COTI AMA with Wolf Crypto — Part Three
We held an AMA with COTI in our public Telegram channel on October 17th.
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.
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 and VP of Business Development Samuel Falkon 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 three 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 and VP of Business Development Samuel!
Welcome guys, since we’ve already done this a few times let’s skip the intros and get right into it.
We last spoke to you back in May 2019, prior to the IEO. What’s been going on at COTI since?
SF
Hello to all of the ladies out there!
NH
Hi everyone
SBG
Hello everyone!
Since our last AMA, we have completed our IEO and listing on KuCoin and launched COTI’s Mainnet. COTI’s Universal Payment System (UPS) already processing several millions of dollars every month, as demonstrated on our ledger.
Corporate stable coins, our Libra-as-a-service (or even Venus-as-a-service) product launch coming later this year with more than $3M in pre-orders.
We announced and started building the Global Trust System (GTS) and our partnership with Chainlink.
We listed on Binance Dex, KuCoin, Bithumb Global and Bitmax.
We recently opened Full Node registration and revealed our staking model.
Here’s some links —
COTI IEO & Mainnet
COTI Binance DEX, BitMax & Bithumb Global Listings
COTI multiDAG
COTI Global Trust System
Universal Payment System (UPS)
Nodes & Staking
THE COTI NETWORK — IEO & MainNet
WC
Alright, that’s a fair bit to get through, fair to say you’ve been up to a couple of things…Let’s take this one by one though…
It was an interesting move doing an IEO and launching your mainnet at the same time. If you had your time again, would you have issued an ERC20 placeholder token and launched mainnet a little later?
It seems like from your IEO & mainnet announcement, mainnet wasn’t as stable as it could have been and you missed out on the “mainnet pump” for the token by launching it straight away.
SBG
We are happy with launching and listing only when MainNet was ready. Regulators would like to see utility prior to listing, or you may need to explain why your ERC20 token isn’t a security. This is not just playing it safe, but also has advantages when seeking legal opinions, allowing you to list later on in lucrative jurisdictions.
In Addition, I’d say, that just sitting on the Mainet announcement as a “pump opportunity” isn’t a consideration for us. We play the long game, bringing in serious technology and products to the sphere. It’s true that we may miss short time price fluctuations due to that, and sometimes even get criticized for that, but those who support us for the long run will win with us.
WC
Least you didn’t get TON’ed I guess.
Fair to say you have no fear of regulators with the way you’ve launched and the approach you’re taking to KYC/AML then?
SBG
Well, one should always be cautious with regulation, but i feel like we have done everything by the book, giving us more options in the future.
WC
Alright, mvoing right along…One of my favourite crypto sayings that I’ve made up along the way is that a mainnet with no use is like a tree falling in the forest, if no-one is around to hear it fall, did it even fall at all?
I had a little debate with Credits last night in Daku about their useless mainnet in a similar vein…
So to use that analogy, while COTI has a mainnet, is it being used for anything at all, and in an existential sense, if no-one is using it, does it even really exist?
SBG
In fact, our Mainnet is actually being utilized since launch!
We use it to track in a transparent way all merchants settlements in our payment products. You can see these transactions on the Trustchain ledger through the block explorer. That will grow now as we start to do credit card processing.
The mainnet is the basis to everything that we do and will do in the future. By the year’s end we’ll have a multiDAG in place, allowing 3rd parties to issue DAG based tokens on our network, something that no other DAG protocol allows to date, and it’s huge.
WC
For the most part, IEO’s and token prices of IEO’s have been underperforming, and it seems COTI is no different.
What’s the teams take on the fact the COTI token price is heavily down from the IEO price and what steps is COTI taking to improve this moving forward?
SBG
We feel that the price doesn’t accurately reflect our achievements, but it may well do so over time. There are a lot of smart traders, and they all understand that price is sustained with organic buys. When there is not enough liquidity in the market, it will have an adverse effect on the price. That said, we have both successfully renegotiated the token release schedule with our top backers and haven’t lost sight of the bigger picture which is focused on the delivery of products and client onboarding that brings about utility and demand.
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.
WC
Part of the criticism I’ve seen leveled towards COTI has been in regards to selling tokens to some undesirable pools…(cough cough, ICO Syndicate), as part of the private sale, which has lead to the token dumping as each tranche is released. Looking at the token release schedule here, it seems like December is the biggest unlock of all.
