We had a lot of questions asked recently about our token model and the future of EDNA so we took a little time to put together a quick FAQ.
EDNA FAQ
What does EDNA do?
EDNA sells DNA sequencing kits to customers who wish to take proprietary ownership of their DNA Data and store their data securely. In tandem, it has developed a decentralised Data Market Place whereby DNA Data can be sold to third parties. Customers can store and sell their Data to buyers of their choice.
What does this achieve?
This allows legal ownership of personal Data, complete financial control and low friction efficient markets to evolve with the removal of middlemen and third-party beneficiaries.
Why would people want to own their DNA data?
Outside of obvious moral entitlement and future medical benefits, ownership of DNA Data through EDNA bestows a large financial potential benefit through the value placed on Data by researchers currently. EDNA is the only platform that allows this benefit to be accessed by Data owners with other DNA Data companies retaining the financial benefit for themselves.
What is the cost to get my DNA sequenced?
The current retail price of a kit is $1,199 although we project the price to lower considerably over the next 5 years.
Why is it more expensive than other companies?
Since other providers in this field retain the financial benefit, they are able to subsidise the equipment. Our research shows the average income that can be generated on 1 DNA Kit is $50,000.
Why is EDNA giving all this profit away?
The EDNA model is a long-term approach and not a quick win. Our economic belief is that Data Markets will become efficient and that Data ownership should be fairly allocated and valued. Our business model is built on the principles of longevity and scale; not obfuscation and exploitation.
What is the corporate structure of EDNA?
The EDNA intellectual property, sales platform and data marketplace are owned by a private company (hereafter the Company). The Company generates revenue from the sale of DNA sequencing kits and from commissions generated from the Data marketplace.
Why are there EDNA Tokens?
EDNA uses the blockchain to record all transactions and to execute smart contracts that govern payment and release of data. Tokens allow access to blockchain resources and facilitate a fair distribution of costs and benefits throughout the ecosystem.
Are Tokens shares in the Company?
No.
Through the EDNA Token model, Token holders are able to be rewarded by the Company in return for services they may provide. Care has been taken to ensure that the Company’s interests and the Token holders’ interests are aligned over the long term.
What are the EDNA Tokens?
There are three Tokens that are relevant to the system currently.
- Payment Token
This is not a freely transferable token but can only be purchased (created) or sold back to (redeemed with) the Company’s treasury. It is used to record fiat transactions on chain. The Company intends to outsource the treasury role in order to provide security and ring fence collateral that supports the Payment Token since by definition it will always be 100% collateralised. This is a mechanism that facilitates fiat onto and off the blockchain and serves no other purpose. It is mainly automated to reflect payment flows and does not appear primarily in the user experience.
2. A Security or Financing Token
Despite the current potential financial gains available, the current entry price for a DNA Kit is prohibitive for the average person. EDNA has established a financing relationship that will provide a vendor finance option for the Company to offer or allow third party investors to participate in the capital returns available. Our smart contracts calculate capital returns at the transaction level to automate repayments per any financing obligation. These Tokens will not be in the public domain in the short term, but our model creates DNA as an alternative asset class.
3. A Utility Mining Token
This is the main token that facilitates resources and economic rewards in the EDNA Token model on the Data Market.
Can you explain how the Data Market works and how any Tokens are relevant?
Data owners can sell their DNA data to Buyers for an agreed price. The price agreed is in fiat currency most likely US Dollars. They enter into a smart contract whereby the Purchaser delivers payment via the Payment Token and the Seller releases his Data files. Once all the consideration for the transaction has been collected, the smart contract will execute for settlement.
The Data Market charges a commission for the transaction to both sides. The commission consists of a proportion of Fiat Currency and a proportion of Utility Tokens. Specifically, the Buyer of Data delivers the Utility Token element of the commission, and the Seller of Data pays the Fiat Currency component which is deducted from his gross sales price.
How much are the Commissions?
