LT Blockchain Upgrade - Potential Launch Plan, and a Massive Surprise! Your Vote is Needed NOW!
In this post, you will find:
- Update on the progress we’ve made on polishing the LT blockchain economy — higher staking, better infrastructure security, more income
- Solution proposals resolving for all limitations preventing us from deploying the LT Blockchain and unleashing its full potential
- A very specific proposal for launching the chain by end of 2020
- A new staking calculator
- A proposal on how to mitigate the Kucoin hack and protect the victims and our community in a “2 birds with 1 stone” strategic move
- A community vote that needs your attention in order to put the whole plan in motion as one elaborate plan. Right here. Right now.
Excited? Great…make sure to read the full post as this is perhaps one of the most important community votes you will ever make. It could also potentially be one of the most advanced asset deployments in the history of LockTrip.
So here we go…….
Update on LT Blockchain
Over the last 10 months, we invested a considerable amount of time examining not only the stability of the current Testnet 2.0 of LT chain but also its economic design and all possibilities for further improving the current model.
The LT chain we presented in late 2018 solved the biggest problems commonly known with blockchains. You can read about them in the original blockchain manifest.
But the solution left four strategic limitations that were very specific to our current operations. These limitations are as follow:
1. Launch Dependency on Booking Volumes
The staking rewards of the LT chain heavily rely on a strong transactional economy. Although a support mechanism was announced in the form of fixed block rewards for stakers, these were designed to gradually phase out over a period of 5 years. After this period the entire staking economy will be 100% reliant on the transactional economy which to a certain degree is impossible to be guaranteed.
This is why we at LockTrip set the launch date for the LT chain as the moment at which we sustainably receive 150 bookings/day. Reaching this goal creates enough transactions to ensure a steady staking income and reduce dependency on fixed block rewards.
However, this has the negative side effect of delaying an otherwise extremely valuable asset until sufficient transactions are reached.
2. Unpredictable Staking Weight and Network Protection
Staking is a critical activity for the maintenance of the blockchain. The more nodes are online, the better it is for the health of the chain, as it increases redundancy and at the same time strengthens the protective shield against attacks.
The combined protection of a chain depends very much on the staking weight, which is the number of coins being staked at a particular moment. This on the other hand depends strongly on the transactional economy, as coin holders will be more motivated to stake their coins if the returns are attractive.
Should the transactional economy be insufficient or inconsistent at any moment in time, it could open up attack vectors due to insufficient protection.
You can read more about this in the newly published blockchain whitepaper (section 2.5). It all comes down to the “Security Factor” outlined there.
3. Missing out on substantial opportunity due to having a pegged economy with LOC
With the blockchain manifest announced in late 2018, we presented the idea of a LOC-powered blockchain. The reason for this was simple yet powerful: The goal was to funnel all blockchain-related economies through the LOC token, by turning it into a coin. This would combine the marketplace economy with the blockchain economy in a single coin, turning it into a super-coin.
However, there is one limitation arising from this. In order for it to work properly, the two economies need to harmonize with each other. LOC having a fixed supply with a deflationary model would make it impossible to have an inflationary based staking income.
This means that although a super-coin is possible, it comes with a number of limitations. If the true potential of the blockchain can not be unleashed due to “harmony limitations” with the marketplace, this can create significant opportunity costs.
4. Lack of Self-Identity and Blockchain Neutrality
The super-coin concept elaborated above does not only create economical limitations, but more importantly, peggs the economy of a centralized marketplace with the one of a decentralized infrastructure.
If half of the coin economy is dependent on a single project, is it really a fully neutral blockchain? Can it develop its own and independent identity and attract as many products to built on top of it?
Although difficult to put in numbers, there is no doubt that if the answer for the above questions is “no”, this could become a limiting factor for adoption, or at least reduce the pace of it.
The Solution we Propose
The limitations above seem uncorrelated to each other, but they can be solved through a few strategic tweaks to the existing model.
