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December 06, 2018, 07:03:11 PM
Last edit: December 06, 2018, 10:39:16 PM by SOVchain |
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SOV - Store of Value Blockchain Protocol
SOV is an open source project focused on creating a decentralized, blockchain based unit of account (coin) with an incentive and monetary structure that result in deflationary effects on unit price. The developers working on the SOV project have witnessed three crypto currency boom/bust cycles and have concluded that negative price swings during declining markets are the primary hindrance to widespread adoption of crypto currency as a method of payment and as a storage of value. The positive aspects many crypto currencies offer such as, ultra-low transaction fees, speed of transactions and transaction privacy, have not offset the negative impact on adoption presented by exchange rate risk.
SOV is an experimental project with protocol level economic incentive/disincentive structure attempting to create a deflationary crypto currency with substantial price stability in a declining market. SOV will have an economic structure that encourages holding of coins long term, staking of coins, and keeping coins off exchanges. This incentive structure is combined with a monetary policy built into the protocol that decreases the coin supply in response to declines in the coin price (network activity), effectively scaling the money supply to meet the demand from the SOV economy. It is our belief that these changes will mitigate the negative effects of a speculative bear market and cause SOV to be a truly valuable asset in the crypto currency space.
Coin Supply Scaling - Transaction Fee Burn:
Highly volatile market cycles have demonstrated that the benefits of a digital cash system with reduced exchange rate risk far outweigh the benefits of ultra-low transaction costs. Exchange rate risk can account for multiple percentage point slippage over a short time and much larger losses over an extended period. To accomplish the goal of stabilizing value in a declining market cycle, SOV has a process of scaling the coin supply to meet demand from the SOV economy.
As observed in past market cycles, when price declines, transactions and network activity decline in correlation. In response to this correlation, an algorithm has been created which sets the current minimum transaction fee based on an evaluation of previous network activity and a process of transaction fee burn has been instilled. Every transaction will have a transaction fee that adjusts between 0.10% - 1.00% of total coins transferred, with between 0% and 95% of the transaction fee permanently removed from circulation (burned); the remainder of the fee is rewarded to block miners. In very rare occasions of extended periods of extremely low activity, the transaction fee can increase to the cap limit of 2.5%.
The situational effects of this adjustment algorithm will be as follows: As comparative transaction activity declines, the minimum transaction fee increases and the burn percentage increases. As network activity returns to averages (not near capacity), the transaction fee would return to minimal and burn would adjust to moderate levels. If network activity were to reach near capacity the protocol would adjust the transaction fee higher and the burn would decrease.
Examples where $100 is sent using SOV network:
Example A - SOV Price: $0.25 | Network Status: normal transaction volume | 0.1% tx fee | 50% burn rate (removed form circulation)
400 SOV sent ($100) | transaction fee 0.40 SOV | 0.20 SOV to block miner | 0.20 SOV removed from circulation
Example B - SOV Price: $0.05 | Network Status: low transaction volume | 1% tx fee | 90% burn rate (removed form circulation)
2000 SOV sent ($100) | transaction fee 20 SOV | 2 SOV to block miner | 19 SOV removed from circulation
Example C - SOV Price: $0.01 | Network Status: very low transaction volume | 2.5% tx fee | 95% burn rate (removed form circulation)
10000 SOV sent ($100) | transaction fee 250 SOV | 12.5 SOV to block miner | 237.5 SOV removed from circulation
An argument will be made that a crypto currency with higher fees will not be selected as method of value transfer due to the existence of lower cost transfer platforms. The counter argument from the SOV team:
1) The overall cost of an SOV transfer (when exchange rate risk is considered) is not significantly higher than other crypto currencies and represents a savings over many popular legacy financial systems. When the market is stable, SOV transaction fees are drastically reduced and are comparable to other crypto currency systems.
2) The deflationary aspects of the burn mechanism and resulting upside price bias will create many long term holders and users of the SOV network.
3) In a declining market, there will be increased confidence holding a crypto asset with a price supporting mechanism. The confidence will reduce speculative selling which will stabilize the SOV price as other crypto currencies decline. The price stability will attract users and reduce the number of situations when the higher fee price stabilization mechanism is enacted.
