DeFiChain-Masternode-Owner
commented
2 years ago $ defi-cli signmessage 8N5iyTHbJNQc1nTfF74khJ9rndj6kG9FzN "cfp-2208-07-yes" IEQ9xcmRfGaFvnKDPv5r5M+71F9g6oOEwDCH73AqIariXXjJreguOUi5soRmTOL+pBSIZbXqZGbvDH/OSTt3Z6I= $ defi-cli signmessage 8Ht3oDDj2uHeoae3mKALM6kVmsuJaj3SSm "cfp-2208-07-yes" H8prQ9hYHNRy9sUiVufHzkyzFCGqim+lQ1o//yq2R3C0fwuSZbPi4LAZGd0dVSOBSciVZoBHO10O/qnfPC9tYP8= $ defi-cli signmessage 8YsdyhGMoJfjfujfQox1D2S8d4JTzGQivj "cfp-2208-70-yes" IIJdssfgfUxRJChy11pERDmWtSkTXqsRBkAZGCFwFcJ8RcRmZvBpo5so7bwzWjbILKzgAtaoRdKv02tM925TdYA=
ms-01
Krypto-Micha
Marc-Mumble
vvxxxvv
0ptim
itmlgife
DFXSwissVotes
defi-sven
surangap
Overview
Summary
This CFP is a loan to build a strong, globally available staking provider alongside CAKE and DFX under the brand LOCK.space, which can be integrated by any DeFiChain wallet. The loan of 300’000 DFI is repaid fully automatically by a fixed formula that returns 20% of the daily fees on Staking Rewards to the Community Fund.
Users have several advantages with LOCK Staking and combines the best features of the CAKE as well as DFX Staking service. The user can invest in Staking as well as withdraw his DFI at any time. On the other hand, the user has several withdrawal options of his Staking Rewards. Thus, a payout directly to the bank account is also possible.
With global availability, LOCK can not only offer a great customer experience with a lean KYC process, but also make Staking globally accessible to business clients.
I am founding LOCK in the spirit of community to make DeFiChain more decentralized and expand the ecosystem.
Vision
When I became part of the DeFiChain community in 2020, I would not have dared to hope to benefit as much as I eventually did. DFX only exists due to DeFiChain and its community through which I got to know the founder of DFX and got the unique chance to actively participate in the development of the company from the very beginning. At the beginning it was not clear at all where this project would lead to. Would the project be successful, would it develop into a company with real employees and would it also offer a sustainable perspective? Many open question marks, but the vision of DFX excited me immediately. The vision of offering a simple and fast service that allows anyone to invest directly into DeFiChain via SEPA bank transfers. I made this vision mine as well and committed myself completely to this project. Looking back, it's almost a bit unbelievable how everything fell into place and DFX grew into an aspiring company for the DeFiChain ecosystem. That goes without saying that I owe this circumstance to DeFiChain and it is now time to give something back to the community.
DFX was started as a true community project, by members of the community for the community and will always work for the good of the ecosystem. The well-being as well as the continued existence of DeFiChain depends primarily on decentralization, (easy) accessibility and fungibility to other protocols. Specifically, it is about how many different exchanges, marketplaces and brokers there are to invest in the ecosystem as well as seamlessly exit it, and especially how many different parties operate the masternodes. The issue of centralized masternodes is particularly critical, since the fundamental governance is steered by the masternodes and thus the future of DeFiChain is determined. What centralization can lead to in such a context is obvious.
With the FIAT Crypto On-/Offramp and the Staking Service, DFX has built products that actively work on further decentralization and make the ecosystem more resilient.
Meanwhile, with more than 6.5 million DFIs in staking, accumulated in only <6 months after the launch of the staking offering, DFX reached a turning point in terms of scalability and regulatory/business aspects. Operating staking out of Europe is extremely burdensome from a regulatory perspective, which directly impacts competitiveness and thus further growth of the staking service of DFX. This hinders and slows down the further decentralization of DeFiChain because the verification process is too costly for the customer and because staking can only be operated to a limited extent due to existing regulations.
