Sovryn as a Platform AKA Sovryn "Chain"

do we have the $ to build a blockchain? how are we raising more capital?
cost of some blockchains:

  1. Bitcoin - $100 million
  2. Ethereum - $18 million
  3. Ripple - $40 million
  4. EOS - $4 billion
  5. Stellar - $500,000
  6. Hyperledger Fabric - $100,000 to $500,000
  7. Solana - $20 million
  8. Cosmos - $17 million
  9. Cardano - $63 million
  10. RSK Rootstock - $3.5 million
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I don’t see how sunsetting SOV will help solve anything? Especially now that we finally start seeing some return on the stakes that actually make this a value proposition to hold the stake. I think the current idea to make a sustainable token and have it grow organically is setting us apart from like 95% of other projects and its pretty much the only thing that gets me to hold on. Just making it all rBTC based is nice and all but its still rBTC which in maxi circles not seen as pure enough to make any really perceptive difference in our standing with this toxic crowd. I still think all we actually need is users and we get them with more aggressive marketing and making our current core product (zero) usable as intended its a killer app and “just” needs its kinks worked out get its origination fee back down market the hell out of it and they will come. You already see this on discord - lots of people want to borrow against their BTC in this sideways market escpecially.

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Has anyone considered the option of building on RGB, i.e. client-side validated smart contracts? RGB works with native BTC, allows to issue assets (rgbZero), and I think in combination with DLCs and fraud proofs the trustless peg-in problem can also be solved. Essentially, Sovryns would run RGB nodes tracking and validating sovryn asset transfers to/from them and can support global state with a network of Sovryn DLC oracles, or DLC watchtowers respectively, to keep global state transitions as well as peg-ins/outs in check. All founded on Bitcoin L1, scaling client-side, no wrapped BTC. Just an idea.

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@Martin_Adriaan

I have long had the feeling that Sovryn suffers from the inability to make one really tough choice: the choice between creating pumpamentals for SOV, or going tokenless and abandon SOV. Let me quickly discuss these.

In my view, going tokenless would be a terrible idea for many reasons - but I want to highlight one specific reason: It would be a surrender to stupidity.
The reason to go tokenless would be to appeal to the “BTC-only” version of crypto-communism. The idea that there can be only one asset and that we must reject other crypto-assets. If we want to build an economy on Bitcoin, we need assets designed to align incentives and rewards risk - i.e. capitalism. This is one of the things SOV is for.

So I want to focus on your ideas for

a SOV made to, or allowed to pump

What would this look like?

I think we have reached a point were SOV is achieving its fundamental goals. I would feel much more comfortable entertaining more entertaining aspects now.

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I deeply hope that no one who has a real say in this project (minus bitocracy)
ever even toys with the idea “make steps towards a tokenless implementation of Sovryn (of course while rewarding the current SOV stakers and holders with appropriate value)”
At this point where we are right now it just starts to get interesting.
Earning yield with staked SOV has just started to show the first glimpse of how it could be in the future.
Tokenomics will be bumpy until next February (´24) and then the coming 4 years of the 7 year schedule should be a different story where eventually scarcity kicks in.
The product needs to be refined (fear of redemptions), off-ramps to the real world need to be implemented (virtual debit card, Sovryn Bank[?]), safety of funds and security of the protocol has still to be the highest priority.
Only if the product becomes a package of attractive yield(s), secured funds and easy ways to spend and stack assets it will be an alternative to banks in the real world. If or when that happens it will not need a marketing team to push it, the product will speak for itself.
What we need is a product that is easier to understand than it is right now -
or a better explanation of what’s what. Telling people after they are being redeemed against in Zero-
“you should have done your due diligance” or “that is part of the game / plan - always is, always was” will not help the process.
We need more “average people” in the project to level out the “geeks” and “insiders” who use every tiny loophole or discrepancy to harm the platform. Sometimes I get the impression that only a handful of highly skilled people toy around with the protocol and feed it or drain it at will.
But that is just an impression.
My point: Without SOV I would not use the protocol.

