COTI AMA with Wolf Crypto — Part Four
We held an AMA with COTI in our public Telegram channel on December 9th.
COTI is a blockchain 3.0 Proof of Trust DAG, Internal Exchange & Payment dApp. COTI aims to be the payment platform of choice for consumers, merchants & enterprise, bridging the gap between traditional and crypto payment platforms.
The COTI Trustchain consists of three main components, the Proof of Trust (PoT) Algorithm, Double Spend Protection (DSP) and Buyer Seller Protections.
COTI-X is an internal interoperability exchange and settlement layer, enabling cross currency payments, direct transfers of one currency to another and ensuring liquidy on the COTI platform.
COTI Pay is the payment dApp built on the COTI platform. COTI Pay offers a payment app and debit card for consumers along with a POS software suite for merchants, including processing tools that allow a merchant to accept and mange payments from COTI Pay wallet holders.
COTI have also built a whitelabel solution for enterprise, allowing developers and organisations to issue their own branded tokens, payments apps and tools on top of the COTI platform along with a Universal Payment System that reconciles the functionality of PayPal and other online payment gateways with that of the cryptocurrency world.
COTI’s UPS provides a comprehensive payment solution that combines all existing support systems of traditional payment processors with the added value of digital assets.
COTI is currently participating in the Binance Community Vote Round Four, you can find out more details on the vote below —
You can also visit the COTI Telegram channel or COTI website for further details.
Here’s what COTI’s CEO Shahaf Bar-Geffen, CTO Dr. Nir Haloani, VP of Business Development Samuel Falkon and VP of Marketing Efrat Bar Lev had to say in the AMA.*
*This AMA has been edited for clarity.
WC (Wolf Crypto Telegram Member)
Welcome to another edition of Wolf Crypto AMA and another addition with COTI. We’re up to part four of our AMA series with COTI now!
You can check out our previous AMA’s with COTI on the following links -
Joining us from the COTI team today are COTI’s CEO Shahaf, CTO Nir, VP of Business Development Samuel and VP of Marketing Efrat!
Welcome guys, since we’ve already done this more than a few times let’s skip the intros and get right into it.
If you’d like to know more about the COTI team, feel free to check out our previous AMA’s listed above!
It’s been a big week at COTI with the Binance Community Vote announcement. What’s your thoughts on being nominated for the vote and how do you feel this adds legitimacy to the project in general?
NH
Hi everyone!
EBL
Hi everyone!
SF
Hello World!
SBG
Hi everyone! Great to be here again.
It’s great to be recognized and to qualify for Binance listing. We have been in discussions with the listing team for a long while and they have a really deep and thorough process. They look on everything, from tech to adoption to community. Ticking all the boxes with such high scrutiny is really exciting for us.
“It’s a great honor to be nominated”, as the saying goes in the Oscars. And if we stay on that analogy, then films that are nominated to win a prize are always good and enjoy great viewership, even if they don’t win.
It is also very important to note that participating in such a contest means that COTI IS QUALIFIED TO LIST ON BINANCE. That’s great news and it means that if we win or not, we’re eligible and qualified to list on Binance if not now then in the future. That’s the bottom line.
WC
The Binance Community Vote coincided with a large token unlock from your end.
Was this intentional?
SBG
It wasn’t.
The way it works with Binance is that you get a short heads up (very short) and then they announce it when they see fit. They have a lot of influence on price and they treat this influence with a lot of responsibility, which is very respectful. So, it turns out that they announce it right when our supply almost doubles.
It was very interesting to see how these two opposing influences work together and the outcome was a price increase of about 30% and then later back to the base line with almost double the supply. It means that our market cap grew and that holders weren’t really affected by the growth of the supply, which is good news.
WC
What is COTI doing at your end to ensure you’ll put up a good show, or perhaps even win the Binance vote?
SBG
We see this as yet another chance to show what COTI is to a greater audience, which we plan to do with a series of AMAs and content distribution this entire week.