To avoid this and also to continue to decentralize DeFiChain quickly, I decided to leave DFX and build a scalable, efficient and seamless staking service outside of Europe with full focus on a great customer experience. This endeavor is about establishing a company outside of Europe and building a staking business based on an existing fully functional solution that can offer its staking service globally and not only in Europe. This service will be operated by LOCK.space.
DFX fully backs this move and offers KYC services to LOCK.space in the spirit of further decentralizing the DeFiChain community.
I want to reiterate how grateful I am to the entire DeFiChain community and for helping to build up DFX to this point. However, both DFX and I are now convinced that the next step has to be taken, which will drive the internationalization as well as the true decentralization of DeFiChain and form another strong staking provider in the DeFiChain ecosystem, from which we all will benefit in the end.
The goal is to build another strong international staking provider for the DeFiChain ecosystem next to CAKE and DFX.
Purpose for this CFP
Regulation for crypto businesses is extremely strict in Europe and will be further tightened with the EU's future TFR (Transfer of Funds) regulation. The TFR regulation for crypto transactions in the EU is the implementation of the FATF guidelines to combat money laundering and terrorism. Basically, it is about applying the Travel Rule to Crypto transactions as with bank transactions, i.e. that information must be provided by the sender with a transaction. This regulation has to be applied already from a traded volume of 0 EUR, which means that Crypto is more regulated than cash. Although Switzerland, the home of the DFX AG, is not part of the EU, the money laundering regulation is comparably strict and sometimes even stricter.
The real problem with this regulation in the EU and Switzerland is that the same standards are applied to fiat- and cryptocurrencies, which is impractical and not very realistic. Specifically, the issue is related to the additional verification of identity via bank transaction and the exact verification of the source of funds (SoF - Source of Funds), which makes it impossible to create a great customer experience when onboarding new users.
In particular, trading and moving cryptocurrencies quickly creates large transaction volumes and it leads to frustration when users are asked to prove these volumes with documents, which is common practice at some exchanges and platforms (also known from the DeFiChain ecosystem). This application of regulation originated in the FIAT world and is not equally applicable in the crypto space. Requiring a bank transaction as an additional verification of identity is absurd for pure crypto-to-crypto transactions.
Furthermore, without segregation of DFI, collective custody is very burdensome from a regulatory perspective and the reason why DFX currently offers its staking service in batches of 28 days.
Other crypto companies and staking providers do not require such extensive KYC procedures and as a result have a clear competitive advantage globally as onboarding can be much more efficient, customer friendly and designed for international investors. These companies are the benchmark for LOCK.space to provide a great service to the DeFiChain community. From my point of view, it is therefore an imperative step to establish another global staking provider in order to be able to operate a staking service in the long run.
The distribution of many masternodes to different staking providers is especially beneficial for the decentralization of the DeFiChain. For this purpose, it is absolutely essential that there are several strong staking providers, of which LOCK.space should be one. The goal is to make staking globally accessible to everyone without having to operate one's own masternode.
The decentralization of a protocol also plays a role in the listing of DFIs on large exchanges or investments by large (institutional) investors, an issue with development potential for DeFiChain.
Furthermore, there is currently no service that makes it possible for businesses to invest in staking on DeFiChain. LOCK.space will also offer Staking globally to enterprise customers from the very beginning. Given the potentially higher investments by institutions compared to retail investors, it is only a logical consequence to offer Staking globally as well, which in this set-up can only be offered by LOCK.space.
I would like to emphasize once again that parts of the open source Staking product of the DFX AG, which is already successfully used by more than 1200 users, will be used by LOCK.space, significantly improved and adapted to international requirements.
In summary, the staking service will be launched directly after founding LOCK.space in Q3 2022. New users can thus immediately benefit from the new and fast KYC process of LOCK.space. This allows customers to start staking directly, usually after just a few minutes, and make the DeFiChain more decentralized with each DFI, as well as earn rewards.
Regardless of the approval of this CFP, I will build up LOCK.space and establish it as an international Staking provider for the DeFiChain. Necessary legal consultations, to clarify how to use an existing staking product of the DFX AG by a new independent company, have been fully completed and pre-funded. However, this CFP would massively accelerate the founding process of LOCK.space, so that the operational business can be started and Staking can be offered worldwide only a few weeks after this CFP (timeline below). If the CFP is not accepted, the launch would be delayed and further development for future features will also progress slower.
