Coin economics & incetives for transactions in ETN ecosystem(keeping ETN from being cashed out)

Hi, I’ve been involved in ETN since 2017, and I have not been active on forum(once I posted about idea of mining ETN as a service, when mining was still possible), but following it from time to time. Here are some ideas(easy to implement), that I think may help, and some questions, concerns and overall my views on ETN.

Taxes &legal info

First, I think it would be nice to have a place where anyone can look info about taxes and legality of crypto/ETN in their country, and in addition to this an easy way to export list of transactions. I, for example don’t know how taxes apply to crypto in my country yet(I think its not yet defined, but will probably be taxed as capital gains), and would rather cash out and pay for something than pay in crypto, as it would be less complicated. I know everyone should research for their own country, but it would be nice to have that info easy to access and it would benefit ETN ecosystem, and wouldn’t be hard to implement I think.

Coin economics

Next, it would be nice to have detailed info of ETN economics for new investors to access. It probably cant be on official website I think, but it would be nice then some influencer to cover it, and somewhere to be accessible. Its not complicated but to clear some questions that arise like does 3rd party buy ETN on exchanges directly…

In short, aside of speculation, the coin is more used, that is the more fiat/altcoins is brought in ETN ecosystem(ETN bought with fiat/altcoins) and less it leaves the ecosystem(sold for fiat/altcoins) the higher price should be. Now, we are targeting unbanked, as there people would feel more need for crypto than in developed countries, as explained a lot of times. So when a lot of people have ETN(earned from Anytask for example), hope is that merchants start accepting it as they see opportunity for new costumers.

As of 3rd party, when people buy tasks on Anytask with fiat, ETN is bought on exhanges. So Anytask is obviously very important for bringing money in ecosystem(also if paying with ETN become possible, that would also bring money in ecosystem, as buyer would need to buy ETN first). But, the problem is that I think as some may keep ETN, a lot of people who work on Anytask sell it for fiat, as they need to buy things for living. There come partnerships with merchants to allow people to spend ETN.

Now, there are merchants and mobile operators where someone could spend ETN, but for now of all mobile operators only two take direct ETN payments, and rest is processed through 3rd party(not sure how many merchants take direct ETN payments). Problem with 3rd party is that everytime someone buys with ETN it gets sold for fiat, and Richard for example, said that when price goes higher they see more top ups, as people see opportunity there buy more with less, but all that ETN is sold for fiat. And as of two operators who take direct ETN payments, they probably also sell ETN, so they could for example pay their workers.

There are a things that keep ETN in ecosystem, like partnerships and incetives for merchants, spread of that enterprenual spirit where merchants start accepting ETN as a lot of people have ETN to spend, belief that its price will rise… I thin the easiest way to impact this is by incetivizing merchants so they don’t cash out ETN, and team probably has their own plans on doing so(with premined ETN for example), but I will explain basic idea of how something like this could maybe be achieved(either way I think it is important to incentivize people in some way to keep ETN in ecosystem).

Incetives for transactions in ETN ecosystem

I know it has been said that ETN has no plans to implement staking, as ETN is supposed to be used as currency, but I think ETN could benefit from incetivizing transactions in ETN ecosystem(inside ETN custodial wallet system). I don’t think It would be hard to implement, and it could be implemented in many ways, but basic idea is this:

-It would be like staking, but for incetivizing transactions(outgoing) in ETN custodial wallet system.

-Every year or some other period, every person who sent some ammount of ETN inside ETN custodial wallet system, would receive certain percentage of it.To prevent creating loops, reward would be based on unique coins(for example coins could be marked, so one person cant get reward twice for sending same coins twice).

Now that is basic idea, and it could be implemented in various ways, for example person could choose to ‘lock’ ETN so anyone who owns it afterwards can’t sent it outside custodial wallet system(ofcourse reciever would now that ETN is locked, and could demand ‘unlocked’ ETN for example), or rewards could be base only on ETN that never left system, percentages could be fixed or not based on other factors like inflation(to be under 1% or maybe not), or rewards could be also based on staking but they would be less than for transacting…

Whole point is to prevent ETN being cashed out for fiat, and I think it could benefit both investors and team.Its just basic idea and its not worked out, and many things have to be taken in consideration.It could reinforce ETN ecosystem, and therefore maybe create that ‘domino’ effect, where employer would pay employee in ETN, and he/she could spend it on food and necessary things without cashing it out(same goes for Anytask sellers and mobile operators and other merchants that take directly ETN, not via 3rd party that converts it to fiat). Ofcourse percentages would need to be high enough to incetivize not cashing ETN out, and the more you send more you save(so big merchants could benefit from it the most, and reinforce ecosystem…), and low enough to not inflate, but I think benefits would overpower disadvantage of inflation.

