BTCST AMA #1 Recap
Hi BTCST Community,
We hosted our first ever AMA on our own Telegram channel a couple of days ago and were grateful for all of your participation, feedback, and questions! Our co-founder and CEO Alex Zhao as well as our community angel Ady answered 12 pre-selected questions and 8 live questions. We received close to 1,000 questions from the community before the AMA, and our community asked another 300 questions during the live session! We are incredibly thankful to all of our fans and communities for participating and supporting our mission to bring DeFi and high yields to Bitcoin mining.
For the 20 questions, we rewarded 1 BTCST per question to the participants, for a total prize of 20 BTCSTs. Our editorial team has summarized the 20 questions and answers below. Some questions and answers have been edited for clarity and brevity. Take a look, and we hope to see you at our next AMA!
Note: This is a 10 minute deep dive that will hopefully answer many of your questions.
Q 1: It seems like the gas fee calculations must be done based on iteration through the entire history of transactions, rather than relying on the snapshot balance in BTCST or unclaimed BTCB.
Does this mean that the fees will increase the more you stake/unstake and claim, and/or increase as the total effective staked BTCST increases from all other staking holders?
A 1: Fees for claiming and unstaking will increase the longer (number of days) you stake, and the more staking holders there are. It has very little to do with how many BTCSTs you have staked. It also has very little to do the total amount of effectively staked BTCSTs, and if you claimed or unstaked, it will count records from your last claimed or unstaked day.
Ady: So, there are many questions about high fees when claiming BTCs / un-staking BTCSTs. We want to add that if you are seeing a strangely high fee, it can be the result of the settings of your own wallet. See if you can “Edit” the fee setting of your wallet. Change the value for “GWEI” to 20. The fees should become more normal then.
Q 2: For the physical machine, it will be broken after time. For example, after 4 years, the Ant Miner 14TH ~ 140 BTCST will need replacement to keep the same hash rate. How do you make sure after a period of time 1 BTCST is still equivalent to 0.1 TH?
A 2: BTCST is standardized in TWO senses. First, 0.1 TH/s. Secondly and more importantly here, the efficiency of each BTCST is standardized to 60 W/TH. If total network difficulty and Bitcoin price change in a way that makes hash rate standardized to 60 W/TH no longer profitable in a few years, we will take the fair market salvage value of the underlying machines and convert that into newer generations of machines. At that time, holders of BTCST will get automatic efficiency upgrade. We will announce details of this change when necessary. In any event, we do not expect this to become relevant until a few years from now.
Q 3: My question is the following: have you already contacted other mining companies, and if so, when do you expect them to join the project and also will each company that joins mean another 1m tokens per partner?
A 3: We are pleased to announce today that 5 miners representing about 12% of the entire BTC global hashrate have started to work with BTCST as tokenization miners. These miners include Atlas Mining, one of the largest single-entity miners in the world; BTC.TOP and Easy2Mine, two of the top 15 mining pools in the world; Genesis Mining, the largest cloud mining company in the world; and Hengjia Group, one of the largest mining conglomerates based in Sichuan, China. These partnerships prove that these miners share our vision. We are excited to work with these new partners to improve our operations and bring new ideas and create new values to our communities.
Q 4: It would be cool to be able to stake your BTCST to mine other coins, should we expect that as a possibility in the future?
A 4: Yes of course, this is a possibility in the pipeline. We actually research on this before our mainnet deployment. You may see these features in a couple of weeks. We will be working with PancakeSwap on this. So stay tuned.
Q 5: The roadmap tells us what you have planned until June 2020, with this being crypto that’s a very short roadmap! What are the plans for the future, and do you hope to do more than just staking with BTCST?
A 5: To be more cautious, we have decided to slow our tokenization steps. Instead of 1000 PH/s, we are now tokenizing only 50 PH/s for the month of February. Any further tokenization will be carefully planned to make sure the ecosystem can remain healthy.
Q 6: What are the benefits of mining Bitcoin through BTCST over regular BTC mining with a miner?
A 6: BTCST is better because of the liquidity — you can enter/exit whenever you want, and because of the boost factor — in most cases you make MORE than direct mining. With direct mining, you cannot enter/stop mining easily. There are a lot of expenses and time commitments. With BTCSTs, you can buy/stake, or sell/unstake at any time. The liquidity is a lot better. Also with our boost factor, your BTC rewards are enhanced because you will earn a part of BTC from BTCST holders who do not stake! Read more about our boost factor here: https://btcst.medium.com/btcst-note-on-mining-rewards-calculation-eb469c8144dd
Q 7: BTCST is currently the first project that provides Bitcoin mining liquidity, but it makes me think that the system is too simple, just stake BTCST and earn BTC daily.
Will there be more ways we can use BTCST? Such as possibly a governance system where the community can vote or propose new ideas with the number of BTCST as voting power? Or would you establish a main governance token in the future?