What are COTI doing to offset a major dump in December considering the token has been dumped in previous unlocks which have been much smaller?
SBG
Yes, that’s true. When we were “young and stupid” we sold to pools and that had an adverse effect. They are all below their buy price now so that had a counter effect to them as well and probably showed them all that dumping isn’t the way to sustain their position. We have negotiated our release schedule with a lot of our buyers and I believe that we’ll go through December okay.
WC
Have you considered just unlocking all tokens at once and ripping off the band aid?
SBG
We did, but didn’t see the value of it in current market conditions. We understand the potential upside of it, but the downside is too big.
WC
Looking at the coin release schedule, a large amount of tokens to be unlocked in December are team and advisor tokens.
Can you give any commitment from your end that these tokens won’t be dumped onto the market as soon as they’re unlocked?
SBG
I’m not selling any of my tokens. The founding team isn’t selling any as well. Our top advisors will probably refrain from selling too, as that what makes them top advisors.
Even more so, I engaged with COTI before being the CEO as an investor. Some of my tokens, as an investor, have been released in September — and I didn’t sell any of it.
SF
Our commitment to the community and the project will always remain strong. We are not here to make a quick buck. we could have launched the product already at the peak of the crypto-times (back at 2017) we are looking at this project as a business and not as a “How to get rich ASAP”.
THE COTI NETWORK — EXCHANGE LISTINGS
WC
Since your IEO and mainnet launch you’ve been listed on the Binance DEX and have a BEP2 token out and have also listed on BitMax and Bithumb Global using an ERC20 version of the token.
Can I ask what your experience has been listing on these exchanges and why you’ve taken the unusual step of having three different versions of the token out?
SBG
Having different token versions helps with interoperability across different chains. This creates an interconnected internet of value and increases accessibility, linking disconnected systems and enabling quick value transfers that are crucial factors to drive the mass adoption of fintech products. The bridge enables the COTI Trustchain to communicate directly with other mainnets, creating an interconnected value chain.
This also provides immediate support for hardware wallets, which wasn’t possible prior due to technical differences between the COTI Trustchain and other blockchains. COTI has not been supported across hardware solutions to date; however, by adding support for ERC-20 tokens, storing coins on cold wallets like the Ledger Nano S or Trezor has been made possible. Users can also stake coins through it to make earnings via specific dPOS and POS networks.
WC
Of course the natural followup question to this, as uncouth as it is, is when more exchanges?
I’d assume from a strategic point of view this would be a post December thing after the big token release?
SBG
We stay in touch with most of the big exchanges, as you know. Listing on a major exchange isn’t a problem for COTI, but should be timed well.
We were able to list but have decided to be more prudent with costs of listings and to do so when there are more tokens out there.
WC
How does having three tokens work into the overall token supply?
This hasn’t increased the overall token supply has it?
SBG
No, our token supply is capped at 2,000,000,000 COTI. when one token switches to the other, it locks the previous one.
WC
You can currently convert mainnet and ERC20 tokens to BEP2, but not back.
When will you be updating your token bridge to be able to do this conversion?
NH
This is in the works, and we will be updating on developments on this front very soon.
WC
Speaking of token supply, one of the other criticisms of COTI I’ve heard around the place is the large token supply and the large amount of tokens held in reserve via the liquidity pool and reserve token supply.
How can you alleviate fears from the community that COTI are using those tokens for their intended use and that there won’t be a sudden dump of tokens onto the market, as we’ve seen with some other projects when the going gets tough?
SBG
Our release schedule is transparent and we have kept it meticulously. It is also reviewed by CMC and Coingecko. The team can’t use incentive tokens for it’s benefit, but rather for the ecosystem’s benefit, to incentive large partners and developers.
We would use this fund in the course of 10 years, and haven’t even used 1 million tokens out of it. That’s only 0.05% in the course of the past 2 years. It’s really insignificant in terms of circulating supply.
Even more so, we only use this pool when it means that the total network should grow in value due to the usage, so it’s beneficial for the holders. We don’t have a plan to use more than 0.1% in 2020, by the way.
Remember, It’s in our interest to use it wisely as we have the same incentives like our community and buyers (we hold all of our coins, remember?).
WC
Do you have some COTI mainnet addresses you can give us where these tokens are stored so the community can keep an eye on them?
Not saying we don’t trust you, but as the old saying goes, “Don’t Trust. Verify”.
