpose does not guarantee
liquidity, preservation of value or investment returns.</p>
<h3 id="f.3-planned-application-of-functionalities">F.3 Planned
application of functionalities</h3>
<p>Native-network transfers and educational reward applications are
established functions. The SmileyTutor reward function has been in
continuous use since 2014 and its integration with the current release
of the learning environment, including exercises built on real
statistical data and student-authored content, is described in the
peer-reviewed literature [F-4].</p>
<p>Participating virtual SmileyStore arrangements are operational
applications described in D.4. Their availability is site-specific and
depends on continued technical operation, funding and programme
arrangements.</p>
<p>SmileyKuku and SmileyTrees are pilot activities combining supervised
learning with trials of local production and trade using native SMLY.
Expansion of physical SmileyStores is intended to support purchases and
sales of locally produced goods. These initiatives extend the use of the
payment system; they should not be presented as completed network-wide
deployments or proof of financial self-sufficiency.</p>
<p>SmileyTutor NGO, a separate non-profit association, proposes an
advertising-funded application under which advertising income would fund
purchases of SMLY for educational rewards. This remains a proposed
funding and application model.</p>
<p>BNB.SMLY is described in D.4 as an existing token deployment. Its
deployment is distinct from the continuing availability of conversion
services, trading pools and third-party integrations.</p>
<p>Future implementation depends on funding, development capacity,
participating-site agreements and evaluation. No guaranteed completion
dates are represented. Further project plans and resource constraints
are described in D.8–D.9.</p>
<h3 id="f.4-type-of-crypto-asset-white-paper">F.4 Type of crypto-asset
white paper</h3>
<p>OTHR</p>
<h3 id="f.5-the-type-of-submission">F.5 The type of submission</h3>
<p>NEWT</p>
<h3 id="f.6-crypto-asset-characteristics">F.6 Crypto-asset
characteristics</h3>
<p><strong>Native SMLY</strong></p>
<p>Native SMLY is the digital asset recorded on the public SmileyCoin
blockchain, introduced in 2014. The blockchain was initially derived
from Litecoin source code and subsequently developed to incorporate
multiple proof-of-work algorithms and features supporting educational
applications.[F-1, F-2]</p>
<p>Native SMLY transactions are recorded on a public ledger. Addresses
are pseudonymous rather than inherently anonymous, and transaction
information may be linked to persons through other information.</p>
<p>New native SMLY is generated under the blockchain’s issuance rules.
The issuance schedule and stated maximum supply are described in G.12.
The initial educational allocation administered by the SmileyCoinFund is
distinct from subsequent issuance and from SmileyCharity’s holdings.</p>
<p>As described in G.5, protocol-directed allocations distribute newly
generated coins among miners, designated SmileyCharity addresses and
qualifying holder addresses. These allocations are not distributions of
company profits. Eligibility for a holder allocation is determined by
protocol conditions, not simply by whether a person supports the
educational project.</p>
<p>Native transaction fees are denominated in SMLY. Holding or
transferring SMLY does not guarantee future market value, market access
or uninterrupted network operation.</p>
<p><strong>Application-supporting features</strong></p>
<p>Service information can be registered on the native blockchain and
accessed through compatible software. The described applications include
store discovery and coupon-related services. Coupon fulfilment and other
service operations may depend on off-chain software and service
providers. On-chain registration is not a guarantee of service quality,
availability or delivery.</p>
<p>These features developed over time; this document does not represent
that every current feature existed at launch.</p>
<p><strong>BNB.SMLY</strong></p>
<p>BNB.SMLY is the designation used in this document for the BNB-chain
token at contract address
<code>0xe015f8C012e932F13184061F3ffd956E9000A6CD</code>. Its actual
ticker on the BNB-chain is SMLY.</p>
<p>One billion BNB.SMLY minted in this contract are associated with one
billion native SMLY held in cold storage. The token contract, host
network, reserve custody and conversion arrangements are distinct from
the native blockchain’s mining and issuance rules.</p>
<p>Transfers of BNB.SMLY require compatible host-network infrastructure
and applicable network fees, normally payable in BNB. Its stated
conversion ratio does not establish equal secondary-market prices or
uninterrupted conversion availability.</p>
<p>Users must distinguish the network and contract identity, rather than
rely on the SMLY ticker alone.</p>
<h3 id="f.7-commercial-name-or-trading-name">F.7 Commercial name or
trading name</h3>
<p><strong>SmileyCoin (SMLY)</strong></p>
<p>The BNB-chain representation also uses SMLY as its ticker and is
designated BNB.SMLY in this document to distinguish it from native
SMLY.</p>
<h3 id="f.8-website-of-the-issuer">F.8 Website of the issuer</h3>
<p>Not applicable: no identifiable issuer (see Part B).</p>
<p><strong>Supplementary project information:</strong>
https://smileycharity.is is SmileyCharity’s website. Identifying it here
does not, by itself, establish that SmileyCharity is the issuer of
either representation.</p>
<h3
id="f.9-starting-date-of-offer-to-the-public-or-admission-to-trading">F.9
Starting date of offer to the public or admission to trading</h3>
<p>Not applicable: no offer to the public or admission to trading is
sought.</p>
<h3 id="f.10-publication-date">F.10 Publication date</h3>
<p>TBA</p>
<h3 id="f.11-any-other-services-provided-by-the-issuer">F.11 Any other
services provided by the issuer</h3>
<p>Not applicable: no identifiable issuer (see Part B).</p>
<h3 id="f.12-language-or-languages-of-the-crypto-asset-white-paper">F.12
Language or languages of the crypto-asset white paper</h3>
<p><strong>EN — English</strong></p>
<h3
id="f.13-digital-token-identifier-code-dti-used-to-uniquely-identify-the-crypto-asset-or-each-of-the-several-crypto-assets-to-which-the-white-paper-relates-where-available">F.13
Digital token identifier code (DTI) used to uniquely identify the
crypto-asset or each of the several crypto assets to which the white
paper relates, where available</h3>
<!--DLI (Ledger): X7CDNC3WH-->
<!--Protocol/Native: NRHV9DD07-->
<!--EDTG: T3F45B3WV-->
<p><strong>Digital Ledger Identifier:</strong> X7CDNC3WH</p>
<p><strong>Digital Token Identifier:</strong> T3F45B3WV</p>
<p><strong>DTI Type:</strong> Equivalent Digital Token Group</p>
<p><strong>Equivalent Digital Token Identifiers List:</strong>
NRHV9DD07</p>
<p><strong>Equivalent digital token grouping reasons:</strong>
Architectural;Organisational</p>
<p><strong>Digital Asset External Identifiers Type + Value:</strong>
ISIN:XTT3F45B3WV5</p>
<h3
id="f.14-functionally-fungible-group-digital-token-identifier-where-available">F.14
Functionally fungible group digital token identifier, where
available</h3>
<p>A functionally fungible group DTI has not yet been verified for the
scope of this white paper.</p>
<h3 id="f.15-voluntary-data-flag">F.15 Voluntary data flag</h3>
<p>FALSE</p>
<h3 id="f.16-personal-data-flag">F.16 Personal data flag</h3>
<p>TRUE</p>
<h3 id="f.17-lei-eligibility">F.17 LEI eligibility</h3>
<p>TRUE; SmileyCharity has a LEI, 636700LQMUJ4E4WR0417.</p>
<h3 id="f.18-home-member-state">F.18 Home Member State</h3>
<p>Iceland</p>
<h3 id="f.19-host-member-states">F.19 Host Member States</h3>
<p>All EEA states other than the home Member State: Austria, Belgium,
Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein,
Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal,
Romania, Slovakia, Slovenia, Spain, Sweden.</p>
<p><strong>References for Part F</strong></p>
<p><strong>[F-1]</strong> Stefansson, G. and Lentin, J. (2017). “From
Smileys to Smileycoins: Using a Cryptocurrency in Education.”
<em>Ledger</em>, 2, 38–54. DOI: 10.5915/LEDGER.2017.103.</p>
<p><strong>[F-2]</strong> Stefansson, G., Jonsdottir, A. H., Gunnarsson,
B. and Lentin, J. (2024). “On-chain Services for Education in Slums and
Refugee Camps.” <em>International Journal of Learning and Teaching</em>,
10(6), 697–702.</p>
<p><strong>[F-3]</strong> Jonsdottir, A. H. and Stefansson, G. (2014).
