ORC-8 The Session Network Token

[KeeJef]

ORC-8 The Session Network Token

Introduction

It currently appears that KuCoin is moving to remove OXEN from their exchange. While this is an adverse development, it (in part) confirms concerns we have with the coin. OXEN isn’t working. While the network is stable, Session is reaching new all-time highs, and Lokinet is blazing a path, OXEN is struggling to keep up with the pace. We don’t want OXEN to get left behind — and we have spent a lot of time thinking and talking about how to get it back on its feet.

Earlier this year we knew that we needed to give OXEN some love. We planned a brand refresh that would clarify OXEN’s position in the space, create new, more reliable customer funnels, and freshen up our visuals. As the project progressed, we uncovered more and more problems — with our brand structure, our coin, and ever-increasing regulatory pressure. We needed to make moves to reunify the brands of our project, rework our tokenomics, and connect with the rest of web3.

However we kept straying further from our original goal, we realised we needed to talk to you. We are not done yet, but it’s time to start sharing our ideas with you.

Motivation

Branding

Session is on the rise. People know what Session is, they trust Session, and they understand why it is valuable. In the crypto world, a lot of people are already using Session as their daily messaging app. And yet, a lot of these people have never even heard of OXEN. Some of them don’t even realise there is a coin behind the app. Despite some efforts — like cross-channel promotion, Powered by OXEN, and official communities in-app, the cut-through just hasn’t been what we need.

We need a brand that is strongly connected to Session: in name, appearance, and theme.

Connection

OXEN is an island. While being a standalone chain comes with its perks, it also comes with devastating drawbacks. We are small, we are isolated, and nobody wants to work with a privacy coin. As exchanges turn their backs on coins like OXEN, we are left with limited fiat onramps, low liquidity, and dwindling opportunities with centralised exchanges.

Web3 anticipated this problem, and set out to solve it: but OXEN lacks interoperability and connectivity with the rest of web3. This leaves us managing specialised and unfamiliar wallets and lacking native support on dexes. These days people expect to swap for a token on Uniswap, hold it in MetaMask, and stake them straight from a website.

We need a token which can connect with web3 and its community.

Tokenomics

Our tokenomics made a lot of sense back when they were first conceived. We were following the Monero-model, whose economic structure was borne out of opposition to the Bitcoin fee-model. Back then, there were no considerations to be made about governance tokens, rebase tokens, or any of the other constructs which web3 would later concoct.

Currently, we are running with an inflationary model where coins are minted to reward nodes. As nodes receive rewards, they are also being slowly (but infinitely) diluted and creating sell pressure.

To offset this, we have monetisation — but with our standalone blockchain, most scalable monetisation models require a manual buy-and-burn setup. This is centralised, requires trust, and encourages unhealthy market dynamics.

We need a modernised tokenomic model which better suits the project and its goals.

Proposal — Session Network Token

Session Network Token is a reimagination of the original Loki from 2018. We’re not just changing the name — we are changing what we are, what the token is, how the system works, and how we talk about ourselves.

SENT will be the token behind Session, other Session-branded apps, and the network of nodes which supports them.

New token

Session Network Token (SENT) is a new token on a yet-to-be-determined alternate EVM compatible Layer-2.

This immediately opens doors to new liquidity, collaborations, and interoperability that has not been possible in the past. Session Network Token will be able to integrate with popular wallets like MetaMask, fully support hardware wallets like Ledger and Trezor, and make staking simpler and easier.

Importantly, this new token also allows us to transition to a static, capped supply, make on-chain value capture easier and more transparent, as well as opening the door to new tokenomic mechanisms, such as token pools.

The reward pool

All of the network’s value is captured and redistributed through the reward pool. The pool is filled with tokens from monetisation mechanisms such as Session Pro, Network Enterprise, and Session Enterprise. As these value capture mechanisms scale, the reward pool grows and incentivises new operators to join the network.

Our current working model for the reward pool is based on industry leaders — although its designs are still in flux. Importantly, the reward pool allows us to have a fixed supply for the network, preventing long term effects of inflation from impacting holders and node operators.

Lokinet

This transition also includes hugely increased focus and attention on Lokinet and the technology behind it. Lokinet will also be folded into the Session family — gaining stronger connection to the Session Network Token, Session, and being able to more easily leverage the value of those brands and userbases.

In the past, our token has been divorced from the things that make it powerful, instead needing to reference Session and Lokinet for proof of value. Now, Lokinet’s unique value can be re-communicated through the Session Network Token.

In the future, it will be possible for others to leverage the network just like Session and Lokinet. We have already had meetings with potential business partners, and people are already expressing interest in utilising the network for their own products, and this will likely be a key part of Lokinet’s success in the future.

Answers to Initial Questions

How is all of this going to work?

Right now we need to finish conceptualising and executing on our new branding and direction. We're bringing you guys in on the ground floor to help us work on some of the details so we can work together in the same direction.

Next, it will be a matter of bringing OXEN across to the new network. We have already started creating technical documentation for how the transition will work, and at the moment we are looking into leveraging wOXEN to bridge people across to SENT.

Where do I trade my OXEN now?

Right now we are planning to increase the wOXEN liquidity on Uniswap. Because Uniswap is a decentralised exchange, we will not be exposed to the same risks of regulation-related delistings while we transition towards a Layer2.

When will we find out more?

We know you want to hear from us — and we want to hear from you, too. We will be doing AMAs to answer your important questions and get discussion rolling about decisions which are yet to be made. You can also comment on this ORC to add your perspective.

Keep an eye out for announcements about them on our socials.

What will happen to my OXEN?

You don’t need to do anything right now. We are still working out the details about how exactly we are planning to bridge OXEN to SENT. Once the transition is complete, all OXEN should be swapped for SENT, but right now, it is fine to continue holding OXEN as per usual.

Good news for those of you running a service node, we’re planning to have large incentives for staked OXEN during the swapping process.

Consultation

This is a proposal about what purpose OXEN serves and how it operates as a part of the wider network and project. We know many of you will have your own questions and contributions — we are opening this request for comment to invite all community members to participate in the process.

We know that there are still details we are finalising, but I hope this document will provide some clarity and insight into what we believe is the best way forward for the project.

[venezuela01]

Thanks for publishing the plan!

The motivation seems clear to me, and I'm looking forward to more details.

There are some immediate questions come to my mind, would be nice to have some discussions:

1. Will SENT be a privacy token, or will it be a transparent token like BTC/ETH?

2. I anticipate that there might be technical challenges in designing a privacy token with EVM compatibility. If, unfortunately, SENT is not going to be a privacy coin, is there any chance we can maintain a dual-stack mechanism? This would allow users to switch between the new transparent version and the legacy privacy version with ring signatures, stealth addresses, and so on.

3. Can you draft a list of 'open technical problems yet to be researched' so that community members with a tech background can contribute their skills?

Looking forward to further discussions and clarifications.

Edit:

Private purchasing of ONS by bridging the legacy private OXEN token

Imagine a user purchasing an ONS name for their Session ID. If they use a transparent token to make the purchase, their tokens are likely from a KYC-ed exchange, and their Session ID would be connected to their real-world identity. However, if they use a privacy coin to purchase the ONS name, then they can maintain their privacy.

Technically, it might be possible to implement a dual-stack architecture, allowing users to decide whether they want to purchase an ONS mapping using the new transparent SENT token or the legacy OXEN token. This can be achieved by implementing bridging in the service node, potentially with or without also bridging the name resolver, depending on implementation details.

Over time, as users become more educated, there might be a gradual migration towards the legacy private coin. It's important to avoid completely shutting down the legacy private version, as it could lead to a one-way path with no option to revert.

Politics is full of change and drama; what is discriminated against today might become a new fashion in a couple of years. I believe that our mission is to keep the project alive for long enough, potentially decades, and preserve the flexibility of optional privacy coin, until the day we see the light again. People will eventually awaken and fight for their rights. There are several potential outcomes:

• In a decade, there is a possibility that others may develop and mature a potential innovation in built-in privacy technology for EVM-chains. This could allow us to adopt their technology, migrate our transparent EVM token to the next generation privacy EVM token, and eventually deprecate the legacy Oxen token. Bootstrapping a privacy token is a highly non-trivial coordination, and during this period, the maintenance mode of the legacy Oxen token will play a crucial role. It will continue to provide minimum but essential value until the next generation privacy EVM ecosystem is ready. With the help of the legacy Oxen token, we won't need to cold start another privacy coin, while users with severe threat model can still use the legacy Oxen token to purchase critical service like Lokinet Exit, until the next generation privacy EVM chain is ready.
• Session might onboard hundreds of millions of users, and on that day, there will be enough users to vote for privacy-friendly politicians in real life, this could lead to the unban of privacy coins someday in the future.
• Politicians themselves might come to rely on Session because it is the best privacy messenger they can trust, which might also lead to the unban of privacy coins at least in some countries.
• A self-sustaining ecosystem might emerge on top of the Session/Lokinet infrastructure, allowing people to get a job and earn a privacy coin as a side income.

Overall, it's crucial to keep the project adaptable so we don't miss the potential opportunity of reviving the privacy coin.

I'm not worried about the long-term huge demand for the project. My concerns are more about irreversible short-term decisions. Hence, I hope we can consider the dual-stack approach. Please let us know how we can contribute!

Edit 2:

Lean-startup style token transition

Imagine a user who has already purchased the new EVM SENT token from either a centralized exchange (CEX) or a decentralized exchange (DEX), and transferred it to a SENT/OXEN dual stack wallet we built for them, with a similar experience to other mainstream wallets. The next step is for them to choose a service node and stake their SENT. Can we integrate a seamless SENT<>OXEN swap directly in the wallet? This way, whenever the user clicks the stake button, their SENT will be automatically converted to OXEN in the background. The rest of the Oxen staking process would then proceed as if nothing had changed. This approach would improve user privacy, maintain a smooth user experience, and reduce the development work required for migration.