We have a long list of AMAs planned for this week:
and we distribute content on a daily basis…
We have a few more plans and tactics coming towards the voting itself, but we’ll keep that as a surprise.
A lot of people don’t believe that a global project can win vs a Chinese project, but it doesn’t mean that we’re not going to try and put on the best show. People that follow this AMA may be supporters of COTI and I encourage them to spread the word and vote early.
SF
Well, at first we believe that our project is a top tier project that deserves to be at Binance, saying that, we are aware of other elements that influence the vote… and so we will continue and be a successful business no matter the result.
WC
Speaking of tokens, your unlock schedule has been met with some criticism, as there are continual monthly unlocks until June 2021.
How does COTI plan to offset this sort of inflation on the network? It seems these unlocks are stopping potential buyers from buying into the project…
SBG
We’re open to changes to our lockup schedule that help both the token and token holders.
We are considering quite a few of them that will be beneficial and we’ll announce it before the year’s end.
WC
Can you link us to the chart of your current coin distribution schedule?
And is this locked in? Are you open to change this in the future?
SBG
We are considering some changes for the benefit of holders, but as mentioned, we won’t announce anything before the voting ends, to play fair.
WC
On the subject of mainnet, there’s been some complaints in your Telegram group about the KYC process for opening a COTI mainnet wallet.
Why do you have this process in place and what is your response to those who say it is an overly complex and slow process, just to open a wallet?
SBG
Any regulated crypto wallet used for payments requires KYC/AML as part of the onboarding process.
COTI follows stringent Know Your Customer (KYC) and anti-money laundering (AML) policies to ensure the network is always safeguarded for all users.
COTI is inherently not conducive to money-laundering, as any user of COTI’s wallets, exchange and processing solutions must undergo strict onboarding procedures. COTI is similarly committed to protecting user privacy and has appropriate consumer data protection mechanisms in place.
That being said, ERC20, BEP2 and any token issued on the COTI multiDAG, doesn’t require the KYC process.
WC
Some of the feedback we’ve picked up on, on a more positive note, is about COTI’s partnerships with some rather large crypto projects.
How about we go into a bit more detail there…
Who are these partnerships, how and when did these partnerships come about and how are they helping the COTI network grow?
SBG
Obviously, CARDANO (ADA) partnership is a big deal and a great vote of confidence —
We have been chosen to build AdaPay and have recently completed the solution. There have been some praising feedback about it, including an article associating ADA’s value increase by 24% after the release of AdaPay —
We have received more requests from well known projects and brands to build their solution and we’ll announce more of it in the coming weeks and months.
We also have a key partnership with Simplex, the same company that provides Fiat to Crypto processing to Binance, KuCoin, BitMax, and others. This partnership allows us to build a bridge to traditional finance and build and even more robust universal payment system.
We have a Defi partnership with one of the leading crypto banks that allows our users to gain interest for their deposits. We’ll announce the partner’s name early next year.
We have also announced earlier this year about deploying our global trust engine on Chainlink. This will add support for trust-based events in smart contracts, enabling user incentivization in line with a predetermined trust score threshold —
Lastly, we keep a close relationship with other DAG based protocols. This includes Fantom (FTM) —
and also $DAG (Constellation). With $DAG we also share the Scalable Protocol Alliance to encourage enterprise adoption of DAG based protocols —
WC
Let’s talk about the project in some more generalised terms then, as now, thanks to the Binance Community Vote, there’s a lot of people finding out about COTI for the first time.
How bout in your own words you tell us what COTI is, what problems you’re trying to solve and how you’re going about doing so?
SBG
COTI is a fully encompassing “finance on the blockchain” ecosystem that is designed specifically to meet the challenges of traditional finance (fees, latency, global inclusion and risk) by introducing a new type of DAG based base protocol and infrastructure that is scalable, fast, private, inclusive, low cost and is optimized for real time payments.
