XY/XYO/COIN — Company Update: Looking at 2021 and Beyond

It has been a challenging year for pretty much everyone in the world, and here at XY, we had our fair share of challenges. Usually, my measure of success for a year is by how much we have grown our business.

The way that I have been looking at 2020 however, is a little different. I instead ask whether or not we are better off now as a company than we were a year ago, and whether or not we are better positioned to grow in the future. The answer to this question is a resounding yes!

This company update focuses on the our responses
to the volatility of the crypto markets, XY Company goals for both our products and our token, and a summarized roadmap that extends past the 2021 calendar year.

First, a Little History

In 2018, we set out to build a decentralized data marketplace based on the XYO Protocol and Token. We completed the technology and initial network for this effort, but the reality of crypto economics has shown that the decentralized approach to this problem is still not yet viable and still out of our control. Even Vitalik Buterin has been quoted as saying that he feels that building business around dApps is not something that is currently viable and will most likely not be for the next few years. Unfortunately, I’d have to agree.

Ethereum
Ethereum suffers from the network economics’ “Primary Use Problem”. Due to the constraints of supply of resources (processing, storage, etc…) in a network like Ethereum, the most economically viable use case sets the price out of reach of every other use-case. In 2018, this was centered around ICOs and people’s willingness to pay high gas prices to get in early in a sale. This has now gotten at least an order of magnitude worse, with Decentralized Finance, or DeFi.

DeFi systems, like UniSwap, have controlled the transaction costs, driving them up, for nearly all of 2020 and will most likely continue to drive that price through 2021. Add the Conservation of Cost problem that decentralized systems suffer from in general, and Ethereum, nor any other current decentralized solution, is viable. (See Fundamental Principles of Network Economics)

How this Affects the XYO Network and XYO Token
At XY, we recognized these economic challenges early on, especially when talking to potential partners regarding the use of the XYO Protocol and Network as a data marketplace and data verification system. Nearly every potential partner we spoke to was excited about what the XYO Protocol had to offer, they too wanted a better solution for their industry’s issues, but unfortunately, the reality of crypto-economics made affordable solutions difficult, if not impossible.

The additional cost was not slight. At the time, it was an order of magnitude difference (replacing $0.50 tracking with $5-$15 tracking). This limited the use cases substantially. At current ETH and gas prices, it is closer to two orders of magnitude ($0.50 => $50). Effectively, we were asking people to pay 100 times as much for something that was (at best) twice as good. There is no other product that I know of that, outside of some select pharmaceuticals, that can command this sort of premium.

Action at XY
When we realized these challenges, we substantially switched our approach to achieving the XYO vision. We introduced COIN, the “Collective Observation Incentivization Network”.

COIN is a centralized data marketplace that still uses cryptocurrency as a method of transacting. Users initially received only XYO for their data, but for various reasons, we moved to rewarding people with COIN to allow them to choose how they would like to be rewarded. As you probably know, this has been a great success to date.

We have built a multi-party data marketplace, that covers both ongoing data generation (location and other heuristics), and on-demand data generation (surveys, bar code scanning, advertisements). In COIN, people naturally build out their data profile by using the application, and based on their ongoing data, they have opportunities to generate on-demand data. With COIN, we realized an initial goal of XYO, albeit in a centralized way, that is economically viable for our users, partners, and our company.

XY Company 2021 Goals

Grow the size of the COIN Network: We need to expand our user base substantially to be able to satiate the appetite for data of our larger partners and to open up additional opportunities. This is a good problem to have. Too many buyers and not enough sellers.

Continue to find new data buyers and paradigms: We have identified many forms of data that are difficult for companies to get at scale, and easy for a large user base to acquire for them.

More data buyers will mean more opportunities for our user base to create and verify data and to earn more COIN.

Introduce new tools for our XY Data Miners or the XY Data Miner Community: Our primary data collection tool currently is the COIN application. In 2021 we expect to introduce at least one additional mobile app and web application that helps our users mine different types of data in ways that they choose and providing additional avenues to get rewarded for that data.