Thinking more about it, SENT could truly function as a seamless wrapper token. We could list SENT on exchanges and encourage users to buy SENT for various purposes like purchasing ONS, Session Pro, subscribing to Lokinet Exit, and staking a service node. In all these interactions with the current system, we would insert a bridge to execute the 'SENT>OXEN' swap at the last minute. This way, users wouldn't need to know about OXEN working at a lower level, except for advanced users curious about the system's inner workings. This analogy positions SENT as a high-level programming language like C, and OXEN as a low-level language like Assembly, with the SENT>OXEN bridge functioning as a compiler that translates the widely adopted EVM wrapper token to its native privacy coin.

For most use cases, a one-way conversion from SENT to OXEN is sufficient, and the users don't even need to download a special wallet, since users typically don't need to convert their spent SENT back to native OXEN if they are merely purchasing something. It's only when a user decide to stake, they need to download our dedicate dual stake wallet, but these users are advanced users anyway. For (un)staking, more research and thorough discussion are needed to design an experience that's user-friendly yet offers users a choice between SENT and OXEN when they are unstaking.

This approach isn't to oppose a more fundamental transition to EVM tokens but rather follows a lean-startup mindset of gradually migrating the ecosystem to EVM. By fully utilizing the wrapper EVM token in the early stages without overhauling the fundamental infrastructure, we maximize potential gains while minimizing costs and risks:

1. The wrapper token SENT is easier to be listed on CEX and DEX platforms.
2. Easier acquisition of the new SENT token for most users as a consequence of 1.
3. The user experience remains familiar to those with EVM wallets.
4. Monetization development for ONS, Lokinet, Session Pro, etc., can progress in parallel, regardless of the fundamental coin infrastructure redesign.
5. Tracking record of real world income from Session/Lokinet monetization, even not significant, is already good enough to be used as a marketing highlight for SENT, even before fully implementing the new infrastructure.
6. Over time, with hands-on experience from Session/Lokinet monetization, the ideal integration of SENT into the infrastructure will become clearer, allowing for design refinements and actual implementation.
7. This lean-startup style strategy breaks the large goal into achievable small milestones with quicker and visible outcomes. It allows us to accelerate the listing and marketing of SENT before the next bull market.

By adopting this approach, the transition to SENT can progress incrementally, so we can collect feedback as soon as possible and adjust our plan when needed.

[crypto-ali]

Thanks for posting this ORC. It is an interesting proposal. I share @venezuela01 concern about the new SENT token being a transparent token. That would severely impact the privacy aspects of Session. To avoid that in the short term, I think you'd need to look at the newest chain that Aztec is developing that will have smart contract functionality as well as public and private state channels. That said, the last bit I read (a while ago) said that the new Aztec chain won't be EVM compatible b/c their research has shown it really isn't possible to have private state on an EVM chain.

Anyway, these are just my initial thoughts after reading the ORC. I'll think on this some more and I look forward to hearing more details.

[Lucifer1903]

I also agree with @venezuela01 I would prefer a dual token approach.

Move everything over to SENT as planned, stop minting coins as planned, but leave the Oxen blockchain as a side chain that people can move in and out of for private transactions. Ideally controlled natively by service nodes.

If private transactions are removed completely I can see many people dumping the coin, we just have to look at how many people stopped using Kucoin once they implemented KYC to verify this. Oxen holders have strong convictions in privacy. I understand and agree with the plan but to remove private transactions completely would be a grave error in understanding of who Oxen holders are.

[dis7ant]

On one hand, I see the desire to streamline access to Session and it's infrastructure for mainstream consumption and for those without the time or desire to learn something new. That makes sense for business and for marketing, it should help with adoption of Session.

On the other hand, the ORC implies a decision to abandon privacy to chase profits. At least, many like myself will read it that way. I don't think "nobody wants to work with a privacy coin" or "regulation-related delistings" are going to be received as winning arguments.

Considering both hands, the compromise point is going to be maintaining privacy while also cucking to the regulators and probably some investor somewhere. If an "EVM-compatible Layer-2" is what's been decided already, then it's going to have to be some sort of ZK or similar implementation. Marketing-wise, this can be spun as "moving from ring signatures to zero-knowledge proofs" and most people will be fine with it. We might even get a bump from the Layer-2's marketing as an example of adoption of their network.

One final thought: Would it be better to get OXEN supported by ChainFlip and work together on launching their DEX with the existing token? I understand there are personal and business-related issues with achieving this, but Oxen's Service Node operators were early supporters of their network and many of us will be running ChainFlip nodes with the tokens received as part of that early support. They have already stated plans to support Monero, doesn't that mean they're okay with privacy coins? Of course there would be considerable development resources needed to pull off a DEX integration, but that's also true of ORC-8 in general.

Thanks for all of the excellent work and massive amounts of time that everyone has put into Loki, Oxen, Session, etc. It's really important work and it's a meaningful contribution to the next chapter of telecommunications infrastructure. If we abandon privacy on the incentive layer, so be it and I'll still be here anyway. If we can avoid that, though, it would be better for everyone.

Edit: typos and clarity

Some specific points of concern for moving away from being a privacy coin:

• Journalists and whistleblowers registering ONS for comms and dead-drop addresses on loki.
• People buying birth control or abortion pills to remain in control of their own bodies.
• Selling coffee to drive-through customers who may have used their tokens for something bad in the past.
• Paying for access to a Lokinet exit node.
• Donating to peaceful protesters who are targets of nation-state surveillance and retaliation.
• Sending tokens from within Russia to support Ukrainians.

[crypto-ali]

Considering both hands, the compromise point is going to be maintaining privacy while also cucking to the regulators and probably some investor somewhere. If an "EVM-compatible Layer-2" is what's been decided already, then it's going to have to be some sort of ZK or similar implementation. Marketing-wise, this can be spun as "moving from ring signatures to zero-knowledge proofs" and most people will be fine with it. We might even get a bump from the Layer-2's marketing as an example of adoption of their network.

@dis7ant, I agree with this point. In my earlier reply I had mentioned Aztec's latest work, but the more I think about it, the more it possibly makes sense to fork their older Aztec Connect repo and launch our own L2. Aztec Connect was "the encryption layer for Ethereum". It was much more flexible than privacy protocols such as Tornado Cash. It also allowed for batch transactions so users could interact with DeFi smart contracts on Ethereum mainnet while maintaining privacy. The Ethereum community was pretty upset when Aztec decided to cease operation of Aztec Connect and instead build a new separate chain. I used it a lot to move funds from one Ethereum mainnet address to a new one without linking the two addresses.

• Aztec Connect repo.
• Aztec announcement sunsetting Aztec Connect

If the team proceeded with forking Aztec Connect the community could maintain privacy via shielding their ETH and SENT on the new forked L2. ETH could be used for the L2 gas and of course for the sequencer to pay for batch transactions down to L1. SENT could live transparently on L1 as well but then could be bridged to the new forked L2 to shield it and then use it there to pay for Session premium features. Operators of Session service nodes could shield their SENT on the L2 and could sign 'staking transaction' messages that lock some amount of SENT along with information about which service node the coins are staked to.

@KeeJef, these are just high level thoughts at this time but I would definitely recommend looking into forking the Aztec Connect repo and running your own L2 to replace Oxen mainnet. Your research may uncover issues that may not make it viable, but if it turns out to be workable, I think it would be a win-win.

• You get to have your own L2 which gives flexibility.
• Maintain the privacy aspect which is vitally important to many users, particularly those that @dis7ant pointed out above.
• You create deep integrations with the Ethereum ecosystem.
• The forked L2 would likely gain usage from privacy-conscious Ethereum users who used Aztec Connect to cleanly move funds to new addresses and interact with DeFi in a privacy preserving manner.

[Paul1804]

Hi ! A have 20 SN. I bought for this OXEN. I'm not going to close them. But I wonder -how much will I lose?

[dread-end]

But I wonder -how much will I lose?

This question is mine as well and will likely be on the top of the list for many SN operators and stakers. Along with - for everyone having been on board for a while and seeing the OXEN value fall and fall - "how much more do I want to lose". If you want to prevent lots of people unstaking in the next days and thus destabilizing the whole SN network simply because they feel they better limit their losses now, you might want to be a bit clearer on that topic than "we are still working out the details" and "we’re planning to have large incentives".

[KeeJef]

Thanks for the comments thus far, i'm going through them now

Will SENT be a privacy token, or will it be a transparent token like BTC/ETH?

In my view SENT should not be a privacy token and should be a transparent ERC20 token. This is for a couple of reasons:

• The narrative around privacy tokens outside of the privacy sphere is deeply negative, this makes it extremely difficult to interact with other projects, companies, exchanges, hiring talent etc.
• The regulatory landscape for privacy tokens limits new investment opportunities, many investors will not invest in privacy tokens given hostile laws in their operating jurisdictions and this is only getting worse
• Building and operating a privacy coin is extremely developer resource intensive, and if it's not our main focus its going to be hard to be competitive against other privacy coins

In saying all of this, I do still believe in privacy at the currency layer, however my view of the future of SENT is that this privacy should be enabled by EVM specific privacy tools. For example Tornado Cash, Railgun, Aztec, etc.

To give an example, currently a user who has Ether which they bought from a KYC exchange can mix their Ethereum using Tornado Cash, they would then be able to use this mixed Ethereum to buy SENT via Uniswap and purchase an ONS or pay for Session Pro. This is just one way a user could get more privacy on Ethereum and I think it's likely that further development happens in EVM land to build additional tools like this. I think it would also be possible to seek deeper contract level integrations with privacy tools allowing interactions like purchasing ONS names to happen privately. However, this is an open field which we need to explore more.

I anticipate that there might be technical challenges in designing a privacy token with EVM compatibility. If, unfortunately, SENT is not going to be a privacy coin, is there any chance we can maintain a dual-stack mechanism? This would allow users to switch between the new transparent version and the legacy privacy version with ring signatures, stealth addresses, and so on.

There will likely be a period where we need to maintain a dual stack functionality since I think this would be the best way to migrate (keeping the Service Node state on the Oxen chain and representing the user balance state on EVM chain) however I think this should be a one way migration (users can migrate to OXEN -> EVM but not visa versa). Otherwise we are going to need to keep maintaining the wallets and Oxen transaction ecosystem.

Maintaining the wallets is not a trivial exercise and if wallet experience is suboptimal we will see very little usage of Oxen (this is already the case, actually) with only a handful of actual Oxen transfers occurring on a daily basis, limiting the practical anonymity set of Oxen. Another plus to unidirectional migration is that once migration is complete we can essentially prune the entire Oxen blockchain, freeing up ~18gb of space for Service Nodes to store Session related content and lower the disk space requirements for new Service Nodes.

