Function X: May Hash Out

As the public release of the Function X testnet is around the corner, we will elaborate more on validators, delegators, FX Connect app and address some of the key questions that the community has posted in our AMA Telegram (held on May 6, 2020) and our Reddit page in this issue of HashOut.

About testnet

When is the testnet launch date?

We aim to launch the testnet in June 2020. The testnet launch date will be the same as the Function X Cloud (beta) launch date. We are now working on the details of the user interface and expecting that there will be bug fixes and improvements after launching the testnet.

Who is eligible to run validators for testnet?

We will start with an invite-only list to access the testnet. The invite-only process started on 11th May 2020. You can register your interest and get onto the list at https://www.hub.functionx.io. A code will be given to test.

Who is eligible to run delegators for testnet validators?

Users can download our FX Connect app (beta) and delegate the testnet FX coins from FX Connect App to validators. FX Connect app will be available at https://functionx.io.

What is the FX Connect app?

FX Connect app (beta) is a decentralized wallet created for the Function X Blockchain. Inside the app you will be able to create wallets, view transactions on explorer and others.

During testnet, you will be able to transfer testnet FX coins to FX Connect app to delegate to validators.

FX Connect app will be made available together with Function X Cloud. These two services will be announced and connect through https://www.functionx.io.

Will we launch a testnet or a mainnet directly?

A testnet will be launched first. From the testnet, we will be able to better determine the hardware requirements for running the node.

Note: Validators/delegators will be given testnet FX coins from the faucets to test out the FX services. During the testing phase, validators/delegators will be rewarded with testnet FX coins. Please note that testnet FX coins carry no value, and cannot be traded.

Do I still get the same reward on the testnet?

The reward rate will likely fluctuate while the testnet runs, as there will be testing going on.

Validators running on the testnet using Function X Cloud will not need to pay for server fees. Function X Foundation will bear all server costs and instances during the testnet period. The reward from testnet will not be usable as they are FX testnet coins.

About validator

As a validator, how do I transfer my existing FX tokens from Ethereum to Function X blockchain?

During testnet, Validators/delegators can get testnet FX coins (FXC) on faucets. Testnet FX coins given from faucets are “test coins” and can be used on validator services on Function X Cloud and FX Connect app, they cannot be traded, sold because there is no value in it. If you attempt to send your testnet FXC to an FX tokens address, your testnet FXC will be lost.

When the mainnet launches, you will be able to transfer your FX tokens to a smart contract in the Ethereum blockchain to get FX Coins on Function X blockchain. The smart contract is persistent so that you can swap back and forth between ERC-20 FX tokens and FX coins.

For example, if you have 1 FX ERC-20 tokens and you swap it for 1 FX coin, your FX ERC-20 token will be locked in a smart contract, and you will get your 1 FX coin which exists in the Function X blockchain. You may also swap the 1FX coin back to ERC-20 token if you like, whereby your FX coin will be locked in a smart contract too.

The current computation on April hash out was computed on 0.05 USD/FX. This only allows a tiny margin for the validator or delegator to suffer losses, what is your solution?

We have received feedback that potential validators would like to have more guarantee on the reward. As mentioned in the April Hash Out, the foundation reserves the right to subsidize the server cost to make sure that validators continue to generate profit.

There is a call for improvement of tokenomics for the reward ratio of validators to be higher to prevent losses. Using the testnet, we will be able to better determine how to increase the governance reward, if possible.

Does it mean, as long as I fit the minimum staked coins, I will be rewarded?

Will this encourage ‘free rider’ issues as validators will only be motivated to stake the minimum.

We would try to build a mechanism to reward contributors, discourage and eradicate the “free riders”, and penalize attackers for preventing the ecosystem from running forward.

We understand there has been some feedback and concern from the community, and we are open to proposals to relate the block reward and the number of staked/bonded tokens together to encourage validator and delegator to join the ecosystem.

In short, the number of staked tokens represents the weightage of the vote (voting power), and the distribution of block reward shall be distributed in associated with the respective voting power.

For example, Alice stakes 100 FX, Bobby stakes 400FX, Charlie stakes 500 FX. The total staked token is 1000FX. Assume the block reward is 100 FX, Alice gets 10 FX(100/1000 * 100) ; Bobby gets 40FX (400/1000 *100), Charlie gets 50 FX. (500/1000 *100).

We believe this proposal by the community can be fairer. Using the testnet, we will evaluate and review this proposal.

As we continue to improve the reward structure, we will post the updates. Please continue to feedback on the social media channels provided.

Note: During testnet, the reward and slashing will be altered periodically without prior notice. The FXC received during testnet are of no value and not tradable.

How to prevent the Matthew Effect? (How to avoid the concentration of stake in the hands of a few top validators?)

Ultimately, this will depend on the community to behave in a self-preserving way. Other mechanisms are in place to smoothen this process as much as possible: Foundation interaction: Foundation will deploy some tokens to cultivate and support validator nodes at the initial stage randomly.

We see the block reward for the node (validation) only consists of part of the total block reward? Where are the rest of the tokens? Since this is a decentralized project? Does the community have the right to control the fund?

The token that is designed to support and facilitate the rest of the ecosystem will be deposited to a designated community proposal wallet for each block creation. The Foundation and community can jointly propose how these tokens are used. A call for proposal is to have a jointly managed wallet.

Will there be slashing if a validator goes offline?

