ORGANIZED BY:

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Coin Burn

It seems that the majority of community debate surrounding CRC elections has been centered on the 16.5 million ELA allocated to CR. The community would like to know the following:

• (a) What is your perspective on the utility of these funds?

• (b) Are these funds excessive, and is a token burn warranted? • (c) Do you have other tokenomic modifications you would like to see implemented,

particularly in regards to inflation?

“I have published a paper titled Elastos Ecosystem Tokenomics: Revisited. This paper

expresses my complete perspective on Elastos’ present tokenomic model and proposes

tokenomic modifications which I believe will provide vast benefits throughout the Elastos

ecosystem. I strongly advise taking the time to read it in full; the future of any blockchain-

based ecosystem depends on the structure of its tokenomics, and the future of our

ecosystem depends on the informed decisions of its community members.”

These funds must be tied to specific KPIs such as user growth, token price appreciation

or developer growth. The secretariat should keep meticulous track of spending and the

direct results. Ideally we can have data analysis to answer the basic question of the cost

to acquire one user/developer (Customer Acquisition Cost – CAC) or a one percentage

point token price increase. If the secretariat is unable to track this data we will have to

set up an “accounting and data tracking team” to handle this.

The proper way to address the funds is not that it’s excessive or not excessive, the real

issue is how much market depth exists and how much can we actually spend. Whether a

token burn is warranted or not warranted is also not the right approach to the funds,

strictly speaking if we had absolute trust that the funds would not be used in a manner

negative to the markets we wouldn’t need to burn any tokens. But the reality is that there

are multiple other factors such as investor sentiment, market factors and overall trust in

the tokenomics model that make at least a partial token burn seem like an overall net

positive.

The inflation needs to be dynamic and adjust in a decentralized manner to oracles

based on a consensus of KPIs, market data and more. We will undoubtedly refine the

tokenomics over time, which is also one of the important reasons to continue to fund the

Elastos core development team after EF dissolves. The tokenomics studies need to be

done properly and it’s too early to speculate on how it will end up, but in the meantime

we have to first justify the current 4%.

More specifically how was this 4% figure chosen? What data was it based on? But I do

think it is too high, ELA as a utility token is meant to pay transaction fees and utilize the

various ELA services. Given the rate of development it will be a while until we see

roughly 800k USD/year of actual services used – at current token prices – to match the

inflation.”

“My initial reaction when learning the 16.5m ELA was positive. Building the community and ecosystem through incentives seems like a great idea. Running a decentralized organization is a pioneering adventure, and will be for years to come. All traditional roles and structure within an organization¨is now, ultimately, something ELA holders would have to vote for to create. If that is what we desire. Without clear leadership, we need to distribute the responsibilities. Contract between the community, represented by the Council, and individual project owners is a solid way to distribute and reward responsibilities.Without any ultimate authority (CEO / board) or possible threat of termination (“you’re fired!”) from the organization, we need to find new ways of collaborating. The fund might become worthless unless we have organic and sustained growth within the Elastos ecosystem. We should not spend more funds than the market can handle, so having good data on how much and how we can spend without negatively affecting the price of ELA is important. After listening to fellow candidates and considering today’s market condition, these funds do seem excessive. There are several valid reasons to consider burning ELA or even change the inflation rate. As a supporter of organic and sustained growth, I encourage carefully considered and long term solutions. There are several ways to achieve the same results as we desire from burning ELA. I have no agenda towards any specific solution and will vote for proposals based on previously mentioned principles. I believe in having skin in the game. And getting rewarded for making constructive contributions to the ecosystem (mining, voting, council, bounties, infrastructure, apps, etc.). Finding better parameters to run Elastos and empower Cyber Republic is a never ending process, with a continuous stream of trials and errors. We need to develop solid feedback mechanisms and be able to adapt to changing conditions without breaking current working models. The easiest and most beneficial solution I think about right now is rewarding profitable projects or behaviour with time- or price-locked ELA.”

“(a) I was always under the impression that this 16.5 million ELA were to be used over

the next few decades to fund the growth of the Elastos ecosystem. This would include

many different activities like funding meetups, marketing like booths at major blockchain

conferences, legal council, hackathons, developer tasks forces like ETH/NEO. We have

also had huge success with the #FundMyDapp contest which has turned out 9 new

dApp MVPs for under 35,000 ELA so I would love to see more activities like this.