EDNA has built an Economic Model which runs algorithms to assess costs and benefits that need to be attributed to stakeholders of the system. The Model is designed to adjust dynamically with respect to time and respond to the overall state of the Market. The Economic Model is beyond the scope of this document but will be published in time once testing and auditing has completed. Generally speaking, Commissions will be higher at the outset and lower over time as scale and maturity is reached. Like any business, margins across the board will compress and the Economic Model ensures that EDNA and the Data Market is competitive in all conditions. We have predicted that Commissions on the Fiat Commissions will range between 3% and 5% of Gross Sales in the early years and converge to 1% over time.
Where do these Commissions go?
The Company initially receives 55% of the Fiat Payment Commissions. This slides down to 8% over time governed by the Economic Algorithm. The Company also receives 8% of the Utility Token Commissions. The balance of both Commissions is placed in a pool which are available for Mining rewards.
What service are Miners providing to EDNA?
Miners validate the transactions provided for settlement by the Smart Contracts. They compete in a stochastic lottery to win the transaction block round. The winning Miner receives the reward for validation which is the associated share of Commissions. This process is economically similar to Bitcoin Proof of Work Mining.
Who can Mine for these rewards?
Anyone can perform the Mining operation who owns Utility Tokens. The Miners stake their Utility Tokens for the duration of their Mining activity. The amount of Utility Tokens required to be staked is proportionate to the Work that the Miner wishes to undertake.
Do I need to buy Mining hardware?
No. The Mining environment is an application developed by UtilityX and is called Virtual Proof of Work (VPOW) since it sits on top of EOSIO chains. An account with UtilityX is required.
What does Mining Cost? Just Utility Tokens?
The Utility Tokens are not a cost. They are required to be staked for the duration of the Mining. The cost of Work (Hash Power) is actually the blockchain resources to execute EOSIO transactions which is primarily CPU.
How do I buy Hash Power?
The purchase of Hash Power is executed through the UtilityX VPOW application. UtilityX has guaranteed the Hash Power costs through its own reserves to ensure pricing stability for Miners to assess their probabilistic outcomes. They have also agreed to subsidise 100% of the Hash Power costs of Mining for Miners for 2 years in return for Mining Tokens.
Why does EDNA use Mining?
Mining is an efficient way to outsource the cost of blockchain resources through a model that aligns growth and profitability with those servicing the transactions.
What is the Total Mining Reward available to Miners?
- 79.5% of Utility Token Commissions from the Data Market
(2) 32.5% to 79.5% of Fiat Payment Commissions from the Data Market
In addition, there are two more components:
- Commissions from Sales of Sequencer Kits (Fiat Payments).
Since this will be a transaction on the Blockchain. This further aligns the Company to Miners in the event that there were plenty of Sequencer Kits sold, but minimal Data Market transactions.
2. Utility Token inflation and deflation
The Economic Model determines the appropriate inflation levels for the Utility Token based on the system state and parameters.
Why is there inflation?
Inflation is a way to grow the Token system with proportionality to EDNA economic expansion and spread of users. The Economic Model builds inflation on the basis that it is value accretive to existing Utility Tokens and is not simply perpetually inflating as we see on other protocols.
How can there be deflation?
By the same logic, when the economy contracts, a mechanism is in place to take Utility Tokens out of circulation. For example, the Economic Model will increase the Commission Payment in Utility Tokens (the Data Buyers) to allow for the proportion to go into the Mining Rewards as well as a quantity to be removed from circulation.
If I am Mining, can I expect to keep up with inflation?
Since the only way to receive inflation is through Mining Rewards, Miners, on a probabilistic basis, will maintain their inflation-adjusted exposures with respect to the Utility Tokens.
If I do not want to Mine, am I losing value?
Since the Economic Model is designed to be accretive, losing Mining power through any inflation is balanced out. However, UtilityX provides a series of derivatives through its core offering, to allow non-Miners to share in potential Mining Rewards.
So, if there is no-one selling Data but just storing it (Mining is a negligible activity) what happens to the Utility Token?
There is a final use for the Utility Token which is paying for Storage Costs for Data Owners’ DNA files. The costs are calculated within the Economic Model since they relate to the activity on the Data Market and the Sequencer Sales. These storage costs are Utility Tokens taken straight out of circulation. In extremis, with minimal Data Market activity, the Utility Token circulation could decrease dramatically.
Who controls the economic model?
No one. It is a series of coded algorithms with set parameters and actions. From time to time it may need updating or improving which the Company will implement as required with full transparency.
