In this post, I will first summarize my failed negotiation with CNI, and then describe my plan to create a new cryptocurrency based on Proof of Space Time and its implications for the community.
1. What happened?
I have been kicked out again by CNI and can no longer view any message on their Discord channel, so I can now only record from memory without accurate quotes from the discussions. I will try to be as unbiased as possible without being deliberately negative towards CNI. But I think a brief documentation of the process will be helpful for someone in my situation in the future. You can skip this first part if you just want to know my plan for a new cryptocurrency.
In my last post How We Can Save the Green Narrative of Chia, I listed three contributions that I could make to the community for getting some rewards:
- pushing CNI to establish an open contribution fund using 1/3 of the prefarm;
- developing a new plot format (new consensus mechanism) cheap to farm but very expensive to compress by computation;
- my finished work to improve their official bladebit plotter and harvester.
I consider the first contribution to be my most important and valuable contribution and clearly explained it in game theory math and hoped they could understand. Now it is especially so since they are selling the prefarm monthly and need XCH price up and therefore need a significant amount of community contribution without paying fiat cash that exacerbates XCH selling pressure. Unfortunately, they seem to have completely ignored it and directly went for trying to squeeze out information from me about my new plot format. This confirms MadMax’s initial assessment that CNI would never allow me to negotiate on my terms.
Initially, they tried to get me to tell them my approach under a Non-Disclosure Agreement (NDA) so that they could assess my claims. However, some chat with ChatGPT told me that NDA would put me in a very vulnerable position since as a Chinese citizen it would be very difficult/costly for me to enforce the NDA with a company developing free open source software. This is especially concerning for me given the previous failures of negotiation of CNI with NoSSD and MadMax, and the warning of MadMax that CNI may not go through the process once they know my secrets. So, I declined discussions to reveal any of the technical details under a NDA. Then, employees at CNI just tried to depict my method as impossible or unlikely significant. In Dr. Nick’s words, he could not take me seriously because I could not figure out his tricks in the ~32GiB plots in his DrPlotter, even though this is logically not necessarily related to making a better plot format (consensus mechanism). However, I kept talking mostly sensibly on their Discord. Eventually, I got Gene (CEO of CNI) to promise to set up a bounty (merely a public promise to pay if pre-specified conditions are met), and pushed them to publish their new plot format as soon as possible insead of just working in secrets. Only then could it be undisputable about who is the first to come up with certain ideas.
So, a few weeks ago, they published the blog post (Approaching the Next Generation of Proof of Space - Chia Network) and some technical details (Technical Details | Chia Documentation) about their new plot format. Gene already forgot about his promise about the bounty for improving the new plot format, and then only mentioned some competition to compress their new plot format beyond what is expected. I might have said something like the new plot format still needed improvement because it is too costly to plot, and got Gene to promise again to entertain me with a bounty and let me to propose the bounty first, and let MadMax be the judge. So, I got serious, and discussed lengthily with Dr. Nick about their new plot format. I pointed out that an attacker could use 200 PiB HDDs to just store critical information about the plots to more easily fake it as 10 EiB netspace, so the resistance of the new plot format to rental attack is not as high as claimed in the blog. Dr. Nick admitted that there is something similar in his DrPlotter and he could adjust some parameters to make it more secure. With other discussions, I think I have convinced many people that I deeply understand the problem and am serious about my claims.