(b) Since only 10% of the CR Wallet balance are available each year, I don’t consider it

excessive and I actually wonder if it will be enough for us to fund the activities we have

planned. I originally was strongly against any type of token burn, but after joining a

WeChat group with other potential Council candidates, I have been trying to have an

open mind on the situation, and explained that I just want to see some data on different

scenarios of a token burn, for instance, one scenario indicating anticipated effects of a

20%, 50%, and 80% token burn. I am still very against a 100% token burn, but I am a

reasonable person, and if we have data that suggests a 50% token burn will help us the

most in the long run, I will support it. A lot of people have opinions on this issue without

having anything to back it up. Clarence Liu said he is going to put together a suggestion

to get some professional data analysis on the token burn, and the data will help me in

my decision.

(c) If there is an 80% token burn, then I do not want to change the inflation since we will

then heavily rely on the inflation to fund the CRC. If there is a 20%-50% token burn, that

I would like to see the inflation changed in the following ways : I think we should make

adjustments to the distribution of inflation with 25% going to Bitcoin Miners (rather than

the current 35%, as this is money they are receiving without using any additional

resources and I don’t think they will stop merge mining Elastos, especially as we

increase in price), 40% to DPoS Supernodes (compared to the current 25%, which will

provide increased returns for our voters in the community, further encouraging staking

their Elastos tokens and keeping less Elastos being sold on the market) and an increase

from 30% to 35% for the CRC to fund future growth. This model will increase the

benefits & duration of staking from the community, and replace ELA being sold on the

market by bitcoin miners with ELA being sold on the market by the CR Council to

expedite building the Elastos ecosystem.”

“(a) 16.5 million ELA allocated to CR is to fund the development of Elastos ecosystem.

Development of Elastos ecosystem includes attracting and retaining talented developers

to build solid technical foundation, marketing to reach wider audience, generating quality

leads through strategic partnership and business development, growing community base

and engagement as well as listing on quality exchanges to provide more liquidity and

access to our ELA utility tokens. Again, we would like to stress the importance of real-

world use cases involving businesses and users. CR funds are not meant to be

considered as the ONLY source of funding for anyone, but lean toward kick-start any

project that has real-world values to users as well as to Elastos ecosystem. All these

areas of development are essential for an organic and sustainable growth of Elastos

ecosystem.

(b) There are debates ongoing whether a fractional or complete 16.5 million ELA token

burn should be undertaken and in this regard, our question to the community is that if

token burn of any reasonable quantum is relatively more beneficial to the Elastos

ecosystem, then what would be that quantifiable or measurable benefits in the short /

medium / long term? Could the higher token price as a direct result of token burn due to

improved community sentiment be sustainable and sufficiently strong enough to absorb

short-term and yet potentially damaging selling pressure from major token holders who

may have been eyeing exit after suffering multiple years of crypto bear market? If a

complete token burn has taken place, it could seem as a right move at first, but what if

community positive sentiment wears off soon and at the same time ELA token price is

not attractive enough to fund various critical ecosystem projects, could this bring more

disastrous effects to CR council?

In general, we believe that it is of paramount importance for CR council to be given a

“reasonably sufficient” amount of ELA funds to finance ecosystem projects in the very

first year of community governance as a DAO. Given that there is no reliable history to

justify what amount is considered reasonably sufficient in our context, we are of the view

that the 16.5 million ELA could be excessive to a certain extent and so a fractional token

burn is definitely considerable.

We believe that a fractional token burn of at most 50% could bring more benefits than

harm in both short and medium terms due to improved community sentiment and

potentially absorption of selling pressure from projects financing over time. Once

ecosystem projects are well funded for development and implementation in the medium

term, we believe that ELA price will be a healthy projection of the underlying organic

community growth, boosting demand as utility tokens and long-term investments from

various stakeholders.