The ecosystem includes a DAG based Blockchain —
A Proof of Trust Consensus Algorithm —
A multiDAG —
A Global Trust System —
A Universal Payment Solution —
A Payment Gateway —
As well as consumer, COTI Pay — https://coti.io/coti-pay, and merchant COTI Pay Business , https://gateway.coti.io/dashboard, applications.
The COTI Proof of Trust Consensus algorithm is a bespoke consensus algorithm that assigns each user on the network a Trustscore and combines it with Proof of Stake to incentivise good network behaviour that results in lower fees, higher payouts and better quality of service as compared to other networks.
The COTI Global Trust System, combined with COTI’s cross chain interoperability, extends COTI’s Trustscore algorithm and allows any other blockchain to use Trustscores to identify malicious actors on their networks, or recognize and reward good actors, greatly improving the safety and security of connected blockchains.
COTI’s world first multiDAG enables COTI to issue smart contracts on DAG based infrastructure and combine independent DAG clusters into the overall COTI network. This allows enterprises to issue their own coins on COTI in a “Libra as a Service” manner. Coins issued are independent to their own multiDAG cluster while retaining the ability to access all the features of the COTI network.
The COTI network also includes an arbitration layer —
An autonomous system that works as a decentralised third party to arbitrate disputes. Disputes are resolved by an arbitrator jury randomly picked from a large pool of highly trusted network participants and arbitrators are incentivised to participate in the dispute resolution by receiving an arbitration fee once a dispute is finalised. Effective and efficient dispute resolution is a long sought after goal in the decentralized finance world and similar to COTI’s Trustscore, the arbitration layer can also be connected to other blockchain networks and protocols..
The COTI coin is used as a fee mechanism on all transactions on the network, regardless of the underlying transactionary currency or DAG cluster. COTI incentivises participants in the network by allowing users to run Full Nodes —
Whom receive a percentage of every transaction processed by their node.
The COTI Universal Payment Solution allows consumers and merchants to purchase and sell goods and services in both crypto and fiat, via the web or PoS. Crypto payments and settlements are instantaneous while fiat settlement in 35 currencies to bank accounts is near instant. Merchants can earn interest on stable coins and apply for business loans using the COTI Pay Business app, while users can spend crypto or fiat using a virtual or physical prepaid debit card using the COTI Pay app.
WC
Ok that’s a nice overview. Let’s break that down a little bit and talk about some of the tech that powers these ideas.
What tech is up and running now and what’s coming in the future?
SBG
Our mainet is of course live since June 2019. We are adding Nodes and staking in the coming weeks so COTI holders can benefit from that.
Another key release coming on our Mainet is MultiDAG, the first ever DAG that lets you issue tokens on top of the base protocol, like ERC20 on Ethereum.
The Universal Payment System is well underway with the Crypto processing elements in place for BTC and ADA, with more to follow soon.
We are already processing millions of USD every month as can be viewed on our block explorer —
Credit Card processing would be live in a matter of days, and we’ll announce it very soon. I expect us to process over 10MM USD / month in less than a quarter.
With that ready, we can start working our way to instat settlements on our Trustchain, and Defi elements of interest to holders and working capital loans to merchants —
WC
Can you explain to us why payments are such a big deal and why real time payments have been called the holy grail of payment platforms, be they traditional or blockchain based?
SBG
Payments are a $20 Trillion industry that is using an outdated technology and systems. Disruption in this industry is the biggest opportunity of our life times and blockchain is the right technology for that.
Real time payments are the holy grail as they give you the benefits of cash on one hand and allow you the benefits of a remote transaction on the other hand. It’s the best of the two worlds. When a merchant is not paid instantly it means that he has cash flow problems, counterparty risk and obviously all the fees that come with these transactions.
Blockchain, at its current state, is not ready for instant payments. COTI is using its own DAG based protocol that was built from the ground up to do real time payments, which means that we CAN do instant payments in a highly secure way that fits with regulation, and this is why people are excited about the Trustchain.
