Part I — Context

Horizon State’s platform is B2B focused — targeting organisations, businesses, institutions, councils and governments rather than individuals.

Our platform operates as an interface between a public blockchain and organisations running votes. As such, it calls for token mechanics that are not common in standard B2C blockchain-oriented businesses.

Let’s use a highly probable real world example to explain the situation. Imagine a government that has not yet finalised legislation pertaining to cryptoassets or tokens. This government may be constrained by its own laws, or lack internal capability to purchase any cryptoasset. They would only be able to use the platform if Horizon State accepted payments in the government’s local currency, otherwise referred to as “fiat” (e.g. USD, Euro or GBP).

Offering a fiat solution in what would otherwise be a purely Ether and token based ecosystem would introduce a set of problems from a token holder point of view, if not for the mechanisms we’ve created to counteract them.

For example, the introduction of fiat into the ecosystem could result in a reduction in the demand for tokens, stifling token price appreciation, and decreasing possible returns for token holders.

The alternative is that we could target only the limited subset of customers who are already in the cryptoasset ecosystem, or wait until businesses, councils and governments came up with their own frameworks and structures to participate.

Of course, we did not feel cutting out a large portion of the potential customer base was a viable path for our business, and would likely be to the detriment of who will most benefit from the services we provide. Nor did we think this would be in the best interest of our token holders.

In creating a better outcome for all parties, we had to consider the operational challenges posed to us:

The expectation, in good faith, of token sale participants and post-sale participants for potential return on their contribution The magnitude of a single instance of usage (e.g. a small national election where there are 3 million eligible voters) The inflexible nature of cash flow and expenditures experienced by customers who structure their budget and operations in fiat. Typically the organisational inertia of governments doesn’t allow them the agility to deal with natural fluctuations in the value of tokens. This in turn translates to an expectation of a fixed price in local currency The different pricing expectations across various industry and public service verticals The likelihood of institutional, non-crypto entities introducing cryptoassets, legislation and financial handling of non-fiat currencies in the immediate future The health of Horizon State’s financial and moral standing The capability of Horizon State to fulfill our mission and drive positive change

In order to accommodate these points, we made, and communicated, a decision early on to facilitate customers payments in fiat and to structure the business in a way that allows us to provide clear and accurate dollar figures for the services required from us.

This allows us the flexibility to address different price points for local economies, and their unique budgetary considerations. It also enables us to shield customers from self inflicted token price fluctuations that their purchase of tokens in bulk could drive in the market.

To protect our token holders, and to improve possible token value appreciation, the platform provided to customers will include an exchange where they can pay for campaigns with fiat. Horizon State’s platform then purchases HST from the market to cover the intra-system HST cost to run that campaign or utilise other features and functions. This guarantees the price for our customers per-campaign, and retains the value of the token at the same time.

The key to reconciling the apparently mutually exclusive goals of protecting our token holders while enabling budget constrained customers to use the platform is the divisibility of the HST token.

A campaign is quoted for in fiat, and uses as many tokens as that fiat figure buys in the market, based on the token price at the time. If an election was quoted at $4 per vote, and the price of the token at the time is $0.40, then a vote will consume 10 HST tokens. If the price of the token at the time is $5, then a vote will consume 0.8 HST. The body running the election is guaranteed to pay what they have signed up for, and any token holders who decide to sell at this point receive the dollar amount quoted.

As the platform grows with new modules such as deliberation, audiencing, analytics, fundraising, incentivisation, social impacts, submissions etc, HST will be used as access rights for more services in this same manner. As the customer savviness of the cryptoasset ecosystem improves, they will also have the opportunity to manage their own reserves of HST. The greater success of the platform and its features, the greater the demand for the token.