A Welcome Note from Echo
This was originally posted on Echo’s blog. We’ve included another section specifically focused on the Po.et Foundation’s plans for upgrading to Echo.
Last week, Po.et announced that it would be migrating its media applications and future development work from Ethereum to the Echo network. We’re thrilled to welcome the Po.et team and community to Echo.
We think that in today’s digital age everyone is a content creator, whether on social media or professionally, and there’s never been a greater opportunity to empower those content creators through cryptocurrency payments, digital identities and blockchain-based content ownership, discovery and monetization.
We share Po.et’s vision of building tools that empower the individual creator and extending Bitcoin’s security model to create a better web built on top of trust, verifiability and accountability. The opportunity in front of Po.et is massive: to onboard millions of new users with publishing tools and applications that are impossible without an open, public trustless network.
We know that it’s critical in the early stages of any blockchain network to build an engaged community of users who can:
- Provide feedback on the current Echo testnet
- Test the mobile wallets, block explorers and infrastructure for the Echo network
- Help us bootstrap the security of the Echo mainnet by running full nodes
- Participate in the consensus mechanism as block producers and verifiers
- Build decentralized applications or onboard existing DApps to Echo
Echo wants to attract a diverse, knowledgeable community that will make it the leading smart contract development platform. Instead of doing an ICO or IEO, we have chosen to build out multiple participation and incentivization programs that are meant to distribute tokens to communities, teams and individuals already involved in blockchain technologies. Po.et’s technology and community are a natural fit to bring on to Echo.
ECHO Token Basics
The Echo network has a core asset, called ECHO, which is used for the security mechanism of the consensus algorithm. If you run a full node and stake ECHO, you can earn both block rewards as well as a stream of transaction fees (paid in either bitcoin or ECHO) from processing transactions. The likelihood of being selected as a block producer or verifier and earning these rewards is proportional to your balance of ECHO.
To compare it to other types of consensus mechanism, ECHO can be staked in order to earn rewards similarly to proof-of-stake networks and the chance of being selected to earn rewards is similar to the difficulty level in proof-of-work networks. Both of these work together to create a secure network that is designed to promote decentralization.
ECHO can also be used as a type of “gas” fee to defend the network against spam or DDoS attacks, in addition to using bitcoin for fees.
ECHO is not designed to be a payment currency on the network.
The supply of ECHO is uncapped and the inflation rate adjusts dynamically based on network conditions to ensure the security of the Echo network. If fewer than two-thirds of all tokens are being held by honest users, the network begins to generate empty blocks due to failure of consensus and the protocol increases the block reward (which inflates the entire token supply) in order to incentivize more rational users to participate in consensus. When the performance returns to the acceptable threshold, the block reward is decreased over time until it returns to the minimum inflation rate.
To learn more about the ECHO token, read the PoWR consensus overview.
What Are the Terms of the Upgrade?
We’re excited about the opportunity to onboard the Po.et community as early adopters of Echo to help us with these objectives. By upgrading, POE holders can participate in Po.et’s migration to Echo and help support the security and decentralization of the network that will power Po.et’s smart contracts, plus earn staking rewards as soon as possible.
Echo is offering a combination of a 1:1 swap of ECHO for POE, plus additional incentives to early adopters that give up to a 2x bonus. Early adopters are crucial for us to attract to the Echo testnet and we hope that this offer incentivizes a great initial decentralization of the network.
The bonus period will begin with the next major testnet release and last for ten weeks. Every week, the bonus multiplier will decrease by 10 percent or 0.1 ECHO. For example, upgrading during the third week of the bonus program will give you 1.8 ECHO for every POE token.
We know that there is always risk in adopting new, experimental technology and so we’re making this upgrade offer available indefinitely and upgrading to ECHO is entirely optional. You will not be force converted into ECHO.
If you choose to wait to convert past the bonus window, you will still have the option to upgrade your POE to ECHO at the 1:1 rate for an indefinite amount of time.
How Else Can I Get ECHO?