Also, I would like to reiterate here that any DFI will be repaid from the CFP and this CFP remains a loan!
Jurisdiction & regulatory framework
The selection of a suitable jurisdiction for a global staking provider is challenging due to (locally) applicable regulations, in particular due to compliance with regards to anti-money laundering and counter-terrorism financing (AML/CFT) regulations.
The legal clarifications in this regard have been completed, so that LOCK.space can be established outside Europe.
Jurisdictions that come into question and which I have evaluated in greater detail are:
The focus of the evaluation of these jurisdictions was primarily on the following points:
All three jurisdictions offer progressive attitudes towards companies from the Crypto Space. Considering the large crypto companies, with whom we want and need to compete that have set up branches in these jurisdictions, indicates its legal suitability. This is noticeable in the liberal corporate policies as well as the low regulation of crypto businesses or by a completely unregulated market environment.
St. Vincent and the Grenadines even considers virtual assets like cryptocurrencies as "a digital representation of value [...]" by law.
It is important to us that we do NOT become a gateway for funds from illegal sources or money laundering. To this end, we will still implement a KYC process to identify the user or the company. This is designed to correctly identify the individual or legal entity, which is common in the market and the standard for large international crypto companies. LOCK.space aims to become the best and most straightforward staking provider for the DeFiChain community and hence, a merchantable KYC process is an absolute necessity for us, particularly because the issue of verification of users is a very sensitive topic in the crypto space and quite rightly so.
The incorporation process is a matter of three, to a maximum of four weeks in each of these mentioned jurisdictions. I am already in touch with law firms locally and just need to initiate the incorporation process.
The key with an offshore company is that it has real substance locally and is not just a shell company that is run and steered elsewhere. LOCK.space will build substance locally to operate a stand-alone company. This may be accomplished with, but is not limited to, office space on site, real employees, servers on site, board of directors/management meetings on site, et cetera. All operational activities to run the company, performed in/from the jurisdiction, increase the substance and therefore the credibility. However, there is no rule that specifies how much corporate substance must be on site.
Another point to consider when selecting a jurisdiction to incorporate a company is the international reputation of a jurisdiction. This is critical because a poor reputation is an indication that the jurisdiction is tightening laws or regulation due to international pressure.
For example, Seychelles has come under increasing focus or criticism over the past few years, particularly from the European Union. While the criticism of Seychelles comes more from a tax perspective than a regulatory one, it still shows that strong pressure is being exerted to make tax avoidance via companies on the Seychelles more difficult. While Seychelles has been removed again from the EU list of "non-cooperative countries and territories for tax purposes", it is of course still under strong scrutiny. This is one of the reasons why LOCK.space is to be established in St. Vincent and the Grenadines.
Product
The Staking Service will be usable via various wallets, such as the Jelly Wallet and DFX Wallet, as well as through the homepage of LOCK.space.
It is important to understand that the Staking Service is a separate product that can be integrated by any wallet via API. Thus, the Staking product of LOCK.space is not linked to a Wallet.
LOCK.space's Staking application will have the following advantages:
the staking will be natively integrated into the wallets
the DFI can be transferred directly into the Staking via this integration
funds can be withdrawn from staking at any time (integration at a later date)
Referral program, so that users will be paid Staking Rewards on a daily pro-rata basis, when using their referral links combined with an attractive, market standard fee structure
There will be a direct link to the FIAT Off-Ramp of the DFX AG for direct, automatic payout of rewards. There will also be the possibility to reinvest the rewards automatically, on a daily basis, or to have them paid out to your wallet.
The images of the Staking application show how different Staking strategies can be defined. It will also be possible to choose where and to what extent the Staking Rewards will be transferred. Different payout schemes can be selected in a single staking strategy, such as a mix of reinvest and payouts to the wallet as well as to the bank account. The entire staking process can be viewed here: Jelly Wallet Staking Click Dummy
The KYC process must be performed and completed before staking begins in each case for this service to be usable.
