Good afternoon, good morning everyone. I'm pleased to announce that the XO Token Design
2.0 Spaces is live and we are looking forward to hear community feedback, questions and
comments surrounding the proposed design. I think we can maybe wait one or two
minutes for some other people to join. Yeah, excellent. Hi Sean, I wonder if it
would be good idea just to post the new link because the old link seems to have
expired. Yes, so I adjusted it on Telegram and shared it on Discord too. Alright,
maybe just post on X as well. And then I don't know if Davin you want to join the
stage and then we can start getting a conversation going as more people join.
Great, I will invite Davin to speak.
Alright, hi everyone. I would like to invite a couple of you up onto the stage together
with Sean Ali who is hosting and facilitating. Come join me and let's have a conversation and
we can see if anyone else from the community joins, otherwise we can just run through some
of the principles of the white paper and plans around the token economy. So in order to join,
I think just request to speak and then Sean Ali will invite you up to the stage.
Yes, I've just the settings to allow anyone to speak.
Hello, Alpane. Hello Sean. Sean and Sean, how are you doing?
Very good, thanks. Yeah, I think so we're just kind of getting to the end of our
day here in Singapore. I guess for a lot of people more in kind of Europe time zone,
this time of the day isn't the most ideal for a community call. It's difficult to try and
coordinate across the time zones. I think it would be useful for us to kick off. I know we're
a few minutes in and we may or may not have other people joining us, but I think just kind of
running through a few of the updates around the token economics, timelines and any sort of
feedback that we're experiencing from the community and questions that you may personally have. We're
all members of the EXO team, but I think that what we can discuss here today will be of interest
and useful for other people who may listen into the recording or in future interactions with members
of the community. So I invite you to kick off with any comments or questions about the revised
token economics. Maybe I can just give a bit of context to this. So the EXO token launched in
2021 with the genesis of the mainnet. Our first network of the EXO blockchain actually goes back
to December 2018 when we had an issuance of ERC-20 tokens on the Ethereum blockchain.
And then those were swapped out when we went onto a layer one Cosmos SDK based blockchain and
introduced the EXO token as part of the genesis of that blockchain. And so we followed pretty much
the typical pattern for Cosmos chains launching around that time, which was to have a supply of
100 million layer one tokens. And I think what was maybe a bit different in our approach is that
we wanted to have a large allocation to a community pool with the intention that
being a hub to the internet of impacts, we should really be focusing on building out an ecosystem
and having the resources to do that. And so the idea was always to create a governance mechanism
around this and a participation mechanism as a DAO. At the time, DAO tooling wasn't really sophisticated
and so it's taken a while for the DAO to be tooled up and for the initiatives around the DAO,
which is underpinned by a Lekenstein venture cooperative to be formed. And now we have
a mechanism through which we can provide sustainable funding to grow the ecosystem
and to continue to invest in the development of internet impacts technologies. And so the initial
allocation, which was quite generous to the community pools, seems like it may be a bit redundant.
We also at the time launched with an inflation rate amongst pretty much a kind of bull market
where there was a lot of hype and a lot of demand for tokens. And so the inflation rate
was again very typical for most osmos chains, around 20% per annum, which meant that people
staking were getting effective yields of initially up to 50% per annum and then as more people staked
and the distributions were more distributed, the inflation, the yields came down to around 30%.
And so we've reached a point now looking back, having gone through a bear market and having
looked back at the utilization of network and the data around token economics and how that's played out,
where it's time for an upgrade. And we see this happening in nation states all the time.
They are central banks that change the inflation rates, that do quantitative easing
and deploy other economic mechanisms to heat up or slow down their economies and to change
the economics of their national currencies in relation to the local economy or the national
economy, as well as how that plays out across different economies with exchange rates and so on.
And so we have an opportunity, given that we are built on the great Cosmos SDK and the built-in
mechanisms for governing chains and their economies around the Cosmos SDK, we have the opportunity
to pull some of these levers around inflation rates and to pass governance proposals
that can lead to changes in the token economy in terms of the total supply, in terms of the utility
of the token and many other parameters that we have in our toolbox which we can deploy later on.
And so at this stage, the proposal is really about slowing down the rate of inflation,
decreasing the supply so that we don't have redundant supply, and increasing the utility
of the token. Now there's utility of the token that comes from the utility functions of the
token in staking in the network, in paying for transactions, in providing liquidity, in
automated market makers, and a whole range of other use cases we're now really starting to see
develop and be deployed and scaling up in our ecosystem. But we also had an idea of going back
really to 2017 in the initial XO white paper that there should be an incentive for
achieving the objective function of the network which is ultimately to achieve impacts.
