Werenode Collaborate With Members Of Nomadic Labs & Renault On Delegation-Based Financing
Note From The Author –
On the 10th of July 2020 I wrote an article on TokenCrunch introducing the Werenode project, which was at that point in the very early stages of development, this can be found here.
This article explained the Werenode project and what they were looking to achieve.
Since that point, the project has expanded and has taken on the support from members of Nomadic Labs in building out the projects draft whitepaper which contains a new proposed form of token distribution called ‘Delegation-Based Financing’.
This draft whitepaper includes collaboration from members of Nomadic Labs, Renault and Werenode. As this is only a draft whitepaper at this stage, any information is subject to change.
A Brief Introduction To The Werenode Project
Werenode is providing a solution to make electrical vehicle charging more efficient and auditable with the help of the Tezos blockchain.
It is a technology that can allow individuals to share their own private EV chargers (EVSE – Electric Vehicle Supply Equipment) with others during times they are not using them.
This enables them to make money or an ROI on their infrastructure.
This method is also known as ‘P2P charging’. Payments can be made in either tez or the Werenode (WRC token). It can also be used as a traceability token, traceability is very important in the EV space.
Present State Of The Project
The draft whitepaper has also received collaboration from members of Renault.
One of the authors in the whitepaper is Yves-Michel Leporcher, Yves-Michel Leporcher is listed on LinkedIn as a ‘Blockchain Technology Expert’ at Renault and as a part-time chairman of the MOBI consortium, which includes members such as BMW, Ford and General Motors.
The Werenode smart contracts are ready on the Tezos mainnet and the MVP is set to launch at the end of Q2.
The Problem: How To Distribute The Tokens
The dilemma of how to safely and efficiently distribute blockchain tokens has long been an issue in the cryptocurrency space faced by projects who seek funding to build out their innovations.
Many distribution techniques in the past have been criticized, or even challenged legally due to their nature.
Many efforts to date have been inefficient, centralized, have been high-risk, or have broken security laws in their pursuit for funding.
The ICO era saw many projects distribute tokens via token sales, where participants sent in BTC, ETH or other cryptocurrencies and received the tokens of the project in return.
Some of these projects which distributed tokens in such a fashion have since found their tokens are deemed securities by the SEC. Recently, Kin, Tierion, Salt Lending and Ripple have all made headlines in recent months due to some kind of SEC enforcement.
So, what if there was another way to distribute tokens? A way that was decentralized in nature and seeked to protect the investor from high risk.
Werenode, in their latest whitepaper draft are introducing the concept of ‘Delegation-based financing’.
Werenode call this particular type of DeFi ‘DBDeFi’ (Delegation-Based DeFi), a brand-new form of DeFi, unique to Tezos and its Lpos architecture.
The whitepaper draft proposes a:
“decentralized investment system using Tezos blockchain innovative mechanisms and an architecture of dedicated smart contracts.
The main components of this system include the new Continuous Delegation Offering concept combined with a Continuous Security Reward allowing to consolidate the value of the investment token.
Additionally, a Decentralized Autonomous Organization is used to overview the token governance.
This decentralized structure can be used for any investment in the development of a project that will generate revenues in a way that allows a share of this revenue in tokens to be bought back or burned automatically thanks to a smart contract, thus sustaining the value of the investment token.”
It’s the Tezos baking delegation system that controls the release of the Werenode tokens via a smart contract. This method removes centralization, enabling a decentralized token distribution.
Continuous Delegation Offering
One element of the Werenode whitepaper draft and proposed system architecture is called the ‘Continuous Delegation Offering’.
The Tezos blockchain architecture is unique in the sense that it is possible for delegators to safely stake without losing custody of their funds.
In Tezos delegators are protected and don’t even need to put up a bond to stake. The baker takes the risk and they adjust their fees accordingly to help deal with this risk.
This unique architecture makes certain use-cases possible, which are not possible for other Dpos (Delegated Proof Of Stake) coins. As the delegator never loses custody of their funds and the baker takes the risk this can solve many custody issues that can occur in relation to delegators.
A continuous delegation offering is proposing to use the Tezos feature of delegated baking to introduce the investment token.
So, instead as with the old model of users taking high risk and submitting BTC, Eth and other cryptocurrencies in order to receive a share of the tokens, users will instead delegate, keeping their existing funds safe in custody.
In this type of Continuous delegation offering Werenode would be a baker on Tezos, but instead of rewarding its delegates with XTZ, it would reward them with Werenode tokens (WRC), or even Werenode tokens and XTZ depending on the delegates choice.
This ratio can be chosen by the user looking to take up the investment.
“The native process of the Tezos baking protocol will control issuance”.
The price of the WRC tokens will be determined by an ‘automated market maker’ mechanism, whether that be through decentralized exchanges like Dexter or Quipuswap or a ‘new relevant comparable exchange’.
This means the market will set the price on decentralized exchanges. However: ‘the emitted number of WRC for each cycle of delegation will be adjusted to the current WRC/XTZ value.’
So, the number of WRC you receive will depend on the price of WRC on the decentralized exchanges in terms of the XTZ value the tokens have.
The expected first pair to be listed on decentralized exchanges will be the WRC/XTZ pair.
Coin Burning Process
There is a coin burning process in this system called to help strengthen the value of the token. The determination of the number of tokens that are destroyed will be made by an autonomous process linked to actual activity of the collateral business.
This coin burning process will be built into the smart contract and it will analyze the usage of the WRC token as a traceability token or a payment token, from this analysis it will trigger a back reward of a percentage of the value of the service tracked.
As this is only a draft whitepaper this feature has not yet been set in stone and it is also stated that an alternate method could be introduced:
Alternatively, instead of simply burning this percentage n of tokens, a larger amount of WRC could
be bought back automatically at market price by the entity managing the revenue flow, with a
fee used to reward the liquidity provider of the decentralized exchange mechanism
Another interesting feature about the Werenode draft white paper is the fact that a Decentralized Autonomous Organization (DAO) will be linked to the token.
This will enable governance features to take place. Some decisions that will be made by the Werenode DAO include:
liquidity management and token life cycle (lock-up, burning, redeeming)…
We are yet to see the results of such a decentralized token distribution and it is likely we won’t see any launch until at least quarter 2 in 2021, but if successful this could be something other projects may be interested in pursuing in order to raise funding for their projects.
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