However I think the most important reason is that once this migration occurs we aren’t going to be innovating on the Oxen transaction chain anymore, we are going to be devoting our development efforts to building Session and Lokinet. We aren't going to have time to implement new transaction privacy methods like Lelantus, Serpahis or other ZKbased privacy protocols or improve UX on the Oxen chain, this will leave the transactional privacy elements on the Oxen chain lacking when compared with state of the art protocols, and i think that will greatly limit usage compared with projects which focus on transactional level privacy.

Can you draft a list of 'open technical problems yet to be researched' so that community members with a tech background can contribute their skills?

Currently our biggest challenges are around building the decentralized bridging and operating mechanism between the Oxen chain, and the EVM chain. Long term our primary idea on how to achieve this is to maintain the Oxen chain as the “Oxen workchain”, with the Oxen workchain tracking only the state of the Service Node network, including pending rewards, deregistrations, decommisons etc… Then having this state periodically snapshotted and posted to the Ethereum network. This snapshot would contain a BLS signature from some threshold of the node network and would update the state of the EVM contract so users could claim rewards. In the reverse direction Oxen workchain nodes would also subscribe to RPC endpoints for the EVM layer 2 or run their own EVM L2 node to fetch events which occurred on the EVM chain and then form consensus about this events by communicating with each other, this would allow staking to occur from the EVM chain.

Currently open problems are around the efficiency of this snapshotting method, Large threshold BLS signatures +2000 plus signers and EVM contract validation of these signatures, smart contract design etc… There are also several open problems around how witnessing events of the EVM chain would occur and how we would come to consensus about those events on the Oxen workchain, tokenomics questions, branding etc…

Hi ! A have 20 SN. I bought for this OXEN. I'm not going to close them. But I wonder -how much will I lose?

This question is mine as well and will likely be on the top of the list for many SN operators and stakers. Along with - for everyone having been on board for a while and seeing the OXEN value fall and fall - "how much more do I want to lose". If you want to prevent lots of people unstaking in the next days and thus destabilizing the whole SN network simply because they feel they better limit their losses now, you might want to be a bit clearer on that topic than "we are still working out the details" and "we’re planning to have large incentives".

At the moment we have legal advice limiting the information we can share about prospective tokenomic plans. However, transitioning Service Node operator, and Service Node contributors over to SENT is one of our top priorities and we are investigating the best way to ensure operators transition across networks. We will release further information on how the migration process will proceed as soon as we can, with particular emphasis on the Service Node network, given its critical role in maintaining Session and Lokinet operations and securing a successful transition to SENT.

[huyahuai]

Please let oxen fly on the stellar decentralized exchange, especially using the latest soroban smart contract launched by stellar to realize more governance tokens and web3 connections and other functions. More importantly, stellar tends to embrace regulation, reduce gas rates, and enhance the ease of use of the blockchain. I believe that oxen's privacy construction combined with stellar's compliance will have unlimited development potential.

[Paul1804]

It seems to me that the decision to switch to SENT has already been made. As the most attractive business model. OXEN will be done away with. Perhaps it's the right thing to do.

[Agorise]

I will probably keep my Oxen staked. BUT... The world needs more peaceful, fearless, anarcho* Devs. Devs who build alternative systems, outside of the control of "regulations" and all that crap. Use (and help build-out) DEX's. To hell with CEX's and their KYC.

The whole point of the Lokinet and Session is to work OUTSIDE of their damn constructs. I used to teach maritime law and I can tell you this.. You do NOT have to obey. Stay focused! Build Lokinet, Session and the OXEN coin monetization the way it should be, NOT how "they" say it needs to be. Do it right! #nofear

[bungoboingo]

Not trying to shill here but I think you should look into making a custom chain with substrate on Polkadot. This could be the best of both worlds - having a custom feature set, fee model, etc. while being interoperable with other projects and having access to liquidity. EVM compatibility and bridges to Ethereum, Bitcoin, and other non-polkadot blockchains are all plug and play features of substrate and Polkadot. Substrate also has modules for ZKP and there's a lot of demand for more hardcore privacy focused chains. Could be a perfect fit.

[Dormage]

Given the history I can't help but wonder how much of this discussion is actually aimed at getting feedback. We had similar discussions before and very little if any of the community recommendations were taken into account.

In the spirit of changing winds I'll give this another try hoping it does not fall on deaf ears.

I'm not against switching to an Ethereum token. However, I do not think the proposal addresses the underlying issues of Oxen. I've voiced my opinion before and will do it once more. The infrastructure of the network provides is essential to the existence of Session and Lokinet. However, the economic model upon which Oxen was built is flawed. It has been flawed from the beginning when assumptions about the growth were simply wrong. It took a few years for it to finally take effect, yet here we are.

The entire idea of Sybil resistance is based around the economic model. It is not the exchanges fault, nor is it the privacy aspect of Oxen. The underlying issue is the constant coin inflation that makes service node operators suffer impermanent loss and incentives constant selling to cover the loss on value of staked coins. The idea that this would be offset by burning is just flawed. It never could and never will as long as it is optional and not enforced by the protocol. Everything the infrastructure provides is free but in reality comes with a cost reflected on the price action and liquidity.

And here we are, a few hundred nodes staked, all operators with net loss on their investment yet continue to show support. It kinda sounds like they are doing this out of altruism, and not financial gain. Kind off sounds like Tor don't it? Did we go full circle?

I strongly believe unless this changes, the project is doomed to fail. The community will only support the network for a limited time if all we get is digital numbers worth nothing. As long as the application layer of Oxen can be used freely there are no incentives to use the coin. I refuse to believe a team of such smart and technical people does no grasp the detrimental effects this has had to the community that supported for the project for so many years. Acknowledge the issue, apologize for not listening to the community and not being transparent about why this was not addressed sooner!

Importantly, this new token also allows us to transition to a static, capped supply, make on-chain value capture easier and more transparent, as well as opening the door to new tokenomic mechanisms, such as token pools.

This requires a lot more information and details. Is static equal to fixed supply? How would that even work. Where do the rewards come from? What is the economic model? Simulations?

Currently our biggest challenges are around building the decentralized bridging and operating mechanism between the Oxen chain, and the EVM chain. Long term our primary idea on how to achieve this is to maintain the Oxen chain as the “Oxen workchain”, with the Oxen workchain tracking only the state of the Service Node network, including pending rewards, deregistrations, decommisons etc… Then having this state periodically snapshotted and posted to the Ethereum network. This snapshot would contain a BLS signature from some threshold of the node network and would update the state of the EVM contract so users could claim rewards. In the reverse direction Oxen workchain nodes would also subscribe to RPC endpoints for the EVM layer 2 or run their own EVM L2 node to fetch events which occurred on the EVM chain and then form consensus about this events by communicating with each other, this would allow staking to occur from the EVM chain.

Running a local EVM L2 node introduces on service node operators but it seems like it is the only realistic option. Using public RPC endpoints will likely create more problems with availability and reliability unless paid for. I would expect some technical report on the resource requirements of running a local EVM L2 node alongside Oxen node before the decision is made.

Currently open problems are around the efficiency of this snapshotting method, Large threshold BLS signatures +2000 plus signers and EVM contract validation of these signatures, smart contract design etc… There are also several open problems around how witnessing events of the EVM chain would occur and how we would come to consensus about those events on the Oxen workchain, tokenomics questions, branding etc…

These are all valid points, yet the elephant in the room is not addressed. Who would pay the gas fees for the signature validation? Security comes at a cost, we can not simply borrow the security Ethereum provides without paying for it. Moreover the change in tokenomics is fundamental to this transition yet none is presented. Not even ideas?

This looks very much like a half baked solution to a localized problem that does very little to address the actual global problem. If the community is expected to sacrifice privacy it should be clearly presented what we are sacrificing it for. Exchanges, integration, interoperability are just buzzwords with no substance that do not address the main issue at all.

At the moment we have legal advice limiting the information we can share about prospective tokenomic plans. However, transitioning Service Node operator, and Service Node contributors over to SENT is one of our top priorities and we are investigating the best way to ensure operators transition across networks. We will release further information on how the migration process will proceed as soon as we can, with particular emphasis on the Service Node network, given its critical role in maintaining Session and Lokinet operations and securing a successful transition to SENT.

Having been involved with the space from a legal perspective my self I can relate to this somewhat. However, we can talk about ideas and not plans. Voicing ones opinion on what is being looked at and researched does not impose any legal obligation. We should be more open and transparent with regards to ideas being explored. Whether or not those are legally acceptable is another topic, which can be addressed at a later time.

Finally, I would like more emphasis be put on the economic model of SENT. It is now undeniably evident a constant coin inflation is destroying the market and forcing service nodes to abandon support. If a fixed supply model is being considered we should be open about it and discuss more on how that would work both in terms of technical issues as well as economics. It would be unreasonable to voice support for such a loosely defined proposal. I would even go as far to say this cannot be considered an ORC. It lacks fundamental information required to be considered as such.

I would suggest the team takes some time to formalize this proposal more clearly before requesting community feedback. Perhaps the correct way to go about it is to decompose it into smaller technical and economic obstacles that need to be addressed. Address those first and then put forth a proper ORC that clarifies the necessary changes.

[dis7ant]

with only a handful of actual Oxen transfers occurring on a daily basis, limiting the practical anonymity set of Oxen.

Can't argue with that, it's also the primary weakness of Lokinet in general compared to Tor. An argument could be made that moving to a massively-used transparent infrastructure with privacy tools like Tornado Cash could actually help with anonymity, if used properly. I don't know if I'm sold on that being true, but it's an interesting point.

If the privacy of OXEN is weak anyway compared to competing privacy coins, why not focus on being a really good private communications network instead of focusing on being a private payments network...that makes sense to me. After all, people are going to just send Monero over Lokinet and Session instead of OXEN or SENT. May as well directly integrate Monero payments if it's going to be used for that anyway, and compete with whatever Elon and Jack's messaging-app-with-payments-infrastructure ends up being.