There will not be an ICO or IEO for ECHO. Instead, Echo wants to distribute tokens as rewards for participation in securing the Echo network, contributing as an infrastructure partner, or through incentive programs meant to attract individuals and teams already working in the blockchain industry.
Currently, there are three ways to get ECHO tokens:
- Upgrade POE to ECHO
- Become an Echo infrastructure partner
- Earn ECHO by participating in the future R&D grant program, bug bounties and other upcoming programs
How is Echo’s initial supply divided?
There will be an initial supply of 10 billion ECHO tokens, broken into three main buckets:
- POE tokens reserved for the 1:1 swap account for 31.4 percent of ECHO supply
- Echo infrastructure partners account for 25.5 percent of ECHO supply
- Echo reserves (ecosystem fund, token treasury, employees, advisors, incentive plans, bug bounties, etc.) account for the remaining 43.1 percent of ECHO supply
The bonus for POE early adopters comes from Echo’s reserves as an incentive fund. Any ECHO not claimed during the bonus period will stay in Echo’s reserves to use in the future.
Becoming an Infrastructure Partner
To help bootstrap the launch and security of the Echo network, up to 25 percent of the initial supply of ECHO has been set aside for infrastructure partners. These partners will support the network by making a 12-month minimum commitment to running nodes and staking more than 1 percent of ECHO, as well as participating in securing the sidechains. To date, these partners have invested more than $6,000,000 into developing Echo. Echo Technological Solutions, the company managing the initial staking infrastructure, has less than half of the available partner positions remaining. If you’re interested in learning more about how to become an infrastructure partner, reach out to team@echo.org.
How to upgrade your POE
The current iteration of the upgrade contract can be found at https://github.com/echoprotocol/poe-conversion-contract.
As of right now, there are still more reviews happening, so this is not the final version.
More specific details on how to perform the conversion and use the contract will be released along with the beginning of the upgrade bonus window, including how to use mainstream wallets like MyEtherWallet.
[Update: As of November 7th, you can find the live upgrade contract and transactions at https://etherscan.io/address/0x7243fada342d9c3fb1ca6a97f300db713fa78bd3.]
IMPORTANT: This upgrade mechanism through a smart contract will be irreversible and permanent. No one, including the Po.et or Echo teams, can retrieve or spend any POE sent to the echo_upgrade contract — it is “frozen” forever. You assume all risk by using this smart contract.
Echo and Po.et’s Future Together
Our goal is to build the best infrastructure for decentralized applications and projects like Po.et by:
- Supporting Bitcoin for smart contracts, opening up these apps to the massive user base and liquidity of BTC for payments
- Interoperating with Solidity and the EVM, so that existing projects can migrate to Echo seamlessly
- Opening up smart contract development to millions of new developers by supporting many traditional programming languages
For the Po.et community, we’re thrilled to have your support for Echo from such a foundational stage. We appreciate your input, feedback, bug reports and testnet participation as we prepare Echo for launch. It’s incredibly valuable for Echo to have a partner like Po.et, which can help inform our design decisions and developer tools.
What Will the Po.et Foundation Be Doing With its POE Tokens?
The Po.et Foundation will be splitting the POE reserves currently owned into two parts.
The first part will be reserved for supporting investors in getting ECHO positions via POE for those that unable to become an Echo infrastructure partner. We are limiting the amount of POE tokens reserved at 156 million, which represents ~5% of the current POE market cap and ~1.5% of the initial ECHO supply. These tokens have already been set aside in preparation for working with those investors when needed.
The remaining 468 million POE will be upgraded into ECHO tokens at a 1:1 basis and used to secure the Echo network. The Foundation will not be able to participate in the bonus incentive program; instead, the reserved allotment of ECHO held for POE token holders conversion will have their staking delegated to the Foundation in order to generate rewards until they are claimed.
All of the proceeds from any token sales and staking rewards will stay with the Po.et Foundation in order to fund the development of decentralized media applications built using the Echo network and Linked Claims protocol.
Get Involved
We’re excited to share more information about how the Po.et community can participate from the ground floor in Echo’s launch over the coming weeks. In the meantime, get involved by:
