Questions & Answers from our AMA (Pt. II)
Tags: Blockchain, Cryptocurrency, Ethereum, Tech, Bitcoin

Please note the transcript has been edited for clarity and brevity.

(8) What are the timelines regarding transitioning from alpha to beta? When are we going to be on mainnet?

JASON: ‘Alpha’ and ‘Beta’ are terms loosely defined. We declared alpha as the ‘multi-stage user input phase’ while we’re still running at this stage of alpha on testnet. Together with our customers we’re building out the feature set of the protocol layer, as well as middleware and SaaS. We’re going to have several series of this, but we’re also going to be moving to mainnet reasonably soon.

BENJAMIN: As we’re building (OpenST) 0.9.3 now, 0.9.4 focuses on the token holder contracts that allow users to own the tokens in a full web 3.0 sense, while still enabling applications to integrate with them. We want to get this right before we move to mainnet, because on testnet it’s easier. On mainnet we want to have the protocol upgrade version and the governance better worked out and implemented. That’s for OpenST 0.9.4. Then for OpenST 0.9.5 at the platform level, we want to work on the multi-chain aspect. Right now we use one utility chain and we are looking to improve the code so that it can be any number of utility chains with some constraints. We’re also working on moving these auxiliary systems, the utility chains, that carry the burden of computation away from Ethereum mainnet. This turns them into “Proof of Stake” systems.

For testing purposes, we’re running them on “Proof of Authority.” The beauty of OpenST Mosaic is that it’s agnostic about what system it runs on, bearing some constraints or assumptions that need to be accurate. Moving to mainnet we want to move the auxiliary systems to more robust Proof of Stake systems as layer one.

JASON: A lot of people will jump from there: From ‘testing’ to ‘when will customers be going live’. It’s important to emphasize that there’s a number of features that are being built over an extended period at the protocol level, at the middleware level, at the SaaS and even at the consumer level. A lot of it depends on when a company’s project actually works. In short: It depends on the feature set that’s there at that moment and whether it’s enough for them to want to launch this for their end users.

We will be on mainnet sooner versus later. That’s when we will start working on the right customers deploying at the right time, followed by further developing with more customers, more POCs and more Alphas based on user input.

(9) There’s already talk about Alpha Phase III. Can you tell us more?

JASON: There’ll be some twist regarding how we run the challenge. The big thing to look forward is the first consumer wallet API. This means that in an integration with OST you can have individual users with personal wallets, enabling you to view the actual token transfers. This is a big departure from the current macro view of transfers in OST KIT or on OST VIEW.

BENJAMIN: People will notice that this goes hand-in-hand with the token holder contracts. This is the first, important step towards building the standalone Wallet. Then at the protocol layer, we’re developing the token holder contracts.

(10) Question from Sokefra: Why as a customer would I want to allow atomic swaps, or swapping around your token for interoperability? If I use my branded token as a loyalty coin, it’s because I want repeat customers. Allowing trades works against this and my customer may use them elsewhere. Why would we want them to use the last one?

JASON: I think most people are familiar with the historical loyalty programs offered by airlines and hotel chains. These programs allow you to earn points, but they decide how many points you earn. They can change the rules at any time, and there’s no transparency as to how much these points are worth. This means a central authority gets to decide whether you get to buy that reward ticket for this flight.

What we see with the decentralized internet and with cryptocurrency is a straightforward principle: if it’s yours, you own it. You can do whatever you want with it. This will open up all sorts of new possibilities. If someone owns the currency, then it’s up to them to decide whether they want to spend it within your economy or elsewhere. Now, that’s not to say that companies might not set up rules for how they wanted to operate with other companies. There might be various layers of convenience factors. If you as an individual wish to unstake your Branded Token and spend it somewhere else, you might have to go through a process of first taking your Unsplash token, unstaking it, getting OST, and then converting it to something else.

Some providers may offer convenience through a wallet that allows you to do that, or an atomic swap that enables you to do that. Those are opportunities where there could be transaction fees or permissions taking place. The free market will help determine this, and some companies will be protective of their interests. I guess everyone should keep an open mind about it. We can also expect there will be more and more decentralization: There’ll be more and more individual ownership of their stuff, their things. We all have to figure out how to play well within that concept.

As with many innovations that give power back to the users, companies taking the lead through better customer experiences and better customer service tend to gain competitive advantages. The second most valuable company in the world is Amazon, and Amazon’s always led by providing the absolute best customer service. They accept your return no matter what, even if they lose money on it, because over the long-term you’ve won with your customers.

I think companies taking this customer-first approach will say “Forget about the old way of doing loyalty programs. If we allow ourselves to be part of ‘you earn it, you own it,’ and we allow ourselves to be part of a broader ecosystem, and we give people reasons to earn and spend within our system and elsewhere, we’ll make it easy for them and maybe even take a cut of it. If we play well within that, that’s a huge opportunity to take a leadership position in the next generation of commerce.”

(11) Why is it beneficial for a company to launch their own token?

JASON: The word token is symbolic of ownership and wealth. The “tokenize the world” concept is based on finding ways to incentivize and motivate your users for taking specific actions that benefit your overall ecosystem and economy. A token enables you to monetize otherwise hard to monetize transactions, especially when we’re talking about micropayments or micro-transfers between individuals.

If you were to reward someone with a couple of pennies for uploading a picture, the transaction fee would be too high and not worth it. So how do you You need to find a solution for that, while also enabling people to accumulate earnings by doing a lot of these little actions that contribute to the community. A big part of it is allowing companies to create a full-cycle economy where you have people who are earning the token, buying the token, and ways to spend the token. You then build these loops that keep the economy flowing within your marketplace. It all comes down to having this velocity going on within your economy. That creates stickiness, and it creates engagement.

