Token Migration Case Studies

[venezuela01]

In a discussion about token migration in the Oxen community, @KeeJef suggested studying cases including Helium, Rollbit, Unibot, Threshold, Thorchain, TRON, EOS, Golem, and Aeternity.

Here are the notes:

1. Helium Migration from Helium native token to Solana token

Aspect	Details
Migration Process	Helium's L1 ceased block production during the migration window. A snapshot of its network state was loaded onto the Solana Mainnet using a Merkle Tree structure. Users only need to upgrade their wallets. Public wallet addresses changed, but private keys and seeds remained the same.
Migration Deadline	Indefinite (balances imported from old to new chain, private keys compatible).
Swap Ratio	1:1 constant rate.
Community Vote in Decision	Yes.
Source	Helium Documentation

2. RLB Migration From Solana to Ethereum

Aspect	Details
Migration Process	Users register an account on the official platform https://rollbit.com/, deposit their RLB to Rollbit, then withdraw to the Ethereum network.
Migration Deadline	Indefinite as promised by the Rollbit official announcement, stating, “Indefinitely. It's important to us that no one is left behind on the Solana network. As such, we'll give plenty of time for folks to migrate their RLB to Ethereum.”
Swap Ratio	1:1 constant rate.
Community Vote in Decision	No.
Source	Rollbit Blog

3. Unibot Migration from V1 Token to V2 Token

Aspect	Details
Migration Process	The first claim window is two days, after that a snapshot will be taken and the second claim window will be open indefinitely for those who missed the initial claim.
Migration Deadline	Indefinite.
Swap Ratio	1:1 constant rate.
Community Vote in Decision	Yes.
Source	Unibot Blog

4. TRON Migration from ERC20 based TRX to TRON’s MainNet

Aspect	Details
Migration Process	Investors can exchange TRON MainNet tokens at exchanges supporting permanent TRX migration, including Binance, Gate.io, Kucoin.
Migration Deadline	Indefinite as promised by the official announcement.
Swap Ratio	1:1 constant rate.
Community Vote in Decision	No.
Source	TRON Network

5. EOS Migration from ERC20 Token to EOS native token

Aspect	Details
Migration Process	A snapshot is taken, and a sophisticated account verification process is created for recovering unregistered EOS tokens.
Migration Deadline	Indefinite.
Swap Ratio	1:1 constant rate.
Community Vote in Decision	No.
Source	EOS New York Blog

6. Golem (GNT to GLM) Migration

Aspect	Details
Migration Process	The migration of GNT tokens through the contract will be done using an audited migration app to perform on-chain contract execution. Similar to the SAI to DAI migration process.
Migration Deadline	Indefinite.
Swap Ratio	1:1 constant rate.
Community Vote in Decision	No.
Sources	Golem Network, Golem Project Blog

7. Aeternity Migration from ERC20 Token to Aeternity Native Token

Aspect	Details
Migration Process	æternity utilizes a smart contract that employs Merkle-tree hashes, allowing the owners of Ethereum private keys to claim their tokens on the æternity blockchain. This is done by providing a signed message of the æternity address.
Migration Deadline	Indefinite.
Swap Ratio	1:1 constant rate.
Community Vote in Decision	No.
Source	Aeternity Blog

8. Threshold Network Merging between Keep and Nucypher

Aspect	Details
Merging Process	Threshold represents the first on-chain merge between two existing networks, Keep and NuCypher. A sophisticated vending machine smart contract is implemented for the token swap. This is complicated because they need to take care of the migration of both liquid tokens and staked tokens.
Migration Deadline	Indefinite, with legacy networks maintained.
Swap Ratio	Constant 1NU: ~3.26T and 1KEEP: ~4.78T.
Community Vote in Decision	Yes.
Source	Threshold Network Blog