Dissecting the additional Layer-2 EVM comments: It sounds like there's already a layer-2 identified and being actively worked on. If you're going to need RPC endpoints, you should be talking to Rivet and not the pro-censorship endpoint companies. Besides the stance on censorship, they have better service and lower latency anyway. If you're going Polygon, there's no better choice at the moment. Especially if you're going to be promoting the use of Tornado Cash...we don't need RPC endpoint partners who are going to be censoring traffic and Rivet is very committed to not censoring traffic.

Other thoughts: Free access to Lokinet is important, but limiting individual bandwidth unless it's paid for could be very good for economic balance. This could be where service node rewards come from in a fixed-supply token model, assuming that's what is being planned for. This could come from people using Lokinet directly or from payments made through Session to access high-bandwidth low-latency features like voice and video calls.

[Onion84]

Lyrical introduction))) I've been following the Oxennetwork project since its inception (Loki), but until the advent of Session I didn't consider it as a serious project, due to the influx of a huge number of the same projects. The fact that the path for private coins will be much more thorny than for speculative coins was clear from the moment Monero appeared. Based on this, I did not rely on one project, because. I knew that not everyone would have the strength to survive all the hardships of the path. Over the years, a huge number of privacy coins have accumulated in my portfolio, most of them are already dead or eke out a miserable existence, but despite this, I still keep them, but for a rather naive reason. The thing is that I really believe that only private cryptocurrencies and projects can return freedom to the Internet, and there is a huge amount of junk created solely for the sake of speculation to make money.

Specifically on the issue. I have supported and will continue to support Session no matter which way the Oxen team decides to go, but I would like the team to take into account the following points when making a decision:

• all tokens built on someone else's blockchain have no real value;
• at the moment there is not a single token successfully implemented in the ecosystem (a vivid example of BAT, with all the popularity of the Brave browser, the token itself is of no value, despite the deep pockets of the initial investors);
• it should be noted that embedding the SENT token into the Lokinet and Session ecosystem can be problematic, due to the underlying blockchain, for example, if the token is based on Ethereum, the horse commission for transactions will not allow you to buy paid services (I doubt that anyone will pay a commission 5 -200 $ for paying a monthly subscription in the amount of 5-10 bucks);
• the problem of payment methods follows from the previous thesis. If you accept only SENT, then the number of paid services will be minimal, because. few people want to bother with a little-known token. If you make a large selection of methods, then no one will use SENT for purchases at all (various discounts of 10-20 and even 30% will not help much);
• under what conditions can replacing Oxen with SENT increase liquidity? If the calculation is on DEX, then at best the volume will remain at the level of wOXEN. If the calculation is that, having abandoned privacy, centralized exchanges will line up, then this is also doubtful, because. we all know that the usefulness of a coin does not affect the listing, especially since the token has no utility. Everyone knows that application tokens are an absolutely useless thing and the demand for such tokens depends on the media and the depth of pockets (even Ripple could not prove the value of the XRP token, although this token was supported by millionaires and billionaires and only thanks to them it keeps a high capitalization, despite the fact that the XRP token is practically not used in the multibillion-dollar Ripple ecosystem);
• reputational loss. Rejection of the original goal always bears reputational losses. A vivid example of DASH, which at one time abandoned privacy as a result, it turned into a slowly dying project with no future.

In general, I hope that the team understands that SENT will not solve the liquidity problem. Yes, this will reduce the cost of developing the Oxen core, but again, the development of Lokinet and Session, as I understand it, was carried out at the expense of a certain value of Oxen, but in order for the SENT token to be able to make a profit, it must first be promoted. In increasing liquidity, there is a successful example of the implementation of Flux parallel assets. On many exchanges, including Binance, this token is listed only in BEP20 and ERC-20 standards without the main chain, and it is also listed on all DEXs and popular wallets like MetaMask.

PS: I suppose that as a result of the OXEN exchange for SENT, within a few months this token will show its non-viability and the further development of Lokinet and Session will have to be carried out only through donations and paid services. Glad to be wrong, but I don't see under what conditions SENT can save the situation. Perhaps you should not spend your energy and money on SENT, if you still decide to abandon OXEN, but immediately switch to working according to the Signal principle, in any case, negative feedback from users cannot be avoided. Unfortunately, I’m not strong in technical matters, so I’m also wondering how Session privacy will change when moving from the OXEN platform to a transparent blockchain?

It is quite difficult for me to express my thoughts, because of the low level of English proficiency, otherwise there were more nuances. I am not a frequent visitor to Github, but on twitter and telegram, some may know me as @CryptoTrueLife.

[Lucifer1903]

The team claims that we can't compete with other privacy coins unless we 100% focus on that. I'm going to agree that aren't able to complete in our current position.

However if the team had substantially more funds and substantially more transactions for decoys then we could compete.

The team needs to;

1. Do the ORC-8 plan
2. Integrate sending transactions through Session.

The team needs to commit to;

1. A dual token stack
2. Having Session only sending transactions via; privacy-coin>token, privacy-coin>privacy-coin
3. Have Session only receive via; token>privacy-coin, privacy-coin>privacy-coin

This commitment should be actioned when;

1. There's suficiente funds to duble the team size and have half the team 100% focus on the privacy aspect of the coin.
2. There's on average 1,000 transactions per day through Session.

If sending transactions through Session becomes popular with users then the coin can be transitioned into a dual stack privacy-coin/token. The token can continue to be accepted by exchanges as it isn't seen as a privacy coin and transactions through Session can become private without anyone even noticing.

Does anyone else support this?

[Danmcg86]

I support ORC8 as written. I have been participating in Loki/Oxen since launch and currently have 6 solo Snodes. I have always felt that this is one of the better projects in the space and has two very useful applications for web3. The project needs to find a way for mass adoption and monetize it's app's more effectively. When the Chainflip announcement came I was very excited that there would be more opportunities but that has yet to occur. Having a specific token that is easy to access would be a great benefit and could lead to wider adoption..

[seoeunju1]

Many CEX lists will help the project grow. I supports ORC-8.

[KeeJef]

I strongly believe unless this changes, the project is doomed to fail. The community will only support the network for a limited time if all we get is digital numbers worth nothing. As long as the application layer of Oxen can be used freely there are no incentives to use the coin. I refuse to believe a team of such smart and technical people does no grasp the detrimental effects this has had to the community that supported for the project for so many years. Acknowledge the issue, apologize for not listening to the community and not being transparent about why this was not addressed sooner!

We have not been flying blind here, everyone is on the same page here about needing to find long term ways to offset new coin emission. The primary way we believe to do this is to monetise our successful applications (Session/Lokinet). If we can convert a small amount of the users of these applications into paying users and market buy and burn Oxen/SENT with those funds then we can effectively offset the newly emitted coins which are paid to Service Nodes to preserve network functionality. This has been the plan since at least 2021, and its the direction we are moving in currently.

This requires a lot more information and details. Is static equal to fixed supply? How would that even work. Where do the rewards come from? What is the economic model? Simulations?

One of the broad ideas here (subject to change) is to hard cap the supply of $SENT and construct a rewards pool, this pool would start with an initial balance of say 100 $SENT, it would pay out say 15% of this $SENT per year given the total size of the pool was either <= 100 $SENT. Given no new funds flow into the pool every year the amount of $SENT paid out of the pool would reduce over time and subsequently so would the operating Service Nodes on the network. However this would be countered by $SENT flowing back into the pool, through Session/Lokinet monetisation. If the pool exceeds 100 $SENT then it would pay out rewards in excess of the 15% per year to encourage growth of the network. This all works while keeping supply fixed and forces a timeline on monetisation given the reducing rewards. None of those numbers should be considered as final, but thats one of the basic ideas.

Running a local EVM L2 node introduces on service node operators but it seems like it is the only realistic option. Using public RPC endpoints will likely create more problems with availability and reliability unless paid for. I would expect some technical report on the resource requirements of running a local EVM L2 node alongside Oxen node before the decision is made.

I think we would give operators a choice on this one, whether to run a local node or subscribe to an EVM RPC endpoint, thankfully i think the actions which we we would be witnessing from the EVM chain would be fairly low volume (staking transactions, unlocks and maybe a few others) its likely that these events could be witnessed without exceeding the free tier options of the larger RPC providers (rivet, alchemy, infura etc...) however for local node operators this requires more investigation on resources required.

These are all valid points, yet the elephant in the room is not addressed. Who would pay the gas fees for the signature validation? Security comes at a cost, we can not simply borrow the security Ethereum provides without paying for it. Moreover the change in tokenomics is fundamental to this transition yet none is presented. Not even ideas?

These are questions we are trying to answer now with a prototype implementation, however i can give you some insight on the ideas here, a snapshot would be a BLS signed representation of some element of the Oxen workchain state, that could either be a low defintion snapshot of all of the Service Node balances or the exact balance of a specific Service Node.

For me the specific implementation i am liking right now is that the service node network produces low definition snapshot of all Service Node balances once every 24 hours, this includes an aggregate BLS signature and indexes for all signing parties. This snapshot is available via RPC from the Oxen workchain to anyone. Unlocking Service Nodes can grab this snapshot and submit it to the EVM chain for validation, the unlocking Service Node pays the fees for validation of this snapshot, validation can occur onchain because Service Nodes register their BLS pubkeys onchain when they stake and smart contracts can somewhat efficiently validate BLS signatures with a large number of signers https://geometry.xyz/notebook/Optimized-BLS-multisignatures-on-EVM. Given a threshold of nodes signed this snapshot it would update the state of a contract which contains owed rewards for each Service Node. Once this update is complete Service Nodes stakers can claim $SENT from that contract equal to their owed rewards, even if they didn't submit the snapshot update themselves.

Gas costs are the primary concern here, but since we would be on an EVM L2 these are less relevant, I'm not yet confident claiming a Gas amount which would be required to execute an snapshot update, but we are hoping based on our investigations that in the worse case naive BLS validation, usage would be under 7m GAS which would be around 1.5$ on most L2s. However I'm hoping we can get this number under well under 7m Gas.

This looks very much like a half baked solution to a localized problem that does very little to address the actual global problem. If the community is expected to sacrifice privacy it should be clearly presented what we are sacrificing it for. Exchanges, integration, interoperability are just buzzwords with no substance that do not address the main issue at all.