WC
Ok so again, can you explain to us why a traditional merchant would use COTI instead of other payment rails?
To the same extent, why would a crypto merchant use COTI over say something like BitPay?
What are the pros and cons?
SBG
Check out this image —
A merchant would prefer COTI Pay to his traditional solution because COTI gives him everything that he gets with his previous solution (like credit card processing) but adds some very important benefits like INSTANT payment, low transaction fees (sometimes 90% cheaper), Defi based Savings account and global access to the underbanked.
When compared to a crypto processing solution, like BitPay, we offer a complete solution by allowing credit card processing, which is most of the merchant’s business and access to loans and savings. We are the only true universal solution out there.
WC
Why would anyone choose COTI over PayPal and what are you doing marketing wise to get a share of the market from PayPal and Skrill?
SBG
i have copied what i answered above and i’ll add some more info about FX below —
A merchant would prefer COTI Pay to his traditional solution because COTI gives him everything that he gets with his previous solution (like credit card processing) but adds some very important benefits like INSTANT payment, low transaction fees (sometimes 90% cheaper), Defi based Savings account and global access to the underbanked.
For PayPal and the like, FX costs are huge and people never notice them as they are “baked” into the price. If you buy crossborder, then you may pay 5%-8% FX costs, not the merchant, you! This doesn’t happen with digital currencies.
WC
Obviously something we’ve learnt over the past few years of crypto is that a crypto project is part building the tech, part getting adoption for said tech.
What are COTI doing to get merchants and consumers to actually use your tech?
SF
We work both on direct merchant acquiring and on big partnerships.
We work directly with merchants by offering them to test us as a credit card processor with added benefits (instant settlement, savings etc) and benchmark us to what they already have. We have a very nice pipeline of merchants as it’s a win-win for both parties.
We work on major partnerships, like Cardano, by offering parts of our technology to benefit what they already have and their user base.
The last element that we are about to add is the multiDAG, they ability to issue tokens on our infrastructure, that will really open us up to be adopted by developers, projects and financial enterprises around the world that would like to issue a tokens for transactions, stable or not.
WC
So what’s the overall COTI business model and how can token holders benefit from it?
SBG
Our business model is straight forward: we take processing fees from transactions and our native coin is used as gas to power the network. Whenever a transaction happens, now or in the MultiDAG future, the merchant automatically converts part of it to COTI native coin, hence increasing the demand. The more transactions, the more demand. At a fix supply state, this leads to price increases, just like with any other utility like power or gas.
We have also expanded the token utility from just transactions to a whole ecosystem of financing and processing. The UPS runs on our DAG-based Trustchain, which means that all payment processing, whether coming from credit cards or crypto, is delivered and settled using our coin. We then power financing options, like interest for savings and loans, and this is also based on the Trustchain and Trust Score Nodes to assess risk. It comes down to having new transaction volume originating from fiat payments turning into digital assets and raising the demand for the COTI coin.
Holders of the coin can benefit from the success of the network and can also manage nodes, to actually take some of the processing fee granted to them for their contribution to the process.
WC
How does the utility value of the COTI coin play into this business model?
I.e How does the COTI coin theoretically appreciate in value when and as the network grows?
SBG
The value of any commodity-type currency arises from its usage as a means of payment and exchange. The greater the utility, the more valuable the currency will be. The COTI network offers a wide spectrum of possible payments and other applications. Payment usage contributes directly to COTI’s utility, while running COTI network infrastructure requires depositing a network fee in COTI and, in some cases, staking a sufficient amount of COTI.
COTI can best be described as a multi-layered system as depicted in the chart below —
Transaction fees are the main income source for a sustainable economy. A payload-agnostic fee is either equal for every transaction, or case-specific, but is only possible for non-payment applications. In the case of payments, we cannot define fees both large enough to recoup the system and small enough to make micropayments possible. For this reason, COTI PAY, COTI-X and the COTI Arbitration Service use value-based pricing.
