(FAQs) MoatCoin for Dummies: A Plain English Explanation of the MoatCoin Protocol
We are receiving a lot of common queries from people interested in MoatCoin. The following seeks to simplify how MoatCoin Protocol works and to walk you through the system in an ELI5 fashion. I’m even going to write things like “ELI5 = explain it like I’m five” because that’s how basic this is going to be. This is your parent’s MoatCoin tutorial. If you’re looking for more details and technical explanations, speak out at our communication channels:
How will you explain MoatCoin Protocol to a complete newbie?
It’s a Fund Managing Protocol. The concept of a MoatCoin is fairly straight forward — it’s a token (like bitcoin and ether) that exists on a ethereum blockchain. But unlike bitcoin or ether, it doesn’t have any value of its own. It have a derived value from the crypto coins it hold under its unbrella. It’s underlying value will increase if the coins under management increases in value. Its backed by some real values, not promises.
If MoatCoin doesn’t have any value of its own then why issuing MoatCoins? Simply distribute the funds (ETH) between different altcoins.
Moatcoin shows Proof of Membership (POM) in the total MoatCoin ecosystem. You will have rights over propotionate funds if you hold MoatCoins.
So we are raising 200 ETH in our ICO which will be eventually diversified into altcoins. You send us 4 ETH, received 20,000 MoatCoins and you own a bit less than 2% of total MoatCoin funds (to be specific 1.9%).
Let say, after 1 year, our altcoins are worth 300 ETH aggregate. Now, your MTC will be worth 300*1.9% = 5.7 ETH (1.7 more than your initial investment). Not disseminating the fact that the ETH is also increasing in value at the same time when compared to fiat currencies.
We will release the redeemption period as per the demand to redeem the Ethereum by buring your MoatCoin.
Why I own less than 2% (to be specific 1.9%) despite the fact that 4 ETH (that I funded) is 2% of 200 ETH (you’re raising)?
We have a dedictaed team behind MoatCoin working full time to build a transparent and secured blockchain based fund managing protocol and we too have bills to pay. I’m sure, you don’t want us to starve.
So smart contract is designed in a manner which generates an addtional 5% of the MTC automatically credited to our team’s Ethereum address everytime someone send ETH to mint MoatCoins.
Your 4 ETH will generate 21,000 of MoatCoin of which you receive 20k and our team 1k. Win-win. Our maximum supply limit is 1,050,000. The 50k will be issued to team if we hit the hard cap of 200 ETH.
What other charges are you deducting? State all hidden charges.
No hidden charges. Promise. Even if we try, MoatCoin Smart Contract will not allow us to charge you in any manner.
Just 5% of MTC at the time issuance. No further charges. Whether you keep MoatCoins for 1 month or 1 year or 1 decade. Our smart contract will not allow us to charge you in any manner.
We are having the most appropriate fee structure in industry to sustain in long run. Fund management protocols like TAAS has completely leveraged the fee structure. 15% direct cut at the time of ICO and charging 25% of the profit every quarter is more than enough.
We are determined to define all the important functions to transparently and securely run a portfolio managing service on ethereum blockchain using Smart Contract.
Your whitepaper says that you’re charging annual dynamic fees and profit sharing. You white lied!
Good catch.
Our whitepaper is not updated with recent changes in fee structure. Previous fee model was:
- 1% of NAV charged annualy.
- 5% of profit charged quarterly.
Now, our fee structure is:
- 5% of the issued MTC.
And that 5% is also flexible. If we provide bonus in our FCOs, that bonus will be deducted from our 5% share keeping the whole MoatCoin ecosystem valuation unaffected.
Why did you changed the fee structure?
Our new fee structure is performance oriented.
Previously, we are drawing out ETH as a fee. Now, we are receiving MTC so all of the ETH funds we are raising in our ICO form the MoatCoin portfolio. Team have no rights to take even a tiny ETH from the ecosystem and that’s how the smart contract is designed.
We are totally different from the current trend of ICOs where most of the ICO founders have direct access to the funds without any market-ready product.
Previously, we were sharing the 5% of the quarterly profits. To calculate the profits, we have to compare our cryptos valuation with fiat currencies and also have to peg MoatCoin to a base fiat.
