Aergo Token Repurchase & Circulating Supply Update — March 11 2019
We’ve conducted an OTC repurchase of approximately 26.5 million Aergo tokens and re-allocated them into the Aergo token split. In this article, we outline the *new* token allocation split accounting for these tokens and provide an updated circulating supply figure for end-March 2019.
Dear Aergo stakeholders,
The team is making great progress in finalizing our upcoming mainnet launch. We are also working with advanced partners and future clients that want to become part of our Aergo ecosystem and use the Aergo blockchain platform. As we draw closer to the launch of the mainnet (aka Aergo Chain), we would like to update our community and stakeholders on an important aspect of the project. Specifically, the Aergo token supply model — how the token will soon become a vital component to the security and functionality of a new permissionless blockchain network.
The Aergo token has a non-inflationary total supply of 500,000,000 tokens. Based on a delegated proof-of-stake consensus model, it ensures both the security and robustness of the Aergo public blockchain. Security and robustness are key properties that underpin the Aergo Chain. This aims to empower customers with new ways of extending and leveraging solutions built on blockchain technology; through (i) a new blockchain-based serverless computing environment, (ii) an advanced programming framework, (iii) a hybrid architecture design, finally (iv) whilst being supported by a strong focus on open-source methods and sustainability.
Collectively, these should enable new ways of conceiving cross-organizational communication and collaboration for businesses. We are also providing advanced deployment methods and support via blueprints — that are already in use with many companies today. Our primary focus is to provide real business value — and not merely proof-of-concept demos using blockchain.
While the vision for Aergo is grand and therefore may be risky — it does aim to address a significant potential future market. It is perhaps a unique solution, in that it allows businesses to form new commercial networks by working together as equal peers and can be implemented easily on top of legacy IT and business infrastructures. In fact, it makes the process of connecting disparate legacy systems incredibly simple. As a broad, highly developer-focused, and requirement-driven platform; Aergo is a productive tool for all kinds of stakeholders that are looking to build practical decentralized applications and enterprise-IT solutions. The product solves some of the biggest pain points in businesses wanting to effectively use blockchain today. On top of that, it is being built (and tested) by a leading-edge team with a large existing client base.
Key Focuses and Use of Aergo Token Reserves
With the above in mind, it is important to ensure that Aergo tokens (included in the projects reserves) are allocated towards the correct parties that will help us to build, manage and use the platform. We intend to use these tokens for their intended purpose, and create the network effects needed to push Aergo as a blockchain ecosystem forward.
We have to always seek to maintain a healthy balance. Tokens that were included as part of the original ecosystem reserve, foundation reserve, and long-term incentive splits need to both be allocated — and leveraged — effectively to ensure we are able to incentivize the correct stakeholders to join the network and help us grow the Aergo ecosystem.
To accelerate our efforts in this regard, we conducted a repurchase of ~26.5 million Aergo tokens as part of a repurchase program from Private Token Sale Contributors (more details on how these tokens are being allocated are available in a below section).
We plan to effectively allocate our reserve tokens as described above through the following actions and five major ongoing programs:
- Allocating tokens (through an ecosystem grant model) to telecommunications and hosting providers with enterprise-grade hardware and support to act as block producer candidates as well as provide exceptionally secure and efficient cloud services on the Aergo Chain. These grants will be subject to long-term contractual holding agreements of up to ten years). This is depicted in Figure 3 below. In this program, Aergo tokens will NOT be liquidated, but rather primarily act as a necessary locked-in stake to participate as a block producer candidate in the network. Some of these tokens may also be consumed as fees for various stakeholders to use the network for their specific business benefit. Note: Full details of the Token Model for the Aergo Platform will be detailed closer to the release of Aergo chain (mainnet).
- Attracting, securing, and rewarding key technical and support talent on to the project is critical. We are allocating tokens through our Foundation New Hire and Long-Term Incentive token pool towards incredible value-adding F/OSS experts, managers, and developers to join our developer community growth efforts that we have started to kick off this month. This will also soon include skilled and enterprise-IT focused business development and sales experts to attract entrepreneurs, SMBs, and enterprise companies onto the Aergo platform. These tokens primarily vest over the course of three years, but in some cases are being used as a joining bonus to secure exceptional talent today (and will vest quarterly over 16 months). For example, Aergo has recently recruited ten of the most experienced blockchain and enterprise-IT developers into a new Aergo Technology Committee. This team will promote and help to advance the Aergo technology stack with programmers, dAPP developers and open source communities around the world. Once again, the vesting of this class of tokens is depicted in Figure 3.
- Allocating tokens towards key ecosystem partners who will help the project to become even more relevant and easy-to-use by a broad range of network participants. For example, we recently signed a strategic technology partnership with SatoshiPay (a leading payment provider and expert technical team). We are working with other partners to help incubate and to accelerate new dApps on top of the Aergo Platform. Quantum-secure blockchain is an area we are also investigating. A number of prospective large scale clients have expressed an interest in seeing if Aergo could address this future need.
- We continue to allocate tokens to our community through various reward programs: some of which will be announced very soon.
