APEX Network — Behind the Scenes #4 — The Community Management team picks Jimmy Hu’s brain
Our Behind the Scenes series has been longing for its next installment, and this time we’ve decided to go for something different.
Our monthly development updates provide insights into the status of the tech, so for this behind the scenes, our community management team compiled a list of questions for Jimmy — a product of the questions and discussions in our telegram channel — and got together for a 90-minute call with Jimmy yesterday.
In this article we would like to take you along for a candid and transparent ride, looking in part at the very near future, and in part at the months and years ahead of us — both internally at APEX HQ, in relation to the enterprises, and for the community through nodes and staking.
A full year in — time to update our tech docs!
To start off, the latest tech update stated that we were well on track with our Q2 mainnet release. There are no currently known issues that could reasonably postpone this, the question is how much time we will need for thorough testing and thus which month of Q2 we will officially go live. The devs are working more or less nonstop these days (except for short bathroom breaks), and the team we’ve got together have been able to solve any issues they’ve come across.
“We aim to release new versions of all these documents before mainnet to provide further insights into aspects like staking mechanics and the road ahead”
We are nearing our mainnet launch, which is perhaps traditionally the most significant development milestone for many projects. This also means that we’ve had a year’s worth of experience shaping the coming ecosystem, and considering how it will play out in real life. On that note, it seems sensible to revisit the documents released so far — the development plan, the node ecosystem overview, and the roadmap — and update these in accordance with new knowledge and details gained along the way. We aim to release new versions of all these documents before mainnet to provide further insights into aspects like staking mechanics and the road ahead of us once mainnet has successfully been launched. On the issue of staking, it would be useful for token holders to get a clear picture of how these things are calculated more on an individual level, as opposed to the tier overview previously presented, and we will try to include things like this in the updated documentation. Rest assured that the overall structure of the token mechanics will definitely remain intact as this was a result of thorough initial consideration, even though we may make slight adjustments here and there to further optimize the node ecosystem.
CPX and APEX Network revenue lines, project expansion
Now it’s time to share some opinions on the CPX token itself. We all know where the speculative value is at currently, but more significant than this is the importance of the token to the ecosystem and what will drive APEX Network’s revenue. Building the ecosystem according to our initial plan –actually, even if it was built to a lesser extent — the importance of the token will be obvious right away in the flow of the CPX (mainnet) coin. This is by design, based on aspects like the different node tiers and what you need the coin for in the ecosystem. Once a couple of enterprises start running their applications on the mainnet, it will affect the token dynamics in a very non-subtle way, showcasing the essential nature of the coin in the ecosystem.
“Once a couple of enterprises start running their applications on the mainnet, it will affect the token dynamics in a very non-subtle way, showcasing the essential nature of the coin in the ecosystem.”
Considering factors that will affect a fair valuation, a large part of it will be staking. In addition to token utility through voter node staking and the data cloud nodes, the enterprises are also staking the coin for the utility of the blockchain (supernodes and such). If we take a moment to consider the flow of the coin, which factors will lock down and restrict that flow in the most efficient way possible, staking is expected to make the most impact, more than the network fees themselves.
Now considering future sources of revenue for the company, there are two main lines. For enabling APEX Network to take profits from the success of the ecosystem, the company will gain revenue from running supernodes and data cloud nodes like Jimmy has mentioned before. Considering our VM and choice of smart contract programming language it makes sense for APEX Network to take charge of smart contract programming for the enterprises. Things like this, in addition to helping enterprises develop their applications on the network will generate additional revenue, providing additional capital in the long run. Any revenue received from that end will go straight back into supporting further development, marketing and expansion of the project in the future.
Enterprises and blockchain — Sidechaining enterprises
For enterprises, there are several ways to employ the technology that we are developing. One is through a private blockchain approach, which is useful for Proof of Concept related scenarios (we will touch upon this later), but what we really want is for the enterprises to be part of the larger ecosystem. From their PoV a central question is whether they will have their own standalone infrastructure or be connected to the mainnet through having a sidechain. Their initial focus is on fulfilling their particular use case, and for most of these enterprises approaching our technology through deployment of a sidechain definitely makes sense. We are specifically looking into different ways of developing the sidechains in a way that makes running on a sidechain more attractive to the enterprises than using a private blockchain approach.
