This article was written before the CR Council Elections ended. It was originally published by CR Herald, and translated by Joel Ma

The first CR Council will be elected at block height 658930. As the time approaches for the CR Council to take office, the number of CR Council candidates, as well as the number of votes have increased progressively. Community members have paid increasing attention to the handling of the approximately 16,310,000 ELA (hereinafter referred to as “1631”), and there are more opinions for what to do with this find still being formed. It is the view of CR Herald, that only after the fullest discussion can we reach the greatest degree of community consensus and gather community strength. Therefore, CR Herald invited Song Shijun, the head of the Elephant Team, to share his views on the election of the CR Council.

 

About the Author:

Song SJun, a partner of Elastos ecosystem, is responsible for Elastos’ business development and technical support in mainland China. He has led the team to develop Elephant Wallet, Elephant Supernode, certificate deposit services and DPoS voting services.

 

Song:

As the first CR Council is about to launch, whether it is myself or another member of the community, some may not fully understand the details of this new ecosystem. Therefore, I have searched for and verified some information that the community cares about and will share it here. This can be a reference about the candidates for the token holders. This article is very long, and is divided into two parts. The first part talks about some factual, or “cold”, knowledge of CR, and the second part talks about my personal understanding of CR and the “1631” point of view.

Part 1

The “Cold” Knowledge of CR rules

  1. The scope of CR management

Everyone has high expectations for CR. In theory, CR manages a large part of ELA, which consists of three parts:

  1. Airdrop part (also known as “1631”), the remaining fund after the initial airdrop is about 16.3166 million ELA;
  2. Block rewards, 30% of each block reward is allocated for CR to manage. That’s 396,000 ELA per year;
  3. Before the establishment of CR, EF promised to donate the remaining ELA from the Interim Council to the newly elected CR Council. That is approximately 1.2355 million ELA.

 

Note:

  1. Point #2: The whitepaper stated that the rewards for the block generation are allocated to EF, who announced they would donate to CR at the 2018 anniversary in Thailand. 
  2. Point #3: The balance is to be transferred to the CRC Fund Address, which is managed by the first CR Council. The CRC Fund Address is CREXPENSESXXXXXXXXXXXXXXXXXX4UdT6b.

 

  1. Method of Fund Disbursement

Although the above assets are managed by CR, it does not mean that the members can use them at their discretion. CR assets are managed by two wallet addresses: the CR Asset Address and the CRC Fund Address (commonly known as the CR operating wallet). These two wallets are not ordinary wallets, but are based on node consensus management. The former is managed by the programs (hard-coded), while the latter is managed by the node consensus and the elected members’ multi-signature is required. The node consensus program will judge the elected member’s public key and judge the validity of the transaction signature based on it.

The CR Asset Address keeps all ELA assets managed by CR. The CRC Fund Address keeps ELA assets available to the current Council members. The consensus process will allocate 10% of the CR Asset Address balance to the CRC Fund Address. This is what the CRC white paper guarantees: that only 10% of the CR Asset Address can be used by each one year Council rotation. When a new CR Council is elected, if the CRC Fund Address has a balance, it will be allocated to the new CR Council. Each proposal must be agreed upon by not less than 2/3 of the members to get funding approved, and the funding cannot exceed 10% of the initial amount of the CRC Fund Address of the current rotation. This is guaranteed by consensus.

The reward for CR for each block enters the CR Asset Address instead of the CRC Fund Address, which results in the money generated this year having to be spent next year. In order to ensure the operation of the CRC and avoid the occurrence of no funds in the first CR Council, EF has transferred the balance of ELA donated to the CR Interim Council to the CRC Fund Address, which is controlled by the first CR Council.

The first CR Council has 1.2355 million ELA to use, and the disposable amount of the CR Council in 2021 is (1631.66+39.60) x 10%.

Of course, all of the above assumes there will be no token burn.

