Equitable Coin Distribution
Blockchains are supposed to create a levelled playing field for everyone and not create another class of elite by rules built into their protocols.
What is it?
Equitable coin distribution refers to the distribution of the supply of coins of a decentralised project to people in a way that is impartial, merit-based, and effort-driven.
A coin distribution mechanism that does not strive to be equitable will lead to a distribution economy only accessible to a category of anointed and privileged people and organisations.
An example of this occurrence is proof-of-work mining in systems like Bitcoin were a small group of participants control and benefited from the coin generation activity. As of today, the Bitcoin network is believed to have about four entities having greater than 50% mining power.
In Proof-of-Stake systems, care must be taken to equitably and widely distribute the initial coin supply to prevent large quantities from falling into the hands of a small group of people. If this happens and considering that there was no additional cost to acquiring the coins beyond paying money, the network will be at risk of manipulation as a potential attacker would be able to create Sybil identities cheaply.
Equitable Distribution For Ellcrys Network
At Ellcrys, We continually explore ideas that we think will help to foster and sustain a fair system, especially a system that includes several participants. Equitability is the primary reason why we introduced PeopleMint — A mining protocol that will allow everyone mine new coins by exchanging their banknotes for the network’s native currency.
Benefits of Equitability
Using a mining mechanism such as PeopleMint, which is inclusive of everyone, We believe we will be able to derive the following benefits:
- Fair & Balanced Distribution: Every and anyone will be able to compete for the chance to create new coins without worrying about purchasing high-end mining hardware. We also reduce the chances of a large number of coins falling into the hands of a few individuals or groups.
- Inclusivity & Community: With a fair distribution system, we will create a large community of diverse people and groups who are involved and invested in that system. People who are incentivised to grow the network and ecosystem to the best of their abilities.
- Early Adopters & Testers: We will attract users who will become early adopters and testers of the client. Users who will be willing to provide feedback that helps the team continuously improve the protocol and the client.
Ellcrys Coin Distribution
Sometime in February, we suspended our ICO in response to the poor performance of the token pre-sale. The decision to postpone was not an easy one for us but it was based on our belief that we were ill-prepared in terms of how we communicated our values, technology and the fact that there was little on the ground to prove our legitimacy.
In this space, a typical response to a failed token sale event is to either shut down the project, optionally refund contributors and start another project/ICO. We understood our situation very well; It was an issue of presentation, marketing and trust, and these are fixable. The solution was not to DIE, but to BUILD.
Today, we are performing private tests of an alpha version in preparation for the launch of an Alphanet. When the MainNet is launched, not only will it be the first of its kind in the world, it would be the first blockchain developed by a team of Nigerians and Africans. A first step to becoming not just a blockchain for open, global collaboration but one on which African startups, businesses and governments will build transparent and life-changing systems.
ICO Structure & Date
Over the last months, the most popular question has been about the new date of our ICO. We have been unable to answer this question definitively because we have been thinking about the most optimal distribution mechanism for blockchain protocols and how it affects hybrid-consensus systems regarding fairness and security. To that end, we do not believe the standard ICO distribution structure will be optimal for the following reasons:
- Exclusive To People Who Can Buy: Only people who can afford the minimum contribution deposit can participate. For a project that values inclusivity, we need to give everyone access and equal opportunity.
- Security Risk: Large buyers can assume multiple identities and amass a large amount of the coin allowing them to take a strong position on the network. As a project with plans to implement a hybrid PoW/PoS system, this is not desirable and bad for security as a small set of people can purchase enough coins to influence more than one identities on the PoS side of the network after launch.
- Short Distribution Time: Token distribution over a short period (e.g. one month) fuel distribution imbalance. Only people who had sufficient knowledge of the project early in the history may be aware of its coin generation and distribution event. People who are not aware or are still in the process of familiarising themselves with the project are denied sufficient time to conclude.
With this in mind, our distribution plan will be different. The next section will describe how we intend to run and conclude the next stage of distribution.
Initial Creation Opportunity (ICO)
Yes, that’s correct; Considering the kind of distribution process we are adopting, the meaning of ICO to us is — Initial Creation Opportunity! The essential words are Creation and Opportunity.
- Creation: This means the native currency is created using our effort-driven mining system.
- Opportunity: Everyone will be able to participate. As long as you have a mobile device and one of the currency notes supported by the mining protocol, you will be able to create new coins.
In our version of an ICO, you will be able to take out a currency note, scan the note according to procedures dictated by the scanning protocol and wait for validation to complete and receive new coins. The network will determine the number of coins you receive based on a hardcoded exchange rate. You can earn coins too by taking on the role of a validator where you join other people in the world to bet, vouch for banknotes and earn coins. Read our paper on PeopleMint to learn more.
Components & Infrastructure
We are essentially going to allow people to go into mining as the first utility of the platform which also means more requirements. These are the infrastructures that need to be ready before we can execute:
- Distribution Network: This is the network that will implement and run the coin generation protocol. Miners on this network will run version v0.2 of the client software (see here for release information). This release comes after v0.1 which is scheduled to be released this October.
- ERC20 Token: Although we have a different approach to distribution of coins, we still need a production ready, fully transparent smart contract platform on which coins generated on the distribution network will be moved to and ready to be traded in markets.
- Initial Supply: Most blockchains require users to pay fees which serves as both an incentive to miners and security measure for preventing prolonged abuse of the network. We are going to need a market where users of the distribution network can buy some coins to pay transaction fees. Validators will also need coins to stake. We expect participants in the private sale, pre-sale and airdrop to provide the bootstrap supply.
- Bridge Service: The bridge service is a web service that will help users of the distribution network move their coins to and from the Ethereum network. When a miner, validator or user receives coins on the distribution network, they will be able to transfer to their Ethereum wallets. After that, users can trade what they got on the distribution network.
You are probably wondering how the team is supposed to sustain continuous development if the coins are not offered in exchange for ETH/BTC/etc. We intend to raise funds passively through the sales of Multiplier tokens.
Multiplier tokens, when sent along with banknotes, have the effect of increasing the number of coins and paid to the sender. For instance, if $1 bill exchanged for 2 ELL, then a 3x multiplier will increase 2 ELL to 6 ELL.
Multiplier tokens supply will be limited and optional. You will not need to purchase them to participate in the distribution network. On their own, they are useless, but when peered with a banknote, they increase the generated coins.
We continue to put all efforts in this project. The team spends over 60 hours every week dedicated and working to make this project come to fruition. I am very proud of the folks I work with and ask that members of our community continue to stand by us. Thank you.