These are not just buzzwords, i have spoken to many investors over the past few years who have chosen not to buy Oxen because of these reasons, including, no hardware wallet integration, not on big enough exchanges, not interoperable with Ethereum, poor wallet experiences etc... I don't think this is the primary reason that people choose not to buy in Oxen, but it is one of the major reasons.

[Agorise]

EVM? Gas fees? Smartcontracts? Privacy? Just curious why noone has even mentioned DERO.

[KeeJef]

all tokens built on someone else's blockchain have no real value;

Is this a philosophical point? If you mean this literally i don't understand the claim, of the top 20 market cap projects 6 of them are non native tokens issued on another blockchain, there is billions of dollars locked in tokens issued on "Someone else's blockchain"

at the moment there is not a single token successfully implemented in the ecosystem (a vivid example of BAT, with all the popularity of the Brave browser, the token itself is of no value, despite the deep pockets of the initial investors);

I can think of Toncoin as atleast one example of a very successful ecosystem integration, although not directly comparable to $SENT i think this shows one of the best case scenarios for ecosystem integrations, and proves that this concept can be successful.

it should be noted that embedding the SENT token into the Lokinet and Session ecosystem can be problematic, due to the underlying blockchain, for example, if the token is based on Ethereum, the horse commission for transactions will not allow you to buy paid services (I doubt that anyone will pay a commission 5 -200 $ for paying a monthly subscription in the amount of 5-10 bucks);

I think it would be wrong to issue $SENT on Ethereum, to keep fees low i think we should issue on an Ethereum adjacent EVM L2 or L1, average transaction fees on most L2s have never peaked past a few cents for simple token transfers.

the problem of payment methods follows from the previous thesis. If you accept only SENT, then the number of paid services will be minimal, because. few people want to bother with a little-known token. If you make a large selection of methods, then no one will use SENT for purchases at all (various discounts of 10-20 and even 30% will not help much);

I think the end goal would be to accept any fiat or crypto payment method for Session pro and then convert this to $SENT on the backend, but potentially offer a discount for users who subscribe using $SENT directly.

under what conditions can replacing Oxen with SENT increase liquidity? If the calculation is on DEX, then at best the volume will remain at the level of wOXEN.

I think if we make the full transition to an EVM layer 2 then the onchain DEX's will be the highest volume markets, and yes i think those pools would have increased liquidity compared to wOxen. The barriers to entry will be far lower for LP's wanting to make markets on a L2 given lower fees and more liquidity will be available from native token holders since all $SENT holders will be on the same chain.

If the calculation is that, having abandoned privacy, centralized exchanges will line up, then this is also doubtful, because. we all know that the usefulness of a coin does not affect the listing, especially since the token has no utility. Everyone knows that application tokens are an absolutely useless thing and the demand for such tokens depends on the media and the depth of pockets (even Ripple could not prove the value of the XRP token, although this token was supported by millionaires and billionaires and only thanks to them it keeps a high capitalization, despite the fact that the XRP token is practically not used in the multibillion-dollar Ripple ecosystem);

The point is not that centralised exchanges will line up automatically, but that it becomes practically much easier to list $SENT from both a regulatory perspective and an development perspective. From a regulatory perspective exchanges have no issues with the privacy properties of ERC20 tokens. From a development perspective integrating a new ERC20 token is often just a few lines of code, vs potentially thousands of lines and hours of development time if the exchange doesn't already support something similar to Oxen like Monero, and even if it does, there are still important differences which need to be communicated and understood.

reputational loss. Rejection of the original goal always bears reputational losses. A vivid example of DASH, which at one time abandoned privacy as a result, it turned into a slowly dying project with no future.

I think the difference here is that Dash hasn't built a highly successful product like Session to lean on, their currency is their whole project so removing/minimising features of the currency hurts the future performance of the project more. This ORC leans more on our most successful products like Session & Lokinet and integrates the coin and project into a singular brand.

[Onion84]

all tokens built on someone else's blockchain have no real value;

Is this a philosophical point? If you mean this literally i don't understand the claim, of the top 20 market cap projects 6 of them are non native tokens issued on another blockchain, there is billions of dollars locked in tokens issued on "Someone else's blockchain"

On the one hand, this can be seen as a philosophical moment, but on the other hand, this is a statement. Almost all TOP projects are very successful commercial projects, but calling them independent and decentralized can only be a stretch. The blockchain itself does not have the necessary properties that Nakamoto once spoke about, the important thing is how the blockchain is implemented. For example, CBDCs are also built on the blockchain, and most cryptocurrencies are similar to CBDCs, they are simply controlled by a small group of businessmen, and not by the state). By itself, the token has the properties that are laid down by the underlying network, and, accordingly, it does not represent any independent value as a product (For example, if the core network cancels transactions by decision of a small group of people, then this will not affect the levels L1 and L2?). The value of a token is influenced by the product in which it is successfully implemented or the wealth and influence of investors, and in the vast majority of cases, it is the second factor that has a more significant impact.

at the moment there is not a single token successfully implemented in the ecosystem (a vivid example of BAT, with all the popularity of the Brave browser, the token itself is of no value, despite the deep pockets of the initial investors);

I can think of Toncoin as atleast one example of a very successful ecosystem integration, although not directly comparable to $SENT i think this shows one of the best case scenarios for ecosystem integrations, and proves that this concept can be successful.

This question follows smoothly from my previous thesis. Toncoin is a great example of how very rich investors can create hype from anything. I have been associated with active advertising services for a long time and have seen how much money is spent on promoting the Toncoin project (millions of dollars have passed through the far from the largest advertising platforms that I know), I doubt that even a project like Monero can afford such expenses. TON is 100% a marketing product, it is as deeply embedded in a real product as Dogecoin in Tesla (the main thing here is Musk, not implementation in a real product, TON just speculates on well-known brands and large investors), but the problem is that privacy has no such well-known and wealthy supporters. You will say that for this reason you are switching to a transparent token, but the bottom line is that Session without direct investment in SENT will have almost no effect on the value of the token, at least until it reaches at least the telegram level, and I strongly I doubt that Session will receive support from the authorities and big business (similar to support telegram), because. they are not interested in real privacy and decentralization. A few years ago, I accidentally stumbled upon an interesting article in a scientific journal (unfortunately I can’t find the source) that dealt with the issue of privacy. The article included a chart with statistical data. One column showed the number of people concerned about privacy, and the second column showed the number of people who understand what privacy is, the numbers were something like this:

• they are concerned about the problem of privacy, about - 8%;
• 0.2% answered the question of what privacy is for them. How much these figures can be trusted, I do not presume to say, but in principle it fully explains the current situation.

PS: Once again I want to repeat that I'm not trying to criticize, but I just want you to take a balanced approach to making a decision and study all the problems that may arise.

[henk717]

I don't support this direction to replace oxen, I held oxen because I believed in the need for a coin like Oxen. A coin that is inherently private, not an energy waste and allows for fast transactions. It is why I consider it technologically superior to Monero. Moving away from that to be yet another non private ethereum token means it looses its value to me to the point i'd rather have something else.

I liked the coin as it was, if it just becomes a non innovative trackable token it holds no value to me to the point where I will be selling all of it.

Ideally run them in parralel with a 1:1 swap so that people who value what oxen is can use oxen.

[Lucifer1903]

@henk717 I agree with your point of view but I also see where the team is coming from.

In my opinion the main problem with Oxen as a privacy coin is that the anonymity set is too low. We need more people using Oxen for it to be a good privacy coin.

That is why I urge everyone who wants Oxen to be a privacy coin to support my proposal in this comment as a compromise between what we want and this ORC-8.

[Lucifer1903]

The last thing I'm going to say on the topic. If the community isn't interested in the compromise I wrote above (that would be my proffered option) then I'll support this ORC-8 as is.

[TrampledF]

These are sad but not surprising news.

I've always supported the Loki project and publicly discussed on discord, with Kingsley and KeeJef against the Loki rebranding to Oxen. But at the time it was the nostalgia speaking, due to the times setting up my GPUs to mine Loki on the testnet, back in April 2018.

Nevertheless, I kept my full support to Oxen, despite not agreeing with it.

And this leaves me to the current situation and is based solely on my personal opinion and I'm not taking in consideration (not even aware of) of the amount of work needed, for such personal proposal. Also (after reading most of the discussions above) please be aware that I might say some really stupid things, as I'm not a developer. Here it goes:

In my opinion, the creation of SENT is a good strategy for Session users to adopt the messenger and to have private value transactions, as it also move them away from the mostly unaware Oxen. But a complicated network must be created and must ensure prevalence for the future.

Oxen (or SENT) should be back to the old POW mining type of Blockchain, with a finite coin/token emission. (People are only really trusting POW)

The idea is to keep the SN as network validators (as they are now, but without issuing SENT), and an algorithm (solely CPU - RandomX or a new created - the Loki team did it before 🙂) should be chosen to mine the blocks and issuance of the tokens (a % on rewards should be allocated to SNs) Going POW in CPU mining, must have a steady block reward, a short mining process time (fast transactions), but calculated to last some decades, based solely on what's issued/what still need mining. The SNs will keep the complete Blockchain validation, except the mining. This will keep the Loki origins and also the original project privacy.

However, the Service Nodes will have a new key player process, for the current web3 DeFi DEX wallets and swap capability.

• Core SENT (L1) wallet balances/transfers will be kept private, as it is now with Loki/Oxen, as well all the transactions between wallets/SN (ring signatures, and so on...)
• Service nodes (also as bc validators) will have a SENT user receiving/sending (L1) wallet and this SN wallet creation must be discretionary of the user
• This SN wallet will "convert" SENT from Private (L1) to Public (L2) (and vice-versa) as a means of capability usage in regular DEX wallets
• The L2 SENT can be converted in any chain (ETH, Polygon, Solana, BNB, etc.) chosen by the team
• SNs will keep track of the SENT issuance (L1) and the full non-private (L2) SENT in circulation (NO DEXs minting tokens out of thin air)
• All SENT (L2) swaps/transfers will be public in the several DEX chains / wallets
• The staking (L2) incentive on the SN (staking must be kept and DEXs can only stake in SENT SNs) could come from the "Priv/publ" and DEX swap fees, as well the (L1) % received from miners (SN validators could receive L1 and L2)
• This will allow adoption and regulatory requirements, but will keep the core of the project completely private still.

