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GAINS Associates

Octopus Network — Telegram AMA — August 22

On Sunday, August 22, we had the pleasure to welcome to our Telegram chat:

Aaron Ting, Community Director.

We asked him questions about the development of Octopus Network.

Some sentences have been slightly edited for readability but the meaning has been conserved.

Summary

Octopus Network is a multi-chain network where validators are deployed as a set of smart contracts on the NEAR protocol for optimization. Octopus Network is committed to unleashing a new wave of innovation for Web3.0.

The Octopus Network decreases the cost to launch an appchain from several million dollars to less than one hundred thousand dollars. Octopus Network works as a free market where appchains can lease the level of security they need at market price any time by using $OCT tokens.

The Octopus Relay enables appchains’ interoperability with NEAR protocol and Ethereum via the NEAR Rainbow Bridge. Additionally, appchains can utilize an out-of-box IBC pallet to connect with any IBC-enabled blockchains directly.

In Octopus, each Appchain gets to decide its own economic model, including how many tokens it’s willing to pay validators for security. $OCT holders decide which Appchain they’d like to stake on, creating a free market where Appchains can lease the security they need at market price any time.

Introduction

Q — Ayeley from GAINS: What did you do before crypto and did you have any other previous venture in crypto? What is your role at Octopus Network?

A — Aaron from Octopus Network: Hi, my name is Aaron Ting and I have been involved in crypto for the past 8 years. Starting as a bitcoin miner but also Co-Founded the ACCESS Blockchain Association of Malaysia and worked with numerous crypto projects including ZCoin, BEAM, Midas, amongst others. I have joined Octopus Network as the Community Director and I’m in charge of managing community management and marketing.

About

Q — Ayeley from GAINS: What is the project about in a few simple sentences? And for how long have you been working on Octopus Network?

A — Aaron from Octopus Network: Octopus Network is a multi-chain network where validators are deployed as a set of smart contracts on the NEAR protocol for optimization. We provide connectivity to Polkadot Substrate-based blockchains (which is the best modular framework to deploy a blockchain) and we leverage on Cosmos IBC Pallet which we developed for inter-blockchain communication. Our founder Louis Liu is a famous VC, researcher of blockchain technology and crypto-economics. Our lead dev is Julian Sun and Mike Tang who also started the Rust and Substrate community in China. I have worked for Octopus Network since April this year.

Q — Telegram user Ble73: Why is your team called CDOT? What will be the role of the community in your ecosystem? And how do you plan to increase the token value in your ecosystem? And where can we currently buy your tokens?

A — Aaron from Octopus Network: We have since rebranded from CDOT to Octopus but the name shows our previous focus which is to build bridges between blockchains especially the Polkadot and Cosmos ecosystem. We are a community of Blockchains and will work together with other multi-chain networks to solve the bottlenecks in the ecosystem. The tokenomics of Octopus is very simple. You have a fixed supply of Usd100 mil and an unlimited demand from appchains for validator staking. We have an IDO on Skyward Finance.

Q — Twitter user @Alessa199625: I understand that Octopus allows you to reduce the capital expenditure to start an application chain by about 100 times, going from several million dollars to less than one hundred thousand dollars. But, how do you ensure that it is the same product quality or even better?

A — Aaron from Octopus Network: Since we are active builders of Rust and Substrate communities, we understand many substrate projects will not have a realistic chance to obtain a parachain, so we decide to solve this problem. Usually, blockchain design is optimized for a certain use case so we are designed to serve an unlimited amount of appchains at a low cost. There are of course tradeoffs. Polkadot is optimized to generate large liquidity and prioritize composability for DeFi but the sacrifice is that their parachains are expensive and limited to 100 only. Only large Defi and smart contract platforms can afford the rent in the Polkadot and Kusama ecosystem. Octopus is designed for the majority of substrate projects which only support a single application. How do we do this? We can solve this at the technical level using a validator that is deployed as a smart contract realizing massive cost savings and we also implement the relay in such a way that we do not have any limits. We also have a different format for appchain selection as well. Instead of straight-up bidding using candle auctions where the projects with the most DOT or KSM wins and those tokens are locked in a crowdloan for a long period of time, we have a different approach. We have a two-stage process where in the first stage, projects after passing our audit enter into a voting process. The appchain with the most votes from Oct token holders wins. And only once they win they are required to attract a minimum of usd2mil of tokens (this can be increased to usd5mil after the first few appchains). This way we can achieve tremendous cost savings. And in addition, for the first 10 appchains, we will provide a grant of 200k $OCT to each appchain project. We believe every contribution to network growth should be rewarded. There is no other network doing this.

