Why burning the unswapped Atlantis Stargate coins is the only path forward towards decentralization and trustlessness
At the present, Dero is the most technologically advanced smart contract platform in existence. These features in particular set it apart from the competition:
- All account balances and transaction amounts are homomorphically encrypted with El gamal encryption. The network uses Graviton Database as the keystore. Graviton was specifically created for Dero;
- The Dero Virtual machine uses a code Interpreter instead of a compiler. This reduces the risk of compiler backdoors or exploits in all of the Dero network smart contracts;
- An egalitarian proof of work mining algorithm (AstroBWT) is used and its network outputs blend in with regular encrypted web traffic making it undetectable. AtroBWT algorithm is also mining machine agnostic. CPU and GPU’s are roughly equal in performance and currently there is no significant advantage to using ASIC or FPGA hashing machines.
- Sigma mining is a novel mining protocol that DERO uses and it negates the need for mining pools. The network itself acts as one singular mining pool where all participants are paid for their hash contributions. This increases the networks resistance to mining pool induced hashrate centralisation and evens the playing field for all miners.
- An undetectable p2p node network is used that is undistinguishable from ordinary HTTPS web traffic (TLS Secured UDP P2P network)
- Gnomon Blockchain indexer (smart contract search function) effectively eliminates the need for and dependency on centralized RPC servers. Thanks to Gnomon you can scan/search the entire blockchain directly from your wallet (Engram) for a specific smart contract ID and interact with it as intended. Because of Gnomon, it is effectively impossible to: lock out wallets, restrict users based on geolocation (or other meta data). no one can limit accessibility to dapps like when Infura/Alchemy began blocking access to the Tornado Cash dapp.
Rome wasn’t built in a day
The capabilities and features described above are so far only to be found on the Dero Stargate network, the latest iteration of Dero. The Stargate network is running on the Dero Homomorphic Encryption Blockchain Protocol (DHEBP). DHEBP is the only protocol in existence that combines an account model with El Gamal homomorphic encryption. In effect Dero Stargate provides superior privacy than Monero while also coming with the distributed computational power of an Ethereum like smart contract platform.
Dero Stargate however wasn’t built in a day, it took 5 years of research and several iterations. The first iteration of Dero was known as Atlantis, it was built from scratch based on the CN whitepaper and it was a UTXO based blockchain. Since then Dero’s team of developers, a group referred to as Captain, conducted the research and development of various iterations (released and tested with the community) that would culminate into Stargate.
It is important to understand that Dero started off as an extremely experimental blockchain project and it all started with Atlantis. Atlantis itself did have noteable accomplishments such as being the first distributed acyclic graph (blockDAG) blockchain and the only original cryptonote blockchain implementation since Bytecoin (this time in golang). However, Dero’s mission was to create a privacy preserving unstoppable smart contracts platform and Atlantis did not have smart contract functionality. Therefore whoever bought Dero Atlantis network coins knew that the end-product was still a work in progress. If the project was to complete its mission a migration to an upgraded network would be required. This upgraded network came to be known as Dero Stargate.
Swap Management
As we know today Dero eventually succeeded in its goals with the release of DHEBP and an official 6 month swap window was announced starting from the date of release of DHEBP on mainnet (February 2022). It was also announced from the start that any unswapped coins would then be burned with proof of burn to be published. As shown in the timeline above, the official window was extended by 9 months. In this extended period all users could still swap their coins autonomously because Atlantis was still kept alive. To be kept going the Atlantis blokchain had to be mined at a loss. In fact, any Atlantis coins mined after the release of DHEBP were worthless and could not be swapped for Stargate coins. So a 9 months extension means that the Dero team dedicated resources to mine a financially dead chain only to make sure that as many as possible among early holders swapped. Nine months after the official deadline, in June 2023, the Atlantis blockchain was finally put to sleep. Any extreme cases who again missed the swap were then given the final option to manually do the swap by DMing Captain:
- their old Atlantis wallet seed phrase (Atlantis has no commercial value and no longer exists)
- a Stargate address they control where to receive the new coins
The latest announcement states that after April 15th 2024 all swap requests will be rejected as any unswapped coins by then will be burned.
The implications of the burn for tokenomics, decentralization, trustlessness
Currently only Captain knows how many of the 12 million Atlantis coins have not been migrated to Stargate. For the rest of us this unmigrated coin total is speculative. Sometime after April 15, 2024 we will all find out how many coins were burnt. This on the other hand would bring clarity and bear important positive implications on tokenomics. Considering that Dero has a hard capped max supply of 21 million coins, and the amount burned will lower the hard cap further, the burn would have the effect of tightening tokenomics even further. If for example 1 million coins are burned Dero’s real hard cap will become 20 million, if 2 million are burned it will become 19 million and so on and so forth. Everyone will agree therefore that the implications for tokenomics are important and bullish.
What about decentralization and trustlessness? Burning is the only way to preserve decentralization. If the plan was to not burn all of the unmigrated coins after the April 15, 2024 deadline, then all of the unmigrated coins would be left under the control of Captain. In this scenario no one would know precisely how many unmigrated coins Captain controls. This is why I am fully on board with and strongly agree with the plan to provably burn the non-migrated coins after April 15, 2024. In my opinion this burn as promised by Captain is the only way to preserve the network’s fair distribution of coins as well as the network’s overall integrity. The only con is that the (unlikely but theoretically possible) coins of the people who still didn’t manage to swap after 2 years and 2 months will be definitively lost. It is my belief that this is a con that we must live with in order to ensure the continued health of the network. Thankfully Captain has been very accommodating as the repeated deadline extensions show. A total 12 million coins were to be swapped, split among exchanges (Kucoin, Coinex, Tradeogre) and users. Since this amounts to over 50% of Dero’s max supply without the necessary closure it would inevitably become a fertile ground for wild speculations on price manipulation and control.
Above I have done a simple cost benefit diagram to summarize my position and illustrate the immensely high load of trust that would be required for an average Dero user to operate on Dero should Dero have opted for no burn. Knowing that a potentially huge % of coins could be in the hands of one group of people is huge source of uncertainty and uncertainty is risk. The only way to compensate for risk is trust. Immense levels of blind trust would then be required for your average Dero user to operate under. Any simple cost benefit analysis will make it clear that transparently burning the unswapped coins is the course of action that ensures maximum trustlessness and decentralization for the Dero network. These benefits by far outweigh any costs from highly improbable and extreme scenarios of users who still did not swap despite having 2 years and 2 months to do so.
