Thanks to the stimulating questions from everyone that made our first AMA on Tuesday 11 May 2021 a success! The chat transcript is here now!
First XBE Proposal AMA with the Founding Team
(Tobie Van Der Spuy & Greg Van Der Spuy)
- Question: Where is the name EurXB coming from and do you guys plan on changing the project name in the future as we are growing towards hitting a wider scope than ‘just’ an inflationary euro stablecoin? Something like xbe.finance over EurXB.finance?
Answer: XB for us has always been how we see tokenised instruments - and it's been core to how we've named our protocols and programs over the last 4 years actually!
The journey started with a P2P Leveraged Tokenised Derivative Matching Engine (BitFair) that we tried to ICO (XBF) from mid 2018 but refunded investors when we shifted focus to an Institutional Opportunity we were presented with - just as the big Crypto bear market set in. We quickly re-imagined our original BitFair trade ideas in the context of a Permissioned Tokenised Securities Platform for Institutional users and started customising the offering to integrate with regulatory systems. This lead to us building a platform for Tokenised Issuances (Primary, Auction) and Trading (Markets: SPOT, TAS, Futures, etc), then the Tokenisation of Regulated Securities (Debts, Equities, etc) and Settlement Instruments (Compliant Stablecoins), and even tested different ideas of exposing these models to Decentralised Finance in a Public Network Sandbox.
Late 2020 we started preparing for our public mainnet launch of our first publicly tokenised Regulated Security - the EURxb in Feb 2021. We realised however that to bring the full vision of bridging off-chain instruments into DeFi for Yield and Liquidity to fruition, we needed to design and develop the foundation (our first XBE improvement proposal) for what we believe will be an open, public Tokenised Securities Protocol... The XBE protocol. Which brings us to today.
The "xb" name has really come a LONG way for us... and we hope it will go a long way into the future too.
- Question: So here is the next question, If we choose to lock up our tokens for the full 23 months (the long term XBE lockup rewards), will we receive our rewards on a daily basis, or will it be paid out all at once, at the end of the 23 month period?
Answer: Protocol Fees, XBE Staking Rewards, and all other rewards EXCEPT for the share of 5,000 BONUS XBE is paid in real-time and can be claimed at any point. Share of 5,000 XBE is claimable at the end of 23 months. We are currently investigating releasing the 5000 during the last 6 months of the 2 year cycle (ie. start minting the 5,000 on a real time basis from month 18 to 24 - last 6 months) rather than simply a large unlock and dump to protect market participants.
We are always investigating how to protect the protocol, and will update more on the 5,000 XBE within the next few days based off market feedback. Let's hit the next question!
- Question: Did I understand correctly that when locking up your XBE you are still able to earn rewards from the vault strategies?
Answer: Yes, lock term lockup is the highest tier of rewards as not only do you get all incomes (1-4) you also get the maximum possible boost. Locking up your Staked XBE for the long-term bonus should always get you the BEST rate of return (highest BOOST) and ALL the possible incomes.
- Question: Will you need to use multiple wallets if you want to stake pieces of your stack for different lengths of time? (I.e. 50% of stack lock for 2 years, 25% lock for one year, 25% lock for 3 months)?
Answer: Yes - the system only allows for one "end of lock-up" date per staking wallet, so using multiple wallets is the only way to setup different "end-dates" for different lock-up terms. It will work exactly the same way Curve does! :-).
- Question: Will our rewards for long term lockup (the 5k) be added to our stake and in effect mean we will earn XIV rewards on our lock up rewards?
Answer: No, as the lockup tokens are only minted at the end of the 2 year cycle. However we are investigating this feature to allow lockup holders to compound their returns.
Based on feedback from the community, we are looking at changing this distribution model to ensure we protect against the "unlock dump".
As it stands now we will most likely begin to mint within the last 6 months of the lock-up period to ensure this token supply is gradual and not released all at once at the end of the cycle. *subject to change :)
- Question: The locking proposal is active for 30 days! Is there an advantage in locking early? Do the 5k xbe distribution start on day 1 or after locking deadline ends on day 31?