And we now have in the XO protocol and with the blockchain services and all the related
software we have a full end-to-end solution for financing, managing, verifying,
and ultimately retiring the credits that get generated from impact-reducing processes,
such as reducing carbon emissions and producing carbon credits and then retiring the carbon
credits. And so reaching retirement is the end of the life cycle of an impact process and that
really in my view represents the completion of the objective function. And so incentivizing
that objective function, incentivizing people to retire impact credits such as carbon credits,
really I think is a supreme utility for the network and it goes back to the original idea
in 2017 that we could use the XO token as an incentive mechanism for reducing impacts.
And so this is really where we are today having experienced a few years of
real implementation and now being in a state of scale up and expansion, taking a new look
at the token economy and proposing some interventions to rejig the economy.
It was quite a long monologue, I'm sorry I'm known for monologues a little bit,
but hopefully that gives a good context that we can
use as the basis for any questions or discussions on the details of what this means for the token
economy and how it's going to be implemented and so on. So I would again invite other participants
who have joined, Kalia and whilst we have here, anyone else who wants to join the stage,
please request to be a speaker and Sean Ali will invite you up and then feel free to ask
questions, make comments, take a discussion forward. Yeah thanks for providing that additional
context and how we got here Sean, that's definitely very useful. I certainly have
some questions but yeah again anyone wanting to ask any questions from anyone?
I think while we wait, so I think maybe Kalia Networks wants to ask a question. In the meantime
maybe just a quick one Sean, why don't you describe the
uptick in the XO price to what's currently happening?
So really price is a function of supply and demand and we have made one significant change over the
last week to the supply dynamic in terms of access to the token and trading on the token
which is that we took the decision to delist from coin store from the central exchange.
There are good reasons that we chose to do that which is probably not appropriate for this call
but that has meant that the trading on the token within the central exchange context
has been removed from the dynamic of supply and demand. So that may be one thing but the other
that is probably more important is that people are starting to pay attention to what XO has built
and that we are seriously on a track to turn around the XO token economy and to grow this economy
and I think people are truly excited about getting involved, about becoming stakeholders,
about actually having participation, economic participation in the opportunities that we're
implementing and in the future that we're building. So I'm excited about more and more
people getting to understand what XO is about, what we've done, our accomplishments, our plans
and the huge opportunities that we're implementing on across the world. So I expect to see this
demand really increasing at a very steady pace. If nobody else has another question.
Actually so I'm super excited about the objective function being reached of the chain.
Could you maybe dive a bit more into how would this feedback to projects underground? So as an
example how would the Zambia cookstoves project that's running at the moment, how would they
benefit from this new mechanism? Yeah that's an excellent question. So
I think there's sort of two possible scenarios here and the one I'd like to focus on is
the switch from centralized traditional financing for carbon projects if we're
focusing specifically on the carbon use case to decentralized financing of these projects.
Now in the traditional financing there's a whole industry of project finance for carbon projects
and generally what's happening is that they discount the future price that they're going to
pay on carbon credits. So whether those credits are being traded and acquired in order to
further trade them so for speculative purposes or whether they're ultimately being acquired
through one or more trades for offsets so they will be retired. There is a huge difference between
what the investors the capital providers are willing to pay for the carbon credits today
and the price that will be ultimately realized when the carbon credits are sold.
So the typical terminology for this is ERPA which is essentially a futures contract on
carbon credits and they may be upfront payments for this. And so what this means is that in
traditional finance there's a big gap between the capital that gets flows through to projects
versus the secondary market and the sort of financial economy that gets generated around
carbon credits through speculation and through trading and brokerage and so on.
And so that financial capital that is essentially extracted by the financialization and the
traditional financial system is a loss to projects. It's a loss from the real economy.
So for example if you're producing cook stove carbon credits which is the project in Zambia.
Excuse me, you will as a project developer probably get a price of around 10 US dollars
on your ERPA on your future carbon credits. So that means you will have 10 dollars
to invest in the project to pay for the infrastructure, the distribution of the
technologies, the customer servicing and all of their costs around doing the MRV in order to get
the project certified and the claims on the carbon credits to be certified such that those products
which is essentially the certified units of carbon credits can then be transferred to the buyer.