SBG
Of course, we already gave them, but here they are again:
THE COTI NETWORK — multiDAG
WC
So what’s a multiDAG, why is it needed and how does it add value to the COTI ecosystem?
SBG
COTI’s multiDAG is a unique implementation that frees the COTI network from being bound to a singular DAG instance. Right now, all DAG protocols are forced to duplicate their entire mainet when they want to allow a 3rd party to use their technology. The COTI MultiDAG ecosystem is similar to Ethereum, in the sense that both are common decentralized infrastructures acting as the basis for a multitude of different tokens and smart contracts while utilising one main coin for payment of fees in the network.
This multiDAG feature is currently unavailable on any other DAG-based platforms and is totally unique to COTI!
COTI’s selfsame node infrastructure enables the creation of multiple DAGs by originators of varying nature, such as stable coins, dedicated enterprise tokens and more. Because COTI uses several independent clusters that each support one token, the whole network is made infinitely more efficient and modular.
In essence, the COTI network will have several independent clusters and tokens built atop the Trustchain, with the COTI native coin used as a common means of payment for all fees and staking inside the COTI ecosystem.
WC
The multiDAG sounds a lot like what Fantom are doing with their multiple mainnets?
Is this the same thing or have I got it wrong?
NH
No, it’s different. They make several “copies” of Fantom.
We make something that is more like the relationship between ETH to ERC20.
WC
Ok, I’m going to be asking this question a bit throughout this AMA, but when will the multiDAG actually be deployed?
One of the criticisms I’ve seen about COTI is many promises, less delivery, when will we start seeing some deliver on these promises?
NH
I find this criticism a bit far-fetched as COTI met its milestones and has delivered advanced technology. Even more so, we are building BIG things, and those take time. We never said a certain tech will b ready on a certain date and missed it. People wants things to be faster, and me too, but the reality is that big things takes time.
We already have early adoption and are generating revenues, unlike 99% of the projects out there. With regard to the MultiDag, our R&D team has already begun working on the full specification for the ClusterStamp and MultiDAG in preparation for Q1 2020 timeline.
THE COTI NETWORK — GLOBAL TRUST SYSTEM
WC
So again, what’s a Global Trust System and how does this fit in with COTI’s existing Trustchain/Trustscore infrastructure?
And most importantly, why is it needed?
NH
Imagine being able to know if the Bitcoin address someone gave you to send BTC to is safe?
The COTI GTS empowers any infrastructure or chain to leverage efficient behavioural tracking — a data layer that is chiefly missing in the crypto world — to calculate trust scores and risk indicators for consumers and merchants. It means that we use our core capability of ranking network participants with Trustscores and give it to any chain to use (and Chainlink, too).
To mitigate risk and ensure a trust-based system, we introduced the COTI Global Trust System (GTS), which blacklists users tied to fraudulent activity. We are also implementing classification techniques to categorize transactions based on their associated risks. Finally, our proprietary scoring mechanism, a byproduct of transaction classification, measures the trustworthiness of a user in any cryptocurrency network.
WC
So I’m assuming based off the fact this GTS is being deployed on Chainlink means that the GTS is something that can be used outside of the COTI ecosystem?
If this is indeed the case, what value does the GTS offer third parties?
NH
We don’t actually need Chainlink for that, but use that as a platform to ease implementation for other parties that use Chainlink.
All components of COTI’s GTS can be integrated seamlessly into any blockchain network and do not require any further technological implementations from existing platforms.
WC
Isn’t the sort of data COTI is collecting as part of the GTS similar to the use case of Chainalysis and somewhat anti ethos to what crypto stands for?
NH
We use a variety of objective factors in our trust scoring mechanism that don’t impact users personal data or anonymity. These include:
- Number of successful transactions
- Number of disputed transactions (disputes lost)
- Number of transactions attempted or made that do not adhere to the network’s rules (with no obvious fraudulent intentions)
- Number of possible attempts to double spend/defraud
- Frequency of network use
- User type — the wide range of possible users impacts the trust score awarded to each user type and classification
- Blacklist status and risk score, which both indicate a user’s degree of involvement in fraudulent transactions
Also, it is important to understand that COTI GTS is not just collecting historical data but also consider the real usage of the wallet with the ability to compare cross chain activity of profiles and also get external events from 3rd party.
WC
So harping back on my previous line of questioning, while this sounds like an interesting concept, when will the Global Trust System actually become a reality?