- Finally, and in order to continually strengthen our Foundation, we are adding extra industry, partnering, financial and technology executives to our advisory committees. This will reduce the amount of tokens being allocated for short term advisory roles — in return for tokens being granted to expert industry advisors who join the foundation longer term.
Aergo tokens are being put to good use to build out the Aergo platform and needed supporting ecosystem. Right now we are accelerating and intensifying our technical and business development efforts and therefore growing our dedicated team of experts. The above programs and associated use of tokens is very dynamic. They also occupy a lot of management time in the Aergo Organization and with its board of directors (that is supported by its highly experienced ecosystem advisory team).
We will share more information as these partnerships and new relationships progress in our next Quarterly Project Update Report in early April.
Upcoming Token Release
To support and in some cases to accelerate the above programs, we have already started the process of releasing more tokens to various stakeholder groups as part of our next token release schedule. This process will be completed within the next two weeks, by 27/03/19.
The majority of this will be the release of tokens to private token sale purchasers who were previously restricted from obtaining their Aergo tokens.
We have fifteen different major classes of Aergo tokens and a grand total of twenty-six individual sub-types of distinct tokens — all with targeted specific vesting schedules. These vesting schedules range from over five quarters for Private Sale contributors right up to ten years for the majority of tokens in our Ecosystem Reserve (for example for Long Term Staking — the largest category of tokens in the project).
In order to provide further transparency to our stakeholders, all tokens are grouped into five major categories. These categories are as follows:
- Private Sale Contributors
- Community Incentives
- Foundation Reserve
- Advisors & Backers
- Foundation New Hire & Long-Term Incentives
26.5M Token Repurchase, New Token Split
We now have a new Aergo token split that takes the 26.5 million tokens we repurchased and reorganizes them into our reserves. As such, we performed a small rebalancing of our Aergo token split accounting for:
- Tokens that were reacquired by the Aergo Organization from Private Sale Contributors by way of a repurchase program. We therefore reduced the amount of tokens in the Private Sale Contributors category by repurchasing approximately 26.5 million Aergo tokens. These transaction happened over-the-counter within the past two weeks. These tokens have been re-assigned.
- Tokens originally allocated towards short-term Advisors & Backers who have become more involved with the project, changing their class of stakeholder tokens.
- An increase in the tokens available for the immediate current and future needs of the project. This is especially true in terms of the available long term tokens that are now available to build out the technology platform and supporting Aergo ecosystem over the coming ten years.
In summary, we re-allocated these tokens to three other categories as follows:
- Increased the tokens available for Community Incentives by ~8 million tokens. This is our largest category and it exists to enable and support the ecosystem necessary for key stakeholders to take full advantage of the Aergo Platform;
- Increased the tokens available for Foundation Reserve by ~7.5 million tokens. These tokens will primarily be used for future technology development, new dApp’s, partners, customer, international business development, and marketing/PR;
- Increased the tokens available for Foundation New Hire & Long-Term Incentives by ~13 million tokens; this also includes tokens for the future Quality Assurance (“QA”) and Developer Operations (“DevOps”) teams needed to test, deploy, host, and operate the Aergo Chain; as well as changes in classifications of certain parties who were previously advising the project part time but became more closely involved.
We continue to use the same categories for our broad token split that we previously reported with in our last update and in our original project whitepaper. This is to provide consistency, transparency and visibility into the allocation and planned use of all Aergo tokens. The effective Aergo token split is depicted below in Figure 1.
- The maximum circulating supply will be 93,874,845 Aergo tokens (i.e., 18.8% of the 500 million total) by end of March 2019.
The vast majority of newly released tokens (i.e. 40 million tokens) will be distributed to private token purchasers who were subject to a change in vesting schedule from late 2018. We are also releasing tokens to some of our partners who will form part of our ecosystem network.
- Some additional tokens will be released over the next nine months related to Community Programs, Foundation Team/New Hires, Key Backers, Advisors and R&D Developers.
- The remaining Private Sale Contributor tokens are not planned to be released until towards the end of the year.
- In the future, we will release tokens to critical stakeholders in our ecosystem as explained in our Key Focuses and use of Aergo Token Reserves earlier. The vast majority of these will be subject to long-term holding agreements of up to ten years in duration.
- We expect the maximum total circulating supply to reach ~250,000,000 Aergo tokens by early 2020 (i.e., 50% of the total supply).
The following will be the latest Aergo token metrics by end of March 2019 (associated vesting schedules are also included)*:
Aergo is a long-term project. Our vision and execution plans are comprehensive — these need a diverse and skilled group of stakeholders in order for the network to reach its true potential. We are happy to outline key areas of focus with the remaining reserves in this document and give more insights into the token model to our stakeholders. We also hope this update to the token circulating supply informs our community so they better understand the breadth, reach and motivation for the now many different token holder groups. We believe it is necessary to provide active updates (like this token supply model status) in an effort to remain clear and transparent with our community and growing list of stakeholders.
*The Aergo Organization reserves the right to modify the future allocation model, although at this point of development we do not believe the current split will materially change over the coming few years.