So that's 10 dollars on 25 dollars and that may be pretty typical and pretty much you get like
between 30 and 50 percent maximum of the price. So with this mechanism that we're introducing with
the impact rewards function essentially the economy is off taking the carbon credits because
it's providing a subsidy to the retirement of the carbon credits. So now if a carbon credit is
25 dollars per ton and the subsidy in EXO tokens is equivalent to 25 dollars per ton
and just as a side note the carbon credits that are issued on the EXO network currently
for cook stoves are denominated in one kilogram units and so at 25 dollars a ton which is what
these cook stove credits are achieving in the open market it's 2.5 cents per carbon credit token.
At a price of an EXO token being 2.5 cents if the rewards ratio was such that you've got one EXO
token reward for retiring one carbon credit we'd essentially be subsidizing the carbon credit 100
percent. That is capital that goes back to the buyer of the carbon credit and if the buyer of
the carbon credit is buying that carbon credit directly from the producer that is money at
whatever the exchange rate is that is going directly to the producer. So in other words
long story it's quite a long story short the producer can potentially get up to the full value
of the carbon credits that they produce rather than this discounted value that is extracted
by intermediaries and capital providers within the traditional model. And so what we should see
happening hopefully is that projects get much better financing and much more efficient and
faster access to capital through this whole tokenized economy mechanism. So that's the hope I mean I
think we need to test it out and see if those dynamics actually do realize direct financial
gains and capital flows through the project developers or to what extent there is there is
sort of gaming of the system we've designed it in such a way to try to reduce the gaming
but we will be implementing this mechanism if we get an approval on the consensus vote
we'll be implementing it in a kind of safe fail kind of way in an experimental way where we
monitor to look at the economic impacts and when you look at the trading patterns
and have information feedback loops that can adjust the mechanism as we go along learn from it
and see how we can safely scale it to become a predominant mechanism within
the cryptoeconomics of Excel protocol.
Makes absolute sense to me. My question would be if I'm a validator and I have to
if I look at the the proposal it seems like I'm going to be losing money
and I'm already in a very tough environment to make and to meet how would I how do you see
the trajectory for a validator of the xo chain and what is the in it for them around this new token
design. Yeah so this is something that's been really troubling me for a while is that validators
aren't really being properly paid for the very important services that they offer.
So when the xo token was at a dollar and a dollar fifty it was definitely worthwhile
financially to run validator services but as the token price has gone down and the liquidity has
disappeared it's really not financially viable and that's not a sustainable situation
and so with these changes in the token economics firstly
reducing the the inflation will cut in half the commission that validators receive unless
they choose to increase their commission so if you're a validator with five percent commission
you could increase your commission to ten percent which I think is still reasonable and you could
receive the same level of rewards as you have been in the past so that's one one lever that
validators have. The second is the price of the token and this is the most important thing
so the token was trading at less than two cents we're starting we're starting to see an increase
in the token price and not just doubling the token price already means double the
revenues in dollar terms are two validators and the third part of this is the liquidity and so
what's not written into the token economics white paper is the other measures that we're taking to
improve the liquidity by making more liquidity pools available and using the advances in
concentrated liquidity to improve the depth of these liquidity pools
and then overall the demand mechanisms in terms of utility in terms of this rewards function
should increase the demand for the tokens so just as a reminder the rewards function requires
you to have a stake of extra tokens so to be delegated in the network in order to collect the
rewards and so there is an investment that needs to be made if you want to collect the
rewards on retiring carbon credits and that investment increases the demand and the whole
excuse me and holdings of of bonded XO tokens and so all of this should have a dynamic which
increases the price and hopefully also improves the liquidity so the ability to liquidate tokens
in order to pay for validator expenses and get some some some profits out of it as well
thank you so i think you've answered most of my questions i'd like to
give anybody else florida hex nodes selling a calia network anybody else
hi uh this is davin yap uh i've this is my first uh xo meeting um i've been uh impressed with xo
and with shawn for um several months and uh my background is i founded uh co-founded
probably the the very first um language model ai company um 20 years ago um and my interest in
blockchain is that really what we need to create a fairer society with ai is decentralized
technologies that allow us to have proper attribution of data um and coming across xo
i really felt that i i needed to help shawn and and the team so um one of my questions regarding
the change in the token economics is that uh xo has been working with a causal ai company
based in france that i'm familiar with uh it's one of ten only ten uh causal ai companies covered
by gardner which is the um tech analysts to follow uh in this space um and the combination
of causal ai and decentralized blockchain technology specifically in the terms in terms of
xo is really a unique proposition it's solving a problem that the world is recognizing and it's