NH
We are now working on the first release (GTS for BTC), which will become a reality by the end of the year.
THE COTI NETWORK — UNIVERSAL PAYMENT SYSTEM
WC
Let’s talk about the Universal Payment System next, as this seems to be the main product COTI is pushing now.
COTI started off as a pure crypto payment solution, why are you now creating a Universal Payment Solution, how does this differ to the original COTI vision and how as this change COTI’s roadmap and approach to product delivery?
SBG
COTI’s Universal Payment System (UPS) is an upgrade from our initial vision of mainly offering a crypto gateway. Now the UPS can process all payment types, both online and offline, including crypto and stable coins, credit cards and even a merchant’s native coin. It also has built-in financing with interest earned on deposits and business loans.
You can read more here:
In milestones, you should view what we do in the following way:
Phase 1: Processing of credit cards and crypto, putting everything on the ledger for transparency and for Trustscores >> This is happening now.
Phase 2: Settlement with stable coins to make payments instant >> this is early next year.
Phase 3: Financial products: loans and interest >> this is Mid next year.
As processing phase is now, here are its components:
Crypto Gateway
COTI’s crypto processing solution will enable merchants to receive crypto payments through their website with instant settlements in their currency of choice. This includes the ability to embed a simple ‘pay with crypto’ button on the merchant payment page for quick checkout.
We have recently signed a major client for that, stay tuned.
Credit Card Processing
This network iteration enables fiat and credit card transactions to be accepted by merchants with instant settlements, which will assist COTI with increasing adoption. Instant settlements in latter stages will enable any credit issuer like a bank or e-commerce company to issue its own token in the COTI network with immediate access to COTI network volume and users.
The first credit card is due to be processed by the end of October, and would be seen on our ledger. We’ll announce when this is happening as it’s a major milestone.
WC
Credit card processing sounds interesting, how come you decided to do those?
SBG
It’s the gateway to merchants. everybody needs credit card processing. We offer that as a way in, then we show them what blockchain can do for them, once we have their attention.
It also generates revenue, of course.
WC
So it’s somewhat of an acquisition strategy then?
SBG
Yes, it is. We give them what they WANT and then show them what they NEED.
WC
Ok so can we talk about the UPS on the content of both crypto and non crypto payments.
How does the UPS fit into both ecosystems and what value it offers to both users and merchants alike?
SBG
As mentioned, COTI’s Universal Payment System (UPS) can process all payment types, both online and offline, including crypto and stable coins, credit cards and even a merchant’s native coin.
Merchant benefits include instant settlements, the ability to earn high interest rates on reserve balances, access to financing options without a need for credit scoring, lower transaction costs and zero FX fees and so much more.
Consumers benefit from the ability to transact quickly and safely using any currency. They can also use prepaid cards to make payments to merchants not yet accepting cryptocurrencies. Consumers also have the option to earn loyalty points and cashback rewards for every purchase made. The UPS is further supplemented by the world’s first buyer-seller protection system that provides crypto dispute resolution, refunds and chargebacks.
WC
How does the UPS accepting payments in other crypto’s (like BTC and ETH) or fiat based payments affect the utility of the COTI token?
Surely this makes the token less useful in the overall ecosystem?
SBG
The COTI token is used to run the entire COTI network and is used to pay fees and incentives for arbitrators and node operators. It will always have a utilitarian value in the overall ecosystem.
As all forms of transactions, even Credit card processing, are being put on the ledger, it means that the entire volume is being put on our network, increasing the demand for the COTI coins. Once we move from processing to settling with stable coins, we even increase the usage.
The following fees are paid with COTI coins:
Network Usage Fees: fees levied on all transactions carried out by clients using COTI’s
Trustchain infrastructure and charged by node operators. The network fee is expected to be
about 0.2% (much lower than standard fees) and depends on the trust score of network
participants. Fees can reach near zero for highly trusted users.
Premium Services: COTI expects to levy fees on enterprise clients implementing COTI’s
technology in the form of setup fees, maintenance costs, customisations and more. We expect that the vast majority of COTI’s transaction traffic will be produced by offering its Trustchain technology to enterprises as a B2B white label payment solution, much like our recent business deal with Ormeus. By charging fees per transaction, COTI will be able to generate significant revenues.
WC
Your COTI UPS demo video spruiks the fact that merchants can hold crypto (including stable coins) in the COTI wallet and earn interest on their stored value.