A — the birth of a unique project “Hydra” as an independent blockchain with its own unique economy and airdropped to the LOC community
In order to solve the blockchain neutrality and self-identity limitations, we are proposing to move away from the single-coin concept and instead launch the blockchain independently under the name of Hydra. This will ensure that it will develop its own identity through independent branding, an independent “HYDRA” coin, and its independent decisions through decentralized community governance.
Important: The new proposed blockchain has been designed, built, and funded by LockTrip’s crowdfunding, which is why it belongs to the LockTrip community, so here’s how we plan to elegantly fulfill this commitment.
In order to honor the contribution of LOC community, all HYDRA coins will initially be airdropped to LOC token owners on a 1:1 basis over a period of 50 weeks (2% of total supply each week). This approach ensures that the community that funded the development of the blockchain is honored, regardless of the unpegging. The gradual drop also will ensure there will be plenty of time for all members to take the corresponding actions to acquire their own HYDRA coins. It will also create a unique micro-economy between the HYDRA and LOC during the prolonged airdrop campaign.
As part of the proposal, the LOC token will be migrated as the first token to be utilizing the Hydra chain — with the same hirarchical status as other projects utilizing the network. This way LockTrip and LOC will enjoy all the technical features of the blockchain and will preserve its own unique deflationary economy. We will also work on a plan for migrating EVED and other potential partners on top of it as we make our progress.
B — Unleashing the Full Potential of HYDRA Chain
Since there are now two assets (LOC and HYDRA) capturing the economies of the marketplace and the blockchain respectively, they no longer need to be designed in harmony with each other. The economical limitations described earlier will no longer exist, allowing for a more aggressive design with each one tailored towards maximum upside potential.
As a result, we have designed the HYDRA to be optimized to a unique inflation-based economy, which offers a number of advantages:
- Supercharging staking yields by significantly enhancing block rewards
- Turning fixed block rewards economically sustainable and preventing them from phasing out, making them a permanent feature. HYDRA will empower fixed inflation in %
- Introducing high predictability for staking yields and eliminating security risks due to too low staking weights
- Strongly incentivizing holders to actively stake their HYDRA coins thus reducing money velocity
- Enabling burning on transaction fees to counter-balance inflation — by utilizing the 50% Transaction fees protocol burn feature, as transactions start to grow, the deflationary economy will work in parallel with the inflationary block rewards. This will solve one of the most challenging problems on how to manage the monetary base (total supply) and reduce inflation as the network matures into an adoption driven system (make sure to read the HYDRA whitepaper for more details..)
Please note that the inflation-based model was not possible before, as the inflation generated by fixed block rewards was incompatible with the fixed supply of LOC. The two concepts would be working against each other.
With the new unpegged solution it will be possible to maintain a deflationary LOC economy on top of an inflationary blockchain. A unique win-win that unlocks maximum potential on both sides.
This setup also eliminates cross-economical risks that would otherwise be caused by the interdependence.
Since the block rewards will no longer be solely dependent on the transactional economy, this also allows us to launch the chain much sooner than it was otherwise planned. The new target date will be December 2020.
Read the Hydra Blockchain Whitepaper for more information:
Whitepaper
The New Staking Economy
The staking economy will experience a dramatic boost through the introduction of the fixed percentage based inflation setting. The starting setting for the inflation will be set at 20% for the first year of operation. Following the completion of the airdrop, the setting can be voted on by the community (within the range of 0 and 25%), although we expect the rate to remain stable for a considerable amount of time.
This will greatly incentivize the community as well as new members to join and participate in maintaining the blockchain, while at the same time generate strong annual yields for everyone who decides to become a node.
Due to the fact that not everyone will stake at the same time, the APR could end up being significantly higher than the inflation setting. Below are some examples of what staking yields can be expected:
The calculations above only take into account fixed block rewards. Income generated from transaction fees that aren’t burnt must be added on top of that.
