Progress & Planning — Closed Alpha and the future HoloFuel Ecosystem

Leadership & Org Update 07

In the Introduction to the Holo Closed Alpha Release, we described many of the discrete components being built in order to give the community a sense of the different functionality required. Today, we are sharing a few updates on what’s been accomplished thus far in the testing, as well as more details about HoloFuel and the work that is underway for future releases.

Closed Alpha At-a-Glance

In our Closed Alpha Testnet announcement and the first two Emerging Clouds issues, we alluded to elements that would land at a later stage of Holo Alpha testing. We’re rolling out functionality in successive ‘waves,’ inviting more people to get involved with each wave. This lets us grow in a sustainable way — every wave will come with its own set of issues to resolve, and we need to make sure our dev and support teams can handle them effectively. We’re not just testing our product and all the integrations it requires, we’re testing our organizational infrastructure as well!

Holo Closed Alpha Architecture

Navigating in the Sea of Technology

The goal of the Closed Alpha release is to check that our components work the way we want them to and are able to talk to one another. When building large software projects we often make temporary choices in the architecture that allow us to move faster in early releases. One of those choices in Closed Alpha was related to the way web users would reach individual nodes. In the early architectural design, we wanted to tunnel from our DNS provider right into each HoloPort with help of a 3rd party service. It quickly became evident that this shortcut did not scale at all. We learned that we needed to stick to the P2P nature of the networking, even in the earliest releases.

This realization triggered some quick brainstorming within our team, resulting in an elegant solution. The new design is based on a virtual network created between HoloPorts and proxy nodes for translating Internet-to-VirtualNetwork traffic. It’s clean, scalable, and very efficient. We love this solution so much that it might stay in our final network design in some form.

Reaching The Land

Eventually, the integrations began working. We were very happy to see our design enabling chat from our browsers via the Holo network. With a simple chat hApp serving users from the HoloPort VM, our long journey across the murky sea eventually reached land. As of now, we’ve reached what we consider only the small islands of the New Internet, but the team is already preparing for our journey ahead, moving us to a new frontier.

HoloFuel Today and Tomorrow

As you can see in the diagram above, there is a myriad of components, and more specifically, integrations being tested throughout the Closed Alpha Testnet. The architecture, inclusive of the components, apps, and integrations, will be evolving as we proceed through and complete each phase of testing as outlined with our releases.

You may note in the architecture diagram that there are only two elements that reflect HoloFuel. Our priority in Closed Alpha is to test the transactor for HoloFuel using test fuel — specifically as it relates to payments for hosting. This transactor is at the heart of how HoloFuel will flow and is the first key mechanism in what we see as the HoloFuel ecosystem within the larger Holo ecosystem.

There are many other components necessary for the HoloFuel monetary ecosystem, and they will be available for testing in future releases. These will include the HoloFuel reserves app, HoloFuel pricing algorithms — and tangentially, the KYC (Know Your Customer) integrations that will support registration and identity validation for different types of users.

HoloFuel Periods of Activity

To understand how HoloFuel will work, it’s important to know that there will be differences at different points as we roll it out. Let’s start by defining some distinct periods of activity for HoloFuel:

Testnet Period (Open & Full Feature)

Mainnet Initial Release Period

Mainnet HoloFuel Transitional Period

Mainnet Post-Swap Period

Testnet Period (Open & Full Feature)

In terms of currency mechanics, during the Testnet Period, we will be working with test HoloFuel in a fixed supply capacity. HOT Reserve mechanisms and 3rd Party KYC mechanisms will be tested, as well as many other integrations for the flows of HoloFuel within the ecosystem.

Mainnet Initial Release Period

Upon release of Holo Beta Mainnet, both HoloFuel and our HOT Reserve account will be live for the first time. This ushers in a period where the following can be said:

HOT can be converted into HoloFuel only via the HOT Reserve

HoloFuel Digital Certificates can be redeemed via a separate app

1:1 parity between HOT and HoloFuel is maintained (since there is no separate market)

Mainnet HoloFuel Transitional Period

As Holochain use and adoption of the Holo network grows, demand will increase, and several variables will come into play, that will precipitate a transition to a truly dynamic supply of HoloFuel. What marks the move into this Transitional Period is the occurrence of one or more of these elements:

Fiat or another Crypto Reserve is established

HoloFuel is listed on an exchange

Host Credit Lines are enabled

At some point during the Transitional Period we will give 6 months notice announcing the end of the HOT to HoloFuel swap. The end of the swap will also mark the end of the Transitional Period.

From the beginning of the Beta Mainnet period, throughout the Transitional Period up until the end of the swap window, Holo guarantees a 1:1 HOT to HoloFuel conversion via the reserve account.

Once HoloFuel is listed on exchanges, its price may deviate from HOT — especially while HoloFuel markets are still immature and illiquid. The 1:1 reserve peg will help to stabilise and bring the HoloFuel price back to parity. If HoloFuel trades at a discount, hosting demand will shift directly to HoloFuel, increasing buy pressure for HoloFuel while decreasing it for HOT. Meanwhile, hosts will redeem HoloFuel as soon as possible to maximise price, shrinking HoloFuel supply. The opposite is true if HoloFuel trades at a premium as compared to HOT.

Mainnet Post-Swap Period

Towards the end of the Transitional period, the Holo economy will start to function fully and more smoothly, with dynamic supply coming online, and HoloFuel price discovery beginning to converge. The Post-Swap Period will see dynamic supply fully ramp up to support value stability, as the amount of computational work underpinning each unit of HoloFuel stabilises. HoloFuel’s value becomes increasingly determined by Holo network improvements and the value of Holochain rather than the raw quantity of compute available.

The way this is achieved, in a nutshell, is that the amount of HoloFuel circulating will be broadly proportional to the quantity of traded hosting activity. HoloFuel is constantly being created by money flowing into reserves and hosts going into debt; and subsequently being destroyed by reserve redemptions and hosts paying back their debts. When hosting activity is stable, these forces are in equilibrium. When hosting activity grows, HoloFuel creation happens faster than its destruction, as greater demand and higher prices means more money flowing into reserves and more hosts using their credit limits. The inverse is true when hosting activity shrinks.