Byteball was launched with the intention to distribute 99% of the supply of its native currency Bytes for free to the widest possible audience. Initially through airdrops to Bitcoin holders. At the time this seemed like a wonderful idea, Bitcoin had the biggest community by far and a lot of early Bitcoin holders deeply care about the philosophy behind it.

The idea was to kind of jumpstart the community around Byteball and give everyone the opportunity to get a certain % of Bytes for free. The concept behind it being Metcalfe’s Law of course.

In practice it didn’t quite work as well as we hoped, the airdrops were mostly seen as “free helicopter money” best turned back into Bitcoin. Round after round of airdrops only got us diminishing returns and an ever falling price of the currency on exchanges. Meanwhile the community to build on and around Byteball didn’t really take off as fast as we thought it might. This didn’t discourage Tony and his team much though, he kept making the platform better and more feature complete over the last 18 months.

At some point it became painfully evident however that continuing with the airdrop strategy as originally envisioned might kill the project outright. After carefully reviewing the situation Tony decided to stop the airdrop mechanism and try other means of distribution, some of them work better than others but none of them are really flying yet. This is a trial and error process and will continue to be.

This also means that the remaining undistributed funds are given out quite slowly at the moment, instead of ~10% every full moon it has been roughly 2% in 8 months. PR & communication wise the airdrop cancellation was nothing short of a disaster and it damaged the community significantly.

But we are not afraid to admit our mistakes and we are fully determined to do a better job in the future. Now that Byteball is almost feature complete, meaning that almost all functionality as described in the whitepaper is now actually available, it is time to start looking at ways of turning the tide. We can now turn our attention to achieving decentralization of witnesses, implementing a future proof governance model and most importantly: real world adoption.

Having the best technology is not enough, as we have seen time and time again. We do understand that we need a sustainable funding model where we will be able to maintain and promote Byteball for decades and hopefully centuries to come.

As you all know we still hold ~32% of Bytes in the undistributed funds. It has always been the plan to give away 99% of the Bytes and Blackbytes for free. Many of you have opposed this plan and asked us to keep a certain % for development, real world adoption and marketing. So far we have declined these requests and focused on getting Byteball feature complete. However, the whole crypto landscape has become much more competitive over the last year and we are now fully convinced that the funds in our Community Fund will not last long enough to achieve our really ambitious goals.

But what if we could form a group of passionate people with experience and expertise but most of all dedication, united in a legal entity with a single clear goal: mass adoption? Then we could really make Byteball fly!

This is where the idea of a Byteball Foundation comes into play

Listed below are some of the things the team would be working on:

Technical development and improvement of the Byteball platform;

Decentralization of witnesses;

Implementing a future proof governance model;

Business development;

Engaging startups to host their ICO on our platform;

Listing on more exchanges;

Marketing activities;

Hosting and participating in events, conferences, meetups, Use-a-Thons;

Raising awareness about the Grants program;

Raising awareness about the Cashback program.

In order to be able to fully focus on their goals the Foundation members would have to be compensated for travel/event fees/accommodation as well as wages and salaries.

Now it is definitely not the idea that this Foundation will do everything and the rest of the world just watches to see if they’re gaining any traction. We need our community to stand together with us and keep actively contributing to the same cause. You can see the Foundation as an entity that can help you achieve your own goals within our ecosystem.

Foundation Funding

As I’ve said before, the Community Fund doesn’t allow us to do this so we need another form of funding. We don’t take changes to our distribution philosophy lightly, that’s why we have made a list of criteria a new funding method should adhere to:

Modest but sufficient : We’re looking for a modest amount that would really allow us to maintain and develop Byteball for years to come, without overdoing it;

: We’re looking for a modest amount that would really allow us to maintain and develop Byteball for years to come, without overdoing it; Sustainable : ideally it would not be a one time lump sum but have some kind of mechanism that would allow recurring funding;

: ideally it would not be a one time lump sum but have some kind of mechanism that would allow recurring funding; Fair : we must be able to justify our decision making process;

: we must be able to justify our decision making process; Simple: the method should be really easy to comprehend and to explain.

In order to turn Byteball into the most widely adopted crypto platform in the world and stay at the forefront of cutting edge technology we want to reserve enough funds to be able to help Byteball grow for at least 36 months. See the budget below. It amounts to ~110,443 GB of undistributed funds for the Byteball Foundation.

We feel this will be a win-win situation for current GBYTE holders. Instead of the airdrops which just gave everyone some more Bytes that would immediately go down in price we will have a dedicated entity with sufficient funding that will do anything in its power to make Byteball succeed.

The proposed method ticks all of the boxes except the “Sustainable” one. Of course if we succeed in our goals we hope that the price of GBYTE will go up so that this will not be a problem but we also have to consider the case where it will take 3 years+ to achieve any kind of global impact. We have some ideas to solve this, like a Foundation Membership Fee that gets you special perks, etc. We feel that three out of four is good enough for now and we are certain that we will come up with a solution within 18 months.

What about the rest of the undistributed funds?

