Proposal for the creation of a new SNS for the CYCLES-TRANSFER-STATION

The CYCLES-TRANSFER-STATION is creating an SNS proposal to place the CTS platform into the control of a new SNS community and governance.

The CYCLES-TRANSFER-STATION is a 100%-on-chain order-book market trade platform for ICRC-1 tokens on the world-computer.

The key feature of the CTS is that the market tokens trade against the internet-computer’s native CYCLES facilitating the mainstream use of the native CYCLES as a stablecoin.

The general overview of our system and vision is written in our whitepaper located here: cts/WHITEPAPER.md at master · cycles-transfer-station/cts · GitHub.

The Native CYCLES

The stability of the CYCLES as a stablecoin is tied to the CYCLES burn-rate on the ICP network as a whole. As more CYCLES are burned, new CYCLES must be minted and thus as long as CYCLES are burning, the price of the CYCLES can never get too low, because if someone does sell some CYCLES for cheap, canister maintainers will buy them up and then burn them to fuel their canisters, taking those CYCLES out of circulation and bringing the price back up to it’s stable minting price. This balance is controlled by the CYCLES burn-rate on the ICP network.

Tokenomics research on the burn-rate of the CYCLES on the ICP network was done by @bjoernek. Here the data on the CYCLES burn-rate over the past two years shows the direction the burn-rate is heading.
Link here: Analysis of Proposals on Neuron Dissolve Delays and Exchange Maturity.

In this other article also by @bjoernek, the future projection of the CYCLES burn-rate in comparison to the ICP inflation is shown.
Link to the article: Tokenomics series: Projecting the total supply of ICP.

With this data, it is clear that the stability of the CYCLES is certain.

THE CTS

The CYCLES-TRANSFER-STATION builds on this certainty, facilitating the mainstream use of the CYCLES as a stablecoin.

Through the CTS platform website, people can mint, hold, transfer, and trade the native CYCLES through the user-interface, without knowing how to code.

The CTS market is where people come and trade their CYCLES with many ICRC-1 tokens back and forth, growing the usability of the CYCLES and the facilitation of the general trade of the CYCLES.

The CTS market is an order-book where traders set the rate (the price) of the tokens of their positions (orders). This makes sure that the CTS market reflects the true-market-value of what people are willing to pay for a token.

CODE

The document on the technical architecture of the CTS is found here: cts/ARCHITECTURE.md at master · cycles-transfer-station/cts · GitHub.

The source code is available for the verification with the reproducible builds.

Leading up to the SNS launch, we are using GitHub releases to show which commits to build the latest canisters from. Some releases only upgrade some canisters so look in the release-assets to view the canisters being upgraded in that release. Post-SNS-launch the proposals will show the latest releases.

The source code of the website-frontend is available for the verification with the reproducible builds using the method in the README file.

SECURITY AUDIT

For the security of the code of the CTS canisters, a comprehensive audit was performed by the Roman Kashitsyn @roman-kashitsyn. The audit document is available here: Copy of CTS Audit - Google Docs. Roman is one of the main people behind the ICP ledger canister and fundamental in building the ICP protocol itself. Many thanks goes to Roman for conducting this audit, and for the great value that it brings to the CTS.

The CTS team has implemented the most important findings and recommendations of the audit and the code is now set for the SNS.

SNS TOKENOMICS

The key feature of the tokenomics of the CTS is that the voting participants receive payouts of their share of the profits of the platform which is collected through the market trading fees.

The SNS initialization file: sns_init.yaml.

TOTAL-SUPPLY: 20_000_000-CTS
TREASURY: 10_000_000-CTS
SWAP: 6_000_000-CTS
TEAM: 4_000_000-CTS

1/4 of the team’s tokens are locked for 5 years and vested for an additional 5 years. The remaining 3/4 of the team’s tokens are locked and vested between 1-month and 4-years.

MINIMUM-DIRECT-PARTICIPATION-ICP: 10_000-ICP
MAXIMUM-DIRECT-PARTICIPATION-ICP: 50_000-ICP

MAX-DISSOLVE-DELAY: 5-YEARS
MAX-DISSOLVE-DELAY-BONUS: 200%

VOTING-REWARDS: Starts at 5% and goes down to 1% over 10-years. This is in addition to the shareholder-payouts of the profits of the platform.


4 Likes

Is this a scenario where I can use CTS?

  • I get paid in cycles
  • I send these cycles to CTS
  • I can exchange them for ICP

I am pretty sure this is possible, but I wanted to highlight this scenario because of the fact that cycles are such a low friction mechanism to get paid for services. The Open Value Sharing protocol implemented on IC will also be based on cycles.

1 Like

Yes sir, that is the function of the CTS. The CTS facilitates the general trade of the cycles back and forth in every direction. Great use case!

At the CTS you can trade your cycles for ICP, and you can trade your cycles for different tokens such as CHAT and KINIC, and many more.

For bringing in cycles from outside the CTS, the canister holding the cycles calls the cycles_in method on the CTS.