(c) To mitigate the risk and effects of potential pumps and dumps resulting from any

proposed fractional token burns as a one-time event, we suggest that the amount of

token burns to be corresponding to the amount of ELA disbursed for project financing

when meeting milestones. We believe that such a move will encourage the community to

be more proactive in participation to come up with quality ecosystem projects and the

effects of each token burn could reduce the effects of selling pressure from

disbursement of project financing. Two more suggestions for tokenomic modifications to

consider include a % of yearly inflation could be locked for a long-term, say 5 to 10 years

as a treasury fund for the purpose risk management (e.g.. for contingency use) and a

bond requirement whereby ecosystem projects funded by CR are required to pledge a

bond corresponding to a % of the total budget approved so that the interests of

ecosystem partners become completely aligned with the Elastos community.”

“(a) The 16.5 millions of ELA allocated to CR is the only tool the elected council will have

to fully perform their duty. The main reason of the existence of the CR council is to

decide which projects are worth investing for the work they are proposing to bring better

adoption to Elastos.

(b) It is too early to say anything about the amount of these funds. The only way to judge

how “excessive” these funds are is to let the first elected CRC use them. Several issues

have been raised regarding the token burn. I am against burning all the 16.5 M token as

there is not enough data to support the expected outcome. However, some interesting

discussion have followed and I believe we will take a decision that will benefit the whole

project.

(c) Again, I will not support any change that is not backed by strong research and data. I

will perform all the required research and take a decision in due time.”

“(a) CR funds are vital and could be used for funding listings on top quality exchanges,

rewarding contributors, and funding key projects.

(b) If the goal is to increase the likelihood of the global adoption of Elastos, The

Strawberry Council views CR expenditures as a vital component of achieving this goal.

Arguments for a “burn” appear to view it as having potential to improve investor

confidence and decrease the likelihood of a further decline in the value of ELA.

However, there is a risk that a 100% burn will cause many investors who do not agree

with the total burn concept to sell their ELA which could greatly offset any potential

“confidence building” that has been assumed that a burn would instill. The Strawberry

Council appreciates efforts to identify solutions to tokenomic problems such as those

discussed by CR Candidate Alex Shipp in his critical paper. Stable coin options using

ELA as collateral are other potential solutions with aims to use CR funds for the benefit

of Elastos adoption without as much risk to those voicing ELA dilution concerns.

(c) The Strawberry Council presently feels the 4% inflation is necessary at this time to

adequately fund the DPoS and Merged Mining aspects that have already been

established. However, we would be open minded to considering proposals that offer

logical alternatives, which likely would be easier to implement in the future once the

value of ELA has risen.”

“First we need to understand where the discontent comes from, and to be honest we do

understand the perspective of the early investors. The main issue at hand here is not

that we need to do a token burn in order to increase the price. We do not see why the

token burn would double/triple the price per ELA or market value of Elastos. The real

issue at hand is that early on in the process changes were made to the whitepaper and

there was an early ending of the lock-up period. This was an early mistake and

consequently, Elastos lost a lot of trust from early investors. Particular individuals believe

that the only way to regain this trust is by getting rid of this roadblock by burning the

fund, thus, starting from scratch. We must recognise and state that we do have a lot of

sympathy for the people who experienced this firsthand and learn that with everyone

having Elastos’ best interest at heart, why is it seen that restoring this trust would

outweigh the negative of losing CR funding to develop the Elastos ecosystem? Whilst

we can’t answer this we hope to understand and explore this matter further.

(a) The Cyber Republic is a huge leap of faith for the foundation, signalled by the

handing over of $30 million to its community to vote and approve ideas as a

decentralised collective.It’s an unusual moment where we can collectively fund and

kickstart business’ to develop, market and earn; taking on responsibilities to enhance the

Elastos ecosystem. Money spent from the CR fund shouldn’t be seen as devaluing the

current circulating supply, but rather action being taken to bring new demand,

excitement and resources to enrich the space. This is an impressive moment in our

history and a test to see whether a model like this can work. We are extremely excited at

Orchard to use the Cyber Republic to strengthen and expand the adoption of Elastos

across the world. We have a great utility offering security, scalability and decentralization

all within a safe environment and this fund is an amazing opportunity to kickstart

expansion.