It also allows companies to rely less on the big guys, like Facebook and Google, or customer acquisition. Simply put: if you can motivate your users by giving them $2 or $3 as an incentive for taking action that benefits your economy, most companies would choose that over spending $10 to acquire a user on Facebook.

(12) The way you scale is by using side chain mechanisms, but are these side chains decentralized? Do they live on a network or are they not on OST servers?

BENJAMIN: That has always been important. One part of the answer why we started looking into what we call side chains is that it helps with data availability. It’s crucial that if you are starting to siphon off some of the data away from Ethereum mainnet to get to that scalability. And that other data should still be available so that anyone can start from genesis for that subset of transactions and validate its way. In that sense it is decentralized because it’s even decentralizing away from Ethereum mainnet.

Remember that with OpenST Mosaic we’re building a layer two network and protocol, where the layer one of those utility chains is hosted by a set of companies. Maybe the foundation with other partners that want to join will follow, but it’s of interest to the end user that that it’s a highly performant network. It is equally of interest to the end user that those parties who are just providing that availability cannot determine the outcome of what happens on the side chain. That’s why OpenST Mosaic is an open network of open sealers that is defined on Ethereum mainnet.

It’s essential to emphasize that OpenST Mosaic brings all the definitions, value and economic finality back to Ethereum mainnet. We optimize it in such a way that it is asynchronous, with the burden of computation on the auxiliary systems that are more performant. This way we leverage the security of Proof of Work in Ethereum to secure these auxiliary systems. It’s that open set of sealers that defines what is finalized on those auxiliary systems. In order to get to the actual value, we call it a value chain and a utility chain, you need to unstake it. On order to unstake it you need to have a majority vote of what was true on the Ethereum mainnet to prove against that.

JASON: Here’s a simple example: If you earned 100 Unsplash tokens, that earning of those tokens or the transfer of those tokens to you happened on the side chain. This is an open system in itself. The way that it’s proven that you’ve earned that equivalent amount of OST (either unstaking it for OST or when someone gives you something else that’s worth the same), that transaction is happening on Ethereum in a decentralized manner.

BENJAMIN: When you say “proven” we talk about the immutability of what has happened on those auxiliary systems. All the votes, all the blocks that have been proposed, they’re all provable against what those open sealers from OpenST Mosaic are publishing on Ethereum mainnet. Any fraud or attempt to revert what was finalized can be proven. The stake of whoever is proposing the blocks, whoever was trying to defraud the OpenST Mosaic system; those proofs can be presented, and the stake can be taken away. In that sense the immutability is also preserved for those auxiliary systems.

(13) If a company has already created their Branded Token and then OST ratio and that’s been set, how do you continue growing your economy with your user base? Bear in mind that it’s only a finite amount that you’ve already staked at the beginning.

JASON: There’s a couple of things embedded in this question. The simple way to think about it is that, when you want to mint your Branded Tokens, you take OST, and then you create an equivalent amount of your Branded Token. It could be one to one, or you could set a conversion rate at the beginning of one to a hundred.

Imagine you start off with $1,000 worth of OST, and you want to turn that into 10,000 of your token. You take it into a smaller denomination. If you have a large company, you don’t need to mint millions of dollars (or OST) worth of tokens.

We wanted it to be that you can grow as you grow. The intent is that, as your economy is growing and your users are placing more demand, they’ll want more of your tokens. Either they’re buying more of your tokens, or they’re earning more of your tokens. There’s always someone paying for the token, if it’s an incentive or a reward, then you as a company are paying for it. If it’s for a service, then the end user or the business that you’re transacting with will be paying for it, and then using it by spending it.

Then you go back, and you mint more of your token. You stake more OST and you mint more of your tokens at that same conversion rate.

The question we often get is “what happens if the price of OST goes up?” The answer there is very similar to what happened when the price of Bitcoin went from $100 to $10,000: You need to buy fewer Bitcoin to create the same amount of value. In this case, you need to stake less OST to create the same value worth of your token as long as you’re setting prices within your economy the way that you want to set them.

Most people today still pay their rent in their local fiat, so if they’re earning tokens on Unsplash, they probably want to set the amount of Unsplash tokens that they’re charging for an action in USD and have it automatically convert to the number of Unsplash. That automatic conversion, we call it a price oracle, happens regardless of what’s happening to the price of OST. This ensures that no matter if OST is worth $1 or $10,000 a coin, you won’t have to mint more of your tokens. Your users are still charging how much they want to charge for the service, and that’s driving your economy.

(14) What are we doing regarding increasing the price and where can we find OST? Also: Do we plan for more exchanges?

JASON: I think those who have been around our project for a while know that we don’t comment on the token price. From the very beginning we’ve been running a professional project where OST is all about the technology, about the solution, and, ultimately, all about customer success. We think being this essential fabric of the decentralized internet is a very big vision. This will create lots of value over time, and that’s what we’re focused on. When people speculate on token prices and say, “Well, what about these other guys, who are out there hyping their coin left and right.” I always point to folks that if you looked at the first five years of the internet, 99% of the companies that were hyped like crazy back no longer exist today.

These are early days in blockchain, and we’re focusing on building real solutions. We’re not focusing on OST’s token price. We aim to build something that customers want to use, and those customers will then go and need to buy OST to stake against minting their Branded Tokens. That’s the market force that is in effect there. OST needs to have a value. This is the only reason why it’s listed on exchanges, because it needs to have a market value so that customers can go and buy it and have a value assigned to it.

In terms of exchanges we also want to make sure that companies and persons who are working on OST have great places to buy OST. When we move to mainnet, developers will need to acquire OST to build their proof of concepts: We’re committed to making OST available to purchase on the the most popular exchanges in the world.