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For the upcoming call on Thursday, here are some of the questions and issues that seem to be of interest:

  • Launching dApps on ETH/Cosmos
  • PoS vs Merge Mining vs Rollups vs Etc.
  • Additional utility for SOV
  • Paths forward: Medium Term vs Long term
  • Raising Capital

What am I missing?

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Imagine I would make a change to the SOV token and staking, in gradual small steps, to help you see the immense value that going tokenless might give you. First step: you need to add a little rBTC to your stake as well, to obtain revenue, so now it is only the rBTC+SOV that earns you a share of the revenue. Second step: I rename ‘SOV’ to ‘multiplier’. Instead of saying that the SOV+rBTC earns you revenue, I say that the rBTC earns the revenue but the ‘multiplier’ beefs up your share of the revenue to exactly what it is now. No real change, just relabeling and reframing things. Now the third and crucial step: I announce that the ‘multiplier’ will become super rare and hard to get, namely: it will no longer be tradable, you can only earn it over time (and as you have it already, you are guaranteed to be ahead of others). This means that your share of the revenue becomes protected and very rare, and hence has become way more valuable. Only if revenue goes up like crazy does it become attractive for others to start staking. You have effectively become immune to SOV dumping and others buying it, thereby diluting your share of the revenue (and the dropping value of your SOV). This is the value proposition to you: you still get an outsized share of revenue, but as early investor you receive protection against downside risk, and against dilution of revenue. (Note: anyone who thinks I propose this because I’m a raving bitcoin-maxi, is not reading carefully or charitably, and creating a clear straw man. I make no appeal to any bitcoin-maxi argument. That you need a token to coordinate around is a shortsighted crypto dogma, one coordinates around incentives and risks themselves, not the vehicles in which these come. On the proposed picture you have incentives and risks. If you want an example of a protocol working with a revenue multiplier, look at GMX).

Ok, now there is one thing that is no longer possible when Sovryn goes tokenless and I think is secretly on the mind of people opposed to this idea: namely SOV going 100x. Here is the thing, I don’t think that is possible, not at least with the current design; I don’t like to go into this aspect of the story much because it sounds like fudding, but here goes anyway. The SOV token gives two things: a vote on SIPS and an APR. There is no value to SOV on top of these two things. Focus on the APR. The special thing about Sovryn is that the APR comes in rBTC. This creates a floor price (why? because as SOV dumps, the APR goes up relative to the decreasing value of SOV, even when revenue stays equal). That’s nice, but the mechanism also creates downward pressure (if SOV goes up against BTC, APR with respect to SOV goes down). As there is nothing other than the APR that gives SOV value in the current design, SOV just cannot pump, except for irrational pure speculation (which we saw initially, and from which we have finally come down brutally). With the current mechanism, there is not just a strong floor to SOV’s price, there is an equally strong ceiling to SOV’s price. True, going tokenless gives up the possibility of riches through a crazy pump, but if you see things clearly, that is currently not really a realistic possibility by design, so it is not a cost of the proposal. Going tokenless would in fact immensely increase the value for early investors, and it would fit with all conceptions of Sovryn.

Now what would undermine this argument is if the design was changed to allow SOV to pump by giving it utility beyond share of revenue; hence the other option I propose. The way I see it, the way forward lies with either of the two routes. To me, speaking both as general crypto enthusiast, as investor, and as a Sovryn, going tokenless is by far the most interesting of the two options. (The reason: what pumps up must come down, when one starts going down the utility route, one needs to continue adding utility on ongoing basis, there is a worry that this is not long term viable; but that depends on devs and their creativity).