4) Many crypto currencies with ultra-low fees fail to gain traction as a value transfer system while other more expensive methods are well used. The SOV team believes this demonstrates that price stability, liquidity and reduced exchange rate risk are superior attributes to ultra-low fees in a value transfer system.
5) SOV is an experimental system designed to test these hypotheses.
Staking Incentive
The SOV blockchain will be secured by SOVpos. The SOVpos block rewards will be on a continuous 12:1 week cycle. For twelve weeks 2 SOV will be awarded per block then for one week 50 SOV will be awarded per block. The block reward cycle repeats continually.
Block 1 - 60,480 = 2 SOV
Block 60481 - 65521 = 50 SOV
Block 65522 - 126,002 = 2 SOV
Block 126,003 - 131,043 = 50 SOV
Block 131,044 - 191,524 = 2 SOV
Cycle Continues
Minimum staking age is 5040 Blocks.
Staking weight increases to max 120,960 Blocks.
Annualized Inflation is 1.5% first year.
The block reward cycle in conjunction with progressive stake weighting is designed to create a system with very low inflation of the coin supply but still provide financial motivation to remove coins from non-staking exchanges and stake at regular intervals. The SOV team believes the SOVpos cycle reward system will provide the highest level of security for the lowest possible increase in total coin supply, maximizing the effect of transaction fee burn mechanism.
Initial Coin Distribution (ICD)
The SOV project team is not accepting any investment or funding in the form of an ICO for distribution of SOV coins. Instead the SOV team has decided to set the beginning balances on the blockchain by three methods to assure wide distribution: referral, dead coin burn, and POW mining. All methods of acquiring SOV require a commitment to the project in exchange for SOV coins.
ICD Referral: It is important to have wide distribution of coins to ensure a sufficiently distributed and decentralized network. With distribution as the goal, the referral phase will begin as soon as this post becomes public and last as long as needed to ensure enough interest has been generated. 2% of coins will be allocated to the referral phase. The 2 million referral coins will be distributed evenly between bitcointalk users who refer additional users. The referred poster needs to mention who they were "refered by" in a post on this announcement. The referred accounts must be recently active and must have been created prior to the original posting of this announcement. We will tabulate and report by manual process on the OP.
ICD Dead Coin Burn: The Dead Coin Burn phase will begin once the referral period ends. 13% of coins will be allocated to the dead coin burn phase. The Dead Coin Burn will allow coins/tokens from other projects to be provably burned in exchange for SOV coins. The SOV team believes this type of distribution can benefit the crypto currency community in a number of ways. It will help the projects that have coins/tokens burned by reducing supply overhang, it will benefit buyers of the coins/tokens who are unable to sell due to poor liquidity and it will allow SOV to gain an active community of users. A list of the project coins/tokens is being complied currently so please offer suggestions in the replies (coins/tokens must have some value).
ICD POW Mining: The POW mining phase will begin post Dead Coin Burn and last for 4 weeks. 85% of coins will be allocated to the POW mining phase. Mining information will follow in a later post.
SOV Project Facts:
- SOV is a open/generic blockchain protocol launched to allow storage of value and value transfers.
- SOV Blockchain will be secured by SOV-Proof of Stake.
- SOV coins will be rewarded by the SOV protocol to users who stake coins and provide security to the SOV blockchain.
- SOV will be a community driven project not a developer driven project. The user community will need to take initiative and get involved.
- SOV has no crowdfunding, ICO funding or funding by institutions.
- SOV developers are not compensated with SOV coins and do not receive a salary.
- SOV has no pre-mine. Developers will participate under the same rules as the rest of the participants.
- The developers plan to update the SOV protocol in an effort to provide a useful system to users, which may include a fork to a new code base in the future.
- The goal of the developers is to maintain a stable blockchain that will enable the use of SOV as a unit of account.
- The developers will not participate in "marketing" or acquiring exchange listings, but will provide necessary information to the community as requested.
- The developers extend no warranty to users wishing to participate in the SOV protocol. The SOV protocol is offered as open-source freeware. Use at your own risk.
Launch: TBD (December-January) when enough users have shown interest to have a wide distribution of coins.
SOV Specifications:
Total Initial Coins 100 million
Block time: 2 minutes
Stake interest: 1.5% first year - declines each year
Transaction fee: 0.1% - 2.5% of transacted coins
Min stake age: 5040 blocks
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