Keep in mind here that for the average enterprise, what they are used to as well as their privacy concerns would tend to have them leaning towards a private blockchain. What we show them is that a sidechain basically has similar features to a private blockchain, but it also provides features that a private blockchain cannot provide. Among the most important of such features are the level of decentralization, robustness, connectivity and the on/off switch for access to the DEX in the future. This approach helps grow the larger APEX blockchain ecosystem, and deploying sidechains is quite obviously the direction we want to convince the enterprises to go. Ultimately the private blockchain alternative would help the project’s revenue and further development of course, but it would not directly impact the token dynamics of the network. Using sidechains makes them part of the network, though initially segregated until the ecosystem has been fully developed, and will clearly influence token dynamics.
“There are three initial use cases that are relevant to the piloting enterprises; tokenization of loyalty points, our consent driven data acquisition protocol and storing unified customer profiles.”
As for use cases, there are three initial use cases that are relevant to the piloting enterprises. All of these may be known to some in the community, but experience dictates that it may also be news to some. The first and simplest use case is to tokenize loyalty points without any connectivity. Lack of connectivity in this case means there’s no need or intention to swap these loyalty points for anything else. This use case is simply bringing a legacy system onto the blockchain — it’s simple, but tokenizing their customer loyalty programs is something a lot of companies want. The second and more interesting use case is our consent driven data acquisition protocol collecting data from the consumer. This protocol will be embedded into their existing applications, it would not make sense to use a new application. Third, and perhaps most interesting from a technical perspective, is storing a unified customer profile on the blockchain. Keep in mind that when companies currently collect consumer data, it is stored on their servers in a centralized manner. In this scenario the company itself has to manage the infrastructure, including server space, data centres etc. However, once you store the customer profile and their information on the blockchain, the customers themselves receive back control of that ID and the information associated with it. To personalize for example product recommendations the company needs to pull up the most recent version of that data, meaning that the person is essentially bringing their own information to the table, enhancing their own experience when dealing with the enterprise.
“Keeping with realistic estimations, we hope to have around six enterprises that are extensively using the mainnet by EOY. Looking ahead to 2020, we aim to expand this to at least 10–15.”
These are simple versions of the initial three use cases — but simple is good, and it is a way most enterprises want to start when approaching blockchain. Both these and additional use cases can be made more complex depending on enterprise needs. The way things are progressing, and keeping with realistic estimations, we hope to have around six enterprises that are extensively using the mainnet by EOY. Looking ahead to 2020, we aim to expand this to at least 10–15. Once we reach this number the DEX scenario is already very viable.
An elaboration on the DEX and what it means for us
The APEX DEX is a very interesting and unique feature that has intrigued quite a few community members who understand its potential. We would therefore like to shed more light on how we now, a year into the process, envision the DEX being used in the future. As Richard touched upon in his article the DEX is in principle quite easy to build, but it is also actually an ecosystem in and of its own, with moving parts that create certain challenges when putting it together for real use.
The main challenge is that before we get economies of scale there is no easy way to calculate the exchange ratio between the different enterprise assets. Like Richard alluded to we’d be likely to bump into some problems with the protocol regarding calculation of liquidity pools and exchange ratios of different assets by forcing the process too early. Considering this, we need to bring on a number of enterprises, as well as their ecosystem of users, to be in a position to test this more accurately in practise. As an example, let’s say that the enterprise tokens themselves represent loyalty points for the enterprises. Without actual exchanging of assets between the customer bases of these enterprises, it’s hard to perfect the DEX protocol. It’s a kind of chicken and egg problem, but it can definitely be solved by approaching it from the right angle.
In terms of priority, and considering what we mentioned above, the DEX protocol will naturally come after everything else on the roadmap, to get those moving parts in place first. It would come after the VM and after certain pilots have been completed. Once we have multiple pilots in production mode, it will make more sense to start testing the DEX protocol.
Another aspect regarding the DEX is that it needs to pass the proof of concept stage first. Some other players have tried and failed to execute similar ideas, and thus we will need to prove to the enterprises that we stand out from the rest in being able to actually solve the challenges involved. Regarding the PoC stage, it is likely that the first production use case of the DEX will be on a private blockchain level. This would be one of our enterprise customers that is already using APEX blockchain tech within its own corporation including its subsidiaries. A realistic case that we have already discussed with some enterprises is that they want sub brand and sub companies within the enterprise to be able to interchange their assets, and a case like that would likely be the quickest route to find a corporation willing to pilot the DEX functionality.
For transparency, there are potential regulatory aspects that we need to be aware of and clarify during exploration of DEX use cases as well, and which is currently a grey area without clearly defined rules. Currently, in the greater China region, making loyalty points and similar assets tradeable carries a certain risk of having it fall into the category of financial instruments. This would naturally increase the chance of regulatory scrutiny, and is something we will make sure to stay on the right side of. It’s not much of an issue when providing interchangeability within the same corporation, but cross company and on the open market is a different scenario which requires careful consideration before implementation.