COTI’s Full Nodes are fee collectors In the COTI ecosystem, the stakes and interests of users with different roles in the network are well defined and equitable. The COTI network core is made up of a constellation of user-run Full Nodes, DSP Nodes and Trust Score Nodes. COTI Full Nodes can define their own price list and compete for users based on their performance and price. Consequently, COTI Full Nodes are responsible for collecting fees for protocol usage and transferring the network fee to the COTI network pool. All fee collections and payment distributions are denominated in COTI tokens.
WC
To be clear, if i do say a BTC transaction on COTI, the fee for that is taken in COTI coin right, not BTC?
SBG
That’s right.
WC
And the idea here right is that you can do a BTC transaction, or any other coin, in an “instant” on COTI. So you use COTI for the fee and cause you settle internally, fee is cheaper and transaction is faster…
Do I have that right?
SBG
Exactly, further reading is here —
The key to understanding it is that we mimic the transaction on top of our DAG structure and so it becomes instant and with low fees.
WC
You mentioned DeFi before, what exactly are you doing in the DeFi space?
SBG
Our universal payment system collects all transactions data and puts it on the trustchain. This data, alongside the merchant trust score, makes the merchant eligible for working capital loans. that’s one.
The second thing is that as we settle with a stable coin, we can allow users and merchants to hold their balance and get interest. we do that through a partnership which we’ll uncover early next year.
that said, the first step is getting processing right and that’s our focus now.
WC
So merchants can transact with you and use their history to then apply for loans?
Isn’t that a bit like a bank?
SBG
Yes, provided by loaning partners on the platform
It’s more a lending platform. if we lend the money ourselves, then we become the bank, but that’s still in the future…
WC
So first you use a lending platform, then you eventually loan yourself?
Is that correct?
How do merchants apply for loans, within the app?
SBG
That’s the long term plan and yes, it’s from within the COTI Pay Business app.
Here are some screenshots of how it all works.
WC
Is Proof of Trust Byzantine Fault Tolerant?
NH
Our consensus protocol at his current state is divided to two:
1. TCC (Trust Chain consensus). It is PoW-based threshold to allow transactions to be added to the DAG. Doing TCC, a Full Node provides proof that a transaction can be further processed, but it is not a decision that the transaction is acceptable (not double spending).
2. DSP (double spending protection) consensus, unlike TCC, is BFT-family consensus.
Currently we are working on pBFT implementation and getting the protocol to be Byzantine Fault Tolerance but at the current state most of the critical nodes are operated by COTI till we finalize our consensus algorithm.
WC
How different is COTI in terms of security, speed and reconciliation comparing with leading projects in the space?
NH
Well, transaction flow within the COTI network works very differently. First PoW within a DAG base protocol is more a way to prevent spamming and balance incentive within the network. In our protocol the transaction get full approval only after receiving the majority of DSP nodes — which are high trusted nodes in the network. Also the architecture of the network is built in a sharding concept which does not require all nodes to participate on every transaction confirmation process.
In COTI Trustchain protocol security is achieved by introducing DSP node and applying trust to every participant in the network. DSP (double spend prevention) attacks are not possible at all — so we are much safer than any existing blockchain protocol. To mitigate DSP risk, COTI deploys dedicated Double Spend Prevention (DSP) Nodes. These nodes carry out additional transaction monitoring without affecting the network.
The PoT (Proof of Trust) employed in COTI infrastructure required to validate each transaction in COTI, limits the number of transactions that an attacker can send. In the rare event where an attacker is capable of making so many small transactions, the account’s Trust Score will decrease, causing an increase in the PoT required to create new transactions and by that blocking such an attack very quickly.
WC
Again on security, how do you handle customer asset security at COTI?
NH
In a nutshell:
Infrastructure Security
- Wallets hosted in a private subnet and internal software communication is through an additional authentication layer.