So in regards the Utility Tokens…
Miners stake Utility Tokens and are rewarded with more Utility Tokens for providing the Hash Power; and
Buyers of Data have to buy Utility Tokens and deliver them to Mining Rewards; and
Users storing of Data have to buy Utility Tokens for storage costs which are taken out of Circulation
Is this correct?
Yes, there is theoretically a commercial loop for the Utility Tokens.
Are the current EDNA tokens in issue the ones that will be used?
No. The new tokens will be listed on the WORBLI Blockchain on the UtilityX protocol.
Why are you changing Blockchain?
The WORBLI Blockchain has compliance as a core feature both in its base protocol and as product and process. Our product requires significant compliance in KYC / AML as well as regulated advice which can only be found on WORBLI. The advent of AMLD5 in Europe this year reinforces this decision. Legally, WORBLI is the only Blockchain that EDNA can utilise.
What happens to my old Tokens?
The old Tokens will have the right to convert into new Utility Tokens on a 1:1 basis. A conversion period will be announced and run for a period of 28 days. Tokens not converted will have no further Utility with EDNA.
How many new Tokens will be in issue?
There will be maximum 1.3 Billion New Utility Tokens issued to those that convert. In the event less than 100% conversion is achieved, there will be proportionately less EDNA Tokens.
What is the maximum am0unt of New Utility Tokens that can be issued under inflation?
The issuance is capped at 7 Billion. Under our Economic model, this would take many years to reach under our most optimistic scenarios; for example, if annual turnover reached $50 Billion by year 5, it would take 7 years to reach the cap.
What will I need to do to convert?
You will need a WORBLI account which requires you to provide valid KYC documentation. This account will grant you access to UtilityX, to the Token Mining and other features.
What is UtilityX?
UtilityX is a resource derivatives market launching initially on the WORBLI and EOS blockchains. Its core product allows a resource or utility token to be deconstructed into its component resources and traded as a secondary market.
This facilitates resource users to manage their requirements at known costs, with the ability to rebalance on a dynamic basis. It provides non-users the ability to generate a yield on their tokens as well as optimise the underlying chain resources. It fulfils a role in price discovery for blockchain resources since it links real world capital to blockchain assets through derivative structures both on and off market.
The VPOW model was developed as a full-scale token protocol to sit on the platform and optimise resource access and price discovery whilst bringing efficiency to both multi-chain resources and project tokenomics.
Derivatives planned for EDNA Utility Tokens allow non-Mining holders to sell their Mining rights embedded in the Token.
What is the guarantee on Hash Power?
UtilityX have guaranteed the cost of Hash Power at the WORBLI daily inflation rate for Utility Token Miners for EDNA whilst inflation on WORBLI exists. Furthermore, they have agreed to subsidise the Hash Power cost for 2 years. This means that Utility Tokens mining on EDNA have no Hash Power costs during that period. This is a commercial transaction in that they have received Utility Tokens for their in specie capital contribution.
How and why would they do that?
UtilityX is part of the 0rigin portfolio who, together with their partner EOS TITAN have considerably resources as principal. In addition, they operate a resource management program for other partners which they deploy in various projects that meet their criteria. As regards EDNA, they are also responsible for the overall Economic Model and are significant stakeholders in the project through Utility Tokens and not the Company.
Should I be concerned about the recent resource issues on EOS?
No. The WORBLI resource model does not allocate resources in the same way as EOS. It is much more rational and has no free leeway vulnerability. Miners on UtilityX need not be concerned with network congestion.
Should I worry about the WORBLI token price (WBI)?
No. You are not required to hold any WBI tokens other than the small amount to operate an account. Since the Hash Power is subsidised for the first two years your exposure to WBI is negligible.
In the period after, you are exposed to WBI daily inflation which caps at 5% at 100% Utility. We predict the average will be 3% based on their resource model and by then we anticipate Utility Tokens with rational models will be priced much more fairly on their resource utility and not on volatile speculation.
What If WORBLI disappears?
UtilityX is multi-chain and the VPOW token protocol will transfer resources.
Stay tuned over the next few weeks for more information and developments. We will be announcing information about our token conversion event soon.
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