So, I made a bounty proposal, something like “reward 1% of the prefarm to anyone who has figured out a fundamental design flaw in the original plot format, and find a solution based on this flaw to make their new plot format about 10X or more times more costly for compression by computation, without adding costs for normal farmers”, and the parameters in my proposal could be negotiated. Dr. Nick continued to try to verify my claims. He eventually said that I could have some contribution here, such as maybe preventing a few percent of compression, but it wouldn’t be mission critical. I replied that it could be mission critical because it could also be used to reduce farmer computational costs by 10X without sacrifacing secure, and therefore reducing running costs and XCH selling pressure. Then, Dr. Nick continued to express his disbelief that I could do it without much tradeoff for farmers, and somehow continued to ask me to figure out his tricks in DrPlotter, even thought I used an example of pathogen and some general defenses of immune system to show him that you don’t need to know every attack to improve the defense, and he was not arguing logically because there is a difference between unimaginable and non-existent. I told him that he could modify the bounty in a way that I wouldn’t get a penny if what I claim is false. To be clear, no one from CNI ever mention the bounty to me again after my proposal, and to me, it felt like they just wanted to squeeze out the maximum information from me without paying anything. Eventually, Gene got mad, called me “very close to being a scammer” because I didn’t show all the proofs to support all my claims, and kicked me out of Chia Discord.
It is still not entirely clear to me why they made such a sudden decision to kick me out when I was expecting negotiation about the bounty details. Maybe they just really don’t believe me, or I have become annoying and somewhat frustrating to them for not working under their terms, or, my attempt to show that I have come up with something better is really against their business model since they want to present themselves to the world as the smartest persons on Earth to get contracts from institutional customers. Anyway, the negotiation failed, like some other negotiations they had with community contributors before. CNI and I do not seem to have aligned visions. So, I have to move on.
2. A plan for a new cryptocurrency
2.1 Project summary
There is a cryptocurrency project (temporarily called ENGC) I would like to build in the Chia community to solve an important problem in innovative industries such as the renewable energy industry where buyers are often economically punished due to the fast depreciation of the products. The white paper has already been written but still needs some polishment and will also be posted here in a few days. The abstract reads as something like this:
Innovation is vital to the long-term prosperity of humanity. However, a major challenge faced by innovative industries is the fast depreciation of their innovative products. Buyers of innovative products, such as solar panels, often find themselves in an economically bad position due to the fast depreciation of these products, despite the bright future of the industry and the vital roles played by the capital of these early buyers. ENGC tries to solve this problem by organizing the industry, buyers, and investors into a global cooperative network by game theory to enforce cooperation even when every participant just acts from selfish interests. Then, buyers can benefit from the ENGC rewarded to them to offset the costs for their purchases since the growth of the whole industry could create a continuous demand for ENGC to stabilize its price, and suppliers can attract more buyers to substantially increase sales revenues of their products by accepting ENGC as part of the current and future payments. ENGC is a cryptocurrency secured by the easy and safe smart contract language Scrypto developed by Radix and the highly energy-efficient consensus mechanism called proof of spacetime (PoST) developed by Chia and improved by me, and is partly distributed by proof of innovation purchase (PoIP) to reward such buyers, making it a secure, green, and permission-less decentralized cryptocurrency that fuels the innovation and massive adoption of renewable energy and products of similar innovative industries.
The basic business logic stems from the simple fact that people are really willing to spend a lot of money buying hardware mining/farming cryptocurrencies. However, instead of buying useless mining and farming machines, why not allow people to buy something that is actually useful and simultaneously funnel their funds into other industries important for humanity? These people, if organized together, will have a strong bargaining power to get a discount from sellers. So, buyers benefit from a discounted price and token rewards that may at least partly offset the costs for these expensive products, and sellers benefit from increased revenue.
Of course, conventional farmers are still needed for the security of the blockchain, but they should not be the only players receiving token rewards for a project that really wants deep penetration in a real world business. The project will be as decentralized as possible, and the tokenomics will be detailed in the white paper to be posted here in a few days to discuss how to fairly reward each group of participants.
2.2 Technical implications for farmers
Given my failed negotation with CNI, it is unlikely for my new plot format to be incorporated into Chia’s official new plot format. Although a more cost-effective and secure plot format will not be the selling point for my cryptocurrency project, it does reduce the operational costs for farmers and the selling pressure from them. For Chia with their new plot format, I see a future where pools with proprietary software would still emerge since some compression is still possible and CNI refuses to set up an open contribution fund for community contributors, and farmers will still try to use the maximum computation possible by burning more electricity to gain additional rewards, although not as extreme as the current situation. So, ENGC will use my new plot format that is different from that of Chia. To prevent the Chia team from free riding (without setting up a proper reward mechanism for community contributors) that is bad for the community in the long run and diverts some attention away from ENGC, my new plot format will be closed source until the new plot format from CNI is already implemented on Chia or if the CNI team do it over and come up with something similarly good.