Regarding Lokinet, don't change nothing (just the token for the Exit nodes) and keep it solely on the L1 (private)

That's it. Hope this gives some kind of help, for the Oxen team to come up with the best solution possible, for the future of the project. Thanks for the chance given, to listen to us (me) plebs. 😁

TrampledF

[torsionion]

Agree 100% to what @henk717 said. Already sold all of mine. Sold for a massive loss, but I've lost trust in the direction of this project. The only reason $OXEN had any value for me was as a privacy coin. It sounds like there has been a lot of thought given to this, and you're completely free to make this decision since you're the ones putting in all the work as the developers, etc., but this does read more like a foregone conclusion and excuse to switch from a privacy coin to make more money rather than a solicitation of feedback. Hopefully, I'm wrong.

Branding

Session is on the rise. People know what Session is, they trust Session, and they understand why it is valuable.

By tying it to a transparent coin, apparently y'all don't? It will now just be yet another messaging app like all the rest. Actually, probably far worse since it's linked to a coin. What's the value prop for a user now?

In the crypto world, a lot of people are already using Session as their daily messaging app. And yet, a lot of these people have never even heard of OXEN. Some of them don’t even realise there is a coin behind the app.

That's a success! I will argue that most people don't care to know at all. In fact, in combination with lack of KYC, that's probably the largest reason it has been a success?

We need a brand that is strongly connected to Session: in name, appearance, and theme.

Just change the name then? Nothing mentioned there about technical implementation. It already changed from LOKI to OXEN, why not just keep adding to the confusion of the name without also now adding to the confusion of what type of coin it is?

Perhaps if I was more knowledgeable in the space, I wouldn't have invested in $OXEN to begin with, but I really thought you all had something going here because of Session's potential for privacy and anonymity, as well as ONS. I couldn't care less about Lokinet until it is more interoperable with the Clearnet, like Tor is, or just more clear what I can do there - it's just not realistic to use otherwise. However, I liked the potential of Lokinet, along with Session and ONS. ONS, was a key ingredient to the potential for me because expecting a normal user to deal with hashes is some kind of Web3 joke. Even for a technical user, it's at best a real pain in the ass. DNS made the Clearnet approachable, but also very trackable. If the privacy coin aspect is removed, ONS is even worse, in my opinion. I understand there are a lot of parts of this system (both technical and non-technical) that I'm not aware of, and I can appreciate how hard it is to try to get funding, but this is how it looks to me as someone mostly outside of the "crypto world", but interested in privacy.

[CallMeCreadev]

TLDR: SENT is good, give SENT

Oxen can still exist as Oxen. If people want to support it they can, but as it stands no one seems to want to use it as a privacy coin, it is not replacing Monero or other privacy coins. Oxen is realy only being used as a way to support Session and Lokinet through service nodes and collect emissions. That is my analysis.

I have been trying to pitch Oxen to many people because I think it is the best investment on the market today. I always run into problems because ultimately I say "The money from session will be used to buy and burn Oxen" People say to me "Why?" I say "Because the Devs promised" That is when it turns into "Sounds like a scam" and "Didn't Jake Paul make a promise?" I then respond about how the business is different and that it can be profitable just like any software product that is growing in users. I am then countered with "That's just like your opinion man, sounds like Safemoon" In other words it's a really hard sell.

SENT can solve these problems if it is designed correctly
If SENT can integrate into the Lokinet and Session applications so that all monetization is done through smart contracts then suddenly one of the big hurdles is taken down, which is trust. If all the revenue from Session pro is automatically through a smart contract system put into a pool that is divided amongst the node operators then you have a trustless system. Basically purchases are made on these applications, SENT is purchased from the market using a smart contract (this raises the price of SENT) and then that SENT is distributed amongst the stakers. As was briefly described the more sales made will result in more SENT being purchased, assuming the purchasing is done in pseudo real time or at least on a daily basis (depending on design) You will have in theory a coin that has a steady growth.

Just going by the simplest view of money in money out, you will have money flowing into the coin through a smart contract and money going in and out from investors. If coins are not minted by the staking process they are simply transferred you will not have the problem of inflation. The only question will be is if the ROI from staking is worth it? If monetization is poor there will be low ROI, if monetization is strong there will be a high ROI. Also ROI will be correlated to the market cap of SENT. If speculators bid up the price of SENT the ROI from monetization will be low. And if Speculators devalue SENT than the ROI will be high.

As a hypothetical if SENT has a market cap of 200 million dollars, the revenue from Session will not do much to raise the marketcap; however, if SENT had a marketcap of 5 million dollars it is likely that Monetization would drastically raise the price. A 1 cent increase to a $5 coin means little, but for a 5 cent coin it means quite a bit.

In other words, the business is sound and should lead to steady growth or at the very least price stability that grows with the applications it is built on. A proper implementation of smart contracts solves the issue of Trust which is a major gatekeeper to crypto investment and is a roadblock to new investors in the current Oxen ecosystem. Smart Contracts and L2 compatibility will allow for a larger market access to SENT and remove regulatory hurdles.

As long as Oxen holders can be transitioned to SENT and maintain their relative market share I fully support this proposal.

[torsionion]

@CallMeCreadev That's a fair point about $OXEN not being truly used as a privacy coin. I would have used it like that if I could, but no one is accepting it for payments or anything else. I thought it could replace Monero at some point or at least compete with it. The Oxen team devs made a good point about the difficult on-ramp to $OXEN, which has been by far the biggest challenge I faced. One approach I've seen work in the past is the company/product that wants the integration needs to help do the integration if they're still small. The devs at other companies are busy doing their own stuff and have no real incentive to do the integrations. Would that more useful engineering time than re-inventing a parallel system for messaging, "web" (i.e., Lokinet) that has the same or worse privacy issues? To me, this new direction does make it feel like a scam now. At the very least, I've lost trust that it won't become a scam in the near future. I don't think the Oxen team intends for it to be a scam, but it's like I said in my previous comment, the entire reason it had value/potential to me was the privacy aspect. PoS and speed also differentiated it from Monero. Take that away, it's just like any other crypto project in my eyes.

[CallMeCreadev]

@torsionion I was worried when I first saw this ORC and it took me some time to think about what the bullish case would be. Of course seeing the price drop lower and lower every day for 2 years had really jaded my views so I was nervous to say the least.

In my view the team has tried to do 3 things, one was to create a privacy token that could rival Monero and the other was create a private messaging application that was decentralized along with an incentivized onion router. These are actually all big undertakings and while they are related I think they can spread an organization too thin.

The Unix philosophy is to 'Do one thing and do it well' I think that is what the team should be doing. They tried to market Oxen as a privacy coin and went to Monerotopia and other events prior to try and get people interested in Oxen, it sounds like everyone was interested in Session instead.

The team has seen that their energy is being rewarded in one domain and is not creating any throughput in another. Of course in a bearish market where fear is the dominant emotion a pivot is the last thing that the market wants in a time of uncertainty, but also a pivot is often the only thing that can happen if the ecosystem is to survive.

In my view SENT will cut the branch of aiming to replace other privacy coins, the team will fully abandon that goal, the goal that in the past 2 years has not been one that they made any headway (from a user buy-in standpoint). In doing so the team will be able to double down on something that they have seen gains in which is the Session app.

The team is cutting their losers and empowering their winners. I don't see SENT being like other coins because it can be built with a direct monetizable ecosystem that provides a real world service. If all the promises of meta-data free onion routed calls and other features can be implemented into Session it will be a revolutionary app and one with a real core of users. If the revenue from that app can be translated into a revenue for holders of a token it will be a real achievement and something that is rare in the crypto space. I do not see the value for example in holding BAT even though brave is a popular browser. I do see value in staking SENT, especially if Session is popular.

I see the value in privacy coins, I love privacy coins. It is unfortunate that not many others seemed to share my love of Oxen.

[pnr777]

How is Xmr surviving just fine while staying fully private, and what can oxen do to be more like xmr in order not to get delisted?

[Agorise]

The name of the organisation is Oxen. Leave the damn name alone. Oxen can invent all kinds of products in the future, not just session and lokinet. The #1 reason why we came here is privacy. Kowtowing to what the cex's, banksters and governments want is well, dumb. MAN UP!! Guys, leave the coin alone and build. Get a second job if you have to. We all go thru rough spots and tough times, but throwing our vision out the window is infuriating.

[Sage0wl]

The name of the organisation is Oxen. Leave the damn name alone. Oxen can invent all kinds of products in the future, not just session and lokinet. The #1 reason why we came here is privacy. Kowtowing to what the cex's, banksters and governments want is well, dumb. MAN UP!! Guys, leave the coin alone and build. Get a second job if you have to. We all go thru rough spots and tough times, but throwing our vision out the window is infuriating.

Agorise, maaate, Braveheart died screaming freedom. You can do the same if you want, but I think rather than trying to win every battle it's better to play possum and circle back later. The Globalists are at war with privacy coins, playing dirty, better to take our winning parts, Session and Lokinet routing – go for scale and adoption, with a healthy bulky user base - in the future we can circle back and beef up privacy tokenomics.

[pnr777]

I think Agorism meant that discarding pravicy is really unnecessary step. Look at XMR, look at NYM on Cosmos, they survive pretty good while maintaining privacy at its core. Screw the CEXs, go full-on Dex if u have to. Consider something other than EVM ( as it is privacy lost/forever).

[pnr777]

The name of the organisation is Oxen. Leave the damn name alone. Oxen can invent all kinds of products in the future, not just session and lokinet. The #1 reason why we came here is privacy. Kowtowing to what the cex's, banksters and governments want is well, dumb. MAN UP!! Guys, leave the coin alone and build. Get a second job if you have to. We all go thru rough spots and tough times, but throwing our vision out the window is infuriating.

Agorise, maaate, Braveheart died screaming freedom. You can do the same if you want, but I think rather than trying to win every battle it's better to play possum and circle back later. The Globalists are at war with privacy coins, playing dirty, better to take our winning parts, Session and Lokinet routing – go for scale and adoption, with a healthy bulky user base - in the future we can circle back and beef up privacy tokenomics.