Perhaps you can include a lot more mining such as ETH, and other tokens that can be mined with GPU’s, then create a main token which can be easily swapped to the variety of mining token selections.
Ex. <Main Governance Token>
- Use: To vote on community or core team proposals.
- Track your holdings of different crypto you are mining.
- Swap Governance Token or other tokens to Hashrate for a specific crypto
Just asking if there are plans for this in the future. Since I feel the plan is way too simple to be the sole plan of BTCST.
A 7: Yes, we have plans for giving BTCST itself governance functions. This is planned for Q2 this year. When we have a more detailed plan, we will let you know.
Ady: I also know that Alex and the team are planning to have BTCST holders vote on how to develop ETHST. BETH (Binance ETH) on BSC is a natural fit for us. But of course, we must consider how the switch to PoS for ETH 2.0 can impact us. So please stay tuned. Very exciting things are coming!
Q 8: Does the Bitcoin Standard Hashrate Token team have a mining farm to back up the large amount of Hash Rate that each token represents? How do you keep BTCST pegged to 0.1 TH/s?
Does Bitcoin Standard Hashrate Token serve as an alternative for users who do not have the ability to purchase mining machines? Would they perform as well when staking BTCST?
A 8: Standard Hashrate Group and its tokenization miners own a network of some of the largest mining facilities in the world. Locations and capacities of these facilities are completely disclosed to Binance Mining Pool as part of due diligence. Binance Mining Pool also audits the hash rate sufficiency from the project. This is NOT something that’s possible to fake.
Q 9: There are many who say that BTCST is quite similar to Grayscale. So what’s the difference between BTCST and Grayscale? Are BTCST and Grayscale a perfect complement to each other?
A 9: BTCST is like the hash rate version of Grayscale. Grayscale uses GBTC to wrap around BTC to give it institutional liquidity. This has generated very strong liquidity premium to the price of GBTC. We now see that BTCST is giving very strong liquidity premium to BTC hash rate. We hope to achieve with BTCST what Grayscale has successfully done for BTC.
Ady: Yes, it is very important to see that BTCST’s vision is to be the mining industry version of Grayscale. We are not “selling cloud mining contracts.”
Q 10: What is the best way to summarize the longevity of the token to keep the interest of people invested? How do you keep stakeholder interest and not get scared away by thinking the tokenized hashing power is over priced compared to real hashing power?
A 10: Our community should understand that BTCST, unlike some competitors, is NOT selling cloud mining contracts. Our model is the Grayscale Trust for mining contracts. With mining machines or cloud mining contracts, you cannot easily exit. But with BTCSTs, you can enter and exit within seconds. So the two are not comparable.
Q 11: How will the release of 10 million tokens next month affect the boost factor and overall rewards?
A 11: Based on feedback from our community members, we have revised our tokenization plan. We are now tokenizing only 50 PH/s for February. Future tokenization is pending. We will update the community when we have more information, but our goal is to tokenize only when we are confident to keep the ecosystem healthy.
Q 12: Why would you call BTCST a leveraged Bitcoin token if BTCST is independent of derivatives?
A 12: The price of BTCST will perform as a leveraged BTC token. This is because the price of hash rate / mining machines performs like so, meaning when Bitcoin rises, the mining rigs’ value also rises. This is a well known fact in the mining machine market, so BTCST is a BTC leveraged token because of the very nature of the assets (mining machines) that back it. Also, because BTCST is independent of derivatives, BTCST does not have liquidation risks. This is a huge value add for investors and traders alike.
Note: The following questions are from the live session of the AMA.
Q 13: My questions for the AMA session: Staking rewards depend on the total number of issued BTCST and the own share of the BTCST stake pool.
Q1: How will a change of the supply of BTCST affect the reward system?
Q2: How will a change of the mining difficulty of BTC affect the reward system?
Q3: If additional miners join the project, will BTCST be collateralized by more than 0.1 TH/s?
A 13: When less than 60% of issued BTCSTs are staking, we still distribute 60% of total daily rewards. Because at the moment, only slightly more than 13% of issued BTCSTs are staking, our Boost Factor will likely remain high for a long time. Additionally, all future issuances of BTCSTs are subject to a 25-week lock schedule. These locked BTCSTs will not be staked to mining. Therefore, whenever additional miners tokenize a sizable amount of their hash rate, staking holders should see an increase in the boost factor. So when the total number of BTCSTs grow, we will see a high boost factor with the lock schedule. When additional miners join our open association, their tokens will be locked and will not be fully released until 25 weeks later. This functionally means that the effective hash rate of STAKERs are greater than 0.1 TH because of the boost factor.
Q 14: Does adding new miners increase the token supply?
Then how do you burn tokens when a miner quits from the protocol?
Since you have to burn some tokens from the supply, some users may experience some losses. What is your strategy for burning?
