Some in-depth questions

Does this also mean the core team is earning much more than ordinary users? What is the point of the 5 million PRV premine if the team will earn several dozens of PRV millions from this practice?

It is not just against decentralization, but makes the PRV distribution much less fair.

8,7 million PRV is being mined in the first year and according to this, the Incognito team earns 5,8 million PRV just in the first year, without any lockdown. Technically this is more like a premine than the initial allocation of 5 million PRV.

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When you say “team”, who are you referring to?

Eg: exactly who operates these fixed nodes?

There are 22 fixed nodes?

Is there a foundation?

What is the foundation’s role?

What is the relationship between the team, foundation, and community?

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I don’t have an issue with premine/founders reward/whatever.

Look at ethereum for example.

They got as far as they did because of extreme transparency in their early days.

I don’t have a problem with rewarding the initial team neither. The Ethereum foundation distributed 80% of the initial coins and kept a whopping 20%. At the end of this year (according to @Jamie’s information) the Incognito foundation will own more than 80% of the initial coins. And their “premine” is still locked. (What is additional) the main problem with this is centralization, since Incognito is a PoS system, they could maintain this percentage in the market cap basically forever, because even if they don’t “fix their nodes” into the committee anymore, they still have more than 2/3 of the market cap.

Incognito provides information to investors saying: they premined 5% + 5% and 90% is for the community, which is maybe not the case.

In case the earnings from the fixed nodes are the 10% mentioned everything is fine. If that is an additional premine then it is a big problem, because it is not locked and hidden from the public.

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With team I refer to the people who initiated the project two years ago, and started writing the code. The people who funded that start with their own money.

At this point in the project “the team” may well include everyone else who is involved, from HR, to marketing, to design and everything in between.

Community is everyone else, people who use the wallet app, validators who run a node. People who use the system the team developed and help it grow and improve by sharing ideas, knowledge, services.

Trouble is, I think you’re speculating and extrapolating a bit because there’s no clear explaination of this anywhere I’ve been able to find.

Clearly explaining these issues is critical.

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Who are they?

Is that who I’m trusting with the Bitcoin trusted setup?

PS: if they’re Anon that’s also okay. Just… Clarity.

PPS: we could probably get all of the answers to all of the questions on 1-2 pages of standard size paper. And we should. Because then, anyone checking out the project has an easy reference to all the tough questions.

This isn’t about selling. It’s about communication.

Goals of this post:

  1. Learn if incognito can secure and scale my bitcoin, or if it just creates additional risk.
  2. Be able to explain this to others.

BTW, yes I think it may be able to secure and scale my bitcoins but… Yeah still lacking a ton of information.

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Hey @Jacob @raz, you guys raised very good and faced reasonable concerns when you haven’t found full answers to your questions.

We have nothing to hide, need to set a clear communication line. Let me jump into this discussion and try to answer clearly on all your questions. I work on it now and get back to you once I have clear answers.

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I’m loving this topic, those information are crucial! Tks @Jacob

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Hey @Jacob
sorry for delay, tried to combine all answers together, and combined with the answers which is already on this thread

1) Can you tell me the story of PRV (the token), from Genesis?

A bunch of privacy nerds congregated around an idea, pooled some money together, and wrote the first few lines of code. Here’s the story in greater detail.

I hope that into is enough :slight_smile: If you would be interesting to hear personal live stories, we could make a separated AMA call dedicated to such topic


2) Is the supply of PRV auditable?

Anyone can download the chain, and count rewards from the beacon chain beginning at the genesis block. Here are the specs.
There is no dedicated tool for this yet, but anyone can audit the PRV supply using the source code, by running a fullnode.

some of our community members work on analytical tools and chain data visualization.


3) Is there an entity behind the project?

There are 3. The Project, the DAO, and the core team. More information here.


4) The fixed nodes:

Who runs them?

  • The Incognito core team

Are they geo-distributed?

  • Yes

What percentage of them can go down, and the network will still function?

  • 25%

What happens to the network and funds on it if they are taken down?

  • Blocks will not be created, transactions will not not be confirmed. The network will be frozen.

What do they do precisely?

  • The Incognito Chain requires a ⅔ consensus. The fixed slots ensure the network functions smoothly through many key upgrades at this early stage of development.
  • The core team will release all fixed slots once the network is stable enough and the key upgrades have been completed. The fixed committee setup will be dissolved by April 2021, approximately.

:exclamation: In terms of risk, please compare the fixed nodes to the Iota coordinator.

Please can you clarify this question?


5) I’ve linked my wallet to this forum account, and my real name, as well. Is it like…

Only the private key holder can view balances?

  • A balance can be viewed by a user who has a private key or read-only key (both are located in your private key directory). Unless you share these keys with someone else, they will not be able to view your balances.

What can someone learn if they only have my address?

  • They could probably enter it in a search engine and maybe find your profile on incognito.org.
  • They would not be able to retrieve your balances, transaction histories, etc. You can of course easily set up a separate address just for the site.

6) The Bitcoin trusted link currently in use:

Who am I trusting by using it? A company? A person? The node network?

  • This is a temporary custodial setup, maintained by the Incognito core team.
  • The trustless Bitcoin bridge is scheduled to go live closer to the end of May 2020. More information here.

How many machines have access to the relevant private keys?

  • Core team: (lead frontend), (lead backend), and 1 Server with decode private key.

Are the machines running this peg geo-distributed?

  • No

Could an adversary (privacy has many adversaries) seize or destroy all of the machines where these keys are kept? How difficult would that be?

  • Only the aforementioned people have access
  • In this transition period the team is responsible for security of the wallets
  • As you know we are on the way to switch to the trust-less set up.

How much longer will this trusted setup be used?

Not long. The trust-less Bitcoin bridge is scheduled to go live by the end of May 2020.


7) Sharding

Can you ease me into how your sharding implementation works?

  • Each shard has its own committee, which independently produces new blocks. The header of each block is stored on the beacon chain. Other shards could reference if needed. Beacon chain randomly assigns committees for each shard at the end of each epoch.

Do shards have independent economies at all?

  • Shards have independent economies. The reward for a shard’s committee depends on the number of blocks they successfully produce in 1 epoch (~ 350 beacon blocks). The fixed reward for each block is 1.386 PRV for the first year. A shard can produce more or less than 350 blocks in each epoch.

Is there a plan to support smart contracts, where a contract on shard A may need to fetch data stored on shard B?

  • We don’t think it’s necessary to build our own smart contract, and a better way to do it is to let the contract run on Ethereum, and we build incognito mode for it (wrap around it). Essentially, it’s incognito mode for smart contracts. More details here.

Since there are currently 8 shards, can you explain to me their relative roles, or do they all do the same thing, and each shard just adds additional capacity to the network?

  • All shards do the same thing. They enable parallel processing.

Can we do a real-world stress test right on mainnet by setting up a script or some such between some machines to fire PRV at one another at high speeds? This would do wonders to ease my concerns.

  • We conduct our stress tests on the testnet, but theoretically we ca do so for both testnet and mainnet. More details here.

8) Inflation is currently running at 50%.

Is the plan to do something kind of like what monero did, with very high initial inflation and then much lower inflation over time?

Is the supply curve documented anywhere?


9) Coinmarketcap/coingecko

I wasn’t able to get a read on prices anywhere other than the pDEX. Is PRV on any kind of “price listing” site or is the only market the pdex?


10) pDEX

Does the pdex live on the same infrastructure that runs the blockchain?

  • Yes.

Why do I need to move funds from my wallet into the pDEX?

  • So the application layer software cannot link your “Wallet” address with your “pDEX” address.

What’s the relationship between the chain and the pDEX? Is the pdex something that runs on the incognito chain?

  • pDEX is built on-chain, into the protocol. It runs trustlessly. Every trade is a transaction made on the Incognito blockchain.

11 what does this mean?

Screenshot_20200402-234557

  • It was an error, already fixed.

12) What does it mean to become a liquidity provider?

Liquidity providers play an essential role. As the name suggests, they provide liquidity to various pools on pDEX and earn trading fees.

We are also designing an incentive initiative for liquidity providers to earn a percentage of the block reward, paid out of the DAO fund. Follow the discussion here.

Is the plan to do something kind of like what monero did, with very high initial inflation and then much lower inflation over time?

Is the supply curve documented anywhere?


13) Taint

Tainted coins could enter the system. I should say that I don’t personally subscribe to the “tainted coin” theory-- Bitcoin, the protocol has no concept of taint whatsoever. To Bitcoin, they’re all just bitcoins.

Is doing a coinjoin on the way in or on the way out a possible solution to the taint issue? Is that way too complex to implement?

  • A user could deposit a token then withdraw them to the other address. Or user could deposit token A, then withdraw token B (same total value). It’s extremely hard to track when number of users/tx is large
    Additionally
  • You can use CoinJoin on the way in

This question opened a very interesting discussion inside the dev team about how to make deposit/withdrawals more secure and private.


14) How did @Jong’s BTC get lost?

Receiving coins from external wallet anonymously 1

How can we have a system where BTC get lost, ever?

  • The BTC is not lost. It may display ‘expired’ (app only), but it is there (on chain). So a user can navigate to his or her deposit details and simply tap Retry. Details here.

The private key to that wallet was actually destroyed or…?

  • No.

Hopefully I answered on most of the question. Feel free to ping me if you get new questions, or some clarifications are needed.

I am always here :wave:

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@andrey I really enjoyed reading your super detailed answer, but unfortunately my question remained unanswered as What happens to the 5 million PRV earned by the fixed nodes in the first year?

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That tokens will be used to support validators, liquidity providers, donated to the DAO.

  • You probably saw that I am working on a program of incentivizing liquidity providers on pDEX. The idea is that users which provides liquidity for the PRV pairs on pDEX, beside trading fees will earn additional interest in PRV.
  • For this program we plan to allocated 1M PRV for next 2 years.

I plan to finalize the program and share all conditions by the end of this week.

And this is the first incentives program. More upcoming.

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I would like to describe why I raised concerns about this practice: Incognito isn’t trustless yet as blockchain projects usually do. Custodial risk affects the network, because a successfull hacker group could take control over 2/3 of the nodes with a single attack.
Also the distribution of the funds are not clarified. Investors think the core team will own 10% of the total circulating supply, but in reality they own +80% of the supply in the first year, which makes it possible to maintain a high ratio.

1 million PRV will make less than 10% of supply. If an average investor buys 5000 PRV, only 200 new members could invest in the next 2 years? :confused:
In my opinion most of the mined coins should be distributed publicly in a sale or sales over a period to provide liquidity & adoption that way. Currently PRV holders could not buy even 10k of PRV at fair price.

The regular crypto gathered from these sales could be used as a perfect way to fund new projects in the DAO, because people will not dump them on the PRV market.

Please open a public discussion about this topic, because these decisions have a significant part in the future success of Incognito. Neither an illiquid, poorly distributed or over-premined coin could stay alive in the long-term.

I bet @duy has a good strategy related to wider adoption & distribution, would be cool to hear him as well.

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Hey @raz

We’ve been working on this project for 2 years, so if we wanted to drum up hype or speculation around the project it would have already happened in 2018 - 2019. And we would be one of thousands of other “crypto” projects that do not offer any value.

We chose to focus on utility, on the fundamentals. Many decisions we make have a long term view, which we admit, sometimes sacrifices the short term outlook.

Over the past couple of weeks, we’ve gotten some similar questions about decentralization. We prepared a piece in response here: https://incognito.org/t/incognitos-pragmatic-approach-to-decentralization/1382
Let me know your thoughts.


The core team owns only pre-mined tokens, 80% of which are locked. PRV from fixed nodes are used to fund development projects from the core team as well as the community (see the DAO category on the site), fund initiatives (like pDEX mining or community rewards), pay server costs to run these fixed nodes, marketing and partnership activities, etc.

Over the first 12 months, the community will mine ≈ 3M PRV.

This is what will happen/is happening. The plan to maintain a steady flow of community funding for long-term projects, as well as to fund incentives programs for Validators, Liquidity providers, and finance other important initiatives designed to grow the project.

What does fair mean? Do you mean slippage? If so, we hope incentivizing liquidity providers will sort that problem out. The Incognito team does not control the PRV price.

Sure, that’s the point of incognito.org.

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Andrey I really appreciate your effort to answer my questions, however you haven’t convinced me yet.

I don’t want to push this further, Incognito is indeed a great project and as I am a perfectionist I quickly find issues with anything anyway.

But as a power user, I like to know every small details on a project when I invest time & money.

We all hope distribution will be fair and transparent as it was proposed. That’s all.

Thank you!

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I don’t want to try to convince you by nice words and promises, you probably heard and saw it from many projects.

Instead, I would try to convince you by real actions. Deliver first, then talk. It’s a bit longer way, but this is the way we choose.

Once we start the first initiative to incentivize liquidity providers, you will see it and will have a chance to try and verify it. I think it would be the best way to convince you :slight_smile:

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The software is some of the most polished I’ve seen in an early stage effort, hands down.

And I love having the forum in my wallet, so to speak.

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Talk about a gold mine of valuable information regarding Incognito. Thank you for posing these questions @Jacob
Bookmarked

Do any of you know of a post detailing the tokenomics of PRV?

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Here’s the post:
PRV token information & economics (tokenomic)

Should the 20 Questions format work out, we’ll also do an explanation video that answers questions around it in the coming weeks.

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Hey, @Jacob, I see you made a lot of questions and you got a lot of answers. Would you mind editing your post to copy and paste the answers you receive? It would make your post a lot more readable.

Maybe...

Using the Hide Details function inside the gear?

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