Token

Q — Ayeley from GAINS: What is the token use case and how does it capture the value of the ecosystem you’re building?

A — Aaron from Octopus Network: What is $OCT? $OCT, the native token of the Octopus Network, is a fungible, non-inflationary token with three primary utilities:

Collateral to guarantee appchain security
Governance
Endorsing appchain candidates by upvoting them in the candidate queue

Octopus Validators stake $OCT tokens to validate a particular appchain and set up a node to run that appchain’s protocol. In return, Validators are eligible to receive the respective native token of the appchain they are validating.

Octopus Delegators can delegate their $OCT to Validators for a share in the staking rewards of an appchain’s native token. Staking rewards are distributed to Delegators directly after Validators collect a unified commission.

There are only 100 mil $OCT tokens and this is a fixed supply with no inflation. The holders of $OCT will be able to stake their $OCT to give security to appchains and appchains will give staking rewards to stakers in the form of their own tokens.

What is the role of $OCT in the ecosystem? The main function of the $OCT token in the ecosystem is to exclusively serve as collateral to protect the security of the appchain. The total supply of $OCT tokens is fixed, so its market price is mainly determined by purchase demand.

When the total demand for security from appchains increases, the demand for collateral increases. The price of OCT tokens has to rise to meet demand. Therefore, the secure supply of Octopus Network has no physical restrictions, only determined by demand.

The other functions of $OCT are governance and endorsing appchain candidates by upvoting them in the queue.

What are your Token Metrics?
What are the benefits of being an $OCT Holder? The total supply of $OCT is fixed at 100 million.

41% of $OCT are to be distributed to investors — 6% to angel investors, 5% to a strategic investor (NEAR foundation), 27.5% to institutional investors who participate in seed and Series A private sales, and 2.5% to IDO investors.

The remainder of $OCT belongs to the Octopus Foundation. Of that, 30% of the total supply will be used to incentivize upcoming Octopus community contributors. 24% $OCT is to reward the core team over 5 years starting from April 2019. Finally, 5% of $OCT over 5 years after the mainnet’s live is allocated for social media users who help share the value proposition of Octopus Network.

All $OCT will be minted before the Octopus mainnet goes live. 30% supply will go into circulation right after that, including tokens belonging to IDO, Seed, and Series A investors. 5% $OCT belonging to the foundation will be used to provide initial security for appchains. 65% of the total supply, including tokens distributed to angel investors, the strategic investor, core team, and foundation, will be released linearly over 3 years after the token generation event.

I think $OCT is going to present possibilities to its holders that other projects just don’t have, which is really exciting. But first, let me give a general overview of the role that $OCT plays in the project.

$OCT plays a key role in the Octopus Network through appchain staking. Holders stake their $OCT to provide security to the appchains they believe in — and earn rewards in the respective appchains’ native tokens.

This means that $OCT holders have the opportunity to earn rewards from all kinds of projects in all kinds of crypto spaces: social tokens, gaming tokens, utility tokens, DeFi tokens, NFTs…you name it. Because all kinds of protocols will be building appchains, those protocols will create continuous value streams for investors who stake $OCT on their appchains.

In addition, $OCT holders will be able to endorse appchain candidates by upvoting them. So, $OCT holders not only have the opportunity to earn an incredible variety of token assets by staking on different platforms, they actually get to decide what protocols they would like to have the opportunity to stake on.