Because of the different consensus mechanisms in the plot formats, farmers will not be able to farm both XCH and ENGC using the same plots after the current plot format is no longer supported. Farmers will need to choose which chain they will support. The good news is that, initially, when Chia still supports the current format, plots for ENGC will still be able to farm XCH, because they will encapsulate the current Chia plot format and contain an additional security layer.
Currently, there is no specific timeline to expect for my new cryptocurrency to be up and running. However, since the plan is to build it on existing technologies, the timeframe of months instead of years is expected. For implementing PoST based on my new plot format, a season of dedicated work is expected. For other components of the cryptocurrency such as integrating Scrypto, the time is also dependent on how many community contributors will join for the development. The good news is, the incentives for community contributors will be built into the tokenomics of ENGC.
2.3 Community developer recruitment
ENGC is planned to be built in an open community. A company for developers will be established to hold 40% of the total supply of ENGC for fundraising. I will own 40% of the company (eventually diluted to 20% after fundraising), another 35% will be allocated to community contributors, and the rest 25% will be reserved for an open contribution fund to reward novel, significant, and unexpected contributions that would require community voting to claim the reward. So, a total of 60% of the company will be allocated to community contributors. This is specified from the very beginning, so that even if a contributor does not get a reward as large as he/she expected, he/she can be assured that his/her contribution is judged without a conflict of interests (the reward comes from neither my pocket nor investors’ pockets) and is only judged for the long-term success of the whole project. So, if you have something to contribute, please don’t hesitate.
Currently, there are several contributions the community can already start to make.
First, start from BPX blockchain, integrate Radix Engine and scrypto into a PoST blockchain with additional proof of stake and a small reward for timelords. The current PoST plot format can be used for testing.
Second, an e-commerce platform for buyers and sellers to register to trade innovative products with ENGC as part of the payment method.
If you can contribute anything above or have other contributions, please contact me for coordination.
2.4 Project funding
When relevant companies have been set up in Western jurisdictions, funding can be easily done. However, some initial funding is required to get the project going, such as paying for legal fees to set up the companies, and supporting some dedicated work I need to do, since I have burnt through most of my cash reserves in the last two years working on this Chia project. About $50,000 a year is required for me to support a family with three kids, and another $50,000 is likely required for me to not be constrained by money to get the project going with the possibility of moving to a different jurisdiction to facilitate project development. However, the constraint here is that raising money in China for cryptocurrency projects from Chinese citizens is close to be illegal and no contracts I sign regarding to cryptocurrencies are legally enforceable here.
There are three options. One is to raise fund from close friends and family that barely understand the project or crypto in general due to the very negative propaganda against crypto here. The drawback is likely a lot of one-to-one communications and unnecessary pressures that would draw my attention away from the work.
The second option, which is most helpful, is to be funded by donations from the community, although it is unclear how likely it is for this approach to succeed given the current hardship in the community. However, if you are willing to donate, please let me know how much you are willing to donate so that I can assess the feasibility of this approach. I may or may not pay back, or may, without any guarantee, pay multiple of the amount back. But this should only be considered as a donation and no profit should be expected to avoid any legal complication.
The third option is to be funded by some really early investors that can invest without signing a very enforceable contract with me under their local laws. This option does not allow Chinese citizens to invest, and only allows accredited investors in the US to invest. For people in the EU, maybe something like an ICO can be arranged with necessary KYC/AML due to the more friendly MiCA regulation in EU. The drawback with this option is that it may negatively affect the overall project if the negotiated term with a large investor is not very favorable.
Through one way or another or a combination of the options, I have decided to get the project going, and hope the community can help and let us do it together.