Yes, there will be slashing if a validator goes offline over a specified period. Slashing will also take place if there are bad actors. For slashing discussion, please head to Reddit for review.

Note: In testnet, slashing is immaterial as the FXC on testnet is not tradable nor used.

Will there be slashing if Function X Cloud goes offline?

Yes, everyone is treated equally, whether you use Function X Cloud or your server.

Based on the consensus, slashing will happen to every validator, including validators run by Function X Cloud. Function X Foundation will try the best to make sure our services are the best grade, please also read the EULA carefully. We may also offer server cost discounts in case of disruption.

If you choose not to use Function X Cloud, you are welcome to run your validator.

We understand that the inflation rate is one of the means to adjust and incentivize the market demand and supply. However, the inflation rate in year 1 seems too high. What is the rationale behind it? Do you plan to change the mechanism to act in accordance with the market condition?

Both inflation and deflation are the inevitable issues we will be facing sooner or later. The rate of inflation should be adjusted dynamically following the current market condition. Hence, we will observe the results in the testnet and possibly propose a block creation mechanism that adjusts the inflation rate with the staking ratio (current staked token/current total supply token). In theory, the number of tokens in each block creation will be determined by the current market condition.

For example, if the target staking rate is 67% and the current staking ratio (80%) is higher than the target staking ratio, this means that less staked token will be needed and less inflation rate will be imposed to incentivise people stake less token; however if the current staking ratio (33%) is lower than the target staking ratio, this means that more staked will be needed and increases the inflation rate to encourage people to stake more token. To protect the interest of all participants, a min-max range (note: range can be changed by governance) will be implemented. The final numbers will be determined after testing on the testnet.

About delegator

Why should I be a delegator?

By being a delegator, you can take part in network governance work, which ensures the stability and health of the blockchain ecosystem. You will also receive FX tokens each time you participate in governance work, specifically the block creation process. Validator helps the delegator achieve that.

How can I be a delegator?

If you do not wish to be a validator, you can delegate your FX to a validator so that you can also earn FX. You may delegate your FX via several ways to your validator of choice.

We will also try our best to list down validators so that users can have a bird’s-eye view and decide which validator is best for them.

As a delegator, how many validators can I choose from?

While we don’t have an exact number yet, our guesstimation is that we will have about fifty validators in the early months of the mainnet. Some of the fifty validators will be open up to delegator services. You will be able to find them on Function X Cloud.

What is the Validator Commission Rate?

It is the rate which the validators charge delegators for the service they provide. Validators charge it because there are maintenance costs including server setup and hosting cost.

How should delegators choose their validators?

Delegators are free to choose validators based on their own preference. Here are some indicators that you can take for reference.

• Amount of self- delegated tokens: It will be important that validators also delegate a good amount of FX tokens into their pool. It shows their commitment to operate the node.
• Commission rate: Commission applied by validators before it is distributed to their delegators.
• Track record: Delegators will likely look at the track record of the validators they plan to delegate to. As validators will be new, all validators will have a chance to establish their track record.
• Others.

Do I need to transfer my tokens to a validator?

As a delegator, you do not need to transfer your tokens to a validator, you merely confirm your participation and staking that you are joining a validator.

About BOB and XPOS

What are the roles of BOB and XPOS?

They will be able to be activated as service nodes if the owners wish to.
Service nodes will participate in the governance like validators, their roles will be complementary to strengthen security and consensus of the ecosystem, we will also share the reward models of service nodes in the upcoming series of Hash Out.

When is BOB launching?

Currently there is a major backlog still in our factories due to COVID-19 and part of the focus is to get Function X platform ready from testnet to mainnet as it’s the engine that powers BOB.

We will keep everyone posted once we have more news but we are committed to deliver BOB as it is a core part of our Function X ecosystem.

What are the solutions for future modifications on the blockchain? Can we change it?

The Function X blockchain is a blockchain that enables on-chain governance. Market condition and technical iteration are unpredictable, hence for the sake of self sustenance, it will continuously be upgraded and refined to fit the market condition and tech environment without or lesser centralized intervention. Function X blockchain aims to provide the mechanism for community and stakeholders to work closely and seamlessly off chain and on-chain as it evolves and improves.

Validators and delegators will be able to vote for a change of rules. More details will be shared later. The testnet is also a way to better understand the governance and consensus model.

What are the calls for proposals, calls for improvements?

There are many examples, including but not limited to:
1. The parameter of the staking rate, minting rate, etc.
2. Slashing parameters, rate of uptime, etc.
3. The distribution of reward among parties, etc.

What is the best place for discussion now?

If you have questions to ask, Function X telegram (https://t.me/Functionx) is the best place to head to, if you like to propose something more serious, perhaps Reddit (https://www.reddit.com/r/FunctionX/) is better suited.

As the community grows, we expect there will also be dedicated discussion areas reserved for validators.

Special thanks to

Question Contributors:
(AMA) @DrCryptos, @Fedor111v, @gongal, @Bobbyfernandito @kabutoss @marionsgomes
(Reddit) u/antoxa_extra, u/elliot_35, u/cryptogon13, u/kuzo998, u/PolarDial, u/kjuuz
(Twitter) @kuzoIV, @Tharax1381, @Fedor111v, @Skydiverinsta
(Medium Contributors) Ruben Irazu, Melissa Kim, Nanna, Pedro Sanches, Sylvia Falbesoner, Glenn Peng, Judie Liu, Fedor111, Pundi X Sherif, Skydiverinsta.