Reconsider Decentralized Technology: At XY, we are huge fans of decentralized concepts, and we will continue to monitor the state of decentralized technology to once again add decentralized features to our network. However, we will only do this when the viability of these approaches has been established.

We acknowledge that many of our XY Data Miners are also fans of decentralization, so we want to ensure stability and viability for these features prior to introduction.

XYO Token Plans

COIN: XYO Tokens will continue to be a primary redemption option for COIN. XYO Tokens and XYO-ETH UniSwap Tokens (coming soon), will continue to be the basis for HODL Rewards. This pushes the XYO Tokens towards being more similar to XRP, rather than ETH. We continue to purchase XYO tokens on the market for a portion of the redemptions in COIN. As the COIN Community grows, both the percent of XYO bought for this purpose can be increased and the absolute amount of XYO needed for redemption will increase.

XYO World: We will continue to use XYO World and Quad Keys as our primary mapping system. Even though XYO World is currently stagnant due to ETH gas prices, there are options to how to unstick it. Options include waiting for ETH 2.0, centralizing the bidding/sale of the Erc721 tokens, or moving the bidding/sale contracts to a side chain. Rewards in XYO World are coming soon, and will be based on both activity and staking of the system.

Staking: XYO World includes the ability to stake geotokens both on and off-chain. We continue to examine ways to utilize this functionality for various use cases.

XY Company: We realize that the difficulties with decentralization described above may be a cause for concern for our token holders. We have been searching for ways to include XYO Token holders in the success of the XY Company regardless of postponing the intended decentralized utility for XYO.

We considered many possible ways to provide value to token holders and after extensive discussion with our attorneys, we have concluded that the best and possibly only legally compliant way to return value to XYO Token holders based on the growth and success of XYO, is via ongoing token buybacks and also a token buy back in the case of the sale of the company. The details of this plan will be published on the XY Company and XYO Foundation websites in the next few weeks.

XYO Protocol Plans

SDKs: The current SDKs (JavaScript/Node, Swift/iOS, and Kotlin/Android) are all serviceable and will continue to be the XYO Decentralized SDKs. We will develop and launch new SDKs that allow access to the Centralized XYO Network being used by COIN as demand requires it.

Clients: The current Bridge/Diviner/Archivist Client is serviceable and will continue to be the decentralized XYO Decentralized Client. COIN, COIN BOSS, Purchases, and Lifehash are the primary XYO Network Centralized Clients.

Roadmap

COIN — Data Marketplace Technology
Rewarded UniSwap Pair Tokens (Q1–2021)
Rewarded Ground Truth Validation (Q2–2021)
Rewarded Receipt Scans (Q3–2021)
Rewarded Store Feedback (Q4–2021)

XYO — Data Verification Technology
Physical Purchase Verification (Q1–2021)
Digital Identity Verification (Q2–2021)
Physical Location Verification (Q3–2021)
Physical Identity Verification (Q4–2021+)

Lifehash — Data Management Technology
Beta Release Development (Q1–2021)
Closed Beta Release (Q2–2021)
Open Beta Release (Q3–2021)
Version 1 Release (Q4–2021)

XYO World — Decentralized Digital Location
GeoToken Rewards (Q1–2021)
ETH Gas Price Solution Selected (Q2–2021)
GeoAnchors Introduction (Q3–2021)
ETH Gas Price Solution Implementation (Q4–2021+)

Purchases — Spend Protection & Management
Beta Testing Completion (Q1–2021)
Improved Transaction Validation (Q2–2021)
Improved Transaction Mapping (Q3–2021)
Improved Card Management (Q4–2021)

Note: This roadmap is subject to change. As we release new features, additional opportunities can arise that take the priority of previously planned goals.

Arie Trouw — If you enjoyed this, please follow me on Twitter: @arietrouw