all throughout the press for instance the the vera over accounting of forested lands and carbon
credits and just yesterday the um in the press all you know the majority of cook stove projects
over count the carbon credits um it's gratifying to know that xo emerging cook solutions
uh is one of the very few projects that this recent berkeley study um endorses as something
that is actually a genuine um generally accurate counter of carbon credits and i think that
there's a great opportunity for xo to now become the platform for providing dmrv for all the cook
stove projects and indeed all the carbon product uh projects that have recently suffered from really
bad press because they have no uh accurate way of counting the information now that's a roundabout
introduction but my point is that i'd like to make is that there is a good reason and a
potential to bring the causal ai company into the core xo protocol and that would be such a unique
selling point for xo that i think that would drive a lot of carbon projects climate projects
in the future to adopt xo over trying to build something on some other chain um and i think in
order to do this in fact i'm pretty sure because i've already talked to the the causal ai company
that some allocation of tokens from the community pool would be very helpful in in in sort of
merging xo with the causal ai company and in terms of you know what's going on in the mindset of
investors broadly and the public broadly i don't think it would be a stretch to say that ai has
taken over the sort of forefront in people's minds uh from blockchain so i think that would
really enhance um the xo proposition um so i mean getting people's feeling on bringing causal ai
into the core xo protocol like being built in and it being a unique feature of xo i think is is is
worth some community uh tokens that's my view anyway i just wanted to say that
yeah thanks davin thanks for being such a great supporter and believer in in what we're doing and
i think you've taken some technical deep dives uh both in terms of the technology and also
understanding um the uh the business models and and the economics around this so i really appreciate
your comments um i i think that um the usage of community pools um um and uh common pool resources
you know really does need to be um over to the community i i do think that there are many
compelling use cases for these kinds of resources i'm looking at other blockchains that use some of
the governance and have similar mechanisms around around community pools if we look at
other cosmos projects there's been a wide range of usage uses of community pools like for instance
providing grants for improving the communications um so one of the things that uh i think xo has been
been poor at doing or the xo team has been poor at doing is is really shouting from the rooftops
about what we've done we have a lot to a lot to tell the world about and a huge opportunity to
mobilize communities of of users and investors and and supporters and so on around what we're doing
and i think there was a similar dynamic within cosmos with the cosmos hub and so there we saw
proposals to implement uh um communication strategies funded by the community pool
we've also seen the community pools being used for uh the purpose of creating liquidity pools
um so um for instance taking atom and combining it with media and tokens so if that happened um
to create liquidity pools that make the other network tokens more accessible um the investment
usage of um of community pool tokens and we're starting to see now emerge as a use case within
cosmos and so there's currently an initiative an initiative to launch a cosmos ecosystem investment
dahr that will use the community pool of the um of the uh cosmos hub so the atom that are in
the community pool as collateral to do leveraged borrowing that can then um come alongside other
investors so really thinking about the community pool as a as a kind of lp on an investment fund
um where the assets of the community pool are used to leverage um uh stable currency
investments and then go alongside other investors um into investing in projects in the ecosystem
so i think these are all absolutely interesting and and relevant use cases um i think in terms
of the specific example that you've provided we have set up the impacts dahr so internet of impacts
dahr cooperative which is a legal entity um uh formed as a nichtenstein venture cooperative
um and have moved um a large number of the exo tokens that were previously held
by the exo foundation and exo company we've moved them into the lbc for the purpose of investing
into the ecosystem and that offers us um as an lbc as an lbc um a lot of optionality around
how to do the incentivization and leverage those assets either as collateral or using
the staking rewards that come from staking the the exo tokens that are held now by the treasury of
of the dahr and using those to fund initiatives and also offering um the lbc fair tokens
um as as investment incentives so i don't want to be prescriptive in terms of how
um how this is collectively governed and how opportunities are assessed and evaluated and
and then decisions are made in terms of investing in it but what i do like about the space and the
way that we've set things up and the way that the technologies work um being cosmos-based
blockchain ecosystem um is the incredible optionality and configurability and
opportunities that gets created by by doing things in these ways um so that's going to be my answer
that's a very long long answer to a long a long contextual question um so i don't want to be in
any way dictating the use of the of the community funds what i have proposed um in the draft of
of the token design is that not all of the community tokens would be burnt uh so there's
currently just over 14 million um there's 41 million tokens there um and my recommendation
is that we burn something like 30 million um but that should be put to community discussion and
vote and intention is to do that in the coming uh well pretty following this meeting once we've
