The Phonon Brief #7: Feb 4-Feb 10

Published in

Phonon DAO

7 min readFeb 10, 2022

Welcome to the 7th edition of The Phonon Brief. Our aim with this newsletter is to keep the Phonon and the wider crypto community informed of the latest news, including product launches, governance changes, and ecosystem updates. If you’re interested in learning more about Phonon, follow our official Twitter and Medium accounts.

Summary

Product Roadmap
PDBG Recap
Chain Analysis

The Phonon Product Roadmap

This week the Phonon Product Working Group had a meeting to work on the short-term roadmap. The meeting covered key Phonon Network infrastructure pieces and the requirements necessary for achieving them. The DAO will provision 300 cards for the Phonon Testnet and up to 10,000 cards for the Phonon Network Beta.

The next discussion topic was the Phonon Wallet which is what will provide the ability to create phonons and transfer them privately. The testnet will initially allow for the transfers of BTC and ETH. Support for ERC-20, ERC-721, and ERC-1155 will be added to the protocol in the coming months, potential through a bounty program.

Native Phonon mining is the next development planned on the roadmap. This will require the emission schedule to be determined which is the maximum number of native phonons that can be emitted if all cards mined to their maximum capacity.

The launch of the Phonon Testnet will towards the end of March. The DAO will be building out documentation to help people join the testnet and will be selling sets of cards and card readers. There will be a standard set that comes with 2 phonon cards and a card reader, and a dev set that comes with 4 cards and two cards readers so transactions can be without having to find a counterparty. The DAO will be incentivizing this testnet by providing PHONON for completion of certain tasks that have not yet been defined.

The DAO will also be looking to hire a firm to run a high-level security audit. Testnet will run for approximately 2 months.

Additional info on the product updates can be found below in the PDBG recap.

PDBG Meeting Recap

This week’s meeting jumped into overarching DAO needs to begin the transfer out of the bootstrapping groups hands and into the working groups.

Website and Socials

On the web and content side the Socials need more members actively running them along with the email address. Currently, Justin is the sole person running them. We then went into some length discussion about revamping the phonon.network website. Justin and Karl mentioned that the current website designer is working on some added features and design for the website, along with the designer from the GridPlus.io website. An RFP could be initiated for this, but consensus was fine with waiting on the current designers to implement updates.

Real World Foundation

An overview of our real world entity was relayed to the group. The legal counsel who worked with MakerDAO and Uniswap recommended that we create a foundation in the Cayman Islands that can carry out anything in the real world decided by the DAO. A secretary and a director are needed for this which will cost around $20,000 per year and these members are still being vetted. For example, this foundation would be able to sign any necessary documents that go along with a centralized exchange listing.

VC Interest

VC funding was a topic in the product meeting and was readdressed here. Karl had mentioned that there are some VC’s interested in getting involved with Phonon, Polychain Capital was one that was mentioned. The communities general take on this was that VC’s at this stage seems to early and could end up being a regretted decision at our relatively low price. Waiting until we have a working product could give the DAO more leverage in negotiation terms further down the line. It was mentioned that we would be interested in hearing from some of these VCs in regard to what they offer and how something like raising funds would work.

Product team should decide on an amount of working capital they need and the economic group can help figure out how to best achieve that goal.

Mission Statement

Mission statement is still being worked on. Two visions being debated, one as a peer to peer cash world and the other as a Layer 0 descriptions. A mission statement meeting will be held to hammer out the final draft ideas so we can get the mission statement on the website.

DAO Testnet

The testnet is going to be our alpha where we can flesh out the basics of participating in the Phonon Network. Karl and the team are working to have this out in the next 5 weeks. When that launches there needs to be documentation on the website about the testnet and how someone can join, where they can get necessary equipment, and what the incentive structure will be for taking part. It will also be important to get technical support users to help guide less technical people through certain processes.

Native Phonon Mining

Understanding mining is critical for using the testnet. Karl gave a detailed breakdown of the native phonon mining. A native phonon is mined on each card, it functions the same way as a hashshare on bitcoin. It is mathematically provably unique based on the number of leading zeros. Relative value is determined by relative rarity, the number of leading zeros doubles the rarity which essentially doubles the value in a rational market.

There are three parameters that can be set, mining efficiency, total number of bits of difficulty that can be minded on the card, and total number of phonons that can be mined on a card. Using those parameters coupled with the number of cards in each produced and sold in each parameter set we can create a supply curve overtime. Karl beliefs this curve should not have a maximum like btc but should have a curve that has an inflation in perpetuity to allow for microtransaction and use of value.

Issues brought up are how do you make sure no one is premining phonons and how do you verify that native phonons are genuine? Premining can be solved by the manufacturers producing lists that have card IDs with the parameters that they have produced, then if anyone notices variation or cards that are not on that list you know that the manufacture has violated terms. To verify that they are valid, native phonons included signatures of the generator, so everything is traceable back to where that activity happened. This would then allow you to set up a blacklist similar to https.

Next a question was asked was how is this going to be related to the PHONON tokenomics. The most straightforward would be through a reverse dutch auction of a limited number of cards with a certain number of parameters and that auction was settled by PHONON tokens it would intrinsically link the native phonons to the PHONON token.

Are multiple manufacturers able to all produce the same native phonons or will there be separate native phonons like there is btc and ltc? There is a certificate set that will represent the various manufacturers which would allow you to expand native phonon mining to all manufacturers or you could have it based on one single manufacturer.

An example of all of this in practice and how the tokenomics works would be if in year one 20,000 mining cards were produced that had 100% efficiency allowing for 10b bits to me mined in a year, the in the following year another 20,000 cards arid produced with a lower efficiency. These cards could be sold through a reverse dutch auction which would allow the market to determine the price of each card based on the perceived value of the native token and their ability to mine. The auction would be settled in PHONON tokens which would require people to purchase tokens and pay with them creating revenue for the DAO while increasing the PHONON price. As the cards gain in value the amount necessary for the bid on the cards each year would be higher and higher. During the testnet we are looking to implement a version of this to bring thoughts on how this works and what the UI would look like.

A separate meeting needs to be managed to discuss how many cards and what the emission curve should look like. The Phonon DAO can also vote on what the emissions should be each year for this curve which is another value prop for the PHONON token.

The other tokenomics at play is requiring manufacturers of cards to bond PHONON tokens to add an additional layer of security against bad actors.