A good token metrics model takes into account predicted demand for a token, based on utility and usage, and matches it with the right supply to preserve and grow network value.
Our token metrics were first designed back in 2017 and then later updated in June 2019 to comply with IEO prerequisites on KuCoin Spotlight.
The COTI network has since grown and matured and coupled with increased demand and community feedback, we believe now is the ideal time to update our token metrics model.
COTI’s Network has Grown
We have seen growth on all three factors that drive COTI’s utility and organic demand:
- Growth in the volume of transactions on COTI’s network, driven by more processing volume by merchants and consumers. Since the launch of our mainnet in June 2019, more merchants have discovered the advantages that COTI adds to their payment processing via the introduction of low fee credit card processing and with partnerships like Cardano — ADA Pay, Fantom — Fantom Pay…and many more.
- Growth in the volume of staking, driven by the increased demand to run Nodes. The recent introduction of COTI’s decentralized nodes, staking model and staking as a service were accepted with overwhelming support and demand to run a node and stake. This demand is coupled with the growth in processing volume, making it very lucrative to run a node and allows more operators and delegated stakers to participate.
- Issuance of new tokens on COTI’s MultiDAG is now possible and any new token issued on COTI’s Trustchain creates more demand to COTI’s native coin, in the same way each new ERC20 token brings more demand to ETH.
COTI Token Metrics Update
Firstly, we would like to thank our community and stakeholders for their patience while awaiting these changes to our token metrics. Making changes of this magnitude to our token metrics has been no small undertaking and we understand the responsibility we have to our current coins holders, our future coin holders, our listing partners and our company in making sure these changes are fair and balanced for all parties.
With that in mind, we are happy to announce the following changes to our token metrics:
1. We have created a new distribution plan for our seed, private and advisor coin allocations that are currently part of a monthly release cycle. One of the overwhelming pieces of feedback we received from our community was the impact monthly releases have upon our coin and our community as a whole. Unfortunately, this monthly schedule was a legacy cost of having done an IEO and one that we feel we have carried for long enough.
These monthly releases will now be moved to a semi-annual release schedule, with distribution taking place twice a year, in February and August, instead of every month. We have also prolonged the lockups for seed, private and advisor allocations by another 6–18 months for seed and private and in 30–42 months for advisers, however, in the interest of fairness, we have also granted some additional liquidity to these allocations in the short term, on a distribution this Sunday. It was important to us to not be one of “those” ICO projects who enforced longer lockups on our original supporters for the direct benefit of the COTI, forgetting it was these original supporters that made COTI viable in the first place…and we trust the community will understand and respect this fact.
However, past that release, we move to a semi-annual release schedule which is significantly reduced as demonstrated in the tables below.
Note — The semi-annual release schedule will fully sync in August 2020. There may be an insignificant amount of tokens released, between March to August, in order to not extend locks on our smaller private sale contributors and to support some marketing events. Again, this was another pragmatic decision that was necessary from our end that took the best interest of our coins holders to heart. In the interest of transparency, this amount of tokens released in this entire period (March, April, May, June, July) is anywhere from a minimum of 1m tokens to a maximum of 10m tokens, with the variable being based off the need for tokens to facilitate listings, and associated marketing events.
2. There has been some debate about coins held directly by COTI as part of the ecosystem allocation, with the major cause for concern was uncertainty about their release schedule.
The ecosystem allocation’s purpose is to incentivize partners, developers, merchants, and consumers to support COTI’s and encourage adoption. We understand that coin holders would like to have more clarity on release schedules and so we have taken the step of locking 400m of these coins for 12 years, with a 3-year cliff before any of these coins can be accessed and with a much slowed release schedule at this 3-year mark. These coins will be converted to ERC20 COTI tokens and locked behind a trustless smart contract, effectively lowering the total supply and ensuring these coins cannot be accessed outside of the set schedule.
Of the 400m coins, 100m coins will come from the team’s allocation and 300m coins will come from the ecosystem allocation (of which 200m are unsold or unallocated advisers coins). This matches our recent commitment to lock up team coins for an additional 4 years, further demonstrating our commitment to our coin while not destroying long term value.
This also counters the next distribution by more than 4:1 ratio, so for every 1 coin released, 4 coins will be locked for up to 12 years. It’s important to note that 400m coins represent 20% of the COTI coin supply, a significant portion of the overall supply and the maximum amount of coins we felt comfortable with locking for an extended period with running the risk of crippling the overall ecosystem.
3. We are excited to announce a regular Coin Purchase (buy back) program in which COTI will periodically buy coins from the market. On the COTI network, all transactions are carried out using the COTI coin to pay fees for services rendered to merchants. This means merchants must maintain a supply of COTI to be able to participate and transact on the network. While many of our merchants understand the benefits of using a blockchain based system like COTI, they don’t necessarily want to have to interact with and manage a coin themselves. As such, COTI will purchase these coins for them on their behalf, using their revenue. In this sense, revenue on the network is directly attributable to increased use and demand of the COTI token, and the need for COTI to purchase these tokens from the open market.
An important point to note here is that ALL COTI coins required by merchants will come from the open market. The ecosystem fund will not be used to sell coins directly from COTI to merchants on the network. Instead ecosystem coins will be used as communicated in our Token Economy whitepaper, as a way to incentivise and grow the network as part of our incentivisation plan to onboard more merchants, consumers and partners onto the network. These will NOT be used as a revenue source for COTI and with the creation of this coin purchase plan, there is now a fixed system in place in which more merchants and more revenue will equal more COTI coins being bought back from the open market.
As such a program leaves itself open for exploitation by token speculators, we will NOT announce coin purchases ahead of time.
A Summary Table of Changes
The New Release Graph
The release sheet with all the details:
The COTI network is rapidly growing and so is the utility and demand for COTI’s native coin. These revised token metrics aim to match such growth and are designed to benefit the ecosystem.
Our new token metrics lowers the monthly sell pressure while adding more confidence on team’s commitment, major holders long term commitment and overall distribution schedule.
Merchant’s usage of COTI allows us a unique opportunity to turn their revenue to demand for COTI’s coin to further benefit all holders. We remain committed to our community and ecosystem, and remain focused on shipping technology and products.
Oh, and one last thing…
We have a Korean listing coming in due time (approximately 10 days) with a KRW pair!
Read more about the COTI Vault here.
For all of our updates and to join the conversation, be sure to check out our channels:
Technical whitepaper: https://coti.io/files/COTI-technical-whitepaper.pdf