(b) First, we need to understand where the discontent surrounding the 16.5 ELA

allocation comes from. Is the token burn intended simply to increase the price? Stellar is

a great example, where they burned 50% of their supply (55 billion tokens) only to see

its price pump, quickly dump and continue lower to the amusement of the rest of the

crypto space. It seems burning our development fund in this regard may not be in the

best interest of the Elastos ecosystem but rather only provide short term monetary gain.

If we do burn and the price does pump only to return what are we left with and how

would you feel? We must take this topic very seriously. On the flipside, if there isn’t

enough liquidity, releasing CR funds on the open market could also see the price

decrease, devalue and shock the circulating supply. There needs to be a balance or an

alternate solution (see answer c).

With all concerns raised, the community must remember that the CRs 16.5milllion ELA

will not be dumped on the market but rather trickled over time. The CR can only use

10% per year stated by the Elastos constitution and it is likely this will be distributed

across numerous proposals throughout this period. It seems any remaining ELA from

this 10% if not spent should either be burned or rewarded to voters for their participation,

something to discuss and consider. If burning is a hot topic, it appears we should be

focusing and directing initial expenditure towards opening up new liquidity avenues and

markets so elastos can handle these additional funds, something the community has

also been very vocal on for some time now. Another option is the immediate funding of

creating a token bridge and stable coin to represent the CR fund.

(c) Decentralised finance is here and if we created a token bridge to ETH, we could

collateralize ELA on the ETH DeFi networks (eg Maker) to produce a pegged stable coin

(DAI). The CR can use these stable coins instead to fund the ecosystem, which in turn

protects us from some of the effects of the market, prevents the need for us to use CRs

ELA funds directly and relieves any inflation concerns the community currently has. The

CRs ELA would sit in a wallet as collateral and if the price dropped enough where it

doesn’t represent our DAIs pegged value, some of CRs ELA (collateral) would

automatically be burned (to restore value) and, likewise, if the value of the collateral

(ELA) increases, we could mint more stable coins for the CR to use. Either way, no CR

coins end up coming into contact with our current circulating supply and we only burn if

necessary. There are two options we could do to make this happen:

(1) Bring Maker onto Elastos and use our Ethereum sidechain to run their smart

contracts. The issue here is the EF has already spoken to MakerDAO about this and

concluded that starting our DAI within Elastos would need a significant liquidity pool and

volume, something we don’t currently have. Clarence from EF states, ‘the code is easy,

the governance and market governance isn’t.

(2) Create a token bridge to Ethereum, wrap ELA and use the current Maker protocol

and smart contracts to create our own DAI externally where liquidity and volume isn’t an

issue.”

“As of now, I am glad to see that this issue has been discussed extensively and

rationally in the community. Now I am carefully reading the article” Analysis of the

Elastos Ecosystem ELA Token Economic Model “by Alex Shipp; I have also carefully

read the Chinese Zhang Qing ’s article about this issue from active community

members, and Mr. Chen Rong ’s comments on the issue. Frankly speaking, I learned a

lot from these articles, and I admire a lot of deep thoughts. I especially emphasize that I

am very I am glad to see that candidates at home and abroad are discussing this issue

in a serious and rational manner. We express our differences objectively and rationally,

and then gradually approach consensus. I am honored to participate in this consensus

process as one of the candidates. I will combine your opinions Continue to think about

this issue. After I have more mature ideas on this issue, I will share with you in real time.

By the way, although I participate in the election of the CR Preparatory Committee

members, I never have to vote for myself with the ELA. Whether or not I stand for

election is entirely up to the community. As we discuss whether to destroy 16.5 million

ELA, I hope my election is due to the community The community consensus reached by

the district agreeing with my concept. As for the economic model, especially the inflation

rate, I think that any kind of token issuance model needs to follow the internal economic

laws, and the blind issuance obviously harms the interests of currency holders. Good

Projects should strike a good balance between “liquidity” and “reserve value”. The

Elastos ecosystem is still developing, and I personally feel that I need to investigate

whether the ELA issue needs to follow a specific economic model.”