9. Thorchain Migration from ERC20 and BEP20 to Native Chain

Aspect	Details
Migration Overview	THORChain activated a "killswitch" to phase out RUNE tokens based on the Ethereum blockchain and BNB Chain in favor of rune issued on its native blockchain. The process aims to unify the RUNE token and enhance network security and stability.
Migration Process	BNB.RUNE and ETH.RUNE (IOU Tokens) are swapped for the upgraded native RUNE token. Users holding IOU Tokens are required to create a new wallet on THORChain and click an upgrade button to make the switch.
Swap Ratio	Initially, the conversion ratio was 1:1. However, after activating the killswitch, the redemption rate of BNB.RUNE and ETH.RUNE will decrease from 1:1 to 1:0 over a year. Six months after activation, 1 BNB.RUNE will be redeemed for 0.5 THOR.RUNE. After one year, it will be 0.0 THOR.RUNE.
Deadline for Migration	The reduction in swap ratio over a year after the killswitch activation serves as a gradual phase-out, encouraging users to migrate sooner rather than later.
Reason for Migration	The migration was part of THORChain's push towards further decentralization. It was also to address security concerns and dependencies on third-party networks, making the native network less susceptible to exploits.
Community Vote in Decision	No.

[venezuela01]

Conclusion

Migration Deadline

Among the 9 case studies analyzed, Thorchain stands out as the only one with a set deadline for migration. The remaining 8 have an indefinite migration window.

Thorchain's deadline is driven by multiple reasons. Firstly, there are security concerns due to the implementation of the Thor token on both Ethereum and Binance Chain. This presents a long-term risk if the legacy contract continues to operate. Secondly, the migration in Thorchain's case is tied to a mainnet launch, transitioning IOU tokens to native tokens. Since receiving their IOU tokens, investors have been anticipating this migration.

Despite potentially justifiable reasons for terminating the old contract and a lengthy preparation period, there are still holders of Thorchain ERC20/BEP20 tokens who visit their Telegram channel to inquire about missing the migration window (https://t.me/thorchain_org/584304). This situation is unfortunate for those holders.

Swap Ratio

Out of the 9 cases studied, Thorchain is unique in having a decreasing swap rate; all others maintain a constant rate. 7 of these have a consistent 1:1 rate, with Threshold Network being the exception due to it being a merger of two networks rather than a migration. Consequently, it offers two constant swap rates for two different source tokens.

MainNet Launch Event

4 out of 9 cases are related to mainnet launches: Tron, EOS, Aeternity, and Thorchain.

5 out of 9 involve migrations occurring post-mainnet launch: Helium, RLB, Unibot, Golem, and Threshold.

Community Vote in Migration Decision

MainNet launches typically involve a planned migration from IOU tokens to native tokens, making a community vote unnecessary in these instances.

Of the 5 migrations studied that occurred after their MainNet launch, Golem's process was a token upgrade within the same chain without dramatic change, rather than a migration from one chain to another, making a community vote potentially less necessary.

For the remaining 4 cases:

• 3 underwent a community vote before deciding to migrate: Helium, Unibot, and Threshold.
• 1, RLB, did not have a community vote for its decision.

The RLB blogs claim that the migration to Ethereum is "the most requested upgrade." Verifying or disproving this claim would provide valuable supplementary information.

Maintenance of Legacy Chain

Most of the case studies analyzed involve migration from one third-party mainstream blockchain to another, or from a mainstream blockchain to the project's own native chain (MainNet launch). This scenario typically doesn't necessitate maintaining a legacy chain. The common approaches in these cases are:

1. Shutting down the old contract and importing balance snapshots to the new chain. This process is facilitated by the transparent nature of these chains, where the balance data is unencrypted and readily accessible for transfer.

2. Alternatively, some projects opt to keep the old contract active.

Thorchain is an exception, primarily due to security concerns, as previously explained. It's unclear whether Thorchain has fully exerted efforts to protect investors' assets. In theory, a snapshot approach could have safeguarded those investors who missed the migration window. The reasons why Thorchain did not opt for the snapshot method remain uncertain.

Threshold Network is unique in not fitting the typical pattern of migration from a third-party mainstream chain. It originated from two niche, self-developed chains. Consequently, Threshold Network has chosen to preserve its legacy network.

[venezuela01]

In the case of Oxen, the approach of importing account balances via a snapshot is not feasible. As a privacy-focused blockchain, it's impossible to expose wallet addresses with their respective balances, making it challenging to determine ownership and the amount of tokens each user holds on the new chain. Consequently, the most viable solution might be to keep the legacy network operational indefinitely.

[venezuela01]

According to Session Token Swap Program

Although this program will run indefinitely, after 6 months the swapping multiplier will decrease to 0.7. Using the above example, the user would receive (300,000 * 0.7) = 210,000 Session Tokens.