Answer: Everyone unlocks at the same time, so no strategic advantage to lock-up earlier - however you would obviously be earning rewards from day 1 in the long-term lockup at maximum BOOST if you lock up on day 1, so locking up on day 30 just means you missed out on 30 days of rewards at maximum BOOST.
Imagine the FOMO if you were to unlock exactly 23 months after you locked up... meaning you would rush to lock-up now so you could get unlocked before everyone else at the end :-).
So no, that would not be our intention - we don't want to create more pressure on users, especially when locking up long term is a big decision.
- Question: Are we going to see Auto-compounding in the staking pool or stakers will have to compound rewards manually?
Answer: No auto-compounding is designed right now, we wanted this to be a manual solution as each of our stakers and lockup holders of XBE each have their own objectives.
We didn't want to force any options on our community. With gas fees we understand this is a big request, but we are also trying to limit the complexity of the smart contracts to reduce risk - definitely worth more investigation though.
This is the question that links up from earlier :-)
- Question: I have read that the circ supply is possibly increased from 15k to 40k. What do you think will be the effect on price? Inflation should be negative for investors unless they are compensated with same factor (40/15 * holders bag).
Answer: We can't comment on price, however its important to note that the system is designed to create compensation for the added inflation to current XBE holders. The question everyone is really asking is:
1) Is each of the current XBE that I have now going to become worth less because more XBE is being minted? and
2) Am I going to miss out on the additional protocol value that is going to be distributed to the new XBE that is being created?
To answer 1 - we've worked hard to ensure that there are lock-up and circulating supply restriction mechanisms to try and balance the sell pressure with market buying demand.
On 2) in order to bring the necessary counter-asset liquidity (EURs, ETH, USD based stablecoins, or whatever we want to be able to exchange xbEURO and XBE for), we need to give up some value as a community that will be used to attract those tokens and their users - so yes, some of our protocol value MUST go out to those NEW users that receive the newly created XBE tokens as rewards, but only because those NEW users help us build the value of the protocol by bringing that liquidity.
- Question: What percentage of the current supply of XBE do you expect will be staked in the vault? With the understanding that this can only be a guess, is there an ideal percentage you're hoping will be staked?
Answer: This is always a difficult question to answer - although ideally the higher the staked amount the better as this greatly reduces circulating supply. However its important to note that the higher the staked amount the lower the APY on the staked assets becomes.
Remember - all the APY figures in the proposal are done based on an "assumed" price of XBE... if that assumed price doubles, so does the APY % rate for LP's because they are providing stablecoin liquidity.
- Question: Can we make the amount currently locked up invisible until after the lockup period is over? Could be interesting when nobody knows how many is locked up?
Answer: Haha, I'm not sure this is in the spirit of DeFi and transparency so I would argue against this. Keep in mind this value is also visible on the smart contracts themselves - which will be publicly provided and audited.
It would be fun - but there's no way to hide it from those who read the contracts themselves, so we would end up creating an unfair advantage for some. It [keeping the total visible] also allows users to calculate their expected returns.
- Question: Can you explain the boost mechanism of locked up XBE in the proposal? You mentioned them being similar to locked CRV boosts. But AFAIK, each CRV pool requires different amounts of CRVs to be locked to count towards the boosts. So how will that work with the XBE lock up? You wrote that a 23 month lock up would grant you the max boost. But does it not matter if I lock up 1 or 100 XBE? Is the boost then applied to the other LPs I'm in or just the XBE staking?
Answer: So the boost on each pool is determined by a few factors - namely your own provided liquidity, the current pool liquidity and locked up CRV(veCRV). Each pool is different however your ability to achieve max boost is determined mainly by the 3 items mentioned above. The modifications made to the contracts allow us to focus on a single boosted asset based on an emission model. This means boost is largely dependent on staked XBE vs veXBE(locked XBE). Some elements of the CRV DAO is not appropriate so we have left those items out in our build out.
This is definitely a complex concept to understand - and will be easier to digest when we can get to a "calculator" that shows you the results like curve does now. But yes, if you have more XBE staked than somebody else (up to a point) and providing liquidity in a specific pool that the other person is also staking in, you could be getting more returns than them even if you are both locked up for the same term. Simple answer is that the more XBE you have staked and the longer it's locked up the better your chances.