The inflation is a guaranteed stream to nodes. Nodes are the most critical element of the equation. The guaranteed inflation maximizes network growth and stability. It also adds protection against multiple attack vectors.
-> As the network becomes more stable and powerful, it stimulates the ecosystem to grow as a transactional economy
-> The unique burn feature on transactions starts to fuel the deflationary economy which starts to work in parallel with the inflationary block rewards
-> The two work in a unique dance which leaves market dynamics to determine the monetary base, without putting any risk on node infrastructure. If adoption is weak, the chain will be in an inflationary mode and grow its value based on price and supply growth. If deflation overpowers the inflation rate, the supply will remain stable or even start to decline.
Solving one of the biggest economic problems with modern blockchains
Most blockchains usually apply a pre-determined “halving” as time-dependent events that are completely irrelevant from what the actual economy and usage of a particular chain are, and thus expose the whole network at risk due to unpredictability of node infrastructure income.
This translates to a significant systemic risk for node infrastructure collapse due to a sudden drop in node staking/mining income.
Uncontrolled inflation on the other hand poses the risk of degradation of price in time. Predicting when to change state and how exactly to do it is impossible, which is why HYDRA enables deflation to combat inflation as a background process and leave the market dynamics and actual transactional economy to determine the outcome. An elegant relationship that takes care of both problems.
This is possible thanks to the unique combination of high staking inflation and Protocol level burn on transaction fees (up to 50%). Both being able to work in parallel.
Hydra transforms the handling of this problem by using a continuous flexible market-driven system. A system that protects both, the infrastructure as well as the users.
Additionally, the unique HYDRA fiat rate oracle determines the transaction fees in USD. This further empowers the deflationary economy in case of severe price degradation arising from inflation. The reason for this is because as price drops, the transaction that costs the same amount in USD, would in that scenario cost a higher amount in HYDRA. As a result, the same amount of transactions result in a potentially much higher burn rate. This allows the network to self-balance itself economically based on market dynamics in case the price starts to degrade.
We have developed a special staking calculator for you, which you can use to calculate your individual staking income.
Hydra Chain Staking Calculator
If you need help with the calculator, please don’t hesitate to join our Telegram group.
As already outlined, given a sufficient transactional economy, HYDRA can turn into a deflationary state. This is the case if the rate at which coins are burnt through transactions surpasses the rate at which coins are minted through block rewards. The calculator above can be used to observe this behavior depending on various scenarios (see section 3 of the calculator).
The Meaning of “Hydra”
Hydra is a multi-headed water monster in Greek and Roman mythology. We chose the name because it shows the unique versatility of the project.
→ Each head symbolizes one node of the chain.
Legend has it that for every head chopped of, it would re-grow two new ones. It is also delivered that Hydra is immortal.
→ It is possible to attack one node, but getting it down will result in new nodes popping up (nodes going offline spike staking returns, stimulating the setup of new nodes).
→ Similar to Hydra, this makes the blockchain immortal as it is practically impossible to attack all nodes at the same time.
Each of the heads speak with a different voice, making it one of the few creatures of this kind.
→ Each node has its own voice through the decentralized governance protocol (voting on blockchain settings and new features).
→ Another analogy for the three-headed monster would be the unique 3 layer economy that HYDRA supports. Inflation: dealing with staking security and node infrastructure, Deflation: dealing with controlling monetary base (total supply) and Protocol Level Community rewards: The ability to reimburse 50% of gas to dApp developers as a reward for their contribution to growing the adoption.
In the meantime, The Kucoin Hack happened…
Backstory: Kucoin, one of the exchanges LOC is currently trading on, has been hacked a few weeks ago — with a total of 771,000 LOC being stolen in the process. As a reaction to this, we have immediately drained liquidity on all exchanges in an attempt to protect the project and avoid a token liquidation event from the hacker.