Last but not least, $OCT holders are entitled to control the governance of the network by forming the Octopus DAO. It’s common knowledge that a sound and widely participated-in governance will give $OCT holders more stable value expectations and suppress extreme fluctuations in the token price. Can you tell us the benefits for investors to hold $OCT as a long-term investment? Octopus Network is a two-sided platform with investors on one side and appchains on the other side. The token price is ultimately a function of supply and demand as well as relative valuation. Our system has limited supply and unlimited demand.

Supply is limited as there will only ever be 100M $OCT tokens. We have a zero inflation system and any surge in demand will be positive for price.

As for demand, there are hundreds of projects building on Substrate and many of them are application-specific or appchains, as we call it, which have very little chance to secure a parachain slot on Polkadot or Kusama.

Big projects such as DeFi and smart contract platforms will be able to afford Polkadot or Kusama slots so we are not focused on them. But for the other hundreds of appchains, do not have a solution and building cross-chain bridges is difficult and expensive.

We believe in the future there will be hundreds of thousands of blockchains, and many of them will be appchains because the cost of developing DApps and Blockchains will be similar, so demand will keep growing for a limited amount of $OCT.

I believe our valuation based on circulating supply will be around 40M USD depending on our IDO on Skyward. Compare this with Polkadot valuation which is 30B USD and the #9 crypto in the world — We think there is a lot of room to grow.

Q — Twitter user @RJM_500: What requirements are necessary for the IDO via Skyward? KYC verification? Can anyone participate?

A — Aaron from Octopus Network: Anyone can participate as long as you have a Near wallet.

-Please create a wallet at wallet.near.org and choose an email-like address. It is free but you need 0.2 near to activate it.
-Then proceed to Skyward.finance and you should see Oct token sale on the webpage. It is whitelisted and the only sale on right now.
-Choose the amount to deposit and the Oct tokens will gradually be purchased using the Near in your account over 6 days.

You will immediately receive your tokens but it is recommended to wait for the end of the sale and withdraw.

Q — Telegram user Illusion BLOCKCHAIN INFINITY: When are you going to launch in exchanges as well as in Pancakeswap etc?

A — Aaron from Octopus Network: We are going to launch after IDO on Uniswap and Gate.io or OKEx. We may follow up with Pancakeswap if the community requests it.

Security

Q — Telegram user mElon Masak: The $OCT token incorporates the security of an application chain validator. What is the mechanism, so that there is a 10x increase in security?

A — Aaron from Octopus Network: Octopus network is a two-sided marketplace for security leasing and connectivity. The small average appchan market cap is estimated to be around Usd2 to 3 mil which makes them prone to attacks where a party can obtain more than 33% of token supply and compromise their network. This is just a small amount of 1 mil USD. Conversely using the $Oct token, our market cap according to IDO at the moment is 43 mil USD, so any attempts to attack a chain secured using $OCT is much more difficult.

Partnerships

Q — Ayeley from GAINS: Can you elaborate more on this? I was going through some questions on our Twitter earlier and it seems people want to know more about the connection you have with NEAR and Polkadot.

A — Aaron from Octopus Network: Appchains in the Octopus Network benefit from flexible and cost-effective leased security (LPoS), out-of-the-box multichain interoperability, complete infrastructure, and a ready-to-be-engaged community. A typical problem with PoS application-specific blockchains is that they have low security because they have low token value and are therefore more prone to attack. The solution is to pool the security using a token with a higher value, so we adopted the idea of a pooled security using a common token ($OCT) with more than 10x more security.

The other problem is the high cost of validators. For example in Polkadot and Kusama, you need to run validators on good servers and since it is expensive and difficult, there needs to be 15 to 20% APY given to validators to cover their cost. We solved this problem by using smart contracts to construct validators. Since our network chooses to build our validators as smart contracts to improve efficiency, we need to choose a Layer 1 that would be able to provide the best support for us. Near Protocol is a sharded blockchain that is infinitely scalable, fast, and the most user-friendly around.