done a temperature check um from other stakeholders um through this uh this space discussion as well
through our media channels i'm interested to hear anyone else's thoughts on this
hex nodes kalia networks zilinga
hello do you hear me yes okay
please feel free to ask any other questions as well i see okay
got your mic um unmuted please feel free if you if you allow me uh let me introduce kalia network
firstly then i will going uh to ask a question
kalia network team is a highly split group with a broad technical background
comprising professional with diverse expertise all right well um uh if you don't speak now
forever hold your peace or or reconnect on the channels um i think that we should just give one
last round of opportunity for people to ask questions or make comments okay and then maybe wrap up the
space okay okay let me ask a question uh firstly uh all right so um in wrapping up i want to i want
to thank the validators who are here on this call oh um sorry you're hearing kalia
kalia network please go ahead okay uh introduce or ask a question uh you can ask your question
okay uh first uh i make a criticism uh the exa group was silent for a long time
i'm glad to see the neer token design i hope the group feel more active from now on
uh we are looking forward to your next updates uh i would like to say this so that we can
contribute to do process uh maybe it would be beneficial to create a quarter based delegation
program for validators because uh you know uh we have been well dating for uh two years
so it's uh important uh to actively uh in the discord
uh we focus on the next updates
because uh we believe the exa group uh exa team
maybe do you do you have a plan uh to make a delegation program for validators
uh alvane shawn do you want to respond to that
uh sorry i didn't hear you hi there can you hear me now
yes we can event hi kalia can you hear me
i can't hear kalia but i'm i'm thinking there's something with uh spaces but let me respond kalia
just in terms of yes we definitely there's a lot of focus going to be on validators and making sure
um this is the backbone of the exo network so making sure that all considerations taken
into account and having conversations with you very closely especially uh so i think
the best channel for us to use at the moment would most probably be the validator
validator groups on discord so let's take the conversation further there and also feel free to
dm me if you if you want to i'm just going to go back onto listening otherwise i can't hear what
your response is thank you for your interesting uh it is awesome
great i heard you okay cool we'll catch up on discord
sorry everyone that i've i lost my audio and i was talking away there i had to log in again
and i can hear everyone again so please feel free to ask any further questions
just briefly i don't know if you were able to hear kalia's um feedback shawn but very positive um
quite happy that we're getting active again and kalia do you want to maybe want to ask
your last question around um how to how the validator set is going to be um engaged with more
uh it should be good for us uh we can contact in discord
yeah that's that's that's great thanks and i i so one of the other things that we will
start looking at um because now the essentially the um supply of xo tokens that is
used to delegate to the validators um from what was previously managed very centrally by the
foundation um that function will now move across to to the to the impact style um so we'll probably
have a uh like a working group um using the dial tooling where the group will will set the
criteria as well as um approve the allocations of delegations to validators and um really what
we're looking for here is to um really i incentivize and i and and recognize the work that
validators do and the contributions that get made into this ecosystem um and i think that's
going to become increasingly important you know as bigger use cases get um built on on the xo
network and as we um have these institutional users as well uh so yeah that is something to
look forward to in terms of how the communications will happen around that as um albany said in the
near term uh the discord channel is the way to go um but i think we will have a more self-organizing
and uh more active community around this as as the dial mechanism starts to take over
great uh if you need support we will be happy to assist you we are taking part in the delegation
evaluation program uh in another blockchain project
that's that's wonderful thank you thank you and i want to thank i want to thank all the other
validators um who are on this call as well today as well as people who may be listening to this
afterwards um you know we um we we we have a lot on our plates um from uh uh yeah developing the
software to um building out all the use cases and fundraising and communicating and many many
different things and uh um i know that sometimes we we have not had as much capacity to uh really
engage properly with validators um and and that's something that as i said earlier has been
been a bit of a concern of mine um so any help that we we can get as the xo team and i'd really
like to um continue to promote that this is a community um this is a community-owned blockchain
it's a community-owned project and um and so we're we're here to help um kind of facilitate and
support um but but really reach out to the community to be part of of taking this whole
initiative forward um so yeah very much appreciated and i want to thank you uh thank you uh for your
interesting i see cosmos four humanity has joined as well as hex mode do either of you
wish to provide any comments or ask any questions before you wrap the spaces up
if not then um i think uh we could conclude the meeting
excellent thanks thanks to everyone for being part of the meeting and uh please do engage in
the social channels and uh do spread the spread the word um you know the more people who get behind
this initiative um and who support um the changes that we're making and proposing um the i think
the moral of momentum we can create
until next time and thanks shawn for hosting wonderful thanks everyone wishing a good day ahead