OmiseGO crowdfunding structure update

Hi everyone,

This is Jun, Donnie and Vansa from OmiseGO. Thank you for your interest while we work to finalize the crowdfunding structure. Over the past few days, we have tried our best to consult the OmiseGO community across time zones and communication channels (e.g. Slack, WeChat, QQ, Twitter, Reddit groups to name a few examples). The decision we made reflects what we believe is in the best interest of the OmiseGO network’s long-term growth.

The community narrative around token crowdfunding have had many lessons learned for everyone in recent months, due to whales, miner bribing, and participants being offered discounts. Every new crowdsale gives us more data points and lessons to learn from. In addition, individual interest in contributions have also increased to unprecedented levels. While that all sounds exciting, it also reveals a number of unforeseen issues which we want to share with the community to understand the impact for not only our project, but also others considering projects and the wider community looking at this space.

Issue #1:

We received an incredible amount in commitments during our Bitcoin Suisse pre-sale alone. At this point we are facing demand of over $60M total, which is significantly more than the $4M we intended to originally allocate to Bitcoin Suisse. We had not expected this level of interest and were primarily working on and had already made significant commitments to early participants who could provide long-term value towards contributing to the success of the project; we want to honour our prior commitments. So of course, with the current pre-sale cap we can't fill everyone's interest even in the Bitcoin Suisse pre-sale.

Issue #2:

One of the biggest concern across the OmiseGO community (and dare we say, the crowdfunding community) is that the public sale will be completely filled by one or two whales. For us, this presents a concern around the fairness and optimal design of our network. The network performs better the more participants are staking. We have suspicions and concerns that one or two people want to buy up all the tokens.

Issue #3:

We are getting a high amount of inbound from people asking about the availability of the tokens, given the fact that this token has a cap on the total amount which can be raised (to ensure that an unnecessary amount of money isn’t raised). We want to align long-term incentives, and part of that is raising what can be useful for the project, and no more. We are concerned that taking in the current interest of $60M (or more, as demand will grow over the coming days) would be irresponsible and taking in that much may even decrease the odds of success of the project. What we are building is ambitious, even revolutionary, on both a network and application level. However, more money will not get the thing built and deployed, and enough is enough.

We have determined that the most responsible course of action is as follows:

It’s clear that the traditional form of token sale we’ve seen even 4 months ago no longer serves today’s needs. Vitalik Buterin, Ethereum founder and OmiseGO advisor, clearly outlined the current challenges in a recent blog post and offered a few suggested solutions, all which have their own strengths and limitations. Vitalik was not involved in the final decision making of the sale process, but his thoughts - along with our discussions that happened both before and after his post - have played a significant factor in our decision-making process.

OmiseGO has chosen to align with the model of capped sale where we limit the amount that can be bought by each person as a way to mitigate the “whale” problem and ensure wide distribution of token holders at the time of sale. However, trying to enforce a per-person limit for an on-chain capped sale won’t currently work; all methods that have been proposed are subject to either Sybil attacks or alternate whale strategies. Therefore, effectively enforcing a limit requires a non-trivial KYC process and whitelisting people after they have been verified; this is the service that Bitcoin Suisse is offering as a trusted intermediary. We prefer open systems, and presume that eventually solutions will be explored in the coming months ahead, especially with novel smart contract mechanisms.

The capped sale model will be as follows:

  1. We increase the overall cap of the sales to $25M from $19M to accommodate more contributors. See our updated roadmap below for more information.

  2. Bitcoin Suisse pre-sale cap will be increased to $21M, with minimum contribution size remaining at $5,000 equivalent and maximum contribution at $100,000 equivalent (excepting prior agreed commitments directly with OmiseGO above the maximum). Registration confirmation will remain on first come first serve basis, if you have already submitted your application prior to closing of Bitcoin Suisse pre-sale registration on June 13th then you do not need to do anything else at this point. Just wait for their confirmation email, starting later tonight. For those of you who haven't registered, registrations will be reopened for a short period of time on Thursday, 22nd of June, 2017.

  3. Allocation of $4M will be sold to other pre-funding platforms, which can accept smaller contributions, and which are willing to enforce a lower maximum contribution per person (which Bitcoin Suisse is not). In this way, we can ensure liquidity of the tokens post-crowdsale and accommodate buyers who may unable to go through Bitcoin Suisse because of their strict document requirements or high minimum contribution requirement. The platforms will be announced later this week. We have agreed with these platforms that they are for non-US persons and/or residence only.

We hope this is an understandable and acceptable arrangement for everyone, and we apologize for any confusion this might have caused. We wish you a safe and rewarding crowdfunding experience.

Roadmap

Stage 1

OmiseGO white-label wallet SDK prototype

An initial wallet SDK prototype targeting developers and managers will be made available for both Android and iOS. The goal is that anyone from the IT department, to a business development operative, to a manager, could download the SDK, insert a few keys and a logo, and have a live, branded wallet to experiment with, within 10-15 minutes.

Prototype workshop

We will continue to engage with corporate clients and partners, in order to test and refine the prototype, identifying key functions to address specific user needs and use cases. These cases will be fed back into the development prioritization as needed.

Scale our development team in Poland

We are expanding our team of Ethereum and application developers. Since 2015, we have been working in collaboration with a development team in Poland. Moving forward, we plan to scale up our development team using this contacts and experience.

Stage 1.2

OmiseGO white-label wallet SDK launch

Launch wallet SDK with fully functioning wallet-to-wallet money transfer and bill payment, plus integration with debit and credit cards for top-up and cash-out options (e.g. ATMs, over-the counter at OmiseGO partners or merchants), and integration with the Omise payment gateway.