“From evaluation to learning: Some aspects of designing a
cyber-university.” <em>Computers &amp; Education</em>, 78, 344–351. DOI:
10.1016/j.compedu.2014.06.017.</p>
<p><strong>[F-4]</strong> Jonsdottir, A. H., Lentin, J., Calian, V.,
Hafsteinsson, E. K. and Stefansson, G. (2021). “Using real data for
statistics education in an open-source learning environment.”
<em>Teaching Statistics</em>, 43(1), 5–12. DOI: 10.1111/test.12237.</p>
<h2
id="part-g-information-on-the-rights-and-obligations-attached-to-the-crypto-assets">Part
G – Information on the rights and obligations attached to the
crypto-assets</h2>
<h3 id="g.1-purchaser-rights-and-obligations">G.1 Purchaser rights and
obligations</h3>
<p><strong>Native SMLY</strong></p>
<p>Native SMLY can be held and transferred using compatible software,
subject to valid transaction authorisation, applicable protocol rules
and network operation.</p>
<p>Holding native SMLY does not, by itself, confer membership or voting
rights in SmileyCharity, shares in SmileyInvest, authority over the
SmileyCoinFund, or an entitlement to those organisations’ profits or
assets.</p>
<p>Qualifying native addresses may receive newly generated SMLY under
the protocol-directed allocation mechanism described in G.5. These
allocations are not distributions of company profits and do not
constitute a guaranteed rate of return.</p>
<p><strong>Educational programme participation</strong></p>
<p>Holding SMLY does not automatically establish eligibility for
educational rewards, charitable assistance or participating-store
purchases. These activities depend on the relevant programme conditions,
local arrangements, funding and continued operation. Rights arising from
a particular purchase or programme commitment are distinct from the mere
holding of SMLY.</p>
<p><strong>BNB.SMLY</strong></p>
<p>BNB.SMLY can be held and transferred on its host network, subject to
its token contract and the host network’s rules. D.4 describes native
SMLY backing and a stated 1:1 conversion arrangement. BNB.SMLY confers
no enforceable right to conversion or to the reserve.</p>
<p>BNB.SMLY was one of multiple outputs from a research project,
EduChain, operated by the University of Iceland but implemented by
Hybrix as a contractor, generating BNB.SMLY for SmileyCharity which
instead put up the reserve native SMLY coins. The BNB.SMLY initiation
process is described in H.6.</p>
<p>The reported backing arrangement should not be interpreted, without
supporting legal terms, as establishing direct ownership of particular
reserve coins, an unconditional redemption claim, or priority in an
insolvency.</p>
<p><strong>Other rights and obligations</strong></p>
<p>Purchases, sales, custody and conversion transactions may give rise
to rights and obligations under applicable law and the relevant
agreements. Users must comply with legal obligations applicable to their
activities, including relevant tax and reporting requirements.</p>
<p>Self-custody requires secure management of the necessary private keys
and backups. Use of a custodian introduces separate contractual
arrangements and counterparty risks. These operational responsibilities
do not exclude any liability or duties imposed on another person by
law.</p>
<h3 id="g.2-exercise-of-rights-and-obligations">G.2 Exercise of rights
and obligations</h3>
<p><strong>Native-network use</strong></p>
<p>Native transfers are initiated through compatible wallet software and
authorised using the keys and other conditions required by the relevant
transaction outputs. Transactions remain subject to network validation,
applicable fees and any relevant maturity or spending conditions.</p>
<p>Protocol-directed holder allocations are determined by the protocol’s
eligibility and selection rules rather than by a request to
SmileyCharity. Holding SMLY through a custodial service does not
establish that the customer’s individual balance qualifies independently
or that the service passes any allocations to that customer.</p>
<p><strong>Programme and service arrangements</strong></p>
<p>Educational rewards and participating-store purchases follow the
relevant platform and local programme procedures. Technical recording of
a payment does not replace the supplier’s obligations arising from the
underlying transaction.</p>
<p>Rights arising from trading, custody or other services are exercised
against the relevant provider through its applicable procedures and
available legal remedies.</p>
<h3 id="g.3-conditions-for-modifications-of-rights-and-obligations">G.3
Conditions for modifications of rights and obligations</h3>
<p><strong>Native protocol</strong></p>
<p>Native SMLY’s technical functions and allocation rules depend on the
software rules adopted and enforced by network participants. Publication
of revised software does not, by itself, amend the rules enforced by
every node.</p>
<p>Changes may affect issuance, allocation eligibility, transaction
processing or other functionality. Disagreement over changes may result
in incompatible network versions or a chain split. Holding SMLY does not
provide a formal corporate vote or an individual veto over such
developments.</p>
<p><strong>Programme and contractual arrangements</strong></p>
<p>Changes to educational programme rules or service terms are distinct
from protocol changes. Their legal effect depends on the relevant
agreement and applicable law, including any requirements concerning
notice, consent and existing commitments.</p>
<p><strong>BNB.SMLY</strong></p>
<p>Changes affecting BNB.SMLY may arise from its host network, any
powers incorporated into the token contract, and the reserve or
conversion arrangements. Contract-administration is described in detail
in H.6.</p>
<p>A technical change does not, by itself, extinguish an existing
contractual or statutory obligation.</p>
<h3 id="g.4-future-public-offers">G.4 Future public offers</h3>
<p>FALSE; No specific future offer to the public is described or
scheduled in this version.</p>
<p>SmileyCharity holds SMLY and may sell part of its holdings, as
disclosed in General information subsection 10 and E.38. This statement
is not a commitment that future sales will occur.</p>
<h3 id="g.5-issuer-retained-crypto-assets">G.5 Issuer retained
crypto-assets</h3>
<p><strong>Applicability</strong></p>
<p>Issuer identification remains subject to the assessment described in
Part B. Accordingly, this white paper does not present a verified
quantity of “issuer-retained crypto-assets.” The following material
holdings and allocation arrangements are disclosed independently of that
assessment.</p>
<p><strong>Educational allocation administered by the
SmileyCoinFund</strong></p>
<p>An initial premine (24 bn SMLY) was designated for educational
purposes. This premine was set at 50% of the expected total from mining
(estimated maximum supply) of approximately 48 bn SMLY. The
SmileyCoinFund administers the remaining premine allocation under a
signed mandate and a multisignature arrangement described as requiring
two authorising signatures.</p>
<p>The educational allocation is distinct from SmileyCharity’s own
holdings. Authority to authorise a transfer does not, by itself,
establish personal beneficial ownership of the coins. The Fund should
not be assumed to be a separate legal entity.</p>
<p>This white paper identifies the Fund address as
<code>3JT9LAzuMChCifVoQQK18BQV9z4BzpbQVH</code>.</p>
<p>Transfers from the allocation have supported SmileyTutor educational
rewards. The educational origins and early use of SmileyCoin are
described by Stefansson and Lentin (2017).[G-1] The mandate, current
administration and on-chain balances provide separate evidence for
present control and holdings.</p>
<p><strong>SmileyCoinFund holdings</strong></p>
<p>SmileyCoinFund holdings are stored in native SMLY address address
3JT9LAzuMChCifVoQQK18BQV9z4BzpbQVH which contains about 7.5 bn SMLY on
11 October 2026 (A.16)</p>
<p><strong>SmileyCharity holdings</strong></p>
<p>As of 11 October 2026, 20:14 GMT, native SMLY balances of the main
SmileyCharity addresses come to a total of 8.6 bn SMLY, excluding the
BNB.SMLY reserve (see A.16, Table A-1).</p>
<p>SmileyCharity holds the reserve in cold storage, nobody else controls
it, and holders have no rights to it.</p>
<p>The reserve address qualifies for holder allocations as it holds over
25 M SMLY; reserve address allocations received above 1,000 M SMLY are
held in the reserve address.</p>
<p>SmileyCharity may sell holdings in connection with its activities,
subject to applicable requirements and restrictions.</p>
<p><strong>Coinbase definition</strong></p>
<p>The <strong>coinbase</strong> is defined as the the number of coins
that are generated from scratch and (usually) awarded to miners for
mining every new block, in which case it is often called the
<strong>block reward</strong> or <strong>miner’s
reward</strong>.[D-6][D-7][D-8] The coinbase is sometimes also referred
to as a <strong>block subsidy</strong> but that is often inappropriate
and especially so when the coinbase is not the same as the block reward.