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While it’s an interesting idea, and may have merit, it is much too soon for it. To grow Sovryn enough so that we can truly build a world on Bitcoin, we need to be able to drive much more powerful incentives. The 100X you speak of is 100% possible. And it is possible on the basis of a share in a profitable protocol alone - 100X would be a FDV of ~$5b. Many companies achieve this on the basis of profitability.

In terms of narrative and utility - look at the various layer1/2 platforms out there - those valuations are possible, nay probable, for the leading BITCOIN smart contract platform - which is exactly what Sovryn will be.

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There is a sense in which almost any valuation is ‘possible’ when we include irrational speculation (if Shiba Inu can have its valuation, then so can SOV, sure). Currently a 100x SOV with equal protocol equal revenue, would turn the 15 % APR into 0.15% APR, that is people buying not for the APR but for pure speculation on price. And agreed, one would lose the possibility of a pump on the basis of such speculation/yolo-ing. Now I definitely believe that there is currently an immense opportunity for growth through organic growth in protocol revenue, but that is growth that benefits people who share in that revenue with or without token, the possibility of gains due to that organic 100x growth is not sacrificed on the proposal, so can be set aside for the purpose of weighing the comparative merit. It is only the hope for magical pumps that would need to be given up. (And community/movement growth is actually far more probable with rBTC staking, as that is more attractive than staking a risky token; but that is another matter).

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Let me rephrase what you have said in a different way - the problem with SOV valuation is that it is too grounded in reality. While in the equity markets, people invest on the basis of future earnings, this is not an equity, it is a crypto-asset, and there is no understanding or expertise in the crypto-asset space in investing. As a result, SOV is punished in the market.

I think this is an excellent observation and one we have discussed before - but time is now to decide how we tackle this issue. There are two ways:

  1. The hard, slow way - educate people in crypt how to invest
  2. The faster, easier way - appeal to the existing investment thesis(es) in crypto

I think we should do both. (1) is who we are. (2) is important for now.
However, (2) implies that SOV value cannot be perceived to be simply a function of staking value. A Sovryn platform/chain is probably the most important way to accomplish that.

What are the other ways?

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Bitcoin Staking is something that only a Bitcoin Maximalist could come up with, just like Lightning Network and a whole other bunch of gimmicks that have failed and are failing on a constant basis.

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I think this is exactly right. The conceptualization of something as crypto-asset as opposed to equity creates an entirely different set of expectations and risk-perception. I think it’s not entirely a lack of understanding that can be educated away, but definitely mostly that.

Yes, fully agree, especially when that function is in terms of real yield in rBTC, for the reasons discussed. (And sadly so, but it just a hard fact).

This is not entirely clear to me with the current proposals. Upgrading RSK doesn’t obviously bear on SOV valuation. Building out something on ETH or Cosmos would only add revenue, it would not change the perception of SOV’s value in terms of a function of staking value. The platform/chain idea that would really give this is creating a PoS chain, where the staked token is SOV, so that it now has the added utility within a consensus mechanism of securing an entire chain, right? But I haven’t really seen anyone propose a new PoS chain so far?

You ask for other ways. I think there is roughly two type of suggestions on this front: (1) acting on the current flow of protocol revenue in the typical crypto ways, and (2) building new things that aim to give direct utility to SOV itself. Just to give some concrete examples:

(1) Acting on current flow of revenue (just throwing up some half-baked ideas):

  • Use n% of the rBTC revenue, to buy SOV off the market and burn it. With say n%=50%, if protocol revenue roughly doubles or SOV inflation is cut further, SOV could easily become disinflationary. Perhaps the possibility of SOV turning disinflationary is worth some cut in rBTC rewards to stakers. Crypto investors love that sort of thing.
  • Give SOV stakers a discount in general protocol fees (or give stakers the option of either receiving rewards, or receiving a serious discount in all protocol fees, for heavy users the latter might be more attractive).
  • … and more of these sort of things.