Here are the reasons they are chosen.
1. Instant finality
2. Infinite scalability
3. Team technical support
4. User-friendliness
5. Usd1 mil investment from Near

Q — Telegram user Antonio González: I understand that Octopus is a multi-chain network that is closely related to the NEAR protocol and Polkadot Substrate, so can you elaborate on this relationship between these platforms? How does Octopus Network benefit from working with these platforms?

A — Aaron from Octopus Network: Thanks to the hard work of Gavin at Polkadot and Cosmos to buy the necessary infrastructure, we are at the beginning of the era of the Internet of Blockchains. In this new world, we have a constellation of chains that all must be connected to create value together. The network effect of two chains that are connected is as if they are one single network. Since the infrastructure is in place, the next stage will see the rise of many Web 3.0 projects that will compete with Web 2.0 counterparts such as Facebook, Google, etc. Some of the Octopus Network appchains as below

DeBio.network — decentralized 23 and me
Myriad.social — decentralized facebook
MuseNetwork.org — decentralized Spotify

This is where the real value generation will come from and there is a major trend for the next 5 years for Web 3.0

Q — Twitter user @PKragak: You announced a partnership with Solana. What opportunities does this Octopus alliance provide and what problems have been solved? In addition to Solana, what other large projects, companies, and investors do you cooperate with, what do you expect from this relationship?

A — Aaron from Octopus Network: We built the Eth bridge for Solana as well as Flow, Platon, and Oasis. I believe not many people realize how difficult it is to build cross-chain bridges and do it safely. As you can see with the USD600 mil poly network hack, keeping cross-chain assets safe is a challenge as we enter the world of the internet of Blockchains. We are always open to partnerships and we are currently in talks with Plasm/Astar to deploy our IBC pallet on their network. Their technical team is studying our code and they would also like to be a contributor. This is the reason we decided to start this project. We have a lot of admiration for Substrate which is the best modular framework to build a blockchain and we believe the number of substrate chains will explode. And we also have an appreciation for Cosmos IBC which is something like TCP/IP for the blockchain world. So we combine this with Near Protocol which has instant finality and unlimited scalability to deliver a much-needed solution.

Finances

Q — Ayeley from GAINS: Did you raise funds so far? If so, how did you handle them? Are you planning to do any future raises?

A — Aaron from Octopus Network: We are thankful we have received very strong support since we started our project last year. Our seed and series A round was oversubscribed and among our investors are a few notable ones such as Near Protocol, DCG, D1 Ventures, Electric, Ascensive, Gains as well as funds of Huobi, OKEx, and Gate. We also have support from Polkadot projects such as ChainX and Stafi and validators such as Polkadotters and Stakenode.

Business Development

Q — Ayeley from GAINS: What stage is the project at? and what should we expect in the coming months, following the IDO?

A — Aaron from Octopus Network: We have been in development for more than a year and before that, we worked on cross-chain bridges for Flow Solana, Platon, Oasis as well as the IBC bridge for Substrate which will connect Polkadot and Cosmos (ready Nov 2021). Our mainnet will be launched mid-Sept 2021 and our first appchain will go live in Oct 2021.

After that, we hope to onboard 1 appchain every 2 weeks so the first year we should have between 25 to 50 appchains which also represents usd50 to 100 million of demand for $OCT tokens.

Q — Telegram user Marzika Ela: What is your most ambitious goal in your project? Would you please share the strategy and vision 2021- 2022?

A — Aaron from Octopus Network: The most ambitious goal for us is to be the largest multi-chain network as we do not have any limitations on the number of appchains. We project fast growth from 2023 beyond.

Thanks for coming into our community, Aaron, and taking the time to answer our questions. Anything else you’d like to say? Where can we follow you to stay updated? — Ayeley Commodore-Mensah from GAINS Associates 🐋

Please come to our Telegram if you have any other questions and follow our Twitter. We will be hosting about 1 AMA a day so if you didn’t win anything, there is always another chance.

Thanks and see you soon! — Aaron Ting from Oct.Network

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