“(a) A very important feature of the blockchain economy is community. Taking Bitcoin as

an example, all coins are issued in a systematic and automatic manner. Miners

participate in maintaining the system’s functions by paying computing power, and at the

same time, they get coins that the system automatically rewards. Because Bitcoin has a

relatively single function, its reward model does not require human involvement. In this

sense, but unlike Bitcoin, the process of issuing Elastos tokens is also community-

based, but its token issuance is artificially involved. We can understand that, of the entire

33 million tokens, half of the 1650 tokens are given to angels, private placements, and

investors or users raised overseas, and the tokens they receive are essentially

contributing to the system through capital contributions; The other half of the 1650 token

issuance is issued to people who contribute to the system in another form, that is,

individuals or teams who wish to contribute to the development of the system through

rewards.

(b) Whether the funds are too much is basically based on two assumptions. One is that

the CRC will sell at any time without restriction and suppress the currency price. This

can be avoided by making design rules public to the community. In fact, although the

monetary authorities of the economies of all countries in the world have the right to issue

currency at any time, they also have a more important task to promote the development

of the economy and keep the currency value relatively stable. Therefore, if we give the

community a specific and clear It is expected that how these coins will be used, and the

use will increase the value of the entire economy, then the basis for this assumption

does not exist. Second, the currency price will inevitably rise after destruction. Logically,

this may not be true, and the practice of many other projects seems to illustrate this. I

am personally neutral and open to destruction. However, it is still considered prudent to

destroy it, because once it is destroyed, it is basically necessary to completely destroy it,

because if the currency price does not rise after partial destruction, then people who are

dissatisfied with this may blame it because it has not been completely destroyed, and

once it is opened Xianhe is difficult to stop. Once it is completely destroyed, it will be

difficult to come back unless the code is redesigned.

(c) I think it is essentially a question of the internal economic laws or financial laws that

an economy needs to issue tokens. Many projects have a large portion of tokens for

community incentives. How much specific inflation is appropriate, there is currently no

successful precedent in the blockchain economy. If we learn from the experience of

traditional economies, we generally think that inflation below 3% is healthy, but our

economy is still a developing economy. Does it follow the same rules? I think we may

need to investigate again. This is open.”

“This part of ela is a double-edged sword. Good use can promote the development of

the project, and bad use will hurt the confidence of the community. We think that you can

destroy some ELA first, and you can also try to use some ela to expand the project, and

gradually destroy the unused ela. The economic model needs to be modified, and it can

be designed with reference to the schemes and cases of other projects according to the

actual situation of different development stages.”

“Our point of view is that the amount of funds is closely related to the strategy, and it is

difficult to draw conclusions without analysis, so the most important thing is to agree on

the role of CR and the development strategy. According to our own experience analysis,

we believe that the large proportion of destruction of these tokens will not affect the

development of the ecology and will help promote community consensus. Specific

analysis details will be detailed in the election declaration. The current economic model

is incomplete, and we support efforts to optimize the economic model. The contribution

of our team to CR lies in the implementation of technology and ecological development.

From the perspective of specific economic models and economic data analysis, we

believe that other candidates will make convincing proposals.”

“(a) The use of this part of the funds has changed many times from the original design

use to now, which is the root cause of community dissatisfaction.”

“(b) Compared with other projects, the total amount of ELA is not much, but because half

of the market circulation ELA consensus price is too low, the impact of this 50% of the

outstanding amount is relatively large, so destruction should be, but the first It is

recommended to destroy at 60% -80% at one time.”

“(c) I think the economic model should be modified and optimized. Long-term inflation is

not ideal. The total amount should be kept relatively stable, such as the repurchase and

destruction in the future to offset the additional issue.”

“(a) First, this funding has created a crisis of trust from the beginning. These funds were

airdropped to bitcoin holders at a 1: 1 ratio in the first white paper. Later, they only

conducted airdrop activities in Huobi and only realized a small part of the airdrop. The

second edition of the white paper modified the use of this fund and decided to use the

more than 16 million airdropped ELAs for ecological construction. In the Chinese

community, the first version of the white paper was the most widely disseminated and

recognized, and most people insisted on the original view-either continue to airdrop to

BTC holders or destroy it. Therefore, the qualitative difference of this fund caused a

great tear in the community. Although the above situation is a thing of the past, it is an

unavoidable problem in the field of blockchain. 16.5 million ELA is a huge amount of

assets. Some people think that it is a “devil” and some people think it is an “angel”.