“The DEX opens up a lot more opportunities for the enterprises, and will be among the unique differentiators for APEX Network.”
Our ultimate goal is of course to see the DEX protocol in operation in a public environment. The reasoning behind this is simple: With more interchangeable assets available within the network, we reach economies of scale providing network effects that make it increasingly more valuable. It also opens up a lot more opportunities for the enterprises, and will be among the unique differentiators for APEX Network.
Like we mentioned earlier, once we have around 10–15 enterprises that are extensively using the mainnet, the DEX will be viable because these enterprises are all consumer facing, and the initial geographic regions of the first production use cases are also overlapping. This also means that the consumer base will likely be overlapping to a large extend as well, which is part of the prerequisites for the DEX to make sense. As an example, say you have 10 enterprises live on the mainnet with their own assets and applications. The number of possible different connections that could occur between those assets can be expressed as n(n-1)/2. Achieving the full set of possible connections is not realistic of course, as there will be some companies that are not willing to work with each other. To illustrate this point, some of the companies that are signed up for the pilot are electric car companies. None of these are likely to be willing to swap assets with each other as they are in direct competition with each other. Other enterprises however can derive synergistic effects from engaging with this functionality, and once we have a couple of enterprises live that are willing to work together, the DEX’s use case is viable. What this boils down to is; If we can achieve that milestone in 2020, APEX Network will be one of the blockchains with the most solid real life use cases out there — and in production mode.
“If we can achieve that milestone in 2020, APEX Network will be one of the blockchains with the most solid real life use cases out there — and in production mode.”
Marketing and growth for APEX Network
With regards to marketing, it makes sense to divide this into two partially distinct areas. One is the greater crypto community, and we are exploring different avenues for spreading awareness about APEX Network around and after mainnet launch. Among our goals is to expand our technical community, as tech savvy community members are highly valuable and tend to help the project move forward. Our main focus however, is the marketing directed towards enterprise users. We are continually marketing internally, and this is by far the most efficient way right now compared to reaching out to random new companies.
Considering our current base of pilots, these are mainly large enterprises. There are pros and cons with that, and among the limitations is that they are lacking the level of agility and ability to make quick decisions that startups usually have. They also have more set limitations on what they can and cannot do. For this reason we are also looking at branching out to startups that would need implementation on a dApp level — due to the inherent agility of startups they can move much faster, and are generally far less hesitant when it comes to experimenting with new technology.
“We are seeing a need in the market, and there are new companies approaching us that were not previously among our existing customers.”
We are actually not limiting ourselves to B2C companies though. In addition to these, there are some tech companies working in software, AI and systems integration that are looking to expand their capabilities. Companies like this can help us distribute our technologies, and to a large extent they have the same end users or serve consumer facing companies. We are seeing a need in the market, and there are new companies approaching us that were not previously among our existing customers. What we have also experienced multiple times is that when our sales people go out and mention that we are developing a blockchain related product, it sparks an interest with the enterprises, and they engage us to continue exploring what this can mean for them. As consumer facing companies, the sort of things they have in mind are what we can provide, as our blockchain is designed to cover their particular use cases.
Interestingly we just onboarded a new company, and this is one which we hope to be able to disclose the name of in the reasonably near future. This company is not particularly well known, especially outside of China, but it’s a wine conglomerate. The use case they have in mind is very simple — it’s loyalty points across different product lines, and they want to integrate the loyalty programs of their different sub companies. While the larger enterprises in China are taking their time getting used to the idea of public association with blockchain technology, this could provide for an early insight into actual adoption of the technology by enterprises. With time we aim to expand beyond the APAC region, but there’s no rush to this. The most effective place to start is where we’re currently at, using our existing sales network. Once we start exhausting those resources we will logically start expanding outwards. From China we will look to other countries in the APAC regions like Korea, and go from there. We have not yet really started the push towards Korea though, as we have more than enough interest to keep us busy within China for quite some time to come.
To all the APEXIANs out there
We are very pleased to have had this opportunity to elaborate on some of the aspects of the project for all those who are aligned with the long term vision of APEX Network. It’s been a bumpy ride so far with regards to token valuation, as it is mainly related to the speculative nature of the market. However, considering the progress that has already been made and our future prospects, it feels like quite the understatement when we say that we have quite the journey ahead of us in the coming years!
Until next time,
Jimmy & the Community Management team
APEX Network
- Visit our Website
- Follow us on Twitter
- Join our Telegram Community
- Subscribe to our Announcements Channel
- Subscribe to our Subreddit
