INTRODUCTION TO PHANTOM BLOCKCHAIN (PhantomChain)
Policy Research No. 1
By Phantom Research Group, contributing member at www.avantgardecollective.org, www.delegaterove.org
I. Value of Phantom (XPH) Tokens
A. What is the Phantomchain (www.phantom.org)?
1. Phantomchain is an advanced decentralized ledger technology (DLT) system with a planned privacy protocol. It is a public blockchain with permissioned-less node. It utilizes a modified Delegated-Proof-of Stake (DPoS) consensus mechanism featuring fifty-one (51) forging delegates.
2. These delegates are responsible for running the public network and are incentivized with block rewards.
3. The community participates in maintaining the security of the Blockchain as a compliment to the cryptographic proof through dynamic on-chain blockchain governance whereby tokenholders are exercising one-vote per wallet address to elect the said 51 delegates and votes are weighed based on the amount of XPH stored in the wallet.
4. Being a public blockchain, Phantomchain is expected to have recordkeeping system that will be immutable, censorship resistant and trustless.
5. A sender that utilizes the Blockchain will be able to transfer one (1) XPH and the receiver would have 1 XPH (less transaction fees) without any intermediary third party to guarantee the said transaction.
6. Tokenholders conducting transactions in a public blockchain such as the Phantomchain are expected to exercise extraordinary diligence at all times being bankers and recordkeepers of their commercial transactions on the Blockchain.
B. What is XPH?
7. XPH is the token that powers the Phantomchain’s decentralized network.
8. XPH complies with a generally accepted definition of a cryptoasset which is a “cryptographically secured digital representation of value that is powered by a form of DLT and can be stored, transferred or traded electronically”\[1\].
9. The XPH has no intrinsic value. The expression "funds are safe on the blockchain" is not the same as having gold bars inside a vault. It simply means that a record is safe from any tampering and censorship. There are no actual funds or fiat backing up the token.
10. There is no central authority that is issuing the tokens. This record cannot be presented to any bank or any treasury or custodian so that a claim for corresponding value can be made.
11. XPH is a means for a tokenholder to access the Blockchain to a) avail current and future services and products and b) participate on safeguarding his/her transactions on the Blockchain.
12. It is a utility token that will grant holders access to a current or prospective products or services but do not grant holders rights on the above-mentioned products or services.
13. As a means of participating on securing transactions, XPH will be used by the community as a governance mechanism device. This token will be used to (1) elect a delegate that will maintain a node that will validate transactions, 2) making sure that the delegate operating a forging node will play under the rules or will not undermine the system.
14. As such, Phantomchain’s operations are not only under the control of the coldness of computers' algorithm that produces cryptographic proofs but with a community influence with the objective of having transactions which are made through efficient, effective and ethical means.
15. These delegates are responsible for running the public network and are incentivized with block rewards in the form of crediting additional XPH to the forging nodes of the delegates.
16. It is only a customary practice that delegates share rewards to its voters/tokenholders. This serves as discount for voters/tokenholders for current and future products or services that may be availed through the Blockchain.
17. There is no contractual obligation between an elected delegate and his/her voters related to the sharing of the forging rewards.
18. This is only a voluntary act on the part of the delegate for the purpose of growing the community through harnessing the benefits of the “network effects” and making the current and future services and products that may be availed through the Blockchain remains cheap and affordable to the tokenholders/voters.
19. XPH does not generate passive income to its holder the same way as deposit-like products earn interest income or shares of stocks regularly receive dividends.
C. What is the value of the XPH token recorded in a blockchain?
20. It can be shown in this illustration:
“There were these two accountants, both recorded a transaction. They exactly presented it the same way.
One accountant signed his name, ABC. The other signed it DEF, CPA.
ABC could be just any other blockchains, which may be considered more secured or fiercely censorship-resistant, however, it may be operating without any ethical considerations.