In the meantime, we have worked relentlessly with Kucoin to make sure we explore all solutions to the problem. While discussing various paths, we had a very strict red line:
We communicated with Kucoin that would not be supporting an ERC20 → ERC20 token swap and instead look to combine a potential swap with the launch of our mainnet
The main reason for this is simple. Doing a swap this time would set a precedent for similar cases in the future. Following this precedent would result in swapping tokens with every hack happening to any third party in the future, essentially breaking the very fundamentals of what a decentralized blockchain is meant to be. Not to mention all the practical overhead and implications to holders.
Also, the direct financial costs a swap costs, since swapping would involve all exchanges, and all non-Kucoin exchanges would normally demand a substantial fee to compensate for their overhead.
Turning a Tragedy into an Opportunity
On the other hand, we currently have a very unique opportunity waiting to be captured. As you know, we have spent the past 2 years developing our own blockchain, with the second testnet running successfully and without major interruptions since it started in February.
Of the 150+ projects affected by the hack, we are the only one having access to such a special opportunity.
In short — having a readily developed and tested blockchain as a unique asset, opens up a convenient solution to the current situation, without setting a precedent or breaking the promise of decentralization.
As tragic as the Kucoin incident has been for many projects and investors — we are uniquely positioned to turn this into an opportunity. By making this powerful move now, we can assist victims with a speedy recovery from the incident.
At the same time, we can eliminate the permanent risk of the hacker dumping the stolen LOC once and for all, without setting a swap-related precedent for similar cases in the future.
Although the hack has not initiated the development of this proposal, it has helped catalyze it and eases the organizational steps to perform the migration. It is not always easy to get exchanges to support a swap. So why not take the opportunity when they are asking for it themselves?
The Kucoin event helped catalyze a development, which was in preparation for almost a year. It also coincided with the design upgrades that we have come to as a conclusion after analyzing all of the previously mentioned strategic limitations.
We need your vote to put the whole plan in motion!
Here is Vote the Proposal
- Pulling forward the launch date of the LT chain to December 2020 (currently scheduled for when a booking rate of 150 bookings/day has been reached on LockTrip.com)
- Rebranding the LT chain into Hydra Chain
- Keeping LOC as a token, by migrating it from Ethereum (ERC20) to Hydra chain as a new LOC (HRC20). The Swap will be managed by our team
- Launching HYDRA coin as a standalone coin, powering the Hydra Chain
- Airdropping HYDRA coins to LOC holders over a period of 50 weeks (2% per week)
- Unpegging the marketplace economy from the blockchain economy, by funneling them through LOC and HYDRA respectively
- Unlocking long-term sustainability by turning Hydra into an inflationary blockchain while keeping the LOC token with its deflationary economy
- Preventing 771,000 LOC (which were stolen in the Kucoin incident) from being swapped, thus eliminating the risk of a dump by the hacker and most importantly protecting the victims of the hack
- Refunding Kucoin with the stolen LOC
Next Steps
(all of the specific steps have already been negotiated with exchanges and partners)
- Getting approval from the community to proceed with the proposal (Pending)
- Launching Hydra testnet (2–3 weeks)
- Disabling trading on all exchanges
- Launching Hydra mainnet based on proven testnet
- Listing HYDRA coin on HitBTC
- Migrating LOC token from Ethereum to Hydra, supported by Kucoin and HitBTC
- Refunding Kucoin with the stolen LOC
- Starting the 50-week Airdrop of HYDRA coins to LOC holders
Update: The official Hydra website is now live! Visit through the following link — hydrachain.org
Place your community vote here (Deadline is Oct 27)
Due to the major changes involved with the proposal, we are seeking approval from the community. Please case your vote through the form below if you approve the proposal.
If you are having troubles voting in the embedded form in this medium post, you can also do so by clicking on this link
Please note that the deadline for voting is Tuesday 27th Oct |14:00 UTC Time.
Please join our Telegram community if you have any questions. We are curious about your thoughts and feedback.
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LockTrip is a blockchain-based travel marketplace that allows users to save up to 60% on their bookings by cutting out middlemen. Every booking burns LOC proportionally to its booking value, continuously reducing its total supply.