  1. Comparison of Four Modes

In view of the community’s discussion on the burn of the “1631”, here are also four scenarios for readers’ reference:

1. No token burn

CR Initial Assets: 16.3166 million
Year CR Asset Balance Fund for the Current Year
2020 16.3166 million 1.2355 million
2021 15.0413 million 1.6713 million
2022 13.8936 million 1.5437 million
2023 12.8606 million 1.429 million

 

2. 30% token burn

CR Initial Assets: 11.4216 million
Year CR Asset Balance Fund for the Current Year
2020 11.4216 million 1.2355 million
2021 10.6358 million 1.1818 million
2022 9.9286 million 1.1032 million
2023 9.2921 million 1.0325 million

 

3. 50% token burn

CR Initial Assets: 8.1583 million
Year CR Asset Balance Fund for the Current Year
2020 8.1583 million 1.2355 million
2021 7.6989 million 0.8554 million
2022 7.2854 million 0.8095 million
2023 6.9133 million 0.7681 million

 

4. Full token burn

CR Initial Assets: 0
Year CR Asset Balance Fund for the Current Year
2020 0 1.2355 million
2021 0.3564 million 0.0396 million
2022 0.6772 million 0.0752 million
2023 0.9659 million 0.1073 million

 

Note:

  1. CR initial assets refer to the amount agreed to be transferred to CR in the “1631” valid proposal;
  2. The balance of CR assets refers to the balance after the transfer of 10% from the address of CR assets in the current period, which is equal to (the balance of CR assets of the previous period + 30% of the 4% annual inflation – the total amount of current funds);
  3. The total amount of funds for the current period refers to the amount of funds available for the current CR Council, which is equal to (the balance of the CR assets in the previous period + 30% of the 4% annual inflation) * 10% + the balance of the CRC Fund Address when the current CR Council generates (if any);
  4. The white paper stipulates that 30% of the 4% annual inflation will be allocated to EF, which was announced to be donated to CR on the anniversary on August 25, 2018;
  5. The numbers in the above are rounded to 4 decimal places;
  6. All the data in the above tables are current estimates, and the specific amount is subject to actual implementation.

 

  1. How To Dispose of Assets?

According to the current rules, when the first CR Council votes to pass the proposal for the “1631” disposal plan and announces it to the community, a valid proposal will be generated and EF will implement the proposal. Those allocated for the token burn will be destroyed, and those allocated for use will be transferred.

For the 4% annual inflation, in theory CR can only determine 30% of it. To touch the basic economic model of ELA, it is necessary to form a broad consensus between the mining pool, DPoS nodes and CRC to change the codes for the entire network upgrade.

Also, can CR modify the node code? Of course, anyone can modify it to generate their own version. (Advertising: At present, the Elephant node is a node that has been modified, which supports the Elephant Wallet, and can charge the transfer fee of the Elephant Wallet).

However, if the consensus layer code is modified, the entire network must be upgraded. This includes:

  • All DPoS nodes (including 12 Council nodes);
  • All merged mining pool nodes.

The first CR Council has a huge responsibility. The above information is for the reference of all participating candidates and voters. Please make sure to make an in-depth understanding before making a decision.

 

Part 2

My View on the Value of CR

Bitcoin has taught us a wonderful lesson in cryptography. A bookkeeping system that does not belong to anyone can issue a world currency that no one can control. Even its creator has disappeared without a trace, which makes it a God-like project and the most trusted blockchain project in the community because it is a public facility without private interest.

Elastos’s vision is to establish private ownership on the Internet, so that data has its own owner, and transactions can only occur after ownership is established to bring a new economy. This will be another era of the Internet. In order to achieve this, the world must be convinced, just like Bitcoin, that Elastos can help everyone privatize their data. It must let itself own no private interest. Forming the community and establishing Cyber ​​Republic stemmed from this intention and goal.

The reason why the remaining ELA after the airdrop were not destroyed was because the goal of expanding the community had not yet been achieved. As a project that launched later than some other projects, we have the opportunity to learn from the experience of earlier projects. Bitcoin’s consensus mechanism has only two kinds of participants: miners and coin holders, and no developer is considered. As a software project, the developer team is of course very important. Such a design led to community conflicts in the future. These are the problems that Bitcoin has not solved.