@KeeJef, I've yet to receive your response to my report. I highlighted that Thorchain is an exception by offering a decreasing swap rate during token migration due to security concerns, contrasting with other projects that maintain a constant swap rate regardless of participation timing. This observation comes from an objective analysis of all the projects you recommended. Quote from the RLB project: It's important to us that no one is left behind.

This leads to a critical question: How can the Oxen team justify its policy of penalizing late adopters who fail to swap within the initial 6-month window? Many supporters, who did not foresee a token migration when they first purchased Oxen, are now unfairly disadvantaged. This includes numerous non-English speakers who learned about the project through personal referrals. Consider those who purchased Oxen, secured their recovery phrase, and then set it aside. These individuals are some of the project's most faithful supporters, now facing undue penalties. Not only are they missing out on Session staking points rewards, but they also face a punitive discount rate for late migration.

This raises a serious question about the values and integrity underpinning the team. Is the success of the Oxen team relying on penalizing and alienating its long-term supporters who miss certain deadlines? Does no one in the team care about integrity anymore? Do you really think this is a small problem? Furthermore, is this practice even legally sound?

I strongly recommend that the Oxen team reconsider and eliminate the 0.7 discount rate imposed on holders who missed the initial 6-month migration window. It's not fair to exploit your supporters when they're unaware. How can you sleep well, if your team members do the same to you? How can your team members trust that you won't do the same to them someday while they're asleep? Didn't the OpenAI drama raise concerns about being stabbed in the back? Exploiting your supporters will only damage your reputation and weaken team morale. Don't open Pandora's box.

(This is not personal, I trust this is team decision rather than Kee's individual decision, I tagged Kee only because he is actively responding to feedbacks. Sorry Kee.)

[venezuela01]

There are two segments of Oxen holders: those who are aware of the token migration and those who are not.

For the unconscious segment, imposing a late punishment won't motivate them to migrate earlier because they are unaware of it.

For the segment that is aware of the token migration, imposing a late punishment does work. However, have you realized why you need to implement incentives in the first place to motivate the conscious segment?

Unfortunately, this is the result of a lack of confidence.

A serious late punishment against the conscious segment is necessary only when we lack confidence that the majority of Oxen holders will support the migration. A serious late punishment against the conscious segment is necessary only when we lack confidence in our communication skills.

If we are confident that this migration is genuinely beneficial for the project's success and for investors in the long term, why would any Oxen holder be against migration? Many Oxen holders have been silently supporting the project, even at a financial loss, because they believe in the project's vision and are self-driven. By imposing a punishment on late migrators, it only demonstrates mistrust in the supporters placed by the team.

Essentially, we are telling supporters, 'I don't trust that you will understand or support migration unless I offer you some sugar or a whip.' Isn't that an insult to supporters?

If incentives are inevitable, a small symbolic punishment or a small symbolic airdrop would be sufficient. A 30% punishment rate won't help us reach the unconscious segment, and, worse, it conveys mistrust to the conscious segment. What we really need is to improve communication skills to ensure everyone understands the vision. This is the same skill needed by a good marketing campaign. If we are not even confident in our ability to convey important messages to long-term supporters, how can we be confident in telling a story to attract new supporters?

[venezuela01]

The narrative of late punishment is terrible; essentially, it is saying, 'I want you to feel pain if you don't migrate early.' How can such a terrible mindset win in any marketing campaign?

There are much better ways to create an incentive by saying, 'If you migrate early, you'll receive an extra bonus as our appreciation for your enthusiastic support.'

[KeeJef]

In my view, we can categorise the community into a few subsets:

• Service Node operators and contributors (comprising about 40% of Oxen supply)
• Active Oxen holders
• Inactive Oxen holders

When designing the program, I believe it's sensible to target rewards towards the most active community members, as they generate the most value for the project. This includes running Service Nodes, building tools, creating software, and welcoming new people. This approach is what we have attempted with the Service Node bonus program and the Oxen swap.

Inactive Oxen holders are still important. However, there needs to be sense of closure with the swap. Keeping a large portion of the Oxen supply indefinitely side-lined will concern Session token holders (wondering what the Oxen holders will do with their tokens). The swap multiplier, in my view, balances these concerns and better aligns incentives. Unifying all users around the Session token

Separately, I can assure you we are committed to making the greatest possible effort to reach out to all Oxen/Loki holders about the swap, including those who are non-English speakers. We're aiming to bring as many people as possible along to the future Session token.

