Telos Improvement Proposal: TLOS Token Exchange Reserve

TIP: 0011

Title: TLOS Token Exchange Reserve

Authors: Douglas Horn, douglas@goodblock.io

Status: Draft

Type: Protocol

Created: 2018–09–27

Abstract

An Exchange Reserve of 140,279,973 TLOS tokens should be created to capture all of the expected TLOS tokens that will eventually need to be created for EOS genesis token holders whose tokens were on exchanges at the time of the EOS snapshot. Creating a consistent and clearly defined TLOS token supply from network launch has several advantages including providing a more consistent public message about the value of the Telos Blockchain Network.

Motivation

Telos is committed to reserving or printing tokens for those EOS owners as of the ERC-20 snapshot whose EOS tokens were locked on exchanges at that time. The Telos white paper called for a process whereby these tokens would not be created at network launch and instead would be created from time to time as exchanges and similar entities such as web wallets or investment funds who hold tokens for multiple beneficial owners in comingled accounts. However, printing new tokens ad hoc has disadvantages compared to printing all of the expected tokens in the money supply into a block producer-controlled multi-sig Exchange Reserve account at launch and distributing these locked funds to exchanges instead of printing new ones.

Rationale

The Telos white paper calls for new TLOS tokens to be minted in the future by the block producers at the time when each exchange, web wallet, or other entity that held EOS for multiple beneficial owners at the time of the EOS ERC-20 snapshot agrees to the terms of the Telos Blockchain Network’s agreement (such as subjecting each individual account to the 40,000 cap, providing TLOS tokens to the customers at the time, et cetera). Lately, it has become apparent that this poses some problems and that it would be better to create all the tokens at network launch and allow future block producers to disburse these tokens rather than newly mint them. This avoids several small problems and is a better approach than to greatly expand the TLOS token supply in the future.

Creating a more realistic full money supply at launch allows Telos to report a more accurate initial money supply to exchanges who consider this value for listing. It eliminates future shifts of value when large new amounts of tokens are minted for exchange customers. It more accurately presents the real inflation of the system for block producer pay and worker proposal system reserves. It anticipates the possibility of resources being allocated directly to token holders at some future point, which exchange customers would otherwise miss out on.

Authority for disbursing tokens in the future is the same as it would be for minting new tokens: the block producers at any time may vote to either create new tokens or disburse the locked up tokens by a vote of 2/3+1. If the amount of tokens reserved should prove to not be enough to provide tokens to all EOS token owners of record, block producers will still have the ability to print more tokens for these owners.

Specification

It is proposed that Telos create an Exchange Reserve account holding 140,279,973 TLOS tokens to make the money supply at the launch of the Telos Blockchain Network 331,753,222 TLOS. This account shall be controlled by a multi-sig wallet requiring 2/3+1 of the current block producers at any time in order to disburse funds. This is the same standard that would have been required to print new tokens. This provides a much more realistic initial TLOS token-supply, which is beneficial for all Telos stakeholders. If it should occur that in the future, these reserved funds are not sufficient to create tokens for all EOS genesis tokenholders, the block producers at that time may still print new tokens to make up the insufficiency. If it should happen that all genesis EOS token holders have claimed their tokens and there are excess tokens remaining in the reserve funds, the block producers and community at that time may determine how to dispose of the excess tokens. Possible actions include destroying the excess tokens, applying them to the worker proposal fund accounts, or distributing them among all current TLOS tokenholders.

Discussion

Douglas Horn: There are no expected negative ramifications of this proposed change.

Copyright

This document is in the public domain.

Read ‘Telos Improvement Proposal: TLOS Token Exchange Reserve’ on GitHub: https://github.com/Telos-Foundation/tips/blob/master/tip-0011.md