For SmileyCoin, the coinbase is <strong>not</strong> all awarded to
miners.</p>
<p>The coinbase, along with fees from transactions, are allocated in the
<strong>coinbase transaction</strong>, which has only one input, called
the coinbase, which creates bitcoin-based cryptocurrencies from
nothing.[D-8]</p>
<p><strong>Protocol-directed allocations</strong></p>
<p>The allocation arrangement introduced in 2017 is described as
distributing newly generated native SMLY (the coinbase) as follows:</p>
<ul>
<li>10% to the miner;</li>
<li>45% to designated SmileyCharity income-stream addresses, selected in
sequence;</li>
<li>45% to qualifying native holder addresses, selected under the
protocol’s rules.</li>
</ul>
<p>The described holder threshold is at least 25 million SMLY.
Eligibility, selection order and payment frequency depend on the
implemented rules. The 45% allocation is a share of newly generated
coins across qualifying recipients, not a return of 45% on an individual
holder’s balance.</p>
<p>These allocations are distinct from transaction fees, transfers from
the educational allocation and distributions of company profits. They do
not guarantee a fiat income or preservation of value.</p>
<p><strong>BNB.SMLY reserve</strong></p>
<p>SmileyCharity holds 1,000,000,000 native SMLY in cold storage at
address <code>BSWCvqnes2LBafFuB3cNwucQUVkcjt1z88</code>, which
corresponds to the 1,000,000,000 BNB.SMLY in existence. Holder
allocations received above that amount are kept at the same address; its
balance was about 1,002 M SMLY on 11 October 2026 (Table A-1). Nobody
other than SmileyCharity controls the reserve, and it is not used for
grants or operating expenditure. BNB.SMLY holders have no ownership of,
claim to or priority over the reserve. The reserve is shown separately
in Table A-1 and is excluded from the 8.6 bn SMLY of spendable holdings,
so it is not counted twice.</p>
<h3 id="g.6-utility-token-classification">G.6 Utility token
classification</h3>
<p>FALSE; proposed for both <strong>Native SMLY</strong> and
<strong>BNB.SMLY</strong> (see D.6 and F.1 for both)</p>
<h3 id="g.7-key-features-of-goodsservices-of-utility-tokens">G.7 Key
features of goods/services of utility tokens</h3>
<p>Not applicable to native SMLY on the proposed classification stated
in G.6.</p>
<p>Nevertheless, documented educational reward and participating-store
uses are described in D.4 and F.2. These uses do not establish an
unconditional entitlement for every holder to receive goods or
services.</p>
<p>Stefansson and colleagues (2024) describe on-chain services
supporting educational activities and store transactions.[G-2] The
publication documents application functionality; it does not establish a
general redemption obligation.</p>
<h3 id="g.8-utility-tokens-redemption">G.8 Utility tokens
redemption</h3>
<p>No issuer-operated utility-token redemption arrangement is identified
for native SMLY on the proposed classification in G.6.</p>
<p>Payments for goods under participating SmileyStore arrangements are
distinct from a general right to redeem native SMLY for fiat currency or
other assets.</p>
<p>Conversion of BNB.SMLY into native SMLY is a separate arrangement and
must be disclosed irrespective of utility-token classification. See
G.1–G.2.</p>
<h3 id="g.9-non-trading-request">G.9 Non-trading request</h3>
<p>FALSE. Admission to trading of SMLY is not sought through this
document (see A and E.1).</p>
<h3 id="g.10-crypto-assets-purchase-or-sale-modalities">G.10
Crypto-assets purchase or sale modalities</h3>
<p>SmileyCharity does not sell SMLY under this document. SMLY can
currently be bought and sold on third-party venues that are not operated
by crypto-asset service providers authorised under Regulation (EU)
2023/1114: Hybrix, DEXOMY and PancakeSwap (see A.13, E.38 and I.3).
Terms, fees and access are set by those venues.</p>
<p>Educational rewards are distributions under programme rules, not
purchases under an offer described by this document.</p>
<h3 id="g.11-crypto-assets-transfer-restrictions">G.11 Crypto-assets
transfer restrictions</h3>
<p><strong>Native SMLY</strong></p>
<p>Transfers depend on satisfaction of the relevant spending conditions
and network validation rules. Particular outputs may be subject to
multisignature, maturity or other implemented conditions. Permissionless
network access does not guarantee immediate transferability or
acceptance by a particular service provider.</p>
<p><strong>BNB.SMLY</strong></p>
<p>Transferability depends on the host network.</p>
<p><strong>Legal and service-provider restrictions</strong></p>
<p>Applicable law and provider arrangements may restrict transfers,
deposits or withdrawals independently of the blockchain’s technical
capabilities. Educational-programme eligibility restrictions are
separate from restrictions on transferring the asset itself.</p>
<h3 id="g.12-supply-adjustment-protocols">G.12 Supply adjustment
protocols</h3>
<p>FALSE</p>
<p><strong>Native SMLY</strong></p>
<p>Native SMLY issuance is governed by the blockchain’s consensus rules.
The project describes a maximum supply of 48 billion SMLY and a
declining coinbase schedule with halvings approximately every seven
years. Calendar descriptions of halving intervals are approximate where
activation is determined by block height.</p>
<p>See G.5 for distinction between coinbase (newly minted coins) and
block subsidy (reward to miners for generating a block).</p>
<p>Nodes validate issuance against the rules they enforce. Changes to
those rules require adoption of modified software by relevant network
participants and may result in incompatible chains; the published
schedule is not a contractual guarantee that no alternative rules will
ever be proposed.</p>
<p><strong>BNB.SMLY</strong></p>
<p>BNB.SMLY has a separate token-contract supply. One billion BNB.SMLY
tokens are associated with one billion native SMLY in reserve. This
supply is fixed at 1,000,000,000 BNB.SMLY. The contract cannot mint
further tokens.</p>
<h3 id="g.13-supply-adjustment-mechanisms">G.13 Supply adjustment
mechanisms</h3>
<p><strong>Native SMLY</strong></p>
<p>The described issuance schedule is not adjusted in response to market
price or demand. Similarly, protocol-directed allocation of the coinbase
changes its distribution among recipients, not the total quantity
permitted to be generated for that block.</p>
<p>See G.5 for distinction between coinbase (newly minted coins) and
block subsidy (reward to miners for generating a block).</p>
<p>Sales, educational distributions and transfers from existing holdings
do not create additional native SMLY. Loss of private keys may reduce
the quantity practically accessible to holders without reducing recorded
issued supply.</p>
<p><strong>BNB.SMLY</strong></p>
<p>There is no supply adjustment mechanism in place for BNB.SMLY and no
plan to try to invent one.</p>
<h3 id="g.14-token-value-protection-schemes">G.14 Token value protection
schemes</h3>
<p>FALSE</p>
<p><strong>Native SMLY:</strong> No scheme identified that guarantees a
minimum price or protects against market loss.</p>
<p><strong>BNB.SMLY:</strong> As of 11 October 2026 a simple swap market
exists for swapping BNB.SMLY and native SMLY at a 1:1 exchange rate. The
existence of a SMLY reserve further implies that it is
<strong>technically possible</strong> to swap all existing BNB.SMLY for
SMLY in this manner, should such a need arise. This, however,
<strong>only links</strong> the price of BNB.SMLY to SMLY and does not
protect the real value of BNB.SMLY <em>per se</em>. <strong>A formal
mechanism has not been set up for implementing such a process, nor have
the criteria justifying such recall been defined.</strong></p>
<h3 id="g.15-token-value-protection-schemes-description">G.15 Token
value protection schemes description</h3>
<p>SmileyCharity’s educational expenditure, participating-store
reference valuations, SmileyInvest’s market purchases and proposed
advertising-funded purchases do not establish a guaranteed price floor
or an obligation to purchase SMLY from holders.</p>
<p>The reported BNB.SMLY reserve is denominated in native SMLY, whose
value may fluctuate or fall to zero. Even complete backing in native
SMLY would not protect against a decline in native SMLY’s market value.
Conversion availability and enforceability are separate matters
addressed in G.1–G.2.</p>
<p>No guarantee of equal secondary-market prices between the
representations is provided.</p>
<h3 id="g.16-compensation-schemes">G.16 Compensation schemes</h3>
<p>FALSE</p>
<h3 id="g.17-compensation-schemes-description">G.17 Compensation schemes
description</h3>
<p>No dedicated scheme compensating holders for market losses, lost
keys, network failures or reserve shortfalls is identified in this white
paper.</p>
<p>As stated in General information subsection 06, the crypto-assets are
not covered by the investor compensation or deposit guarantee schemes
specified there. This does not exclude claims that may arise against a
responsible person under applicable law.</p>
<p>Educational reimbursement arrangements are not holder compensation
schemes. Any insurance held by a service provider should not be
described as holder protection without verifying its beneficiaries,
covered events, limits and exclusions.</p>
<h3 id="g.18-applicable-law">G.18 Applicable law</h3>
<p>Native SMLY’s protocol rules do not designate a single governing law
for every holding, transfer or transaction. Applicable law depends on
the relevant facts and legal rules, including the parties, transaction,
property or contractual claim and any valid governing-law agreement.</p>
<p>SmileyCharity is an Icelandic association subject to applicable
Icelandic law. That does not establish Icelandic law as the exclusive
law governing all activity involving either representation.</p>
<p>SmileyCharity holds the reserve in cold storage, nobody else controls
it, and holders have no rights to it.</p>
<p>Nothing in this document excludes mandatory legal protections. See
also E.39.</p>
<h3 id="g.19-competent-court">G.19 Competent court</h3>
<p>Jurisdiction over a dispute depends on the parties, the nature of the
claim, applicable jurisdiction rules and any valid jurisdiction
agreement.</p>
<p>SmileyCharity’s establishment in Iceland may provide a basis for
proceedings before Icelandic courts, subject to applicable rules. This
does not establish exclusive Icelandic jurisdiction for all disputes
involving SMLY or BNB.SMLY.</p>
<p>Claims relating to the educational allocation, custody, conversion or
third-party services require identification of the relevant responsible
persons. The SmileyCoinFund should not be assumed to possess separate
legal personality or the capacity to be sued in its own name.</p>
<p>No statement in this Part restricts mandatory rights to bring
proceedings before another competent court. See also E.40.</p>
<p><strong>References for Part G</strong></p>
<p><strong>[G-1]</strong> Stefansson, G. and Lentin, J. (2017). “From
Smileys to Smileycoins: Using a Cryptocurrency in Education.”
<em>Ledger</em>, 2, 38–54. DOI: 10.5915/LEDGER.2017.103.</p>
<p><strong>[G-2]</strong> Stefansson, G., Jonsdottir, A. H., Gunnarsson,
B. and Lentin, J. (2024). “On-chain Services for Education in Slums and
Refugee Camps.” <em>International Journal of Learning and Teaching</em>,
10(6), 697–702.</p>
<h2 id="part-h-information-on-the-underlying-technology">Part H –
information on the underlying technology</h2>
<h3 id="h.1-distributed-ledger-technology-dtl">H.1 Distributed ledger
technology (DTL)</h3>
<p><strong>Native SmileyCoin blockchain</strong></p>
<p>Native SmileyCoin (SMLY) operates on a public, permissionless
blockchain initially derived from Litecoin source code. Transactions are
propagated between participating nodes and recorded in cryptographically
linked blocks. Full nodes independently check transactions and blocks
against the consensus rules implemented by their software.</p>
<p>Native SMLY uses a transaction-output model in which transactions
spend eligible previous outputs and create new outputs subject to
specified spending conditions. Wallet balances are derived from the
outputs that the wallet can identify and spend.</p>
<p>The project describes a target average interval of three minutes
between blocks and five supported proof-of-work algorithms: SHA256d,
Scrypt, Groestl, Qubit and Skein. The target interval is not a
guaranteed transaction-confirmation time. Consensus operation is
described further in H.4.</p>
<p>Transaction records are publicly inspectable through compatible nodes
and blockchain explorers. Addresses are pseudonymous: transaction
information may be linked to individuals through other information.
Public accessibility does not establish that every explorer is accurate
or continuously available.</p>
<p>SmileyCoin’s development and early educational reward applications
are described by Stefansson and Lentin (2017).[H-1] Subsequent
applications include service registration and payment records supporting
educational programmes, described by Stefansson and colleagues
(2024).[H-2]</p>
<p><strong>BNB.SMLY</strong></p>
<p>BNB.SMLY is a separate token representation at contract address
<code>0xe015f8C012e932F13184061F3ffd956E9000A6CD</code> on the BNB-chain
network identified in D.4. It is not a native output on the SmileyCoin
blockchain.</p>
<p>BNB.SMLY transfers depend on the host network and token contract.
Conversion into native SMLY additionally depends on the reserve and
conversion arrangements. The existence of records on two blockchains
does not, by itself, establish an automatic or trustless connection
between them.</p>
<h3 id="h.2-protocols-and-technical-standards">H.2 Protocols and
technical standards</h3>
<p><strong>Native-network protocols</strong></p>
<p>SmileyCoin uses a peer-to-peer network protocol derived from its
Litecoin code ancestry to exchange transactions, blocks and related
network information. Consensus rules determine which transactions and
blocks are valid. Node relay policies, miner transaction-selection
policies and wallet defaults are separate from consensus validity.</p>
<p>Native transactions specify inputs, outputs and spending conditions.
Digital signatures authorise relevant spending operations; cryptographic
hashes support transaction identification and the linking and
verification of blocks. The supported mining algorithms are listed in
H.1.</p>
<p>Multisignature spending is used for the educational allocation
described in G.5. The applicable signature threshold and responsible
signatories belong to that allocation’s control arrangements; they are
not a governance mechanism for the entire blockchain.</p>
<p><strong>Application data</strong></p>
<p>The project describes the use of transaction data outputs, including
OP_RETURN, for application messages. Compatible application software
interprets those messages for functions such as service discovery and
coupon-related communication.</p>
<p>OP_RETURN does not itself encrypt information or execute a
general-purpose application. Where a message is encrypted, encryption
and decryption occur through the relevant application’s cryptographic
implementation. Network validation of a transaction does not establish
that an application message is accurate or that a related off-chain
service has been performed.</p>
<p><strong>BNB.SMLY</strong></p>
<p>BNB.SMLY’s technical interface and supported operations are
determined by its deployed contract and host network: BEP-20 (ERC-20
compatible), 18 decimals, fixed supply, no mint/burn/pause/blacklist
functions.</p>
<p>A shared ticker or compatible wallet interface does not make native
SMLY and BNB.SMLY interchangeable at the transaction-protocol level.</p>
<h3 id="h.3-technology-used">H.3 Technology used</h3>
<p><strong>Native-network infrastructure</strong></p>
<p>Native SMLY depends on node software that stores and validates ledger
information, mining software and hardware that produce candidate blocks,
and wallets that construct and authorise transactions.</p>
<p>Mining and full-node validation are distinct functions. A participant
can validate ledger information without mining. The computational
resources required for competitive mining are also distinct from those
needed to operate a wallet or non-mining node.</p>
<p><strong>Wallets and key management</strong></p>
<p>Self-custody wallets require secure key generation, storage and
backup using the recovery method supported by the particular wallet. Not
every wallet necessarily uses a mnemonic recovery phrase. A custodial
account instead depends on the provider’s key management and account
records.</p>
<p>The Fund’s multisignature arrangement and the reported cold storage
of native SMLY backing BNB.SMLY are separate custody arrangements. “Cold
storage” describes aspects of key handling; it does not, by itself,
establish effective recovery procedures, independent control or legal
segregation.</p>
<p><strong>Educational applications</strong></p>
<p>SmileyTutor reward administration, participating-store interfaces and
coupon services combine blockchain transactions with application
software and off-chain operations. Blockchain records can support
payment verification and reconciliation, but learning assessment,
eligibility decisions, goods delivery and charitable reimbursement are
not performed by blockchain consensus.</p>
<p>The on-chain service applications described by Stefansson and
colleagues (2024) illustrate this division between ledger functionality
and educational service delivery.[H-2]</p>
<p><strong>BNB.SMLY and external infrastructure</strong></p>
<p>BNB.SMLY additionally depends on its host-network (**BNB Smart
Chain*) clients, token contract and compatible wallets. Conversion
services introduce further software, operational and custody
dependencies. Failure of an interface or conversion service may prevent
access to that service even while one or both underlying blockchains
remain operational.</p>
<h3 id="h.4-consensus-mechanism">H.4 Consensus mechanism</h3>
<p><strong>Native SMLY: multi-algorithm proof of work</strong></p>
<p>Native SmileyCoin uses proof of work with the supported algorithms
listed in H.1. Miners construct candidate blocks and search for a proof
satisfying the applicable algorithm-specific difficulty target.</p>
<p>Receiving full nodes verify the proof and the remaining consensus
conditions, including transaction validity and permitted issuance and
allocation. A valid proof of work alone does not make an otherwise
invalid block acceptable.</p>
<p>Difficulty adjustment is intended to regulate block production around
the stated three-minute average target. Actual intervals vary with
mining participation and network conditions.</p>
<p>Competing valid branches are evaluated using the chain-selection
rules implemented by SmileyCoin nodes. S.4 describes selection by
accumulated proof of work.</p>
<p>Native transaction finality is probabilistic. Additional
confirmations generally increase confidence that a transaction will
remain in the accepted history, but reorganisations remain possible. The
appropriate confirmation policy depends on transaction value, network
conditions and the recipient’s risk assessment.</p>
<p>Supporting multiple mining algorithms does not guarantee independent
miners, evenly distributed mining power or immunity to attacks. Security
depends on the implemented rules, participating hash power, its
distribution and the integrity of software and network
communications.</p>
<p><strong>BNB.SMLY</strong></p>
<p>BNB.SMLY does not use native SmileyCoin mining to validate its token
transfers. Their ordering, execution and finality depend on the host
blockchain’s consensus rules. Host-chain confirmation does not verify
the native reserve balance or ensure completion of conversion into
native SMLY.</p>
<h3 id="h.5-incentive-mechanisms-and-applicable-fees">H.5 Incentive
mechanisms and applicable fees</h3>
<p><strong>Coinbase</strong></p>
<p>The <strong>coinbase</strong> is defined as the “the number of coins
that are generated from scratch and (usually) awarded to miners for
mining every new block” (taken from
https://coinmarketcap.com/academy/glossary/coinbase on October 9, 2026).
The coinbase is sometimes also referred to as a <strong>block
subsidy</strong> but this terminology is inappropriate for SmileyCoin.
For SmileyCoin, the coinbase is <strong>not</strong> all awarded to
miners.</p>
<p>See G.5 for the detailed distinction between coinbase (newly minted
coins) and block subsidy (reward to miners for generating a block).</p>
<p>Native SMLY is generated through the coinbase permitted by the
consensus rules. As described in G.5, the allocation arrangement
introduced in 2017 distributes the coinbase as follows:</p>
<ul>
<li>10% to the miner, as the reward for generating the block;</li>
<li>45% to designated SmileyCharity income-stream addresses;</li>
<li>45% to qualifying native holder addresses.</li>
</ul>
<p>The detailed recipient-selection and eligibility rules are described
in G.5. The holder allocation is not a 45% return on an individual
balance. Receiving a holder allocation does not confer block-production
or consensus-voting authority and should not be described as
proof-of-stake validation.</p>
<p>The miner’s share of the coinbase and applicable transaction fees
provide incentives for mining. Allocations to SmileyCharity and
qualifying holders are distinct from miner remuneration. None guarantees
continued mining participation or a particular level of network
security.</p>
<p>G.12 describes a declining coinbase schedule with halvings
approximately every seven years. The operative block-height rules,
rather than calendar estimates, determine the coinbase generation at a
particular block.</p>
<p>See G.5 for distinction between coinbase (newly minted coins) and
block subsidy (reward to miners for generating a block).</p>
<p><strong>Native transaction fees</strong></p>
<p>Native transaction fees are denominated in SMLY. For ordinary
transactions, the fee is the difference between the value of the inputs
spent and the outputs created. S.5 describes fees as paid to miners in
addition to their share of the coinbase.</p>
<p>The fee needed for relay and inclusion depends on applicable
policies, transaction characteristics and network conditions. Wallet
defaults and service-provider charges should not be confused with
consensus rules. Paying a higher fee does not guarantee confirmation
within a specified time.</p>
<p><strong>BNB.SMLY fees and incentives</strong></p>
<p>BNB.SMLY transfers incur host-network execution fees, normally
payable in BNB. These are distinct from native SMLY transaction fees and
from any conversion or trading-service charges.</p>
<p>Native SmileyCoin’s coinbase generation (newly minted coins) do not
automatically migrate in any way to BNB.SMLY holders.</p>
<p>The native SMLY reserve address qualifies for holder allocations as
it holds over 25 M SMLY; reserve address allocations received above
1,000 M SMLY are held in the reserve address.</p>
<h3 id="h.6-use-of-distributed-ledger-technology">H.6 Use of distributed
ledger technology</h3>
<h3 id="h.6-use-of-distributed-ledger-technology-1">H.6 Use of
distributed ledger technology</h3>
<p>FALSE</p>
<p>Neither the native SmileyCoin blockchain nor the BNB Smart Chain is
operated by SmileyCharity or by a third party acting on its behalf.</p>
<p>The native SmileyCoin blockchain was launched in 2014, before
SmileyCharity was established. It is a public, permissionless network
maintained by independent miners and node operators, and no single party
controls it. Developing software, using a blockchain and operating a
blockchain are separate activities. Between 1 January and 30 June 2026,
mining hosts operated by SmileyCharity produced 5,793 of approximately
86,880 blocks (about 6.7 %). Assuming an equal split of blocks across
the five algorithms, the share per algorithm ranged from about 0.6 %
(sha256d) to about 10.6 % (qubit); see S.8–S.9. This share is not enough
to control block production or consensus. Its purpose is to keep blocks
being produced if outside mining interest falls. The same measurements
are used in Part J to set an upper bound on the network’s energy
consumption.</p>
<p>BNB.SMLY is a token on the BNB Smart Chain, a third-party public
blockchain that SmileyCharity does not operate. The token was created as
one output of the EduChain research project. Hybrix, a contractor funded
through a research grant administered by the University of Iceland,
deployed the token contract
<code>0xe015f8C012e932F13184061F3ffd956E9000A6CD</code> on 2025-01-23 at
09:08:36 UTC from a standard token-generator template. The University of
Iceland has no ownership, control or ongoing role in the token.</p>
<p>The entire supply of 1,000,000,000 BNB.SMLY was minted once, at
deployment, directly to SmileyCharity’s BNB Smart Chain address
<code>0x15D90F88833FaB7ce8D41727827fEd7FE9F46413</code> (Table H-1). On
the same date, SmileyCharity moved 1,000,000,000 native SMLY to the
reserve address <code>BSWCvqnes2LBafFuB3cNwucQUVkcjt1z88</code>, which
it holds in cold storage. <strong>From SmileyCharity’s perspective, 1
billion native SMLY were set aside and 1 billion BNB.SMLY were created
in their place.</strong> Burning the native SMLY would have been an
alternative. The reserve was chosen instead so that the step can be
reversed.</p>
<p>The token has 18 decimals, and its total supply is fixed at
1,000,000,000 BNB.SMLY (10^27 base units). The contract has no minting
function after deployment and no upgrade mechanism. It cannot burn,
pause transfers, block addresses or charge transfer fees. Its mintable
and burnable flags are both FALSE (verified on BscScan on 2026-10-12).