[venezuela01]

Thanks for your quick response.

Inactive Oxen holders are still important. However, there needs to be sense of closure with the swap. Keeping a large portion of the Oxen supply indefinitely side-lined will concern Session token holders (wondering what the Oxen holders will do with their tokens). The swap multiplier, in my view, balances these concerns and better aligns incentives. Unifying all users around the Session token

Didn't you notice a fallacy here? As I've explained, inactive Oxen holders will not be motivated by a late punishment because they are unaware of it.

Separately, I can assure you we are committed to making the greatest possible effort to reach out to all Oxen/Loki holders about the swap, including those who are non-English speakers. We're aiming to bring as many people as possible along to the future Session token.

I trust that you intend to do your best, but Thorchain has also made their best efforts, and yet there are still people who have missed out. You can verify this within the community by following the link I provided: https://t.me/thorchain_org/584304. You can even count them yourself.

Keeping a large portion of the Oxen supply indefinitely side-lined will concern Session token holders (wondering what the Oxen holders will do with their tokens).

This is admitting that we intend to take advantage of infrequent Oxen holders for our own benefit. Those infrequent Oxen holders have equal rights with any active Oxen holders, and we have no right to take advantage of them. This would be illegal in traditional IPOed companies if large stakeholders deprived infrequent stakeholders of their rights. Crypto projects are not IPO companies, but engaging in such misconduct is precisely the type of behavior that harms minority investors and provides regulatory agencies with an excuse to strengthen their hands towards decentralized projects in the name of protecting investors from scams.

[venezuela01]

Keeping a large portion of the Oxen supply indefinitely side-lined will concern Session token holders (wondering what the Oxen holders will do with their tokens).

By the way, have you studied the above 8 out of 9 projects who have a constant swap rate? Why don't they have concerns about having a large portion of inactive holders on the old chain, potentially creating selling pressure? Remember, it was you who pointed out these projects to me.

[KeeJef]

Didn't you notice a fallacy here? As I've explained, inactive Oxen holders will not be motivated by a late punishment because they are unaware of it.

There certainly will be inactive Oxen holders who become aware of the swap because the swap multiplier is decreasing, news travels far wider when there is a financial reward or cost to action or inaction.

I trust that you intend to do your best, but Thorchain has also made their best efforts, and yet there are still people who have missed out. You can verify this within the community by following the link I provided: https://t.me/thorchain_org/584304. You can even count them yourself.

We intend to hold the swap open indefinitely, which is inline with other projects, this should resolve the concern of people coming back and being unable to claim

This is admitting that we intend to take advantage of infrequent Oxen holders for our own benefit. Those infrequent Oxen holders have equal rights with any active Oxen holders, and we have no right to take advantage of them. This would be illegal in traditional IPOed companies if large stakeholders deprived infrequent stakeholders of their rights. Crypto projects are not IPO companies, but engaging in such misconduct is precisely the type of behavior that harms minority investors and provides regulatory agencies with an excuse to strengthen their hands towards decentralized projects in the name of protecting investors from scams.

I disagree, we are targeting rewards towards active members, the reward being Session tokens, Oxen holders still hold Oxen the value of which will trade at whatever it trades at, we don't remove Oxen from anyone. I see this as analogous to running a rewards program where you give x tokens to active members of the community or Service Nodes, but give less x tokens to less active members of the community, which is done every single day in crypto.

[venezuela01]

I disagree, we are targeting rewards towards active members, the reward being Session tokens, Oxen holders still hold Oxen the value of which will trade at whatever it trades at, we don't remove Oxen from anyone. I see this as analogous to running a rewards program where you give x tokens to active members of the community or Service Nodes, but give less x tokens to less active members of the community, which is done every single day in crypto.

Thank you for your explanation; it gives me a better understanding of why we disagree with each other. I still disagree, though, as I think you are confusing two different things. This is quite complicated, and I need time to write a detailed post to explain.

There certainly will be inactive Oxen holders who become aware of the swap because the swap multiplier is decreasing, news travels far wider when there is a financial reward or cost to action or inaction.