- Question: Does staking XBE in the vault require providing an equivalent supply of ETH, in the same way as one would in a liquidity pool?
Answer: XBE Staking is one-sided liquity provision. You only need XBE to stake XBE for more XBE. If you want to be a liquidity provider in the respective pools that the protocol will incentivize, you need both sides of liquidity (i.e. you need equal values of xbEURO and EURS to provide liquidity to the planned xbEURO[EURS] pool @ Curve, and you need equal value of XBE and ETH to provide liquidity to the planned XBE/ETH pool - and so on for other incentivized pools.
Yeah, staking in one asset is a super easy way to get yield - with no risk of impermanent loss! This should make it easier for users to start!
- Question: I’m going to play devil’s advocate here! What happens if for whatever reason the XIV or curve/sushi/uni pools get exploited? Are we pursuing any insurance on these funds? Are XBE holders liable for any of the losses of EURXB/XBEURO holders?
Answer: We are continually working on the institutional side to provide an acceptable level of risk insurance from traditional markets. On-chain, we know that no Audit is perfect so we are also committed to other solutions - but right now DeFi's insurance models aren't nearly as mature as the other sectors that has been innovating so quickly. We don't think XBE holders would need to create an insurance fund from protocol revenues though.
There's always some risk in every investment - the question is, is the risk greater or equal to the risk you already have by holding your current funds.
- Question: It mentions that XIV will provide 50% liquidity in LPs! Is this in XBEURO lp or XBE lp or both?
Answer: Only xbEURO LP. Our focus is on liquidity for our institutional partners and in turn yield. Each of these are their own focus and the design takes these into account. There will be provision for XBE LP rewards however the XIV will have no involvement in this.
- Question: Will vaults be called hives?
Answer: We’ve been discussing this internally, and we love the idea. The beautiful thing about governance - list a proposal and we can all vote on it and decide!
For the record - We love the X BEE Keepers.
- Question: Would also be very interested to learn more about the team's view and strategy for the Institutional Vault specifically in light of an arising bear market?
Answer: The major reason we love Curve (apart from the sexy capital efficiency) is that it functions beautifully within a bear market as the yield is provided on stable assets. And as such stable asset farming is expected to thrive during bear market conditions where other assets are extremely volatile.
- Question: How are we going to deal with ETH gas fees, and attracting DeFi users on other networks?
Answer: We will be able to pay XBE rewards against ANY type of LP token, even LP tokens from pools on other chains, meaning we can incentivize liquidity on layer 2s - and multichain.xyz looks to be the best to bridge.
- Question: How did you get Miris to partner up with EURxb? Is anyone from the team associated or have prior business with them? Do you know what happened to MirisX - did EURxb replace it or why is it shut down?
Answer: One of the founders of our deployment company has been involved with Miris for several years because of their work on MirisX. We have always loved Jan's approach (CEO of Miris) to green sustainable investing and his focus on DeFi. It was a match made in heaven to work with Miris, and we are very grateful to have them as our issuing partner.
Their work with MirisX demonstrates their commitment to tokenising securities and we do work with them from time to time to integrate the public protocol for their investments clients into the MirisX UI. We can't say much but we believe there are still big things ahead for MirisX.
It's not easy as an institution to take a big leap into DeFi, so we really value this partnership, it opens the way for others to follow in BIG footsteps.
- Question: How is the Eurxb team funded? Who's paying the bills? You mentioned being self funded; how are you planning to change that and making the project more sustainable?
Answer: Profits from our institutional work over the last 3 years have been invested non-stop into the roadmap to a public protocol, culminating in the EURxb and XBE. Our first major proposal to upgrade the platform is our commitment to ensure the protocol is self-sufficient from a tokenomics, revenue, and liquidity perspective. After that, the 3,000 XBE in treasury should be more than sufficient to fund community proposals, and possibly a foundation that engages institutions on behalf of the protocol to tokenise more off-chain assets.
- Question: I don't think any major protocol has ever actually locked up +-80% of their governance tokens in the history of DeFi???