I know, one of the ways Electroneum as a company plans to generate income in future is by introducing fees on transactions(apart from fees on Anytask), but its not contradictory, as those fees would be on all transactions and these rewards would be for transactions of unique ETN inside wallet system(and maybe with condition of not leaving it for certain period…), so it could be like ‘cashback’.One other concern is that it establishes more of relation where success of a company implies succes of a coin(in terms of price), because this would potentially mean more transactions in system, and therefore more revenue in future for company, but it would also probably mean less ETN sold on exchanges and therefore higher prce(although there would be inflation, but if low enough effects of less ETN sold over periods of time would probably be superior, like staking for other cryptos), so it would maybe make ETN more like a ‘security’, which brings me to next point/question.

What if ETN happens to be security?

One concern in crypto, especially now as regulations are coming(as we saw with Ripple), is whether or not coin is a security. A lot of people are asking when will we be on US exhanges, and count on that we are not a security, but what happens if ETN happens to be? Now this is tricky, and I am not sure should I go in details, but if companies success heavily implies success of a coin is a characteristic of security, then a lot of alcoins that offered ICOs should maybe be securities. Because, a lot of people treat their coins like stocks, and companies success and work is essential for coin/project to succeed, and why would anyone invest in ICO(aside from speculation) than to treat that coin like stock(otherwise they just funded company without them necessary benefiting)? I know also a lot of people in ETN community have said that they think of ETN like it’s a stock. I first got in crypto, because in my country it was way easier than buying a stock(and it its more volatile :smile: ) I know we are waiting for US lawyers opinion on this- or maybe not? Either way, I think it has to be cleared out, what happens if in US ETN is declared as security, are there sanctions or not, and what are sanctions(ETN is UK company, but there are people from US that participated in ICO)? I don’t think there would be and if it would they wouldn’t be like for Ripple as they got warnings and are completely different story, and we played by rules all the time. More is what exchanges could we get listed on, I’ve read that Coinbase also has license to list tokenized securities… In most other countries, I think Richard once said that there is different categorization but mostly ETN is viewed as utility token.
I think this is common in crypto space, a lot of people want to treat a coin as a stock/security, but they also don’t want it to be, because it could not be on many exchanges(as they don’t have license to list securities) :smile:

P.S. As of incetives maybe some merchants/mobile operators could also be allowed to mine ETN(but with some conditions, to prevent them cashing out like NGOs)…

I have some other ideas too, also concerns and critics for some things(and praises for other), but this post is already too long, so that is it for now :smile:

ETN is not a security.

Beyond that, thanks for the detailed post & ideas. Looks like a lot of thought has gone into it. :+1:


What is ETN then?

It is not a security - one is having ownership of the company or debt
It is not a currency - currencies are created by governments with laws and legal proceedings to be recognized

Utility Token???
Def is as follows by Merriam Webster:
a digital token of cryptocurrency that is issued in order to fund development of the cryptocurrency and that can be later used to purchase a good or service offered by the issuer of the cryptocurrency sold utility tokens as a method of fundraising for the start-up

I don’t even see ETN as a Utility Token, the ICO had that and was converted if I remember right into ETN. I just don’t think the legal term has yet been defined exactly. The best term I’ve found is it is an Asset and the laws for trading and selling assets come into play.

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The legal standard to consider a given asset a security is the Howey test. For an investment to be considered a security under Howey, the scheme needs to involve (1) an investment of money (2) with an expectation of profits (3) in a common enterprise and (4) profits derived from the effort of others.

I saved somewhere link of good breakdown(many pages) of SEC charges against Ripple, and will post it when I find it. In most countries XRP is viewed as utility token, so is ETN(Richard once mentioned). But now in US, SEC charged Ripple for selling unregistered securities(since it seems to pass Howey test), among other things they did. There are also arguments, that ETH 2.0 could be classified as security, so we will se what happens(maybe there will be need for new legal term).

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