Unfortunately, we can’t do that on Smart Contract. There is no reliable way to get the crypto fiat price on smart contract so implementing that will surely bring the manual calculation and centralisation.
So why don’t we charge our cut on Smart Contract itself at the time of minting MoatCoins, once in lifetime. You can stay in MoatCoin ecosystem as long as you want without being charged further. Any questions?
How do we trust that our funds are in safe hands?
DA-ICO.
We are implementing DA-ICO in MoatCoin protocol. This is where we are separated from other fancy ICOs where all the ETH are withdrawn immediately by the team members on the future promise of building their product.
We can’t simply withdraw anytime or any amount of ETH from the smart contract. MoatCoin protocol restricts the withdraw of funds using a concept Decentralised Governance which means there is no single governing party.
This is how the funds will move:
- Create a proposal for investment for approval against board members (and even you can create the proposal).
- Collecting the specific ETH amount from the smart contract (after the board’s approval).
- Transfering to our exchange account.
- Buying altcoins (ERC20 tokens).
- Transfering altcoins to our Smart Contract.
Here’s an indepth article: Implementing Decentralized Autonomous Structure in MoatCoin ICO
Are you registered with Government?
Wait! What? Why are we even considering this question?
The whole point of using smart contract is to create an agreement between 2 parties without any third party interruption. There is no need to register with any central authority as all the transaparency is maintained by Smart Contract. And programs can never be baised. They will accurately do the job they are programmed for. You can check the code and all the related transactions on Ethereum Smart Contract (we will create a guide for this later).
However, government may implement taxation which must be paid personally whenever you convert your crypto into fiat currency.
Our previous question and this article explains clearly how Decentralised Governance ensures the safety of funds.
The only point where we have centralised access to the funds approved by the board (not all of the funds) is while buying tokens from centralised exchange. Currently, the decentralised exchange are not matured so the volumes and execution speed is very low. Many initiative like 0x, loopring is working towards easing the process of decentralised trading. Let’s wait to let it grow.
However, we will stay away from any kind of centralised setup as far as possible.
But aren’t there already fund managing protocols? How will you differentiate yourself from TAAS, ICONOMI etc?
Yes, I agree. There are many fund managing protocols but most of them lacks the transparency and are mostly centralised — the team have full access to all the funds at any point of time. You can’t get a clear picture of actual movement of your funds inside their protocol. And fees are extremely high (already illustrated above).
We are only dealing in ERC20 Tokens which is a type of standardised crypto coins hosted on Ethereum Blockchain. TRX, BAT, EOS, BNB, REP, AE, MKR, ZRX etc are all hosted on Ethereum blockchain.
So we can store ERC20 Tokens in our smart contract ensuring the safety, providing a transparent protocol to the underlying assets of MoatCoin at any given point of time.
All the transaction are also publicly available on ethereum blockchain. We dare to betray you.
So if all your investments are public, what stops someone to invest in the same cryptos?
You’re are free to do so but not everyone are free.
I invests in ETF M100 every month. It’s an instrument which contains top 100 listed Mid Cap companies. The management team of M100 charges an annual fees. Despite knowing the underlying stocks, I prefer to stay away from the hustle of managing many stocks and rebalancing them on quarterly basis.
And hustle in crypto space is far much higher than any other market. If you’re really diversifying your portfolio, you have to manage credentials of so many accounts. I personally have a file with more than 20 credentials of different registrations which includes 5 crypto exchange, dozens of private keys ( bitcoin, ethereum, ripple, litcoin, metamask, steemit, status etc). More to be added.
If you lost any creds, you lost the amount. No way to recover the funds. That’s the loss you have to bear for being in decentralised world.
So instead of the hustle of managing keys, rebalancing portfolios, tracking market, why don’t get the benefit of economies of scale by investing in MoatCoins with a dedictcated team to interact. Not everyone actively track the market so its better to let others manage your funds.
However, if you’re actively tracking and trading cryptos, you can replicate our portfolio which is publicly available at https://moatcoin.com/portfolio
I’m not convinced. What if I bought MoatCoin and changed my mind to sell it within 1 month? How can I do so?
You can do 3 things after minting MoatCoins:
- Transfer it to any ETH address.
You can exchange MoatCoins (ERC20 Token) with any other ERC20 Tokens or Wrapped ETH. You can also simply transfer it to your wife’s or friend’s ETH address with no consideration. It’s transferable easily.