Answer: We can’t comment on that... There are a few projects with great lockup rates (not 80%). What's interesting to note in their lockup and decrease of circulating supply is their token price has responded very nicely to these changes.
- Question: When you lockup your XBE tokens from 1 week to 2 years, - what happens after the lockup period is done. Example XBE locked for 3 months for the reward boost. Can you relock your tokens for a new period after that?
Answer: Yes, the boost mechanisms will remain and returns will be driven by the protocol fees.
- Question: Is Bitfair still an active part of a future roadmap. I saw it mentioned in the March update?
Answer: Yes it is, big things are coming :)
- Question: Can you guys speak to what is the end goal here if all dreams come through?
Tobie: An integrated global securities market for institutions and DeFi alike
Greg: Decentralized securities protocol allowing free access to complicated financial instruments.
- Question: Can you lock up upward even when the lockup is not finished? Let’s say I locked for 1 month and then few days later decide to lock up for 6 months?
Answer: Yes, you can always increase your lockup date to [longer or to] maximum at any time until the lockup period ends. Identical to the way CRV DAO does it.
This proposal wouldn’t have been possible without the Curve team. They have done some truly amazing work!
- Question: One more thing; any update on exchange listings for XBE? Working on it?
Answer: Upon product release the marketing campaign will include some Tier 1 exchanges.
- Question: Do we have some sort of ETA for product release? I know you rather not mention any specific dates (which I understand and support), but maybe some sort rough estimation?
Answer: Pending Audits - Q2. Possibly sooner - but we will update as we progress. We have increased our dev count by 9 people in the past 12 weeks. :)
- Question: I know the question about how the name of the protocol came about, was answered, but will the name of the protocol ever change?
Answer: EURxb is the first regulated security that we publicly tokenised, and it set off a protocol for tokenising securities. XBE set off a protocol to create value for tokenised securities in DeFi.... Let's see.
- Question: Maybe more of a Defi-wide question, but I see some comparisons between a share and governance tokens. A share offers value (capital raising, strategic interests, governance) in turn for dividends. What is your vision on governance tokens long term value and sustainability?
Answer: We would love to answer this in detail, however we need to be sensitive to financial security laws here. So to answer it generically, we hope to see governance tokens focusing more on income for their holders in future whereby you can use conventional finance metrics to value them, rather than sentiment and hype.
Then to close it out - we have a bonus question for our avid readers that was not included in the official chat! (We answered this in the informal community price chat).
Question: Anyone want to suggest any models or ways of finding true value for XBE ? Now and into the future.
Answer: We won't comment on token price - but maybe this will give some insight.
Currently the entire crypto market is +- $2.2tn. Compared to gold at +- $10tn, crypto is a small asset class.
Our vision is to use DeFi to attract a reasonable share of the CeFi market. We don't think of the protocol (a public tokenised securities protocol that offers DeFi utility to financial securities) to be something that can be defined within the context of how big DeFi or Crypto is today - because the vision is to utilise the amazing innovations of Crypto and DeFi to tokenise CeFi - meaning we create Crypto/DeFi value from CeFi and trade it in DeFi.
So how big is CeFi? It's a hard one to calculate - but here is a rough model. Take the sum total of "financial securities" and "m0 + m1 money supply" and for now ignore the unlisted / privately traded financial securities (which could push the figure over a quadrillion dollars). This is basically all the money and financially traded value in the world (including debts, equities, etc) registered for trade.
That figure is in the 100s of trillions of dollars globally, and puts you between 100x and 200x north of the size of the entire crypto market, so all of crypto is around 0.5% of traditional financially traded instruments. And DeFi is at what - $90bn now (maybe 5% of all of crypto) - just 0.025% of CeFi?
So for us to succeed in our vision - DeFi needs to be liquid and robust enough to offer a viable tokenised alternative to the large global institutional trades taking place everywhere today in the existing system.
That's why we are working with the EURxb, xbEURO, XBE and other protocol tokens as well as our roadmap products to create a protocol that will help DeFi grow 200x - 400x so that it can be at least 5% - 10% of the size of CeFi...
And sure, such a massive vision is not something you can do alone (or overnight) - but we think such a market really is big enough to share 🙂