I think Agorism meant that discarding pravicy is really unnecessary step. Look at XMR, look at NYM on Cosmos, they survive pretty good while maintaining privacy at its core. Screw the CEXs, go full-on Dex if u have to. Consider something other than EVM ( as it is privacy lost/forever).

[degenrocket]

Compromise proposal: Session Pro + OXEN.

There are two major parts of the ORC-8 proposal:

• The activation of in-app purchases via Google/Apple payment methods,

• The transition to transparent ERC20 token SENT.

Implementing both changes at once will not only lead to more centralization, reliance on fiat-based payment systems, and deviation from the privacy-by-default ethos, but it will also make irreversible changes, preventing us from going back to the original privacy-focused decentralized model in case of a failure.

Since the transition to SENT and in-app purchases doesn't guarantee to generate enough revenue stream for sustaining a highly decentralized network and funding the further development of Session, it makes sense to implement only one change at a time and see its impact before proceeding further.

Thus, the compromised solution:

• The OPTF adds in-app purchases of ONS and Pro features via Google and Apple payment mechanisms,

• The fiat revenue from in-app purchases will be used to buy OXEN from the market on centralized exchanges and wrapped OXEN on Uniswap and then burning OXEN with a approximate procedure described in #47,

• The buying pressure will increase the price of OXEN and attract more liquidity,

• A few months later we will get solid data on how much revenue in-app purchases generate, so we can evaluate further steps based on data rather than on assumptions.

• Meanwhile, we can work on the integration of the EVM wallet and the OXEN wallet into the Session app to allow private transactions within the app as aligned in the #38,

• The Oxen and Lokinet Twitter accounts, which have ~80K followers and have been largely inactive for the last few years, can be used to boost the demand for OXEN through a marketing campaign and an airdrop as aligned by @venezuela01 in the #41.

This compromised solution can be implemented much faster than a full transition to SENT described in the ORC-8. The OPTF team will be able to enable in-app purchases and distribute the revenue among Session node operators and OXEN holders without the use of Ethereum-based reward pools. A few months later we will see how much revenue paid features will actually generate, so we can adjust our plans based on the data.

This solution can potentially help us save core values of the community like privacy-by-default, decentralization, and censorship-resistance.

[KeeJef]

@degenrocket

ORC-8 is proposing a set of changes, primarily the following

• Migrating branding from Oxen to SENT
• Migrating token from Cryptonote chain to EVM chain
• Tokenomic changes (Moving to fixed supply, Service Node pool etc...)

It's not proposing the activation of in app purchases for Session for Session pro and ONS, that strategy of monetisation was put to the community quite a while ago and was generally agreed upon https://oxen.io/session-the-road-to-monetisation . However generally speaking i think Session monetization would work better with SENT that it would with Oxen, for a few reasons

• The narrative we can build by rolling all the branding into a single Session brand is much more streamlined, i think this makes it much easier to sell the idea of growth in the Session application = growth in the Session token.
• Users who see the Session narrative developing can onboard into the ecosystem easier, wallets are a simple (Metamask, Hardware wallets) and users can onboard through Uniswap which should attract additional liquidity if all users are onboarded to the EVM chain
• Tokenomics become simpler to understand and more attractive externally, SENT/Session token has a fixed token supply and mechanisms to reduce circulating supply through the leveraging the Service Node pool.

This is not to say that Session monetisation wouldn't be successful on Oxen, however i think to a lesser degree

[M1ingithub]

Proposal to add DAO governance to ORC-8.

As SENT moves to EVM, DAO becomes available. I'm not going into even high level design and I propose absolutely nothing on how DAO should be implemented. If there is any slight chance for DAO in OXEN/SENT, it will be brought about by self interest of OPTF acting in order to preserve itself. Here are some things that might give such a motivation.

== MOTIVATION == The main argument for DAO governance is that there exists no mechanism for influence from oxen holder towards decision making within OPTF. This is a major systemic flaw which manifests the weakness it brings in different ways:

1. Interests of those, who have invested into the project are not reflected in the decision making. And this has real world consequences.
2. Responsibility for actions, done ultimately with the investor money, doesn't exist. And this has real world consequences.
3. Due to these facts, there exists inherent mistrust between actors within the ecosystem. This could be also characterized as lack of legitimacy on part of OPTF.
4. Upcoming xchain partners do not receive a share of influence if they invest in liquidity pool, heightening the risk and threshold to invest. these entities particularly might want to secure positioning, unless of course that is secured through other means.
5. There exists no viable method to divert resources to community driven projects. OPTF has option to fund projects, but to best of my understanding, only time this has been used was in the case of Chainflip, which was the devs own idea. No financial incentives to contribute to OXEN or SENT.

== GOALS == there are at least four methods to solve the problems:

1. Let investors influence decision making directly by a vote. This will never happen tho.
2. Let investors influence decision making by a proxy; vote on optf membership and board composition by a vote. Will never happen.
3. Let investors influence how the liquidity pool pay-outs and governance rewards are used by a vote. This will happen neither.
4. To lesser extent problems can be alleviated by increasing transparency. Change OPTF rules to include investor oversight committee which would be elected by DAO vote. overseers would be privy to records and could inform the community. Another way could be moving the use of governance rewards on-chain and have OPTF rules to be built around this. I'm afraid this will happen neither.

---

The listed problems can probably be alleviated without risking the strengths of current organization method, there's value in the image it creates, and there exists wide range of choices to organize based on what the ecosystem needs to thrive. As OPTF has total power over the project, they will most likely keep it even if it was detrimental to their cause as has been so far. Before you write this off completely, do consider the total freedom to create the DAO rules as well as freedom within limits to change the legal entity rules. Maybe there exists an organizational form which would enhance the current strategy.

[M1ingithub]

some studies to back up my arguments:

cost of capital

https://www.researchgate.net/profile/Jim-Fornaro/publication/263302792_The_impact_of_SFAS_157_fair_value_disclosure_on_firms%27_cost_of_capital/links/5a5fd4320f7e9b964a1eda9f/The-impact-of-SFAS-157-fair-value-disclosure-on-firms-cost-of-capital.pdf

Paper states information risk increases cost of capital and this can be remedied by stronger governance and more accurate information for the investors

" Generally, prior studies (Clarkson and Thompson 1990; Easley and O’Hara 2004) conclude that information risk is non-diversifiable3 and that this non-diversifiable >characteristic of information risk influences the cost of capital (i.e., investors’ >expected return). Prior studies have identified different determinants of information risk that lead to a >higher cost of capital. For instance, Easley and O’Hara (2004) conclude that it is information asymmetry between informed and less informed investors that determines information risk and results in investors’ demand for a higher return premium "

" The reduced reliability of less verifiable fair values can be remedied by effective corporate governance mechanisms. Given the non-diversifiable risk related to less verifiable fair values, firms can lower their cost of capital by providing investors with more precise information and/or a greater amount of information (Easley and O’Hara 2004). This, in turn, can be achieved if firms have strong corporate governance. Previous studies show that firms with strong corporate governance have higher financial information precision orfinancial reporting quality "

---

DAO valuation

https://static1.squarespace.com/static/6384dba8333bc6267fc97f46/t/63fe97c751bafb1c4a5fd16d/1677629383189/DAO+Token+Valuation.pdf

The paper states that one of the components used for DAO organization fundamental valuation analysis should be DAO benefits. Meaning that DAO utility increases the valuation of organization in the eyes of investors.

" One could think about a fundamental valuation model for DAO tokens in the following way DAO Token Value = Value [Expected Token Flow] + Value [DAO Benefits] +Value [Expected Staking Rewards] "

---

General benefits of DAO governance

https://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=9403889

Paper states that DAO is potentially an ideal solution for agency problem, a problem stemming from division of work and ownership among other advantages.

" 1) CORPORATE GOVERNANCE ON ETHEREUM’S BLOCKCHAIN Traditionally, principals have controlled the oversight tasks of their agents, which now can be delegated to decentralized computer networks, with the following advantages:

• Blockchain technology provides a formal guarantee for principals and agents involved in solving agency problems in corporate governance.
• Blockchain technology can facilitate the elimination of agents as intermediaries in corporate governance through code, peer-to-peer connectivity, groups, and collaboration.
• DAO token holders are not affected by the existing corporate hierarchy and its restrictive effect. DAO token holder focuses on adding value, which benefits all components.
• The “work value focus of workflow” in DAO structure has the potential to reform the agency relationship. DAO technology greatly contributes to improving the efficiency of agency relationships and reducing agency costs by an order of magnitude. "

[KeeJef]

Removed some posts surrounding discussion of Session Perfect Forward Secrecy, which is unrelated to discussion of this ORC, please open another Github issue or comment here https://github.com/oxen-io/oxen-improvement-proposals/issues/43 if you want to discuss these topics. More than happy to engage

[Dormage]

I would support the move to a DAO. I would even argue that the DAO should prioritize votes from staked SENT contributing to the decentralization and network security, but that's another topic. The DAO would most definitely infuse much needed trust and commitment to ORC's, which have had a history of phase shifting that does not benefit the community.

Things like these (https://oxen.io/session-the-road-to-monetisation) are a very nice example of what a DAO vote would be best for.

@KeeJef would you consider this as a possible path?

[dis7ant]

I would even argue that the DAO should prioritize votes from staked SENT contributing to the decentralization and network security

This is an example of behavior-based governance and it's very powerful if designed thoughtfully. I've been working with the concept for a couple of years and have experience with measuring behavior to determine governance voting weight. If a DAO is something that gets traction, this is definitely something to strongly consider. Knowing that the folks who are voting aren't just any rando who happens to have some tokens can be the difference between implosion and stable governance.

[venezuela01]

I think the suggestion of 'DAO' is a 'meta-topic' and should be addressed in a separate discussion.

[dis7ant]

I think the suggestion of 'DAO' is a 'meta-topic' and should be addressed in a separate discussion.

Fair point, I agree and won't add more to distract from the primary discussion.

[venezuela01]

I think the suggestion of 'DAO' is a 'meta-topic' and should be addressed in a separate discussion.

Fair point, I agree and won't add more to distract from the primary discussion.

If you can start a seperate thread on 'DAO' I would love to comment there!