To solve the above problems, Elastos has developed into a hybrid consensus: PoW+DPoS+CRC. Among them, PoW is responsible for generating blocks, and DPoS is responsible for signing. They complete the incentives for miners and currency holders; CR is composed of people, which is a kind of a “human consensus computer”. The Council members evaluate the community contributors, and these “community miners” can get rewards. These community miners are not just developers, but also promoters, users, and operators. In addition to rewarding contributions, efforts can also be encouraged, such as rewarding usage efforts, promotion efforts, and operation efforts. The CR Council are like jurors in court, and they can be flexible enough in the face of future uncertainty. Together with machine consensus, “human consensus” forms the cornerstone of trust on the Internet in the future. This kind of economics, in which everyone obtains tokens through “mining” is also the essence of Bitcoin: no pricing for tokens at the beginning, and tokens are only to indicate workload. When workload produces value, the market will provide tokens a price. The value brought by participating in “mining” far exceeds an airdrop.

With the core team becoming community contributors, the role of EF will become smaller and smaller. The CR Council elected by the community will become the core of the community governance of the Elastos community. This will be an innovation of a governance model after Bitcoin. This allows the community to accommodate various voices, and allows different parties to resolve conflicts through CR. This is a credible computer that everyone makes a decision on. It will automatically run on the virtual network and will become the notary office for public property of the Internet. This sounds transcendent, right? If it can be done, will Elastos succeed? Will each of us be rewarded? The result is self-evident.

Many people just saw the token price going down, and simply made a mathematical calculation: the numerator is unchanged, the denominator is halved, and the value of the quotient is doubled. But this is actually mistaken. The so-called “1631” is not counted in the denominator by CMC. Whether it is destroyed or not will not affect the price. Taking a step back and saying that even if the token burn has driven the price and doubled, is everyone satisfied? Succeeded? Compared with two years ago, the price difference is dozens of times less, so can it be restored only by a token burn? Even if the price doubles after the destruction, the market value of Elastos is only $50 million, which is a negligible valuation in the Sino-US investment banking circle, even lower than the valuation at the time of Foxconn’s previous investment in Elastos Industrial IoT project in 2013. At present, the new Elastos Internet based on blockchain technology has been basically completed and started to operate independently. It is no longer a simple project plan and a few simple demonstrations. Without ambition and courage, don’t try to do big things and make big money.

Let’s think about it from another angle. If Elastos is a startup company with only one shareholder and 100% holding, would you like to attract talents during the development process? Do you want to give them equity incentives? How many shares do you plan to reserve? Let’s take a look at a few Internet success stories: Ali’s Jack Ma and Tencent’s Pony Ma account for single-digit shares. Ren Zhengfei accounted for 1% of Huawei. Of course, they did not own so few on the first day, but share the results of the future on the road to success. So, we reserve 50%? 1.2% per year? How much is suitable? I personally think this is a key point for the Council members to make important considerations.

Looking at the current Internet, it invented the “free economy” because it is now an explosion of material and information. What is scarce is attention. It must first be free to get customers, and then find a means of monetization. The blockchain is born out of the Internet, and more emphasis is placed on the community economy, or the token economy, to let everyone “mine” to participate, and the talents earned by labor are both consumers and investors, so that good projects can be developed. 

If CR does not have tokens to incentivize, how do we realize this token economy?

Finally, I saw an old friend of the community “Lao Mao” mentioned to avoid the “planned economy”. I am also a fan of Austrian economics. I very much support the abolition of any top-down “plans”, but CR is not a “Development and Reform Commission.” I don’t think it’s a place to make plans or make money from investment funds. It’s the “human consensus computer” I said earlier, which evaluates the workload of “community miners” and issues ELA rewards. At the same time, it is also a place that brings fresh blood to the Elastos community. It should do something different from EF.

The above represents only my personal views, and rational discussions and opposing opinions are welcome.