I think we are oversimplifying the game theory behind the market. Inactive holders might not be a threat, as shown in the above 8 case studies. Bitcoin has the most inactive holders, but this doesn't prevent Bitcoin from being the most valuable project. In contrast, by forcing inactive holders to wake up, we might create unexpected selling pressure instead. A constant swapping rate is a safe option because most projects do this; a decreasing swapping rate is rare, and we have far fewer examples to study and much less experience in predicting the risk.

[venezuela01]

Quote from J: https://t.me/Oxen_Community/399882

As someone who does not hold any tokens related to this project, and only cares about the integrity of session as a platform, I am concerned about the latest developments especially given how the SEC likes to hammer people. Be careful of pissing off your coin holders, there is a possibility they appeal to the SEC and the SEC will use any excuse possible to take your money.

I'm not the only one having a similar concern.

Disclaimer: Unlike J, I hold a significant amount of Oxen, sufficient to generate the Session User Engagement Report and conduct independent security/privacy research on Session.

[venezuela01]

https://t.me/Oxen_Community/401387

from lily wong:

Some holders of oxen are hardly shareholders in the telegram group. How do you inform them?

from Alex Linton:

Oxen holders can be informed of the update in various ways. Telegram is only one channel available, we also have an email list, other communities, our website, and our software which can each be used to push announcements to holders. There will also be quite a lot of time passing before anything actually happens, the only thing people can actually do right now is earn staking points.

Again, I'm not the only one with concerns for the inactive Oxen holders.

No one ever saying OPTF is not notifying stakeholders. What we are pointing out is that OPTF is not going to reach 100% of stakeholders, and this is undeniable.

You can refer to historical data, such as the number of Oxen staked in the Chainflip airdrop, to estimate the maximum number of stakeholders that could be notified about the upcoming Session swap. It's clear that this number is far from 100%. According to the dashboard and block explorer, we can estimate that at the peak time in Jun 2021, 27.25 million Oxen (49.9%) were staked out of a circulating supply of 54.59 million Oxen. This indicates that over 50% of Oxen remained unstaked, even at the peak of the Chainflip airdrop staking period.

It is unethical to penalize those who remain uninformed due to your failure to notify all stakeholders. This is an undeniable fact. I'm not criticizing; I'm stating a simple truth. Arguing over this fact is not productive.

Instead, I offer a constructive suggestion and request that you review this comment and this comment.

I request OPTF to review and address any concern you have with the alternative approach, cause for whatever concerns OPTF have, I might have further solutions, but if OPTF does not disclose any concern nor giving any feedback, then no further suggestions can be made, opportunity for improvement will be missed and the conversation will be one way and unproductive.

Please stop using a defensive tone in the conversation. What we should do is to find a solution and discuss about the solution instead.

[DDOXEN]

Considering there are so many similar cases to reference, why would the project management team choose to exploit the silent majority, 50% of whom hold OXEN, at their expense? Please ponder this.

[DDOXEN]

hey get 60M$SENT from treasury and unsold $SENT from strategic sales. It's definitely a ratio of 25%+@. Magic that turns 12% of OPTF into 25%+@This magical equivalent exchange is community dilution.

[DDOXEN]

Up to 80 million Session Tokens unlocked at TGE

This step involves issuing an additional 14 million circulating coins to the foundation, which dilutes the value of everyone's holdings of OXEN by 17.5%. Consequently, the original value of 1 OXEN is now equivalent to 0.825 OXEN.

[DDOXEN]

6 million for Project Treasury (7.5% TGE supply) 14 million for the Ecosystem and Community Fund (17.5% TGE supply) In the first phase, the data is as mentioned above. However, in the "Where did it go" section, the data doesn't seem to match up. Where did the aforementioned two sets of data end up?

[DDOXEN]

In the second phase, aside from setting aside 40 million for node rewards, the other 120 million is used for further dilution. Consequently, the value for the original holder of 1 OXEN decreases once again to: 0.825 * 0.4 = 0.33.

[DDOXEN]

Even after deducting the Ecosystem and Community Fund of 44,000,000 and the Strategic Token Sale of 36,000,000, the foundation and team have again taken away a value of 40 million from the original shareholders. As a result, the value for the original holder of 1 OXEN decreases once more to: 0.825 * 0.667 = 0.5503. Moreover, who will manage the funds from the sale of 36,000,000 Strategic Tokens? Will it be proportionally returned to shareholders, or will it again fall under the control of the foundation? Please consider whether this numerical game is fair to the original OXEN shareholders.