While DEF,CPA is a DPoS blockchain that follows customary rules guided by universally accepted community values, which could be informally adopted and dynamically constituted.
21. Essentially, these two blockchains are the same. They are both tools, like instruments being used in doing a certain work or producing a certain result, especially such as the ones that require delicacy, accuracy or precision. They are both public blockchains which require extra-ordinary diligence at all times on the part of the tokenholders being bankers and recordkeepers of their own transactions.
22. Which one do people rely with?
The one prepared by DEF. It is not because he is DEF. The reason was he signed it professionally and attesting that he recorded the transaction based on a strict and generally accepted set of rules in accounting. If later on, someone will find out that he is dishonest, his title of CPA could be revoked.”
II. Acquiring Value or Value proposition of the PhantomChain
23.Satoshi Nakamoto, based on his paper on Bitcoin, posits that only “honest nodes” can “validate wealth”\[2\].
24. According to this principle, Phantomchain nodes will create wealth if these stay honest, protect privacy, avoid rent-seeking activities and will play by the rules.
25. This is all forward-looking statements. The supposed wealth recorded on the blockchain does not yet exist, but needs to be earned.
26. It should be based on the future cumulative value i.e. Enterprise Value\[3\], of yet to be performed recording services by honest nodes that will play by the rules.
27. In other words, a token represents the value of the incentive to be received in the future because of the efficient, effective and ethical prospective bookkeeping services.
28. Therefore, the value of the XPH token is largely relies on the continuous exercise of good governance of the tokenholders over their elected delegates, which includes making sure that the forging delegates have the highest composite “ROCE” ratings\[4\].
29. Such that the validity of wealth creation (offering of services) largely depends on the continued operations of honest nodes that will not undermine the system or should not possessed a perception or even a hint of dishonesty.
III. Conclusion
30. It is the Community that will assign XPH's worth.
31. If the Phantomchain is operated within the bounds of the community-wide mandate and prove to be a useful tool in achieving the community visions and missions, the more valuable is the blockchain so is the token that powers it.
IV. Post script:
32. To clarify some ideas, see below:
The Blockchain is immutable, censorship-resistant and trustless. It means that: when a sender transfers 1 XPH through the Blockchain, another will receive 1 XPH. No third party guarantees the recorded transaction. 1 XPH is equal to 1 XPH.
33. On the other hand:
The general acceptability for fairness of the recorded transactions on the Blockchain refers to a transaction that transfer 1 XPH worth 10USD, by the time another person receives 1 XPH, its value remains 10USD.
34. Perception is very important. The validity of the value of the token (wealth) was upheld because, there is a community through a social consensus is attesting to the honesty and fairness of recorded transactions.
35. If tokenholders are giving guidance or giving influence for delegate operating a forging node to stay honest and play by the rules, then, they are being incentivized by a share on the forging rewards which is effectively a discount for current and future products or services.
36. A tokenholder completed a task that is the reason why a reward was shared with him by a delegate. A task of concluding with community of network users (validating their wealth) that the recording of transactions by the top 51 forging delegates were done efficiently, effectively and ethically.
37. Therefore, what the tokenholder receiving is not a passive income. This is an incentive for a dynamic work that entails a constant research on what his/her elected delegate is doing on the Blockchain.
38. It is expected that immediate mitigating measures will be executed by a tokenholder if there is a misbehavior that will affect the safety, soundness and fairness of the operations of the Blockchain.
V. References:
\[1\] www.ucl.ac.uk/laws/sites/laws/files/02\_mckee\_ucl-blockchain.pdf
\[2\] Item 6, Incentive, Bitcoin: A Peer-to-Peer Electronic Cash System
\[3\] What is the Enterprise Value (EV) of a blockchain? By Rove1512,[https://link.medium.com/DuNtOoe5PT
\[4\] Risk Rating System for Decentralized Network Delegates by Rove1512, [https://link.medium.com/QM2hOGA2PT]