Reserving ~110,433 GB for the Foundation still leaves about 22% of the total supply on the table. To make sure that we won’t sit back and enjoy our monthly dose of GBYTE turned into USD or EUR we also want to reserve 50% of the total 36 month payroll budget for a long term Motivation Plan for team members and advisors. The Foundation will publish exactly how this is going to work but you can think about things like annual unlocking of a % of funds if yearly targets are met. This plan ensures that the Byteball team remains highly motivated to make the platform succeed.

We want to use the rest of the funds for all of the other distribution methods combined, including our long term Grants Program. This includes airdrops by textcoins, attestation rewards, the cashback program and any other kind of distribution we might come up with.

We would like to be more specific here but setting a specific budget per distribution method would only give a false sense of security. Frankly we don’t know which method will be the most popular and we intend to try out many more. Same goes for the Grants Program, we could reserve an arbitrary amount but when a really interesting opportunity comes around we want to have the flexibility to move budgets around between different methods.

Breakdown of undistributed funds

The amount needed for the Foundation is at the lower end of what we deem necessary and not up for discussion but we are open to suggestions about the partitioning of the rest of the funds. If you have any ideas about this that differ from ours please join our Slack and engage in the discussion about this topic.

Byteball Grants Program

This program has been running for a little bit over a year now. Its aim is to support work that improves the Byteball ecosystem. We have seen some very positive things come out of it, like the very first Use-a-Thon in Venezuela, some really impressive IoT proof of concepts using payment channels and of course the World Community Grid bot which allows distribution of Bytes for doing good.

These kind of projects bring great value and we want to make sure that we’ll be able to technologically advance the project and acquire new users for a long time to come. In essence this is also a distribution method and we think it makes sense to dedicate a sizeable percentage of the undistributed funds to it. It is also a strategic tool for directing development into areas where we see the best opportunities, like for example IoT, gaming, AI or big data.

Byteball Distribution Methods

So about 40% of the undistributed funds will be used to directly improve the ecosystem, both through technical development, marketing/promotion as well as business development. The rest will be used to aid with user acquisition efforts and to get a wide distribution spread over as many people as possible. We already have a number of initiatives but we aim to try out many more, find the best performing ones through trial and error, and focus on them. What we have so far:

Cashback for purchases at the merchant stores we partner with. In most cases, the offered cashback is 10% of the purchase amount;

Verification rewards and referral rewards to those who verify their real name;

Verification rewards and referral rewards to those who verify their email address;

Verification rewards and referral rewards to accredited investors who verify their accredited status;

Rewards to those who pass a quiz in Telegram;

Subsidies that offset part of the fees paid when buying Bytes with Visa or Mastercard;

Rewards for donating one’s computing resources to the World Community Grid;

Giveaways distributed e.g. through youtube channels of our supporters;

Mass sending of textcoins to subscribers of our partners.

Maximize odds for success

This means that 100% of the undistributed funds will go towards helping Byteball succeed in the long run:

Foundation: market and develop the platform;

Motivation Plan: ensure team & community have aligned interest;

Grants Program: improve the ecosystem;

Distribution Methods: acquire users.

Governance

Just putting undistributed funds in the hands of Tony in a Foundation instead of directly in his undistributed funds wallet won’t do much to make Byteball less centralized so of course we will try to address this in the Foundation structure. We are aware that the Foundation has to be fully transparent and have room for independent members of the advisory and supervisory board, you can be sure of that. And you know, Tony can only have one seat on the board ;). In order to make sure that this process of decentralization goes as smoothly as possible it will consist of several stages. Roughly it will look like this:

Register Foundation in Liechtenstein; Install board, Tony will be chairman of the board; Publish further Foundation principles; Nominate additional board members; Install additional board members.

Furthermore we will install a committee that oversees all distribution activity, so Foundation, Grants Program as well as all other Distribution Methods. We want this committee to have influence on the policy making process, so it will act as an advisory board for the Foundation. The community can nominate members for this committee. A quarterly report will be published for review and discussion. More details about the committee will be published by the Foundation later this year.

Long term vision / short term focus

We will publish a long term strategic plan including the most important milestones within the coming months as well. There are two important areas we will put most effort into short term, user acquisition and decentralization:

Adoption through educated trial and error

There’s one thing you can be sure of, we will keep trying new methods to gain users for our platform. There is no clear path that we must take. This means that we will iterate a lot and improve through educated trial and error.

There’s one thing you can be sure of, we will keep trying new methods to gain users for our platform. There is no clear path that we must take. This means that we will iterate a lot and improve through educated trial and error. 50% of Witnesses decentralized before January 1st 2019

Perhaps most important of all, we are going to finally decentralize the network. This is a must if we want to seriously compete in the tokenization of assets field that is going to become the next crypto battlefield. Our goal is to have at least half of the witnesses in the hands of people other than Tony before the end of the year.

Short term, high level roadmap

Community feedback

We feel these steps are necessary to compete on a global scale. Otherwise we wouldn’t take the risk of making fundamental distribution changes like these. Our community is the most important asset we have, so we are very interested in your feedback. Please leave your comments below or come join the #Foundation channel in our Slack to discuss it.