Epoch 3 introduces many changes in financial services governing the TEA token economy.
In epoch 2.1, only those who registered before the epoch started could join the contest. Now in epoch 3.0, anyone can join the contest at any time.
The only advantage of registering upfront is that the registered users will be offered CML coupons at a fixed price (but not free as in epoch 2.1.)
Those registering before the start of the contest can still apply for CML coupons. But the user needs to pay COFFEE when redeeming their coupons. The price will be as follows:
- Type A: 2000 COFFEE
- Type B: 1000 COFFEE
- Type C: 500 COFFEE
Users can only redeem all of their coupons at once. For example, you cannot redeem one type C seed while keeping your other CML coupons untouched. So when you fill in the registration form, make sure you're OK to pay that much COFFEE upfront for each type of seed. COFFEE can be borrowed by all contestants at an interest rate to be discussed below.
You cannot transfer funds or coupons between different accounts. This is to prevent cheating and to disincentivize the use of multiple accounts.
All fund transfer transactions are listed on the blockchain. Anyone breaking the no-transfer rule will be disqualified and removed from the rewards list.
You won't have any initial funding as you did during the epoch 2 mining contest. But you can now borrow COFFEE with no limitations. Whenever you need funds, you can borrow COFFEE, and then convert it to TEA at the prevailing exchange rate. But take note that this is a debt: COFFEE has a compound interest rate of 0.2% per 100 blocks (this number is subject to change.) If you don't manage your debt well while accumulating assets during this epoch, you might end up with a negative balance!
Everyone needs to pay off all of their COFFEE debt at the end of the epoch. Failure to do so results in disqualification for any contest rewards. Given that most people may rush to pay off COFFEE close to contest end, the exchange rate may be high at that point when many are attempting to get the necessary COFFEE for repayment. It would be wise to consider paying off your COFFEE debt earlier than others.
In epoch 2.0, there was no COFFEE debt. If you had COFFEE in your account balance, you could let it sit and earn compound interest. Now, since you can borrow COFFEE, there will be a debt interest rate as well. The debt side has the same compound interest rate as the credit side. The initial interest rate is set to 0.2% per 100 blocks. Compared to the 0.5% initial rate of epoch 2, this is much lower. But since it's a compound rate, the number could result in a climbing account balance over time for the amount borrowed. Please keep a cautious eye on your loan balance when borrowing COFFEE.
The interest rate is not a constant number. The DAO may change the value during the contest. We plan to give advance notice of any interest rate changes in our telegram group.
The compound interest rate may look like just a tiny number at the beginning, but it may turn your balance into a scary number over time. Make sure you always keep your debt under control.
In epoch 3.0, you can still use your frozen CML seeds as collateral for a Genesis Loan. The interest rate for our first mining contest in epoch 2 was 0.1 % flat. Now, the rate will change based on the remaining TEA in the liquidation pool of the Genesis Loan. This rate is calculated using the AMM curve: the less TEA there is remaining in the liquidation pool, the higher the interest rate. The interest rate will be a flexible compound interest rate that is recalculated every 100 blocks. So no matter what the rate it was when you took out the loan, the current interest rate you pay is whatever the rate is for the most recent 100-block recalculation.
In epoch 2.1, you couldn't pay just the interest due to extend your loan. Now you can extend a loan by paying the interest accrued by the end of the loan due date.
You still have the option to pay off the loan entirely.
You can see how much Genesis TEA Loan debt you have outstanding in your wallet:
During epoch 2, several contestants fell into trouble when their remaining TEA was too low to make any transactions. Although it's always best to avoid running out of gas on the way to the gas station, sometimes it still happens. To help those who've fallen below the approximately .0003 TEA balance necessary to make transactions, we've added back the Topup button. You can click the top up button to get 0.1 TEA. It won't make you rich, but it'll at least help you drive to the gas station!
Youll now not only need to pay the 1000 TEA stake (or 1 staked CML) to start mining, epoch 3 will also require paying COFFEE to buy a mining machine. From now on, this is what's needed to start a mining machine during epoch 3:
- a defrosted CML seed to plant into the mining machine.
- 1000 TEA or 1 CML (defrosted or not, doesn't matter) for the initial staking slot.
- an amount in COFFEE to pay for the mining machine itself.
The mining machine price in COFFEE depends on the type of CML seed that's being planted. We currently require any type A CML to pay 2000 COFFEE, any type B CML to pay 1000 COFFEE, and any type C CML to pay 500 COFFEE. The mining machine is not reusable. If you unplant a CML from a mining machine, that mining machine is also gone.
In epoch 2, there were two ways for miners to make TEA mining income: mining yourself or staking into another mining CML.
In epoch 3, there are two new ways to make TEA income besides only mining and staking.
- You can be an investor of a TApp by buying into its Bonding Curve. You invest in a project just like venture capitalists do.
- You can host a TApp using your mining CML to earn a hosting fee. Just like Amazon charges you a cloud hosting fee, you're paid this fee when you are a miner providing the cloud infrastructure.
For epoch 3, each TApp will represent a particular YouTube video. The winning video (the one with the most views) will receive a separate prize of $1500 to be distributed to its token holders.
In epoch 3, there's a new top-level TApps page.
This page shows the existing TApps and buttons allowing you to either invest or host any particular TApps.
To invest means you're a shareholder of this TApp, just like when you buy a company's stock. The difference is that you're buying from a smart contract called a bonding curve. You pay TEA to the bonding curve and receive a particular TApp token in return. For example, in the screenshot above, you'll have DDF and TYB tokens as your assets if you pay TEA to buy them. The AMM calculates the price of the token based on each token's bonding curve. Generally speaking, the earlier you invest, the lower the price.
(in this image, n > 1, but we set n = 1/2 and m = 1 and 0.7)
In epoch 3, we use the following basic bonding curve:
The a is 1 for the buy curve, 0.7 for the sell curve. The integral formula:
is used to calculate the TEA amount for the funding and reserve pools.
If the bonding curve is a new Defi concept to you, please google for more details. Simply put, if more tokens are sold (total supply increases), the higher the price of the token and the market cap.
Unlike traditional order book marketplaces, you don't need a buyer when you sell your investment token. You're actually selling it to the bonding curve. The sell price is based on the predefined the rule that the sell curve is 70% of the buy curve. If you buy a token and sell it immediately, you'll lose 30%. The 30% goes to the TApps owners' funding pool.
The income and expense of the TApp will go directly to and from the bonding curve as well. The TApp here is a simple DAO that is managed by code and not by the app developers. The bonding curve will automatically calculate how to distribute revenue to shareholders or take tokens from a wallet to pay expenses.
When a consumer pays to use this YTB TApp, the funds will be distributed based on the bonding curve's predefined logic. This also holds for the expenses, such as paying for hosting fees.
The bonding curve is constantly changing. Every consume and expense event will cause the price to fluctuate. This is how a typical AMM (Automatic Market Maker) application works to attract venture capital.
Once you've invested in any TApps, you can see them on your Assets page under the My investment in TApps tab: