April’s AMA … the Write-up
Last week we ran an AMA for our valued community. Twenty no-holds-barred questions received 92 answers. What questions were raised, what answers were given, and where is Factom headed?
Who are we?
The Factom protocol is governed by a coalition of 27 companies, “Authority Node Operators” (ANOs), who make blockchain work in the real-world by enabling dApps and platforms to become scalable businesses with low fixed costs.
The Topics
- FCT price, tokenomics, and the effects on the community.
- Usage forecasts, competition with other blockchains, and sector focuses.
- Opportunities to improve governance.
- ANOs’ revenue sources, the possible consequences of Factom Inc. leaving the protocol, and decentralization.
- Grants’ audits, visibility, and accountability.
- Technical capabilities, core development, and key projects.
“I’ve realized the Factom Protocol has so much potential at this point in time in the world it’s absolutely unreal!! In my eyes, you guys are literally at the forefront of changing the world if you so desire. I commend all of you for your unique collaboration.”
FCT Price
FCT has fallen in price in parallel with most of the altcoin market. The drop affects the whole ecosystem — token holders, the grant pool, ANOs — and we all share in the renewed challenge.
Low liquidity (e.g. Bittrex and Poloniex closing US accounts) has been a difficult problem, which is why Factom has been focused on solving the demand part of the FCT equation.
Usage
The Factom Protocol has a very broad range of capabilities, such as Smart Contracts, Zero Knowledge Proof, Voting, Verifiable Credentials, Supply Chain, Decentralized Identifiers (DIDs), Badges, Tokenization, and Stablecoins. Some ANOs questioned whether this is perhaps too broad, and whether resources have not been focused enough.
The tokenomics are built around usage creating buy pressure for FCT, however this has been dependent on end-user applications coming to market alongside enterprise adoption, which takes time. In response, the ecosystem is working on killer apps such as FX trading to promote usage and demand in support of the FCT price.
Blockchain at scale has proven difficult for even the biggest protocols, and the industry has struggled to progress past proofs of concept. By contrast, Factom elevates data into the second layer of its architecture where integration of dApps and platforms makes this scaling easy.
As a layer-2 oracle to the world’s data, Factom finally allows businesses to thrive on the blockchain.
“Once again I’m blown away by more amazing Factom news that will most likely fly under the radar.”
Governance
Decentralized governance is tough! Factom’s governance has been evolving since inception. Designed to allow us to navigate ever-changing environments, our evolving governance requires continual refinement as we learn from, and adapt to, new experiences.
There are already many elements in place, including an effective forum for communications, decision making, grant handling, and ANO management. Recently a Governance Working Group was established, and has been charged with working in partnership with ANOs to further enhance governance.
ANO Questions
ANOs revenue sources come from:
A — Sales of entry credits to customers
B — Block and grant rewards sold on the market
C — Other services, software, contracts, or consulting that utilize Factom
ANO motivations are to continually evolve the protocol. With awards paid in FCT, people’s incentives are aligned. There has naturally been a lot of recent focus on one ANO, Factom, Inc., the original architects of the protocol, who are currently facing a funding squeeze.
Factom, Inc. provides value to the protocol through its staff — people who continue to play an active role in the ecosystem, regardless of their independent commercial efforts. The grant pool has the ability to retain their skills and knowledge if needed. However even if they depart, the protocol is sufficiently decentralized and robust to allow for individual entities to leave without compromising the protocol and ecosystem.
“I have been nothing but impressed with the Factom Protocol, Foundation, along with Factom Inc, due to the decentralization factor, along with the many other achievements other protocols can only dream of.”
Grant Questions
Factom awards grants every three months from a pool of tokens created by ANO “efficiency” sacrifices built into the protocol. Grants are the lifeblood of development and marketing projects. Since launch, we’ve attracted many grant requests that exceeded our available funds; the challenge has been how exactly to allocate these funds. They are subject to a challenging, competitive submission and voting process. Successful applicants require broad approval, and are required to provide updates and undergo an evaluation process.
We acknowledge that some grants, despite best efforts, have not provided sufficient value. A side-effect of the current shortage of resources is that it forces change which we expect to see in coming rounds. For example, there is growing interest in post-delivery grants which assure success and transfer risk from the ecosystem to the individual grantee, ensuring greater accountability.
“Consensus Networks in conjunction with the Factoid Authority have completed what sounds like an absolutely exciting POC using the Twitter API and the Factom Protocol, with a first generation prototype to be rolled out in the next few weeks. Wow Factom and Twitter!”
Technical Questions
Core code is actively being worked on by a number of ANOs, becoming increasingly robust as shown by the reduced number of network pauses. Today the protocol handles PegNet, and other sustained loads on the network, well.
Throughput isn’t always an apples/apples comparison because of the different ways in which blockchains work. For example, Bitcoin and Ethereum have 7–8 TPS, while more-centralized Ripple has 1500. Factom, a fully decentralized public blockchain, with the latest P2P code, handles a sustained throughput of 60 TPS with bursts up to 100 TPS.
A complete rewrite of the codebase will enable Factom to achieve even higher TPS, and is the bedrock for a move to sharding which enables fragmentation of transactions (similar to Ethereum 2.0) that push TPS orders of magnitude higher. This rewrite is progressing well and is targeted for the end of 2020.
Other ANO developments include an innovative Twitter tracking platform to record deleted tweets, for which a proof of concept has been created. And even the World Bank is participating in a demonstration of open-source DAML technology.
Marketing Questions
To promote usage, all of the marketing focus to-date has been on attracting enterprise usage to Factom. This has worked to some extent, but the rate of adoption of blockchain technology is very slow, and chasing only large enterprises, as was the case early on, has proven to be overly optimistic.
As a result, the new Marketing Working Group has moved the focus to retail investors and crypto funds.The intention is to provide a better-value proposition for token holders through a variety of means, including the possibility of Staking, Voting, and Mining, among others.
An awareness campaign based on improved marketing material, active social media, exploitation of traditional industry channels, meetups and conferences, was one particularly welcomed suggestion.
Join us again for the next bi-annual AMA. With thanks to Mike Buckingham for collating.
Factom Protocol