Why have you started offering this and how is it actually facilitated?
SBG
This service will be facilitated through a partnership we have signed with one of the big players. In creating the UPS, we wanted to ensure that merchants and consumers could benefit in as many ways as possible beyond just payments.
This is why merchants can earn interest on their accrued balances and access financing options to grow their business. It allows us to offer added service and unique advantages over legacy payment systems like PayPal.
WC
Isn’t the UPS just another version of BitPay?
How does the UPS differ to existing crypto payment solutions that are already out there?
SBG
It’s much more than that, brother. The UPS has a number of unique features, namely that it can process fiat, crypto, merchant coins and stable coins. As we mentioned earlier, merchants can also earn interest on their balances and access business loans without a need for credit scoring.
COTI’s UPS also has a built-in trust scoring system as part of our Global Trustchain System (GTS) that can be imported across other chains. We take trust further with buyer-seller protections on crypto transactions, which has never been done before.
Virtually any enterprise or merchant can build their own whitelabel solution of the COTI UPS and supplement that with loyalty programs and our Coin as a Service (CaaS) offering.
This is more than what BitPay and Paypal offer combined.That said, they are market leaders and we are runner ups, so better to stay humble.
WC
A big part of the COTI payment ecosystem was instantaneous or almost instantaneous payments by using the COTI DAG based infrastructure.
Doesn’t allowing users the ability to pay in any type of crypto mean that they’re now hamstrung by the underlying networks? I.e. a user paying in BTC or ETH is reliant on the BTC or ETH network processing the transaction which means it will take much longer?
If so, how is this an improvement to payment solutions we already have for these cryptos?
SBG
That’s the reason we built the stable coin generator. In COTI’s Universal Payment System, the entire lifecycle of a transaction — authorization, clearing, and settlement — occurs immediately. With digital assets, the cryptographic keys and digital imprint provide trust and security without the need for time-consuming steps.
Funds are credited to the merchant immediately and are backed by stable coins, which reduces friction and high costs for all parties. The entire process is made up of a few simple steps that require a few seconds to complete instead of three days. Instant settlements in COTI are backed by a stable coin generator that ensures the transaction from the merchant’s end and removes all settlement risks and delays.
WC
One of the selling points of the UPS for merchants is instant settlements. I’m always a bit skeptical on anything “instant”.
Can you explain what this actually means for merchants and why this is attractive to them compared to traditional payment methods?
SBG
In traditional systems, settlements can take up to 14 days, which means that a merchant’s funds are tied up in the system. Our stable coin generator, which is built into the UPS, enables merchants to settle instantly and remain liquid, receiving funds into their bank account daily.
It also removes price volatility and high FX costs.
WC
You mention as part of the UPS doc this also includes instant settlement to a merchants bank account. This sounds almost too good to be true. Again, can you take us through the process as to how this actually occurs and what the caveats on this are?
I.e I wouldn’t expect a merchant to be able to get an instantaneous bank settlement if there were in Africa instead of America.
SBG
If a merchant wishes to leave from digital to FIAT, then it takes 24 hours in 35 Fiat currencies.
That’s fast!
WC
You also talk about a “stable coin generator” as part of the UPS. What exactly is that?
Don’t stable coins already exist and as such have no need to be “generated”?
SBG
Generation can mean a unique creation of a minted coin made by COTI or it can mean instant conversion through a liquidity pool, in case we use a stable coin that is already in existence.
In both cases, the idea is to convert a FIAT/CRYPTO processed transaction to stable coin instantly.
WC
COTI first promised the issuance of a physical Visa/Mastercard debit card to fit into the ecosystem and allow for users to pay in crypto at traditional merchants, this now seems to have changed into a virtual debit card that will be contained within the app.
Why the change here?
SBG
Virtual debit cards enable payment with cryptocurrencies, even if the merchant does not yet accept them. We can offer both physical and virtual, actually.
We have that signed and in place, and we’ll roll it out as we roll out our consumer app early next year.
WC
So to read between the lines there, pointless releasing a card til the COTI Pay app is out?
SBG
Exactly.
WC
How will the card actually function within the wallet?
You’ll be able to prefund it with any type of crypto and use it on your phone in a NFC style tap and go or QR code style payment scenario at a traditional merchant?
SBG
Exactly like that, actually.
WC
Past the backend tech on the UPS, it seems there are two main “user” facing apps, COTI Pay for consumers and COTI Pay Business for merchants.
When are these going to be released and how? Staged release? Mobile apps?
SBG
We are focusing on the merchants’ solutions for start. The crypto gateway solution will be launched next month, including the ability to embed a simple ‘pay with crypto’ button on the merchant payment page and a ‘COTI Pay business’ dashboard. Right after, we will provide credit card processing solutions for merchants. Merchants’ web and mobile app are scheduled for Q1 2020.
The first release of the COTI Pay wallet (mobile app) for consumers is scheduled for Q2 2020. You can view the complete UPS roadmap here:
WC
The UPS seems to be the sum of many moving parts. From my understanding you need to have the merchant facing app released, the COTI-X exchange up and running, the aforementioned partnership with lending providers, the arbitration system implemented along with pre paid card issuance and COTI Pay website plugin’s released.
This sounds like a LOT of things to build, mold together and actually get working in a useable fashion.
When do you expect to have the UPS up and running and in what manner? Will it be a staged release?
NH
The crypto gateway will be released next month, which means COTI Pay Business (a web-based version at the start) will also be released at the same time and include a merchant dashboard and settlement management.
Traditional payment method support will be available in the next few months, while the first release of the COTI Pay wallet (mobile app) is expected in Q2 2020.
THE COTI NETWORK — NODES & STAKING
WC
I just want to say at this point, thank you for letting me run one of the first nodes for COTI! I’ve been a miner and node runner for quite some time so I hope I can help provide some value with helping other node owners as they come onto the network!
Here’s a guide I wrote on running a Testnet COTI node server —
Before we get into the details of nodes and staking on COTI, can you outline how the node infrastructure on COTI works.
What type of nodes are there in the COTI ecosystem and what do they do?
NH
There are four types of nodes in the COTI network, including Full Nodes, DSP Nodes, Trust Score Nodes, and History Nodes. The most common node type is a Full Node.
COTI’s Full Nodes
Full Nodes are the main client-facing servers of the system. Each transaction sent from a wallet is received by a Full Node and propagated to the entire system. Full Nodes perform Trustchain Consensus by receiving new transactions from wallets, validating them, doing Proof of Trust and attaching them to the DAG. Full Nodes also execute COTI smart contracts in a decentralized manner. On the COTI network, Full Nodes can define their own price list for users and compete for them. Consequently, COTI Full Nodes are responsible for collecting fees on all protocol usage and transferring the network fee to the network pool.
Double Spend Prevention (DSP) Nodes
A set of highly trusted distributed servers responsible for DSP consensus, account balance control and general protocol and data integrity. Each transaction must be approved and signed by the majority of the DSP nodes, and users cannot directly connect to DSP Nodes. To run a DSP Node, a user is required to stake a substantial amount of COTI. This amount can be deposited solely by the DSP Node operator, or by a group of network participants delegating their deposits to the node operator.
Trust Score Nodes
Trust Score nodes are dedicated servers responsible for calculating and storing participant Trust Scores and KYC statuses. To run a Trust Score Node, a user is required to stake a substantial amount of COTI.
History Nodes
COTI History Nodes maintain all aspects of transaction data storage and retrieval in the COTI network. This service can be provided by a single powerful node using industrial-grade servers, although better reliability can be yielded from distributed solutions like Elasticsearch.
WC
So the nodes that users will be running in the first place are full nodes and this will be testnet only to start with.
Do users receive anything for running testnet nodes or is this only once they become active on mainnet?
NH
Full Nodes running in TestNet are not currently receiving fees for running nodes, but we will be giving first priority to them once MainNet node management is possible in the coming weeks.
When running nodes in MainNet, operators provide the network with useful resources, including CPU, memory, storage and network bandwidth. These resources are not cost-free, which is why node operators are compensated and have the opportunity to earn a reasonable ROI.
Full Node operators receive fees collected from transactions. The more transactions that a Full Node processes, the more it earns.
WC
So when mainnet nodes?
NH
The first full node operator will be added in Nov and 2–3 new operators will be added through Dec.
WC
There seems to have been some confusion on the returns for nodes. The advanced node costs 250K COTI to run (along with server costs) and is guaranteed a return of 25% per year, which is 62.5K COTI.
However this doesn’t take into account the fees a node would receive for actually processing transactions.
Can you go into a bit more detail on this for us? (i.e tell me how rich I’m going to be once COTI starts running mainnet nodes and have merchants processing transactions through them!)
NH
All nodes are required to deposit (stake) COTI native coins to participate in the network, although the requirements are different for various node types.
250K COTI is how much needs to be staked to run an advanced node. Users running such a node will receive a minimum of 25% guaranteed returns and can potentially receive more than that.
Full Nodes can earn fees from merchants, as well as P2P transactions. You can use our calculator https://coti.io/node-calc to estimate your potential earnings as a node operator in the COTI network.
Profits are relative to your level of service and fees you’ve set.
WC
Speaking of the node calculator, it doesn’t seem to take into account the amount of nodes running at any one point in time.
You’ve said that COTI processed $5m worth of transactions in August. Using the node calculator this works out to something like the below…
My question is, the monthly profit figure there is based off ALL transactions running through the node right?
So in reality it should be that figure divided by the amount of full nodes running to get a more accurate figure?
NH
That is correct — no one node will be processing all transactions in the COTI network. However, it doesn’t mean that revenue will be distributed evenly between all nodes.
Actually, your Node’s trustscore and fees will affect how much volume will be sent your way.
WC
Can you go into more detail as to how “probability distribution” works in connection with node selection?
NH
The income source for Full Node operators is the Full Node Fee. The fee from each one transaction is sent automatically to the Node’s wallet (it is a part of COTI transaction structure) and can not be redistributed. For this reason, the only way we can ensure node operators to have fair income, is to send transactions to be processed to nodes randomly, and shape the probability distribution so as all node operators would have fair revenue expectations, proportional to their stakes (Standard of Advanced Full Nodes). As it stated above, the node income depends on the node Trust Score and node fee. These are independent variables, and node fee can be directly managed by the node operator. For this reason, we focused our analysis on the full node fee effect and omit Trust Score effect for now.
When a merchant requests full node list for the transaction, the Node Manager recommends a node. The merchant is free to change the recommendation, but, if the node uses the standard level of the fee, there is no motivation to do it. CCX, COTI Bridge and other automatic transaction generators always use recommended node. Only nodes set the fee ceiling can be recommended (but a merchant can select any node manually).
WC
I see that a merchant can choose to run their own node and process their own transactions through that node. Couldn’t they then set that node to 0% fees and undercut the whole market?
It seems to me that the cost of the COTI coins required to run a node along with the small amount of server costs would mean this would save the merchant a lot of money in transaction fees, while costing the network and the node owners their percentage of these fees?
NH
Running a node isn’t for all merchants. They are very focused on their core business. Other than that, they will still pay some other usage fees in COTI coins, for the benefit of the ecosystem.
Also if the fees are set to 0% it means that the merchant will also need to support and observe the costs of all transactions running in the network and not just their own business transactions — they can’t select which transactions are handled by them.
WC
Doesn’t that somewhat undercut the fees for node runners though? And the overall network?
NH
It does but it means that one merchant is willing to observe the costs of all transaction processed by him — meaning running in lost.
Also no one node can handle all the transaction in the network so there will still be normal distribution along the network.
COTI AMBASSADOR PROGRAM
WC
You recently announced an ambassador program for COTI that came under some criticism due to the fact it required a potential ambassador to hold $25K USD worth of COTI coins to take part.
You announced this program on September 10th and at the time a COTI token was worth $0.0229 so an ambassador would have needed to hold just over 1m COTI tokens to take part. With the drop in price of the token recently, they would now need to hold just over 2m COTI tokens.
Do you think it’s fair to require the Ambassador stake to be held in USD value and that the level of required tokens to take part is so high?
Surely a better option would be to have different tiers of ambassadorship and require a certain amount of tokens be held, not USD value of tokens…?
SF
COTI’s ambassadors play a significant role at COTI and have a number of tasks to fulfill, which require a high level of professionalism. COTI ambassadors are tasked with holding meetups, scouting new business opportunities and partnerships, implementing creative ideas across various social channels, contributing to existing COTI AMAs, hosting AMAs in their local communities and so much more. We’ve set the stake at $25K to ensure that anyone who would like to become a COTI ambassador is serious about their role and impact across COTI’s communities around the world.
We’ll also be launching a COTI Light Ambassador program for community members who would like to support the project, but do not have the means to provide a $25K stake or don’t wish to. These ambassadors won’t have the same duties and perks as the original ambassador program, but can still contribute in meaningful ways. For both Ambassadors and Ambassador light programs (soon to be released), we have a clear sum that is not subject to the token fluctuations. Part of being an Ambassador is to be part of the project with personal care into it, this can be achieved with the staking sum. Not everyone are happy with it, but you can’t make them all happy.
The light Ambassadors can come in mass, and I am sure we will get the support for it.
WC
Again on the qualifying criteria for this program, you require the COTI coins to be locked for three years.
In an altcoin market that has really only existed for two or so years and has seen it’s a fair share of ups and downs since then, surely this is a grossly unfair expectation when it comes to risk v reward?
SF
You are correct and we are reviewing that, also as part of the Light Ambassador program.
But who knows, maybe forcing you to HODL for 3 years will become a very good decision for you :-)
WC
What is the actual incentive for an ordinary community members to take part in the ambassador program?
SF
Becoming a COTI ambassador is a first-class ticket to take part in COTI’s overall vision of encouraging the mass adoption of cryptocurrencies and radically changing the world of payments.
You will, of course, have many perks as an ambassador, including the option to run up to three Advanced Full Nodes, first access to company news and events, getting featured on our company blog, receiving remuneration for referrals, gaining recognition for any notable content you create and becoming an indispensable part of COTI.
WC
In the next six months, how many ambassadors do you hope to onboard to the program and in what regions are you most focused on?
SF
We hope to have up to a dozen ambassadors over the next six months and encourage anyone who would like to support the COTI project to reach out to us.
You can send us an email at support@coti.io, or drop us a line anytime in our Telegram group.
WC
So when you say a dozen, those are the higher level ambassadors?
SF
Correct.
PARTNERSHIPS
WC
Let’s talk about some of the existing partnerships you have in play.
Can you list them off and give us an example of how these partners are using COTI as of right here, right now?
SBG
There is usually a confusion between partnership and clients. In terms of clients, we are processing a few millions of dollars every month coming from multiple clients. I understand that people always ask about “show me your clients”, but this is not a rational request from a commercial company. It’s odd that people keep asking for that, as if we don’t live in a competitive environment. That said, we have a client that we can reveal soon per their request. Follow our channels towards the end of October.
Partnerships are different in the sense that they are mutually beneficial for both parties around similar interests. We have some of these in the lending space (commercial secret), liquidity (DAM), prepaid card issuance (commercial secret), identity (Global ID), Trust and GTS (Chainlink) and crypto friendly projects like Cardano, Constellation, Fantom, Bifrost and some others.
WC
Another point of concern from your community is the fact you state you have merchants using the COTI network right now to process transactions, but you can’t name who these merchants are, or state any other details on them past the fact they’ve processed X value of transactions on the COTI network.
Why are these merchants under such a veil of secrecy and how can you alleviate these fears from the community that these might be made up or glorified figures?
SBG
See my comment above. I reject the whole notion of revealing trade secrets so people can be vain about it. We rather generate revenue and traction without attracting attention to our merchants and encourage competition.
Everything that we do is on the ledger and can be viewed on the block explorer.
Don’t trust us, verify!
ROADMAP & FUTURE GROWTH
WC
We’ve spoken a lot today about what COTI’s working on, and while there’s a lot of exciting stuff there, it seems like much of development is still some way off.
Can you tie in all the elements we’ve discussed today and give us a solid roadmap and commitment as to when these features will actually be delivered?
SBG
With regards to UPS, this is a good summary:
Phase 1: Processing of credit cards and crypto, putting everything on the ledger for transparency and for Trustscores >> This is happening now
Phase 2: Settlement with stable coins to make payments instant >> this is early next year
Phase 3: Financial products: loans and interest >> this is Mid next year
GTS: by the year’s end
MultiDAG: Q1 2020
Staking: started with Testnet. Plan to launch on Mainet afterwards.
You can view our entire technological roadmap for the second half of 2019 here:
CLOSING THOUGHTS
WC
Well it seems like EOY year it big for COTI. We wish you all the best with it.
Thanks to Shahaf, Samuel and Nir for dropping by today.
We expect you to drop by and chat about the news that’s coming up later this month when AND ONLY WHEN it drops 😉
SBG
You bet!
SF
Thank you! I had a blast.
NH
Thanks for hosting us.
WC
Just before we go, here’s the Wolf Crypto AMA effect!
If you hold shitcoins, tell them to do an AMA with us, 100% gains guaranteed!!!
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
