This month our September AMA was held on Wed, Sep 17, 2019. We would like to thank all of our LCS community that took the time to attend (or submit their questions in advance) in order to discuss the upcoming community vote #3 with the team. If you have any additional questions that you would like to add for next month's AMA, please continue to pre-submit your AMA questions or join us in our Telegram channel.
Hi everyone and welcome to the September Live Telegram AMA. The LocalCoinSwap team will be available in the channel for 1 hour to answer any of questions that you may have about the community vote #3, non-custodial migration or anything else you would like to discuss. Thank you.
Q)This question may be a little early, however, do you know what approx USD value of 20% of fees would have been for Q3? This will give an indication of what impact it would have on the current price.
For this past quarter, it would be a little under $1,000 USD
Q) Will Option 1 in the vote (buyback and burn) now include a clause about an automatic return or vote to dividend model based on certain criteria i.e. timeframe such as 2 quarters, or when 100% profits exceed 20% fees?
Yes most definitely. The community has made it clear that if we are to go down the buyback/burn route, that they want the chance to vote on how the system will change once we reach a level of profitability.
For this reason, we have added in a clause whereas once 20% of trade fees is less than 100% of profit, we will hold another vote where options will include a return to the dividend model.
Q)Thanks Dan - assume will this be communicated within the quarter of profitability rather than the end of the quarter? i.e. LCS becomes profitable in month 2 of Q3, do we vote before the end of Q3 after this is recognised, or do we vote in Q4 and continue to see out Q4 under buyback and burn model?
Yes, as soon as this threshold is reached, a vote will be announced. However, a vote takes time to prepare, announce and complete so it will likely be a month or so before all this is completed after the threshold is met.
Q) Is there a specific customer base that is ready and waiting for us to launch non-custodial, or is this more 'anticipated' that p2p traders will favour our exchange bc of the benefits of NC?
NC takes trust out of the equation, so it opens the platform to anyone who might want to trade but is currently cautious of depositing money to an incumbent exchange with little volume.
It also allows us to compete for the customer base of competitive non-custodial exchanges, who currently have no reason to trade with a custodial alternative.
Finally, it deals with the concerns of traders who might not currently want to trade due to the legal implications of using our service
Q) How will referral program brackets work given we don't hold LCS on the exchange anymore to qualify?
The referral program will be transitioned over to the non-custodial platform. We aim to have it operate in as similar a fashion as possible. However, due to the on-chain nature of all transactions on a non-custodial platform, there will be some additional technical considerations on how the payments are made.
The current plan is to allow users to build up a balance of referral payments and give the user the ability to “redeem” that referral balance whenever they like. This way they aren’t paying a tx fee for every trade a referee makes. We are still investigating the viability of linking referral payment percentage to LCS balance as per the current model.
Q) If regulators intervene and we need to comply with KYC for dividends, can we have a non-custodial exchange with a compliant, dividend distribution portal where to redeem dividends, all LCS needs to be held on this portal? Similar to the NEXO set up.
As far as I am aware, KYC is required both in order to use the core lending platform of NEXO and to redeem dividends.
It would be technically possible to have 2 completely separate platforms running in parallel, however, this would involve much more development (time and costs) and incur higher operating expenses (servers, technical maintenance staff, general support staff, KYC costs etc). In addition, the legal aspects would have to be further investigated to understand the viability of the relationship between both platforms.
Q) What is the utility of an LCS token if there are no dividends?
Under the proposed buyback/burn model, the token will still provide the holder with voting rights whenever a community vote goes live. It will also provide the holder with a deflationary asset as the total supply will constantly be reduced, and the team will continue to explore other utility for the token in the LocalCoinSwap ecosystem. We are currently exploring the use of LCS in a fee-paying model for ETH and ERC20 transactions on the non-custodial platform.
Q) Thanks - how will you go about communicating to potential first-time traders who are simply looking to buy btc under a non-custodial platform? Initial communications and marketing around the simplicity of trade was easy with hot wallets, however not having wallets on the exchange becomes a different ball game? Is there potential to partner up with a wallet partner?
To simplify the process we have built a non-custodial web-wallet. It’s basically a wallet you can open on the exchange but with the keys only ever available to the user.
This is the same style of wallets you’ll see in many other providers including Blockchain.info, where you hold the private key but can open the wallet on a site.
This is being offered in addition to hardware/software wallet interfaces for advanced users.
We hope that beginner users will be able to use the non-custodial web-wallet with the same ease as our current wallet setup.
In addition, we’ll create some educational content and videos geared around the benefits and lessons of non-custodial trading.
And yep, plenty of potential to partner up with a wallet provider!