- Outbound connections from the wallet server are allowed to the blockchain & inbound connections blocked except for the white-listing of client issued RDP addresses.
- Wallets hosted on hardened servers.
- Cold wallets are hosted offline and firewalled off.
Personnel Security
- Separation of duties for key and RDP password generation.Separation of duties for key and RDP password generation.
- Role based access control with authentication, authorization & accounting.
- Stringent background checks for personnel.
Logging & Monitoring
- All access to the wallets is subject to monitoring & logging.
- Personnel access to the wallets is authorized only through a 3. multi-tiered approval process.
- Real-time alerting on any anomalies.
WC
How about speed?
What TPS does COTI have and how will it scale?
NH
DAG is a more appropriate algorithm data structure-wise, instead of adding blocks sequentially to a chain. As such, transaction validation is parallelized, which results in higher throughput. It goes without saying that low throughput is not acceptable in any payment platform.
In addition, DAG works differently than the blockchain. Whereas the blockchain requires Proof of Work from miners on each transaction, the DAG gets around this by getting rid of the block entirely. Instead, DAG transactions are linked from one to another, meaning one transaction confirms the next and so on. These links are where the term DAG comes from, just like blocks getting hashed are where the blockchain receives its name. Blockchains allow one to track down any record stored in a ledger’s history, but their sequential structure is also what significantly hinders their transaction throughput. The flat list nature of blockchains is the biggest bottleneck in their ability to scale.
This data structure resembles a flow chart where all points are headed in one direction. As a blockchain grows over time, nodes will need more and more storage capacity and a higher bandwidth as volume increases in order to keep up-to-date with the transactions added to the ledger. This can become a very costly operation. Other issues include lack of data privacy, as many blockchains are public and there is unwanted centralization due to miners.
A DAG works in depth. This means that every node consists of multiple layers of transactions. When a transaction is registered in a node, it first has to verify two other transactions before the transaction itself is verified. Those two transactions are chosen according to their trust score.
The node is tasked with checking if the two transactions are not conflicting. For a node to issue a valid transaction, it must solve a cryptographic puzzle similar to those in the Bitcoin network (Proof of Work). Just two verifications are needed to verify a transaction. This gives the benefit of a drastic decrease in unnecessary verification.
CLOSING THOUGHTS
WC
What do you think about your competitor in the Binance vote, VITE?
SBG
I don’t think about them at all, to be honest. I didn’t even know about their existence before the competition.
I wish them all the best, anyone that is promoting DAG is my friend.
WC
Have you done any research on VITE?
SBG
We did, my tech team is not impressed, to say the least…
But other than this week long competition, I don’t see them as a competition but as someone who promotes the same agenda and I truly wish them all the best.
WC
If you could give just three reasons for someone to vote for COTI, what would they be?
SBG
- Real world use case
- Real proven business model that is already generating revenue
- Utility for holders: price increase as the network grows, running nodes to gain more coins
- Superior Tech — high reviews by experts
- Proven team
WC
What do you have to say to those who are on the fence about voting for VITE or COTI in the community vote?
SBG
COTI’s technology is superior and we are already deployed in the market. If you care about product and tech, you should vote COTI.
If you care about your upside, then the upside for COTI being the winner is far greater than it is for Vite.
In terms of market cap and opportunity, you must vote COTI.
Either way, vote COTI!
COTI Resources
Website: https://coti.io
Telegram: https://t.me/COTInetwork
Medium: https://medium.com/@COTInetwork
Github: https://github.com/coti-io
Technical Whitepaper: https://coti.io/files/COTI-technical-whitepaper.pdf
COTI Pay Overview: https://coti.io/files/COTI-Pay-Overview.pdf
COTI Token Economy: https://coti.io/files/COTI-Token-Economy-2019.pdf
Wolf Crypto Resources
Public Group: https://t.me/WolfCryptoPub
News Channel: https://t.me/WolfCryptoAnnounce
Twitter: https://twitter.com/WolfCryptoGroup