The contract owner role is held by the deployer address
<code>0xd6b7EA5A3FA066D1a2f4bff166Dedef5aC315677</code>, which Hybrix
controls. This role can only transfer or give up ownership. It carries
no power over balances, supply or contract logic. These facts can be
checked at
https://bscscan.com/address/0xe015f8C012e932F13184061F3ffd956E9000A6CD.</p>
<p>As of 11 October 2026, SMLY and BNB.SMLY can be swapped at a 1:1 rate
through a pool operated by Hybrix, a third party. The reserve exists so
that, if all pools and markets fail, it remains technically possible to
restore native SMLY in place of outstanding BNB.SMLY. Any use of the
reserve would be a decision of SmileyCharity alone. BNB.SMLY holders
have no right to conversion or to the reserve. SmileyCharity does not
operate a conversion service. Before offering any conversion to third
parties, it would assess whether that activity requires authorisation
under Regulation (EU) 2023/1114, and it would carry out such conversion
only through an authorised crypto-asset service provider if
required.</p>
<p><strong>Table H-1: BNB.SMLY minting</strong></p>
<table>
<colgroup>
<col style="width: 50%" />
<col style="width: 50%" />
</colgroup>
<thead>
<tr>
<th>Item</th>
<th>Value</th>
</tr>
</thead>
<tbody>
<tr>
<td>Token contract</td>
<td><code>0xe015f8C012e932F13184061F3ffd956E9000A6CD</code></td>
</tr>
<tr>
<td>Contract creator and owner</td>
<td><code>0xd6b7EA5A3FA066D1a2f4bff166Dedef5aC315677</code>
(Hybrix)</td>
</tr>
<tr>
<td>Minted to (SmileyCharity BSC address)</td>
<td><code>0x15D90F88833FaB7ce8D41727827fEd7FE9F46413</code></td>
</tr>
<tr>
<td>Transaction</td>
<td><code>0x7431a3a9d3a13b6c88c39ef2855368557626f2cabdffde5741e12af57f3db2e9</code></td>
</tr>
<tr>
<td>Amount</td>
<td>1,000,000,000 BNB.SMLY</td>
</tr>
<tr>
<td>Native reserve address</td>
<td><code>BSWCvqnes2LBafFuB3cNwucQUVkcjt1z88</code></td>
</tr>
</tbody>
</table>
<p>See also Part B, G.1 and I.3.</p>
<h3 id="h.7-dlt-functionality-description">H.7 DLT functionality
description</h3>
<p>Not applicable, as H.6 is FALSE.</p>
<p>The native SmileyCoin ledger records transactions and supports
validation of spending conditions, issuance and protocol-directed
allocations.</p>
<h3 id="h.8-audit">H.8 Audit</h3>
<p>FALSE</p>
<p>No documented technology-security audit report has been supplied for
the native SmileyCoin implementation, the deployed BNB.SMLY contract or
the associated conversion system. Audit status therefore remains
unverified for these components.</p>
<p>The research publications cited in this Part describe development and
applications; they are not presented as security audits. SmileyCharity’s
financial-statement audits and the independent programme evaluation
concern different subjects.</p>
<h3 id="h.9-audit-outcome">H.9 Audit outcome</h3>
<p>No verified technology-audit outcome is reported in this version.</p>
<p>Public availability of source code permits inspection but does not
demonstrate the scope, independence or results of a completed security
assessment. Reviews of upstream software or host-network components do
not automatically cover SmileyCoin-specific modifications, BNB.SMLY’s
deployed contract or its reserve and conversion arrangements.</p>
<p>Any subsequently identified audit should be reported with its
auditor, date, scope, software version or contract address, principal
findings, unresolved issues and remediation status. An audit does not
guarantee the absence of vulnerabilities.</p>
<p><strong>References for Part H</strong></p>
<p><strong>[H-1]</strong> Stefansson, G. and Lentin, J. (2017). “From
Smileys to Smileycoins: Using a Cryptocurrency in Education.”
<em>Ledger</em>, 2, 38–54. DOI: 10.5915/LEDGER.2017.103.</p>
<p><strong>[H-2]</strong> Stefansson, G., Jonsdottir, A. H., Gunnarsson,
B. and Lentin, J. (2024). “On-chain Services for Education in Slums and
Refugee Camps.” <em>International Journal of Learning and Teaching</em>,
10(6), 697–702.</p>
<h2 id="part-i-information-on-risks">Part I – Information on risks</h2>
<h3 id="i.1-offer-related-risks">I.1 Offer-related risks</h3>
<p>This document is published for information. It has not been notified
to any competent authority and does not constitute a public offer, a
solicitation to purchase financial instruments or an application for
admission to trading.</p>
<p>Prospective holders should be aware that the information presented
does not constitute investment advice or a guarantee of future
performance. There is a risk that readers may incorrectly interpret this
white paper as a prospectus or as a regulatory approval of SmileyCoin’s
investment potential.</p>
<h3 id="i.2-issuer-and-preparer-risks">I.2 Issuer and preparer
risks</h3>
<p><strong>Charitable Dependency</strong></p>
<p>SmileyCharity’s operations and the resources available to support the
SmileyProject are primarily dependent on grants, donations, and
protocol-directed allocations. Its financial sustainability is not
guaranteed. A reduction in funding or a failure to secure future grants
may adversely impact the charity’s ability to maintain the educational
programmes described in this white paper, which in turn could impact the
demand for, and utility of, SMLY.</p>
<p><strong>Governance and Conflict of Interest</strong></p>
<p>The governance of SmileyCoin is distinct from the charitable
operations of SmileyCharity. Potential conflicts of interest, as
disclosed in Part E, arise from SmileyCharity’s holdings of SMLY, its
receipt of protocol-directed allocations, and the separate roles of
related entities such as SmileyInvest and the SmileyTutor NGO. These
governance structures and shared philanthropic goals do not eliminate
the risk that actions taken by these entities may not align with the
expectations of individual SMLY holders.</p>
<p><strong>Key-person dependency.</strong> The independent evaluation
(Nielsen et al., 2024) found that the project depends heavily on a small
number of volunteer founders and lacks a governance structure able to
function independently of them. It rated sustainability Adequate to
Satisfactory. Loss of these individuals could disrupt operations,
software maintenance and Fund administration.</p>
<h3 id="i.3-crypto-asset-related-risks">I.3 Crypto-asset-related
risks</h3>
<p><strong>Volatility and Liquidity</strong></p>
<p>As with any crypto-asset, the value of SMLY and BNB.SMLY is subject
to significant market volatility. There is no guarantee of liquidity or
an active secondary market. Market price fluctuations may be influenced
by speculative trading, external market conditions, and changes in the
perception of the project’s charitable goals, independent of the actual
operation of the educational programmes.</p>
<p>Historical trading volume before 2020 may include transactions
between project-controlled accounts (see E.38).</p>
<p><strong>Listing risk</strong></p>
<p>SMLY is not admitted to trading on any platform operated by an
authorised crypto-asset service provider, and no such platform may
decide to admit it.</p>
<p><strong>Representation and swap and reserve arrangements
(BNB.SMLY)</strong></p>
<p>BNB.SMLY is a token on the BNB Smart Chain. It corresponds to
1,000,000,000 native SMLY that SmileyCharity holds in cold storage at
address <code>BSWCvqnes2LBafFuB3cNwucQUVkcjt1z88</code>. This structure
creates risks that native SMLY does not have. These include outages or
failures of the BNB Smart Chain, loss or compromise of the keys to the
native reserve, and closure or failure of the third-party swap pool and
liquidity pools. Holders depend on SmileyCharity’s decisions about the
reserve. No bridge or automatic link exists between the two blockchains.