- Redeem it for ETH (burn it in consideration of ETH).
On quarterly or half yearly basis, we will open the window for redeeming your MoatCoin in consideration of ETH below NAV value of MoatCoin but not above NAV.
- Donate your MoatCoins (just burn it).
God bless you.
We are also planning to build an in-house exchange for trading MTC with ERC20 tokens in a decentralised manner. We will make accurate statements in 1st quarter 2018–19.
Why will you redeem MoatCoins below NAV value?
Our protocol is curated for long term benefits of token holders. Longer you hold MoatCoins, higher will be your benefits.
- No dividends.
Every coin have a compounding effect.
In stock market, the companies with very low dividend payput ratio are the one which outperform the market in long run.
Despite the company having billions of dollars of cash on hand, the prospect of a Berkshire Hathaway dividend is dim as long as Value Investor Buffett is in charge. The company has paid only one dividend during his reign, in 1967, and Buffett later joked he must have been in the bathroom when the decision was made.
That profits can be used to buttress the company’s financial position results in greater wealth for shareholders than paying dividends. Berkshire Hathaway’s stock price increased by almost 700,000% between 1964 and 2014. Someone who invested $1,000 in the company’s stock in 1980 is a millionaire now.
Our protocol doesn’t allow usto distribute partial funds so 100% of the funds will be reinvested in crypto currencies. Or we may also conduct buyback programs time to time.
- Buyback.
While in bearish trends, we may propose the buyback of MoatCoins from existing tokenholders at premium and burn it. These benefit investors in two ways — they allow them to cash in some or all of their MoatCoins at a premium price that they would not receive in the open market. And the remaining tokenholders also increase their ownership stake in MoatCoin Fund as the total number of MoatCoins are reduced.
Again the the tokenholder, which stick for long benefited the most. No strings attached.
Remember, in short run, the market is voting machine and in long run, it’s an weighting machine. We will always work in favour towards the long run benefits of our MoatCoin community.
I heard that MoatCoins doesn’t have any fixed quantity and are mintable? What if you insanely minted MTCs and credited it to your ETH address?
We don’t have power to mint the coins. Whenever someone sends the Ethereum to the smart contract, the coins will get minted as per the rate of MTC.
We can just set the minting period, rate, bonus etc required field as accepted by our smart contract to initiate the minting process.
You can instantly see the MoatCoins at your ETH address after transferring the ETH to smart contract, if the transaction is not failed. No need to wait for days to get the coins.
What will be the minting period?
24x7x365. Our minting will stay open forever (except the period of redeeming MTC).
We are conducting ICO for only issuing MoatCoins at par value. After the ICO period gets over, the minting rates will be higher. If anyone mint coins after ICO, the premium amount will be the value addition to the existing MoatCoin holders (who participated on ICO).
Again, the long term investor is benefited the most. MoatCoin is a tool to transfer the wealth from impatient to patient investor.
Rates will be reduced to NAV value whenever we will conduct FCO (Follow-up Coin Offering). Mostly on monthly basis.
What if there’s any bug in your Smart Contract and the funds get locked up? Did you take any precautions?
We had tested all the function thoroughly multiple times on Ethereum Ropsten Test Net. Here’s the link to our testnet smart contract.
Still, there are 2 ways to get ETH out from smart contract.
- Our team can collect the ethereum after going through the board approval process.
- Users can redeem their MTC for ETH after our team release the redemption functions.
We will always take necessary steps to secure our protocol. Smart contract will be available on Github for review purpose.
Upto what decimals MoatCoins can be divided?
Zero. You have to buy MTC as a whole. No decimals. It’s a unit linked investment plan.
Any whitepaper?
Here it is (not updated with new changes). We will soon published the updated one.
How to interact with the team?
We are active at following communication channels:
Disclaimer, please.
Here’s an honest statement that most of the crypto founders refrain to say (at least before their ICOs) — We sincerely apologize for spoiling the excitement, but it’s really important. Buying MoatCoin is extremely risky. We expect to have a very volatile crypto market where the price may plunge or spike by double digits in short spans. If you can’t handle the 50% drop or start dreaming lambos after 500% spike, don’t participate in MoatCoin ICO! We are expecting investors with long horizons.
Website — https://moatcoin.com
