MasterCoin Review and Rating

“MasterCoin” (in 2015 re-named to “Omni”) is the second layer protocol (on top of the Bitcoin), which aims at being the base of users’ own currencies. Basically, MasterCoin utilizes series of payments (some of which are to the fake addresses) to transfer arbitrary data “encoded” into it in the hexadecimal form.

Allegedly, it was the first of its kind (dated back to August 2013) and, now, after we have so many other projects following the same road, it has became more difficult to objectively analyze that “grand-pa” of the growing ICO movement (famously, MasterCoin served as an inspiration for Vitalik when he created Ethereum).

Nonetheless, I’ve decided to assign “MasterCoin” the “Tokenomics”: Sustainability-Value-Engagement-Transactions sub-rating because I still find this paper instructive in a way of how DLT projects might approach their own monetary policies.

Citing: “Alternate block chains compete with bitcoins financially, confuse our message to the world, and dilute our efforts. … New protocol layers on top of the bitcoin protocol will increase bitcoin values … “

This might be very appealing to multiple devoted, long-term BTC hodlers / users as well as to many news-comers joining the network. However, as more and more people keep investing in various “alt-coins” that appeal continues to dissipate. Result: “b-” for “Engagement”.

MasterCoins were created from existing BTC using an exchange rate 1 x 100. Anybody who sent one Bitcoin to the so-called Exodus address received 100 “development” MSC, which were intended as project coders compensation. To finance project’s long-term development for every 10 “Dev MSC” one more MSC was created. The accumulated funds are to be slowly added to Exodus address in the following years. The total number of MSC is fixed. Result: “a” for “Sustainability”.

At the time of its creation one of the most distinguishing features of MasterCoin protocol was that it allows to use bets (essentially, two joined contracts on future rise / drop in a price of MSC relative to other assets) in order to safeguard long-term MSC holdings.

Citing: “It is possible to create tools to allow end users to create currency protocol layers which have a stable value, pegged to an external currency or commodity. In this way, users of these currencies can own stabilized virtual currency tied to U.S. Dollars, Euros, ounces of gold, barrels of oil, etc.”

Today, with the advent of smart contracts and stable-coins that feature looks trivial, but, IMHO, MasterCoin, still, deserves “a-” on the “Value” side of the sub-rating (of course, non of the “pegging” strategies might fully preserve the coin value).

Transaction fees in MasterCoin are calculated as 0.1% — 0.2% of the transaction volume, which is, generally speaking, not a good idea, even, though, those fees are applied only to limited categories of transactions. Most consequentially, however, is that the Bitcoin protocol layer fees are also to be paid by this coin users. Result: “c” for “Transactions”.

“Tokenomics”: Sustainability-Value-Engagement-Transactions sub-rating: aa-b-c

Link: http://www.wanglutech.com/LoadFiles/file_1483947884405_[%E7%99%BD%E7%9A%AE%E4%B9%A6]Mastercoin%20whitepaper[%E8%8B%B1%E6%96%87][PDF%E4%B8%8B%E8%BD%BD].pdf Link: https://github.com/OmniLayer/spec

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