The LOCK.space staking service can be integrated by any wallet via open source API. Initially, the staking service will be available via the LOCK.space website, the Jelly Wallet and the DFX Wallet.
On the LOCK.space website, the user's blockchain address can be entered and signed. After that, a Staking Deposit address can be generated via a payment page, to which the DFI can be transferred by the user. After that, depending on the setting, the Staking Rewards are either paid out or reinvested.
Additional wallets are welcome to integrate the LOCK.space Staking. Also, the fee structure can be negotiated so that a part of the fees is transferred to the wallet operators. LOCK.space follows an open source approach here.
Further products of LOCK.space are being considered, such as an automatic reinvestment of rewards from liquidity mining, for which LOCK would have to take over the custody for the LP tokens. A service for crypto-crypto transactions is also conceivable, such as BTC to dBTC on the DeFiChain. Again, the user would have the clear advantage of a streamlined KYC process through LOCK.space.
Timeline
How will the loan be spent?
The use of DFI from the CFP breaks down in detail as follows:
I commit to pay back the 300,000 DFI by transferring them back into the Community Fund. For this purpose, a fixed formula will be implemented that transfers 20% of the daily staking revenues of LOCK.space fully-automatically back into the Community Fund.
The chart above shows the repayment schedule. For this, I have made the following assumptions:
The 300,000 DFI from this CFP will be paid back to the Community Fund in the end of 2025 or beginning of 2026 based on these assumptions. Also, the 1200 masternodes by 2025 is a realistic assumption given the >300 masternodes that DFX created in <6 months.
This CFP is exclusively intended to serve as seed funding to build a relevant global staking provider for the DeFiChain community as quickly as possible. I will continue on this path regardless of the outcome of this CFP because I believe in DeFiChain and am convinced that DeFiChain needs another staking provider for true decentralization that can provide staking not only in Europe but also globally.
The use of CFP funds breaks down into the four classes: Legal/License, Service, Salary and Marketing costs.
The legal fees for the transfer of staking from DFX AG to LOCK.space have already been pre-funded and have so far incurred costs equivalent to USD 63,000. The legal advice was provided by a Swiss law firm specialized in dealing with crypto companies.
The costs for the formation process including license application amount to approximately 21'000 USD, taken from our law firm's quote.
In order to start the operational business of LOCK.space directly after registration of the company, KYC services have to be purchased from DFX AG: Identification by means of KYC (USD 100,000).
It is assumed that 2000 new users will be verified in the 1st year, which is very realistic considering the current >1200 staking customers that could be acquired within 6 months and the globally available service through LOCK.space. The cost of a user verification is about 50 USD.
I will draw a salary of 30'000 USD and dedicate 100% of my working time to this project and therefore to DeFiChain and do everything I can to build the best and easiest staking service here for the DeFiChain community and beyond.
I will completely give up my position as COO at DFX AG and will not take on any tasks for DFX AG after the foundation of LOCK.space as well as will not receive any salary from DFX AG anymore.
Another 45'000 USD are planned for development services, which would finance half of a developer position. The first priority here is to develop additional software features that make the staking service even more customer-friendly and to automate it as far as possible. In addition, further developers will be recruited as soon as LOCK records sufficient revenues.
Marketing spend is $41,000 with individual spend on videos, social media, and partnerships.
Videos are professionally created to explain the service simply and understandably in multiple languages. Social media targets campaigns to be played out to our target audience (young investment-minded people and innovative companies). Partnerships will be established with renowned institutions such as universities (like partnerships such as between the Frankfurt School Blockchain Center and DFX) to strengthen the trust in LOCK.space as well as the knowledge transfer in the field of DeFi.
A project of this scope and significance to the decentralization of DeFiChain would spend only 1% of the Community Fund, which would be returned through Block Rewards in less than 10 days.
How does the DeFiChain community benefit from this CFP?
Contact to LOCK
Website: lock.space
LinkedIn: https://www.linkedin.com/in/jonassurmann/
Twitter: LockSpace
Telegram: https://t.me/LOCK_Staking
Mail: info@lock.space
Staking Preview: Jelly Wallet Staking Click Dummy
DFX Statement: Open Statement