OmiseGO hosted server node

Storage on a blockchain is very expensive, and should primarily be used to verify the accuracy of information such as identity, balance, and transaction history. An OmiseGO hosted server (similar to Coinbase or PayPal) is a generic database layer combining secure and cost-effective storage. This may be used by a financial institution for wallet transactions that are transacting within their own ecosystem. Such institutions may also want a centralized ledger where they can hold user funds in custody, or where coordination across institutions is not an immediate factor of concern. This hosted server node is constructed to be compatible with open blockchains (i.e. code will be able to be used for an ETH hosted wallet), and decentralized wallets will replace this for interchange in the 2018 development schedule.

Framework for decentralized cross-wallet payments

The detailed system architecture and design for decentralized cross-wallet payment over the OmiseGO network (including on-chain transactions) is finalized with feedback from the technical and business community.

Stage 1.3

Peer-to-peer SPV “light” mobile client launched

Functions include a validating ledger and maintaining balance of users funds without dependence on centralized/hosted wallet servers (only dependence on full nodes). Front-end of hosted app will be updated for full compatibility with SPV client.

Open-source centralized exchanges (with decentralized fund custody)

We will focus on developing, or applying already-developed, centralized exchange and clearing solutions that are in-line with our end-state vision of fully decentralized on-chain exchange (as opposed to just decentralized fund custody, or merely off-chain decentralized exchange).

Further work may be done to develop hosted interchange and clearing and to prepare a system where transaction fees can be paid to token holders for validating interchange. Initially, during the test phase, OmiseGO may run validators which have greater share (but do not receive validation fees); in the final deployment, these will be removed.

Stage 2

OmiseGO decentralized exchange (DEX)

This includes a proof-of-stake blockchain and OMG as staking token. Other functions include:

  • Decentralized exchange governing the core consensus rules
  • The ability to use SPV proofs for ETH contracts requiring a ticker price
  • Being able to create smart contracts whose execution syncs with smart contract expiration
  • Bonding with ETH as backing token and enforcement of smart contracts
  • Interchange payments for digital wallets
  • Payment channel support
  • Batch execution engine and order book

Order blinding

We will develop a system that allows blinded orders/commitments to be placed to encourage transaction confidentiality and reduce systemic risks of market manipulation, and make improvements that will allow for blinding to be implemented on what is a natively pseudonymous and permissionless network without significant performance sacrifices.

Bitcoin (and Bitcoin-like) clearinghouse

We will develop constructions that will allow Bitcoin or Bitcoin-like blockchains to participate in decentralized exchange via external bonding (of those tokens) enforced by the OMG chain and backed by Ethereum mainnet smart contracts. Rather than use SPV proofs (to safeguard against chain attacks from counterparty-chain miners), the clearinghouse system will use novel Lightning channel constructions and bonded release of information to allow Bitcoin to be traded in a decentralized way on protocol token blockchains.

Stage 3

PoS and core consensus mechanism research

We will carry out further Proof-of-Stake research and develop core consensus mechanisms for scaling Ethereum smart contracts for cross-blockchain use.

OmiseGO Ecosystem Development Fund (“OmiseGO Fund”)

Omise has been supporting the Ethereum ÐΞVgrants program since 2015 and has witnessed firsthand a number of initiatives that benefited the Ethereum ecosystem as a result of it. We ourselves are also a beneficiary of it through the role we played in developing Raiden, the Ethereum version of Lightning Network. As this is a public network whose consensus is determined by its participants, public participants have significant influence over the network. Helping to fund and increase decentralized development of the OmiseGO chain is fundamental to its success. These funds are to further the goals, with an emphasis (but not requirement) on open source projects, with a principal goal of community development. Further, as token holders can run different open source implementations, encouraging a wider ecosystem (along with increasing ease and ability to have a diversified development process) within the network with contributions from many more development stakeholders.

We are looking to continue to support the growth in this ecosystem through the OmiseGO Ecosystem Development Fund. We will allocate a portion of our resources towards improving the community, as well as towards research and development, with the objective to support initiatives that can benefit the long-term growth of the OmiseGO network and Ethereum community. Specifically:

  • Further research and development on PoS and the core consensus mechanisms for scaling up ETH contracts cross-blockchain, beyond the immediate needs for realization of the OmiseGO network. The funds allocated to companies, individuals and/or organizations are intended to be used to hire, allocate resources,and develop a team to do research and development on behalf of OmiseGO’s project goals. Further research into innovation in robust Proof-of-Stake consensus mechanisms is a necessary area of research and development for OmiseGO directly applicable towards Decentralized Exchange scalability.

  • Provide developers interested in contributing to the OmiseGO network and Ethereum ecosystem the opportunity to spend time on their project, in order to bring it to completion.

  • Projects that contribute to core software, its development process or key parts of the OmiseGO ecosystem (common services, APIs, ABIs).

  • Increase our outreach to other communities and the general public. We will also consider funding opportunity for tech startups that may be looking for technical and funding support to bring their technology onto the blockchain space. We expect the OmiseGO Fund can be a strong vehicle to make it easier for mainstream innovations to be integrated into the blockchain community.

  • Resources allocated to marketing and recruiting future candidates to contribute to the public OmiseGO network.

  • Fund can be used for (but not exclusively limited to) payment of professional services or equipment, payment of expenses incurred as part of collaborative workflow, payment to help cover cost of project members, to create public goods which develop blockchain payments.

Web: omg.omise.co
Slack: omg.omise.co/slack
Reddit: reddit.com/r/omise_go/
Twitter: @omise_go
Email: omg@omise.co