(2) Building new things that aim to give direct utility to SOV:

  • Open up the AMM pools, create a dashboard for anyone to create pools, but require that external parties pay a certain amount of SOV (and say, burn half and use the other half to incentivize the pools).
  • Return to the launchpad idea, finally build it out, let projects that want to use it buy SOV and let people buy the tokens with SOV, etc.
  • Create only eSOV/eDLLR pools over at other DEXes.
  • … and more of these sort of things.

I’m sure we can come up with more and better proposals along these lines; but it might require loosening the no-need-for-SOV principle, and this comes at a cost.

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Shooting down new ideas and proposals for innovation without any arguments is exactly the sort of close minded-ness shown by the Bitcoin Maxi. I haven’t seen any single serious engagement with the idea of going tokenless here on the Forum, only dismissive rhetoric, and its frankly pretty disappointing.

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I think your “timing” could not be worse.
A week after the highest yield for stakers on their SOV your suggestion comes across sarcastic.
Furthermore, people here have paid more than 25$ per SOV (includes me)
and you want to “reward” stakers with “appropriate value”.
That is different for each individual.
The grass is always greener on the other side.
The comparison with GMX has been brought up quite often (not recently though).
Why copy other protocols when people here have put up with “far from perfect” tokenomics for two years and next Feb token distribution reaches almost 90%. It will get better eventually.

Your knowledge is beyond mine, so I cannot withstand arguing with you the way I’d like to.

I like your ideas about the pool creation and having to buy & or burn SOV in the process.
eSOV/eDLLR sounds like something DJ is suggesting on Citadel and Dojo for quite a while and I like it as well.

I like your writing and think lots of good stuff can come from brainstorming but sunsetting SOV would be nothing more than upsetting.

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It’s been discussed somewhere on the forum many months ago if i recall correctly. Specifically I remember personally replying to why going token less won’t work. So there may be no recent engagement but it definitely has been discussed.

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Yes, you are right, there were serious points and questions in that earlier discussion. I was referring to the thread here. Got annoyed by it being called ‘a terrible idea’ that ‘surrenders to stupidity’, a fall to ‘crypto communism’, some stupid gimmick only a ‘bitcoin maxi can come up with’, and then I received two very nasty emotional DMs from people I have never engaged with; it’s just unpleasant. I don’t have bad intentions. Just putting an idea out there, and it’s straw manned and misframed to oblivion. Makes me sceptical about the future of DAO’s. But, you’re right, going back to that earlier discussion, the Forum can be good too and I appreciated your bit of input back then. Anyway, these little meta-comments only clutter the Forum and I think are bad discussion practice, so I’ll shut up now, so people can get back to discuss chains and platforms.

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I apologize that I contributed to what seemed like an attack. However, I think the point I was looking to make is a valid one. I do think the demand for tokenless protocols is wrongheaded for the reasons stated.

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I think what you are missing in this APR calculation is that if SOV actually does a 100x on fundamentals it will probably mean we also did a 100x in revenue as the attention we received will be huge and the ZERO/DLLR actually works and everyone wants to hold DLLR as a safe haven and the AMM goes nuts because of it. (I did not calculate if that is possible some smarter persons on here please do). That would then mean a 100x SOV still makes 15%APR. I think both Xs will go hand in hand there will not be a 100x SOV with revenue staying the same. we already saw that the last weeks - SOV soared and revenue soared - albeit with a bit of a delay.

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The comment was not meant to attack you. Only a criticism towards maximalists that try to reinvent the wheel…“we will make our BTC wheel square because Ethereum made theirs round, and because we are morally superior to etherians we will take time and come up with the best square wheel humans can make”… This is not entirely the case with your novel idea - which has its merits - gotta admit!

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The next phase in Sovryn’s evolution!

Join us on Friday, April 28th at 4pm UTC to discuss the evolution of the Sovryn platform and the future of the Sovryn Layer.

Bring your ideas, feedback, and questions—let’s shape our future together!

Stay Sovryn

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