BNB.SMLY and native SMLY may trade at different prices, and BNB.SMLY is
not equivalent to native SMLY in every legal and technical respect.</p>
<p><strong>BNB.SMLY contract owner</strong></p>
<p>Contract owner role held by a third party. The BNB.SMLY owner role is
held by Hybrix, not SmileyCharity. It gives no power over supply or
transfers. However, Hybrix could transfer it to another party, and
SmileyCharity cannot control that.</p>
<p><strong>BNB.SMLY back-swap risk</strong></p>
<p>The Hybrix pool may close, using the reserve needs action by
SmileyCharity, and holders have no formal right to it.</p>
<p><strong>Liquidity provision risk.</strong></p>
<p>Trading depth in SMLY and BNB.SMLY partly depends on liquidity
occasionally provided by SmileyCharity and Smiley Invest ehf. (see
E.38). That liquidity may be reduced or withdrawn, and SmileyCharity has
no obligation to keep it in place. The venues are not authorised under
Regulation (EU) 2023/1114, so investors lack the protections that
regulated trading platforms provide.</p>
<h3 id="i.4-project-implementation-related-risks">I.4 Project
implementation-related risks</h3>
<p><strong>Dependency on External Partners</strong></p>
<p>The SmileyProject relies on collaborating with universities, schools,
and community libraries in diverse regions. Disruptions to these
partnerships, technical or infrastructure failures in local
implementations, or political/economic instability in the areas of
operation could limit the documented educational utility of SMLY.</p>
<p><strong>Sustainability of Pilot Initiatives</strong></p>
<p>Initiatives such as SmileyKuku and SmileyTrees are pilot projects
designed to test sustainability models. They have not demonstrated
financial self-sufficiency. There is a risk that these or similar
initiatives may fail to yield the expected results, and the project may
continue to depend on charitable reimbursement.</p>
<p><strong>Reward-Gaming and Participant Behaviour</strong></p>
<p>Because SMLY is distributed in response to performance in an open,
freely accessible learning environment, the reward mechanism is exposed
to behaviour that the educational system was not primarily designed to
resist. Peer-reviewed studies of the platform show that students work
towards a high internal grade and that their decision to stop or
continue is strongly driven by the grading scheme; in a large calculus
course, the probability of stopping rose sharply once a top grade was
reached, and the choice of grading window materially altered behaviour
[I-1].</p>
<p>A separate analysis of the same platform found that students who
answer quickly and incorrectly, consistent with guessing, show the least
improvement between a status exam and a final exam, and that improvement
is a non-linear function of both the number of items attempted and the
time spent per item [I-2].</p>
<p>Once a crypto-asset reward was attached to the grade, the platform
experienced repeated attempts by non-students using many registrations
to extract SMLY by answering easy items; these were addressed by
separating reward parameters for class-registered students from those
for self-registered users and by other measures described in the
literature [I-3].</p>
<p>The risk remains that reward parameters set to encourage genuine
study may be exploited, that countermeasures may reduce rewards for
legitimate students, and that the quantity of SMLY entering circulation
through rewards may differ from the amounts intended by the
SmileyCoinFund’s allocation. None of these studies measures the effect
of reward value in fiat terms, and no inference should be drawn about
the market behaviour of holders from the study behaviour of
students.</p>
<h3 id="i.5-technology-related-risks">I.5 Technology-related risks</h3>
<p><strong>Multi-algorithm PoW and Security</strong></p>
<p>The native SmileyCoin blockchain employs a multi-algorithm
proof-of-work consensus. While intended to provide security, the
reliance on five separate algorithms requires that each maintains a
sufficient hash rate. A failure or vulnerability in any one of these
algorithms could potentially impact the network’s security or ledger
consistency.</p>
<p>As noted in H.6 and S.9, SmileyCharity operates a handful of miners
for security reasons. These are also used to estimate the total energy
consumed by the network.</p>
<p><strong>Security Audit Status</strong></p>
<p>As disclosed in Part H, no third-party technology-security audit has
been supplied for the native SmileyCoin implementation, the BNB.SMLY
contract, or the reserve conversion arrangements. Prospective holders
must understand that the absence of a documented audit leaves unverified
potential vulnerabilities.</p>
<h3 id="i.6-mitigation-measures">I.6 Mitigation measures</h3>
<p>To manage these risks, the project prioritises the following: *
<strong>Transparent Disclosure:</strong> Clearly separating the
philanthropic purpose of the SmileyProject from the technical operation
of the blockchain, as documented in this white paper. * <strong>Reserve
Custody:</strong> The native SMLY intended to back BNB.SMLY is held in
cold storage arrangements, with the intent of facilitating off-market
conversion, though this is not a guarantee of instant redemption. *
<strong>Research-Based Development:</strong> Technical developments and
educational applications are developed in alignment with the
peer-reviewed research cited throughout this white paper. *
<strong>Ongoing Evaluation:</strong> Independent programme evaluations,
such as the 2024 Ministry of Foreign Affairs commission, are used to
identify and address governance and sustainability weaknesses.</p>
<p><strong>References for Part I</strong></p>
<p><strong>[I-1]</strong> Jonsdottir, A. H., Jakobsdottir, A. and
Stefansson, G. (2015). “Development and use of an adaptive learning
environment to research on-line study behaviour.” <em>Educational
Technology &amp; Society</em>, 18(1), 132–144.</p>
<p><strong>[I-2]</strong> Stefansson, G. and Jonsdottir, A. H. (2015).
“Design and analysis of experiments linking on-line drilling methods to
improvements in knowledge.” <em>Journal of Statistical Science and
Application</em>, 3(5–6), 63–73. DOI:
10.17265/2328-224X/2015.56.001.</p>
<p><strong>[I-3]</strong> Stefansson, G. and Lentin, J. (2017). “From
Smileys to Smileycoins: Using a Cryptocurrency in Education.”
<em>Ledger</em>, 2, 38–54. DOI: 10.5915/LEDGER.2017.103.</p>
<h1
id="part-j-information-on-the-sustainability-indicators-in-relation-to-adverse-impact-on-the-climate-and-other-environment-related-adverse-impacts">Part
J – Information on the sustainability indicators in relation to adverse
impact on the climate and other environment-related adverse impacts</h1>
<p>This Part is provided in accordance with Article 6(1), point (j) and
Article 6(10) of Regulation (EU) 2023/1114 (MiCA) and Commission
Delegated Regulation (EU) 2025/422. Fields S.1 to S.9 are mandatory.
Because the annualised energy consumption disclosed in S.8 is below the
500,000 kWh/year threshold, fields S.10 to S.16 are not mandatory; they
are nevertheless disclosed voluntarily for completeness.</p>
<table>
<colgroup>
<col style="width: 41%" />
<col style="width: 58%" />
</colgroup>
<thead>
<tr>
<th style="text-align: left;">Field</th>
<th style="text-align: left;">Content</th>
</tr>
</thead>
<tbody>
<tr>
<td style="text-align: left;">S.1 Name</td>
<td style="text-align: left;">SmileyCharity</td>
</tr>
<tr>
<td style="text-align: left;">S.2 Relevant legal entity identifier</td>
<td style="text-align: left;">636700LQMUJ4E4WR0417</td>
</tr>
<tr>
<td style="text-align: left;">S.3 Name of the crypto-asset</td>
<td style="text-align: left;">SmileyCoin (SMLY)</td>
</tr>
<tr>
<td style="text-align: left;">S.4 Consensus mechanism</td>
<td style="text-align: left;">Proof-of-work. SmileyCoin uses a
multi-algorithm proof-of-work consensus in which blocks may be mined
with any one of five hashing algorithms: SHA256d, Scrypt, Groestl, Skein
and Qubit [J-1]. Each algorithm has an independent difficulty adjustment
so that no single algorithm dominates block production. The target block
interval is 3 minutes, giving an average of approximately 480 blocks per
day. Block validity is determined by the longest valid chain under the
standard Nakamoto consensus rules inherited from the Bitcoin/Litecoin
code base. No staking, delegation or validator set exists. SmileyCoin is
also represented as BNB.SMLY on the BNB Smart Chain; the consensus
mechanism of that chain (Proof of Staked Authority) is operated by third
parties and is outside the scope of this Part.</td>
</tr>
<tr>
<td style="text-align: left;">S.5 Incentive mechanisms and applicable
fees</td>
<td style="text-align: left;">Miners are incentivised through the
coinbase transaction of each block. The coinbase (newly minted coins) is
5,000 SMLY per block (subject to the halving schedule described in Part
G) and is divided by protocol rule into three outputs: 10 % to the miner
of the block, 45 % to the SmileyCharity and 45 % to qualifying holder
addresses (see G.5)[J-1]. Transaction fees included in a block are paid
to the miner of that block. Fees are set by the transaction sender and
are not fixed by the protocol; there is no minimum fee enforced at the
consensus level beyond the standard relay policy of the reference
client.</td>
</tr>
<tr>
<td style="text-align: left;">S.6 Beginning of the period to which the
disclosure relates</td>
<td style="text-align: left;">2026-01-01</td>
</tr>
<tr>
<td style="text-align: left;">S.7 End of the period to which the
disclosure relates</td>
<td style="text-align: left;">2026-06-30</td>
</tr>
<tr>
<td style="text-align: left;">S.8 Energy consumption (kWh/year)</td>
<td style="text-align: left;">≤ 257,000 kWh/year (network upper bound),
based on project mining measurements annualised at 4,600 kWh/year.
Measured period consumption (1 January – 30 June 2026): 2,300 kWh; see
S.9.</td>
</tr>
<tr>
<td style="text-align: left;">S.9 Energy consumption sources and
methodologies</td>
<td style="text-align: left;"><strong>Scope of the figure.</strong> The
figure covers all mining infrastructure owned and operated by the
project: five Dell OptiPlex 5050 Micro hosts (Intel Core i5-7500T, 4
cores each) located in Iceland and ten mining containers on five hosts.
The project does not operate any other mining hardware.