Q) Is the platform allowed to do paid marketing on social media through Facebook marketing ads? Will we be investing in these tools or other alternatives?
Currently, we are unfortunately unable to do paid advertising on FB using our own account which makes it difficult as it takes away some important opportunities for reaching various audiences around the world. With that said, we do work with various different partners to do 3rd party paid to advertise on social media which has been effective in reaching new audiences so far. We will continue to work with our partners and will also continue to reach out to FB in order to gain approval to run our own campaigns as the non-custodial platform nears completion.
Q) Who do we see as our biggest non-custodial competitor? HODLHODL made some announcements about licensing their code out so more p2p exchanges can be made. Is this a threat?
We still see localbitcoins as the major competitor in the space. They still have the biggest market share for P2P cryptocurrency trading. They have recently been forced to implement KYC (due to them being a custodial platform), so we expect the privacy conscious users to be on the lookout for alternatives!
Q) Do we have time-frames of when the launch will occur under:
- buyback and burn
- dividend model
Regarding the launch of non-custodial, we are giving updates rather than estimated launch dates.
We have a working non-custodial wallet system for multiple cryptocurrencies and blockchain functionality for handling escrow. We are currently working on the user experience for trading and a redesigned frontend. After this is complete we will perform load testing and develop a migration process for existing users, and then we'll be ready to launch.
I don't want to give a time frame because it's important to under promise and over-delivers, and with this kind of feature late and safe is better than early and insecure (as we will no longer be responsible for holding user funds).
Given the upcoming vote, there has not been any development work completed on non-custodial dividend systems. Once the non-custodial platform is completed and launched, these would have to be developed (and is a reasonably large task in itself)
So the platform would launch in a similar timeframe, but if the vote goes against buy/burn then features related to dividends would need to be launched after NC
Q) I would like to know what is the purpose of dividends since they have no demand. I can not find anyone trying to buy those on exchanges or your site. Doesn't the non-existent demand make them quite pointless? Thanks
So far the dividend model has not generated sufficient returns for investors. The current upcoming vote is about an alternative model that may
Q) Can you confirm or deny hotbit trade volume is fake? Are there any plans to bring LCS to new exchanges?
We have no partnership or connections with Hotbit, so can’t answer whether the volume is real or fake unfortunately
Q) Is it or will it be possible in the future to distribute dividends in a non-custodial way? E.g automated lightning payments to all holders whereby the BTC is spliced into the LN channel by every paid BTC fee. Or multisig addresses whereby a big amount of signers is created and a quarterly batched transaction get signed by the community itself (distribute keys instead of coins). If possible, would this be a way to avoid KYC?
As a big fan of Bitcoin and the advances in BTC tech, I love this idea on face value. Distributing dividends only using BTC Lightning Network would be a great way to save on fees and transaction times. However, regarding the practicality for LocalCoinSwap, there are several issues here.
Firstly we do not know LCS holders BTC addresses. So users would have to register their BTC address to associate it with their LCS holdings. This means that it would no longer be a non-custodial and decentralized system.
Secondly, the LN is currently not yet very user-friendly. Many LCS holders are not crypto experts, and we wouldn’t want to exclude them simply because of this.
Lastly, the regulations surrounding dividends aren’t specific in terms of the exact way that they are distributed. Rather they apply simply because of the fact that they are being distributed.
Q) Where does a novice trader start? Will you recommend wallets?
We will recommend that novice traders start with and use the supplied platform web wallets provided. These are secure from centralized hacks as users control their own private keys, but still easy to use as everything (funds and trading) is all accessed on the same site.
We will be implementing the functionality for users to trade directly from their own hardware wallet, so users who prefer them will not be excluded from trading on LocalCoinSwap.
Q) Thanks - how will you go about communicating to potential first-time traders who are simply looking to buy btc under a non-custodial platform? Initial communications and marketing around the simplicity of trade was easy with hot wallets, however not having wallets on the exchange becomes a different ball game?
The main issue with many non-custodial or P2P platforms is the fact that it is not immediately obvious how to use them. We aim to make LocalCoinSwap NC as beginner-friendly as possible. This is important for both general crypto adoption, and for the success of our platform!
Q) One more question - any further developments on C2C? Or planned developments?
We have already implemented a few different major cryptocurrencies as payment methods on the platform to allow C2C. Some traders have utilized this but, as expected, not a huge percentage. We will continue with this format of implementation when we launch NC, and keep an eye on user demands to determine whether any further versions will be beneficial!
Thank you to everyone for their contributions to our AMA this month. Don't forget that you can view the full transcript in our English Telegram channel.
Here is a list of our past Ask Me Anything (AMA) events to read in your spare time:
The LocalCoinSwap team