Discussing the possible result, it is indeed a “double-edged sword”. However, we need

to understand that the 16 million ELA is similar to a knife. If it is placed in the hands of a

chef, it can make delicious dishes. If it is placed in the hands of a devil, it may be a killing

tool. So, the point is, who owns the 16 million ELA? How to use it in an orderly and

reasonable way? Under the existing conditions, this fund is an uncertain factor for

external capital and hinders the entry of capital and talent; of course, if this fund can be

planned well, the problem of uncertainty can be turned into a positive one. The signal is

that this money is the most useful.”

“(b) This money needs to be destroyed. It is not a problem of excessive funding, but the

need to use destruction to rebuild trust. If there is no such problem left over by history,

and there are not so many uncertain factors restricting development, then the more

funds available to CR, the more it will contribute to the function of CR.”

“(c) ELA’s token economy design is necessary. How to design the token mechanism to

some extent determines the future direction of the project. Token is the key to the

commercial success of a blockchain project. It is necessary to establish a set of

incentive mechanism with Token, and then analyze whether this incentive mechanism

and the corresponding governance mechanism are sustainable. The design of Elastos

Token should consider the interests of miners, technology developers, Dpos node

maintainers, and investors. In the case that the Elastos infrastructure is not fully mature

and the sustainable ecology is not presented on a large scale, inflation is a significant

dilution of the interests of Elastos holders, which will dampen investor confidence … So,

under such circumstances, Expansion must be controlled.”

“It is recommended to destroy all 1650w and a fixed total of 3300w, and modify it with reference to the Bitcoin token distribution model. It is well known that the problem of Elastos 1650w has a long history. In the Elastos white paper, the 1650w of the token distribution plan was airdropped to the Bitcoin community. Due to technical reasons, only a small part of ELA was airdropped to users holding BTC on the exchange through Huobi Exchange, and the rest was locked by the Elastos Foundation. Now that this part of the ELA is established by the CR Committee, the members propose to vote to stay.

From the following address, we can see that CR has about 150w and 39.6w ELA (1.2% additional issuance per year) after the establishment of CR. In the long term, these assets are sufficient to support CR use.” CR Interim Assets Address (Ecosystem Inflation Address): 8VYXVxKKSAxkmRrfmGpQR2Kc66XhG6m3ta CR Interim Council Expenses Address: 8MoqqaXmfTLfBH28QBzDjWbWmsNkJswChc “(a) Total destruction is the simplest and most effective way to resolve disputes. The rest is not justified for any party.” “(b) ELA is not a currency at this stage. Using ELA as funds to develop the ecology is completely wrong. It is equivalent to selling ELA to the market at a low price. The ELA received by the partner needs to be sold to the market to obtain funds for development, because ELA is not money and cannot be used directly as money. Ecology requires money, not ELA. It is recommended to access stablecoin and DiFi to obtain funds from the outside.4. Each time the ela supply is reduced by half, bringing hot spots to the market.” “(c) Anyone, foundation, CR, the idea of taking part from the remainder of 1650w is encroaching on the interests of investors and ELA holders, which is shameful. Because there is no cost to obtain these ELA, it will eventually flow into the market and dilute the value of ELA in your hands. The key point of Elastos is that there is no perfect token economic incentive model. ELA’s 4% annual token issuance mechanism does not provide effective incentives for investors and community nodes. Because no investor would like to invest in an infinite inflation token. From the perspective of Bitcoin’s long-term development, the token incentive model of Bitcoin’s fixed total halving and additional issuance has made it a great success without human governance, and it will continue, and it has also been fully tested by the time market. We should use lessons. I will promote this research and here are the expected benefits. “

• 1. The total amount of 1.3300w and the design of the early white paper did not change much, in line with investor expectations.

• 2. According to the revised token incentive model of halving the fixed amount, there will be a large number of elas issued in the early stage. CR has sufficient ELA assets to develop the community and invest in Elastos.

• 3. Added DPOS nodes and joint mining rewards. Investors can obtain considerable dpos node voting rewards by voting through DPOS nodes. Improve dops voting rate, reduce ela flow into the market and reduce selling pressure.

• 4. Each time the ela supply is reduced by half, bringing hot spots to the market.