<strong>Method.</strong> A conservative upper-bound method was applied
in preference to sampled measurement. (1) Each host’s power draw is set
equal to the rated output of its 90 W external power adapter, i.e. the
maximum the hardware can draw, regardless of actual load. (2) An AC/DC
conversion efficiency of 85 % is assumed, giving a wall-side ceiling of
90 W ÷ 0.85 = 105.9 W per host. (3) All five hosts are assumed to
operate continuously for the full period: 181 days × 24 h = 4,344 h. (4)
100 % of host energy is attributed to mining; no deduction is made for
idle time, operating-system overhead or non-mining containers co-located
on two of the hosts. Period consumption: 5 × 105.9 W × 4,344 h = 2,300
kWh. Annualised: 2,300 kWh × 2 = 4,600 kWh/year. <strong>Block
count.</strong> During the period the ten project-operated containers
produced 5,793 blocks (verified against the SmileyCoin ledger via
smileycoin-cli on 10 October 2026). <strong>Network-wide upper
bound.</strong> SmileyCoin adjusts difficulty separately for each of its
five algorithms, so a miner’s share of an algorithm’s blocks equals its
share of that algorithm’s hashrate. Project hosts (Intel Core i5-7500T
CPUs) are among the least energy-efficient hardware per hash; any GPU or
ASIC miner uses less energy per hash. Network energy for each algorithm
is therefore bounded by project energy on that algorithm divided by the
project’s share of that algorithm’s blocks. Project energy was split
equally between the containers on each host, and each algorithm was
assumed to produce one fifth of the approximately 86,880 blocks in the
period. The bound is 128,700 kWh for the period (about 257,000
kWh/year), of which about 107,600 kWh comes from sha256d, where the
project produced only 99 blocks. Actual consumption is expected to be
far lower. Figures are not derived from other networks’ published
estimates.</td>
</tr>
<tr>
<td style="text-align: left;">S.10 Renewable energy consumption (%)</td>
<td style="text-align: left;">Project-operated hosts only: 100 %. All
five project-operated mining hosts draw electricity from the Icelandic
national grid, which is supplied from hydroelectric and geothermal
generation. Source: Orkustofnun (National Energy Authority of Iceland),
electricity generation statistics for 2025.</td>
</tr>
<tr>
<td style="text-align: left;">S.11 Energy intensity (kWh per
transaction)</td>
<td style="text-align: left;">Project-operated hosts only: 0.397 kWh per
block (397 Wh/block), calculated as 2,300 kWh ÷ 5,793 blocks. Each block
contains at least one transaction (the coinbase transaction); the
per-block figure is therefore an upper bound on energy per transaction
for blocks produced by project-operated hosts.</td>
</tr>
<tr>
<td style="text-align: left;">S.12 Scope 1 DLT GHG emissions –
Controlled (tCO2e/year)</td>
<td style="text-align: left;">Project-operated hosts only: 0 tCO2e/year.
The project’s mining hosts involve no on-site combustion.</td>
</tr>
<tr>
<td style="text-align: left;">S.13 Scope 2 DLT GHG emissions – Purchased
(tCO2e/year)</td>
<td style="text-align: left;">Project-operated hosts only: 0.0506
tCO2e/year (50.6 kg CO2e/year annualised; 25.3 kg CO2e for 1 January–30
June 2026), from grid electricity purchased for project-operated mining
hosts.</td>
</tr>
<tr>
<td style="text-align: left;">S.14 GHG intensity (kgCO2e per
transaction)</td>
<td style="text-align: left;">Project-operated hosts only: 0.00437
kgCO2e per block (4.37 g CO2e/block), calculated as 25.3 kg CO2e ÷ 5,793
blocks. As with S.11, this is an upper bound per transaction.</td>
</tr>
<tr>
<td style="text-align: left;">S.15 Key energy sources and
methodologies</td>
<td style="text-align: left;">Energy source: Icelandic national grid
(hydroelectric and geothermal). Methodology: rated-adapter upper bound
(90 W per host), 85 % conversion efficiency, 100 % uptime, 100 %
attribution to mining, five hosts, as set out in S.9. No on-site
generation, battery storage or energy purchase agreements are used. This
<strong>only holds for Icelandic hosts.</strong> The Icelandic grid
factor and renewable share can’t be applied to outside miners, whose
locations are unknown.</td>
</tr>
<tr>
<td style="text-align: left;">S.16 Key GHG sources and
methodologies</td>
<td style="text-align: left;">Emission factor applied: 11 g CO2e/kWh,
the location-based emission factor for electricity supplied by the
Icelandic national grid, as reported by the Environment Agency of
Iceland (Umhverfisstofnun) in the National Inventory Report 2025
(covering data up to 2023). Calculation: 2,300 kWh × 0.011 kg CO2e/kWh =
25.3 kg CO2e for the period; annualised × 2 = 50.6 kg CO2e/year. No
embodied (life-cycle) emissions of hardware, cooling, network equipment
or e-waste are included. Location-based method; no market-based
instruments (guarantees of origin, offsets) are claimed.</td>
</tr>
</tbody>
</table>
<h2 id="summary-table-1">Summary table 1</h2>
<p>Data from the project-operated miners include the first two data
columns in the following table. Those data were then used to estimate
(bound) the network energy expenditure.</p>
<table>
<colgroup>
<col style="width: 20%" />
<col style="width: 20%" />
<col style="width: 20%" />
<col style="width: 20%" />
<col style="width: 20%" />
</colgroup>
<thead>
<tr>
<th style="text-align: left;">Algorithm</th>
<th style="text-align: right;">Our energy (kWh)</th>
<th style="text-align: right;">Our blocks</th>
<th style="text-align: right;">Our share</th>
<th style="text-align: right;">Upper bound for network (kWh,
Jan–Jun)</th>
</tr>
</thead>
<tbody>
<tr>
<td style="text-align: left;">qubit</td>
<td style="text-align: right;">460</td>
<td style="text-align: right;">1,844</td>
<td style="text-align: right;">10.6 %</td>
<td style="text-align: right;">4,330</td>
</tr>
<tr>
<td style="text-align: left;">groestl</td>
<td style="text-align: right;">383</td>
<td style="text-align: right;">1,406</td>
<td style="text-align: right;">8.1 %</td>
<td style="text-align: right;">4,740</td>
</tr>
<tr>
<td style="text-align: left;">scrypt</td>
<td style="text-align: right;">460</td>
<td style="text-align: right;">1,234</td>
<td style="text-align: right;">7.1 %</td>
<td style="text-align: right;">6,480</td>
</tr>
<tr>
<td style="text-align: left;">skein</td>
<td style="text-align: right;">383</td>
<td style="text-align: right;">1,210</td>
<td style="text-align: right;">7.0 %</td>
<td style="text-align: right;">5,500</td>
</tr>
<tr>
<td style="text-align: left;">sha256d</td>
<td style="text-align: right;">613</td>
<td style="text-align: right;">99</td>
<td style="text-align: right;">0.57 %</td>
<td style="text-align: right;">107,600</td>
</tr>
<tr>
<td style="text-align: left;"><strong>Total</strong></td>
<td style="text-align: right;"><strong>2,300</strong></td>
<td style="text-align: right;"><strong>5,793</strong></td>
<td style="text-align: right;"></td>
<td style="text-align: right;"><strong>≈ 128,700</strong></td>
</tr>
</tbody>
</table>
<p>Note that each algorithm was <strong>assumed</strong> to produce one
fifth of the blocks in the period, as in the protocol’s target.</p>
<p>Note also the very <strong>low local value</strong> (99) for sha256d,
which indicates substantially greater external hash power, leading to a
high difficulty. This is in accordance with the fact that sha256d
equipment is much more common than specialised equipment for other
algorithms.</p>
<h2 id="summary-table-2-project-operated-hosts-onlyxs">Summary table 2,
Project-operated hosts onlyxs</h2>
<div class="line-block">Indicator | Jan–Jun 2026 (measured period) |
Annualised |<br />
:——– | :—————————– | :—-xs—– |<br />
Energy consumption (S.8) | 2,300 kWh | 4,600 kWh |<br />
Blocks mined by project hosts | 5,793 | – |<br />
Energy intensity (S.11) | 397 Wh/block | – |<br />
Scope 1 emissions (S.12) | 0 | 0 |<br />
Scope 2 emissions (S.13) | 25.3 kg CO2e | 50.6 kg CO2e (0.0506 t)
|<br />
GHG intensity (S.14) | 4.37 g CO2e/block | – |<br />
Emission factor applied | 11 g CO2e/kWh | – |</div>
<p><strong>References for Part J</strong></p>
<p>[J-1] Stefansson, G. and Lentin, J. (2017). “From Smileys to
Smileycoins: Using a Cryptocurrency in Education.” <em>Ledger</em>, 2,
38–54. DOI: 10.5915/LEDGER.2017.103.</p>