[M1ingithub]

Current organization method has advantages in flexibility and expert risk management & decision making. If there was a move towards DAO, these qualities should be preserved. Thus having direct vote on major decisions might not be desirable.

The path chosen by team is shrouded in mystery:

• What does interoperability mean?
• What is the idea behind the proposed positioning within layer 2?
• How is the mixnet going to be utilized in this position?
• Are there already partners lined up?

non of these core questions can be answered by what the team chooses to communicate, but I'll try to make a guess:

Current OXEN/SENT strategy(?):

1. Reposition into ETH layer 2 as ERC20 token
2. Create a relay service for XMR<->ETH atomic swaps
3. Create liquidity pools for ERC20 token pairs
4. Let mixnet hide origin of transactions
5. Now you have a perfect way to mix ETH and any ERC20 tokens via XMR
6. profit ???

This whole thread is discussing something totally different, because there exists information asymmetry between investors. This asymmetry has cost to token value as one of papers i linked to argues. Other side of the coin is that this strategy didn't and most likely couldn't have been conceived by the community. Investors taking direct vote on it, as well as on any major decisions, could render the organization into a political stalemate, inefficiency and inflexibility.

The purpose of the DAO is not to give power to investors for the sake of power so we could vote on things we do not understand. The purpose of DAO is to strike a balance of power in such a way as to increase the value of the token by introducing both responsibility and accurate information flow without sacrificing flexibility and expert decision making.

We shouldn't scare the devs by proposing to take over the decision making to investors and rather concentrate our efforts into arguing for general benefits of the DAO to both investors and devs, and lastly leave the specific implementation to the devs unless we have something to offer which would be truly innovative and in accordance to their strategy. The freedom to create DAO rules is total and freedom to create legal entity rules is great. If there exists an organization method based on DAO, which would benefit both devs and the investors, it has to- and it will come from the devs.

[dis7ant]

The path chosen by team is shrouded in mystery:

Not really, it's pretty clear if you read the ORC and also the follow-up replies from the team.

What does interoperability mean?

It means that the SENT token can easily move between different sub-ecosystems that operate on ethereum and it's various L2 networks. Oxen on its own stand-alone network cannot do this without bridges and DEXs, and those either aren't ideal or would need a lot of resources to develop and implement.

What is the idea behind the proposed positioning within layer 2?

Interoperability, low gas fees, access to web3 "normies" who primarily use metamask or a similar Eth-based wallet, and rewriting the tokenomics to improve inflation concerns.

How is the mixnet going to be utilized in this position?

Probably won't be, the person using SENT will likely need to be responsible for their own anonymity needs. This is implied by team comments above already.

Are there already partners lined up?

Maybe. For lokinet infrastructure I think, but nothing is guaranteed.

Current OXEN/SENT strategy(?):

No. This is not the current rollout plan and XMR is a different network entirely, Oxen and Sent have nothing to do with Monero at this time.

information asymmetry between investors.

Please do not confuse participants and token/coin owners with investors. Participation is voluntary and the network's utility is what is being offered to participants, nothing more. You're free to invest and speculate all you want, but this does not place a burden on the team to invite you over for dinner and spill the beans on what they're working on in the background. Sorry to put it so bluntly, but this mindset has become a plague on the whole space and needs to be eradicated.

All that said, I do think that it would be convenient to preserve as much privacy as possible so that people using the token can rest a little easier when they communicate in open groups and receive literal death threats from random people who are trying to disrupt and sabotage the Oxen network. Whether that means using a zero-knowledge roll-up L2, integrating something like tornado cash, or providing some other safety mechanisms...I don't know what the best option would be. I just know that banks and the governments they control are currently at war with privacy and crypto, and it's getting worse to the point where people are being placed in harms way to appease overlords who would prefer to control the money.

[M1ingithub]

https://imgur.com/a/9F7KW1V This is OPTF CEO giving a response to DAO. I argue that he is ultimately wrong in his analysis that DAO would be classified as security under Australian law.

CORPORATIONS ACT 2001 All references are to Corporations Act 2001 http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/index.html

Securities are defined SECT 92 http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s92.html

Voting interests and voting shares are defined under SECT 9 http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#voting_interest

Managed investment scheme is defined under SECT 9 http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#managed_investment_scheme

Disclosing entities are defined under 111AC http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s111ac.html

ED securities are defined under 111AD http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s111ad.html

ACNC ACT All references are to ACNC act http://classic.austlii.edu.au/au/legis/cth/consol_act/acanca2012523/

Tax concessions are outlined under SECT 20.5(2) http://classic.austlii.edu.au/au/legis/cth/consol_act/acanca2012523/s20.5.html

Entitlement for registration under ACNC act is defined under SECT 25.5 http://classic.austlii.edu.au/au/legis/cth/consol_act/acanca2012523/s25.5.html (Relevant subtypes column 2, rows 2 and 7)

Governance standards are defined under SECT 45.10 http://classic.austlii.edu.au/au/legis/cth/consol_act/acanca2012523/s45.10.html

CHARITIES ACT 2013 All references are to charities act http://classic.austlii.edu.au//au/legis/cth/num_act/ca2013104/

Charity is defined under SECT 5 http://classic.austlii.edu.au//au/legis/cth/num_act/ca2013104/s5.html

Public benefit is defined under SECT 6 http://classic.austlii.edu.au//au/legis/cth/num_act/ca2013104/s6.html

Charitable purposes are defined under SECT 12 http://classic.austlii.edu.au//au/legis/cth/num_act/ca2013104/s12.html

PROBLEMS

• • Interests of de facto shareholders/investors should be looked after in systematic manner.
  1. Mechanisms to reliably inform the investors should be in place.
  2. Mechanisms to enforce responsibility at organization level should be in place.
• • Deviations from causes towards public benefit (column 2 of SECT25.5 of ACNC act) and charitable purposes (Charities act SECT12) result in losing tax exempt status.
• • DAO arrangements to enforce investor interests by voting on membership or board composition could enforce profit motive onto the charity (OPTF).
• • DAO voting rights enforcing investor interests and profit motive could constitute a security under corporations act SECT92.
• • If DAO voting rights enforcing investors interests and profit motive constitute a security under SECT92, the arrangement could be classified as managed investment scheme (corporations act SECT9)
• • If the arrangement would be classified as managed investment scheme, the DAO securities representing interests in the scheme could be classified as ED securities and thus OPTF would be classified as disclosing entity which can’t be a tax exempt and would have to follow different set of regulations. (corporations act SECT 111AC and AD)

PROBLEM SOLVING Easy one first: there are no laws or regulations to prevent OPTF from providing the investors with accurate information, period. The choice to operate in darkness and without responsibility has been made: no accurate information to investors, attempts by few investors to inform others are squashed, and the CEO is habitually lying about current events as well as financials of OPTF. This has an effect on price: investors calculate information risk into their equation and deem it too risky to invest. Investors also see the blatant lies and make the decision to not invest in untrustworthy entity. Solutions could include:

• • Integrated off-chain and on-chain governance based on existing transparent supply chain models such as: https://www.researchgate.net/publication/356283324_Integrating_On-chain_and_Off-chain_Governance_for_Supply_Chain_Transparency_and_Integrity This has drawbacks in investing resources into development as well as making all processes heavier. Although a very promising model and surely adaptable to the circumstances, this is not viable solution for a 4M$ market cap coin.
• • Lightweight solution would be DAO vote on investor oversight committee. Elected committee members would be appointed as non-voting members of OPTF and would receive privileges to OPTF records so these could be verified and investors could be informed reliably.
• • A third solution would be hiring a professional auditor by DAO vote. Investors could pool their money into a smart contract and take a vote to hire a specific auditor which would be automatically approved by OPTF. Another way to finance this model could be from the reward pool directly into the smart contract.

The second one is much tougher. As outlined above, enforcing a profit motive onto a “charity”, will introduce multitude of legal problems with a risk of losing the tax exempt status. In order for the DAO to not be classified as managed investment scheme, it must not have these three qualities (paraphrasing the corporations act SECT9):

1. Investors contribute money or money’s worth as consideration to acquire rights (interests) to benefits that are produced by the scheme;
2. All contributions from investors are pooled or used for a common purpose to further produce benefits. Benefits may be financial or consist of rights or interests in property; and
3. The members of the scheme (investors) are not active in controlling the scheme’s day-to-day operations.

The problem is in potential loss of tax exempt status and further regulation on OPTF activities, but if you look at the stated lawful charitable purposes listed by OPTF: furthering education and human rights, anyone can see that these are not furthered beyond perhaps the surface level. When you strip away privacy features from the coin, the arguments for stated goals and purposes become weaker.

However

Number 2 is potentially the weak link that could constitute a loophole in the law. “All contributions from investors are pooled or used for a common purpose to further produce benefits. Benefits may be financial or consist of rights or interests in property” All contributions are not pooled, they are arguably not used to produce further benefits but to uphold and develop infrastructure in accordance with the charity’s stated goals and purposes and if there is motive to uphold the price, there is proven reason based on the whitepaper to uphold certain price level in order for the infrastructure to stay intact.

Thus, solutions could include:

• • DAO vote on membership of OPTF as voting members.
• • DAO to propose an address for governance rewards and a vote to release the funds to one of the proposed addresses.

Both of these would arguably introduce responsibility for OPTF towards investors.

[KeeJef]

Started a new issue for discussion of DAO governance https://github.com/oxen-io/oxen-improvement-proposals/issues/53, i believe this is a meta-topic to what is discussed in ORC-8, i will be hiding posts related to DAO governance in this issue to help keep discussion on topic.

[Gg-sen]

By creating a new token you guys scammed all the $OXEN supporters. Instead of adding new coins with the same, exact, non-feasible, failed (twice already) mechanism, why can’t you just maintain the same $OXEN coin (automatically make a 1=1 change with a new coin) and stop the issuance/reward program? Then use it for Session/Lokinet/whatever but at least you won’t scam people. The value of a coin is directly linked to its supply. You guys are making the same mistake over and over again while allowing people to waste their money on projects you cyclically abandon (just to pick them up few years later with another name). Also start accepting normal fiat to get a more stable funding if that is the problem. How can’t you guys understand the basic concepts of a business environment yet? WAKE UP!