A 14: Yes, adding new miners will increase total token supply. And if some miners break down, we will voluntarily buy tokens back from the secondary market to ensure that the collateralization still works.
Q 15: Bitcoin mining hashrate is at an all-time high. How will this affect the development of the Bitcoin Standard Hashrate project and the value of the BTCST token?
A 15: This is extremely good news for us, as typically when hash rates increase, so does the value of the underlying mining rig. Even though we do not want to speculate about the price of the token too much, in scenarios where the hash rate increases, the value of the BTCST token would likely appreciate as well.
Long term, more hash rates in the market may potentially mean more opportunities to partner with the largest miners in the world, like we did recently. Check out this press release for more details on this: https://www.prnewswire.com/news-releases/standard-hashrate-group-welcomes-atlas-mining-btctop-easy2mine-genesis-mining-and-hengjia-group-to-btcst-301213578.html
Q 16: If I tokenize my ASIC 110TH S19 PRO hash rate with you, do I benefit from your boost factor? What is the difference with buying directly 1,100 BTCST?
A 16: With an ASIC 110TH S19 PRO hash rate, let’s say you will receive X amount of BTC. By buying 1,100 BTCST, you will receive a boost factor of more than 1X. The past couple of days, the boost factor has been 11–13X, meaning you would have received 11 to 13 times more BTC than if you were to just mine with your S19. That is why we believe our value proposition is so attractive. On top of the additional boost rewards, you do not need to worry about maintenance or mining rigs breaking down. Our team handles all of these worries for you.
Q 17: What happens to boost factor when it goes to 1x, is there any way to increase it back?
A 17: We believe it is highly unlikely Boost Factor will ever go to 1x. For Boost Factor to go to 1x, this means that 60% of all circulating unlocked BTCST supply will be staking on our dApp. We believe that the nature and design of our BTCST token will spur many investors to stake BTCST to earn BTC as well as trade in the secondary market. As evidenced by our historical staking data, our Boost Factor has been above 8x since inception.
Q 18: With i) growing mining difficulty ii) increased supply of BTCST iii) boost factor decreasing, how will a single token hold its value over time?
A 18: Part 1.) Growing mining difficulty would not affect the intrinsic value of our token, since 1 BTCST is standardized to represent 0.1 TH/s of hash rate. Regardless of the mining difficulty level, the intrinsic value of a standardized token would not change.
Part 2.) The increased supply of BTCST will not fully affect the circulating supply until 25 weeks later. There is a linear vesting schedule of 25 weeks for all new issuances. As a note, the miners who hold these tokens would not “dump” or sell these tokens since they do not lack resources or money. We’re talking about the largest miners and mining pools in the world, not a startup with limited resources. There is no incentive for them to sell because if they were to crash the market, they would be holding tokens that are worth much less than when they originally locked up the new total supply.
Part 3.) We expect Boost Factor to remain in the low teens or high single digits for the foreseeable future, as a result of the additional 50 P that is part of the total supply now. See the point above regarding Boost Factor on the last question.
Q 19: BTCST will aim to support any kind of assets, which is a huge goal. What measurements will you be implementing to avoid scam assets infiltrating the BTCST system?
A 19: We have both internal and external monitors and auditors in place that will prevent any scam assets. To summarize, our team visits each mining farm to ensure that the farms are operating to exacting standards. More information about how we choose mining partners can be found here: https://btcst.medium.com/btcst-protocols-of-bitcoin-hashrate-tokenization-78a7f13c64e1
On top of our own internal controls, Binance Pool also verifies and audits all new hash rates, ensuring that the proper amount of hash rate is actually switched into Binance Pool. Without verification, the new issuance or asset would not occur. Everyday we check that the hash rate remains stable to ensure that specifications are consistent, therefore providing the standardization service for all of our community.
Q 20: It seems that a lot of “cloud mining” projects are gone and failed to deliver on their promises. How will BTCST avoid the same fate? How can we be confident that BTCST won’t disappear a year from now?
A 20: We want to clarify that BTCST is not a “cloud mining” project nor do we intend to be associated with “cloud mining”. Many cloud mining projects simply provide their own hash rate and sell the hash rate to users / investors. Standard Hashrate does not hold any hash power (BTCST), our mining partners do. We are an open association that welcomes all interested parties to join. We are not trying to sell our own hash rate because we do not even hold any.
In addition, cloud mining historically has no liquidity, as users may have to lock up their investments for a period of time and cannot enter / exit as easily as BTCST in the secondary market. We have heard of projects that do not have any hash power, and said projects even sold “cloud mining” services to unsuspecting investors. We are fully audited by Binance Pool, which controls the release of new issuances. Therefore, all of our hash rates are legitimate.
To summarize, all of our mining partners are profit making already in their own rights. We’re talking about hundreds if not thousands of people operating in each mining partner’s companies.