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AMA Highlights – Ferrum Network

By 02-Feb-2020 February 9th, 2020 No Comments

AMA Highlights – Ferrum Network

By Daniel Dal Bello, Director.

February 2, 2020 – 8 min read.

On Friday 31 January 2020, we welcomed Ian Friend, COO and General Counsel of Ferrum Network (‘Ferrum’) into the Hillrise Capital Telegram chat for an AMA.

Ferrum is a US-based blockchain startup developing a suite of fintech products to allow secure and easy access to financial services. Ferrum are building a DAG-based network to address transaction costs and interoperability between blockchains, alongside a product suite including a digital wallet, decentralized exchange, and cold-storage solution.

In this post, we have compiled key questions and answers from the event.

Daniel Dal Bello
For those who might not be familiar with yourself and Ferrum, can you give us some insight into your journey into blockchain and an introduction to what you’re doing over at Ferrum Network?

Ian Friend
Absolutely. Prior to Ferrum I was practicing law in NYC working at some big firms. I got into cryptocurrency in a serious way in early 2017 and quickly realized there was a professional opportunity to combine my skills and my passion for the industry, so I co-founded the blockchain practice team at the firm I was at. Shortly after, I met Naiem my co-founder at an event in New York and not long after that we decided to team up. A few weeks later we won a competition to pitch the project at Consensus 2018 on the main stage. Things really took off from there.

As Ferrum’s non-technical co-founder I pretty much do everything except code. I do a lot of marketing, legal, biz dev, community engagement, team management, fund raising, and the list goes on.

@RayswayOwn
Can you explain in short what Ferrum is and does? I haven’t heard of it before.

Daniel Dal Bello
Ferrum was built with a motivation to address several fundamental issues in broader blockchain adoption: slow transaction speeds, and lacking interoperability among differing networks. Talk to use about your solution to this—your high-speed transaction layer and the proxy token system. How does it all work?

Ian Friend
Ok sure, so this will answer both of those questions.

So Ferrum Network is really two interrelated components: a DAG based interoperability network that enables enables near instant exchange/transactions of any digital asset through the use of our own provisionally patented technology, PLUS the decentralized (and centralized) financial applications that run on top of our network such fiat gateways, non-custodial wallet, staking mechanisms, cold storage application and a cross-chain DEX.

The network achieves interoperability through import/export mechanisms that allows users to deposit assets into the Ferrum Network, thereby creating a proxy of that asset. Once the assets are in the network its much faster and cheaper to transact them because its a DAG not a blockchain. Our innovation is that the proxy tokens and the underlying assets are both managed in a decentralized manner, in that the private keys are broken down and randomly distributed among the nodes with anti-collusion measures in place for security.

In sum what this means is that using Ferrum Network you can exchange a Bitcoin for an Ether in milliseconds for near-zero network fees – and, you are no longer paying the BTC or ETH network fee, just a small fee in FRM as gas.

Here’s a demonstration of how it works in practice.

That’s a non technical description of it, I’m sure my co-founder who is a PhD in distributed data base systems and who designed the technology can describe it better. We usually focus on the products rather than the underlying technology because we don’t believe hyping up protocols is the way to be successful in this industry and move the industry forward. We believe it’s more about building user friendly apps that solve their every day problems.

@Tetey69
What are the use cases of Ferrum token and how it is different from other tokens?

Daniel Dal Bello
I have something to further to this, with regard to the economics of the FRM token. We understand that all Ferrum products in your suite require the token for transactions. What drives usage and who needs the token? Do you burn all tokens paid as fees, and if so what happens as a finite supply becomes ever constricted?

Ian Friend
Ok, so in terms of the token, we already have token utility based on numerous products we launched including our token bridge that can instantly swap between ERC-20 and BEP-2 tokens (tokenbridge.ferrum.network), our web based staking mechanism (ferrum.network/frmstakeandearn) and our community driven marketing tool called Social Mining (community.ferrum.network) as well as within our fiat gateway and payments app https://firstkudi.com.

All of these products use FRM to some degree or another, whether with fees, rewards, payments, etc.

However, our primary utility will come when the main network is launched. Ferrum Network is a DAG, not a blockchain, so instead of paying miners fees to confirm transactions, we developed a proof mechanism called ‘Proof of Burn’. Essentially users must spend a small amount of FRM each time they run a transaction on the network. This results in it being burned.

Despite the fact that the system is deflationary, there is no meaningful risk the supply ever runs out because the cost of each transaction will always be around 1 cent or less. Presently 1 FRM is trading around 1 cent. But if it ever goes to 10 cents, you’ll spend .1 FRM for a transaction. Since the supply is 330 million, it would take a very long time (hundreds of years, if not longer) to burn through it all spending .1 or .01 per transaction.

We did the calculations and created a burn rate sheet based on the number of transactions on Kudi right now and projected into the future and found that to burn through the supply in anyone’s lifetime is not a realistic outcome.

Daniel Dal Bello
Can you take us through your staking model?

Ian Friend
We just announced our second round of FRM staking. We are calling it FRM ‘Stake and Earn’ based on community recommendation. In fact this round of staking was almost all community driven–they asked for it so we delivered.

FRM Stake and Earn is a web-based staking mechanism for ERC-20 tokens, you can think of it like a savings account but with very high rewards.

It is also unique in many ways. For one, it is pool-based which means participants contribute to a pool with other contributors.

Second, it is highly flexible, meaning you can unstake any time after a certain amount of time has passed and still get some nice rewards. We don’t lock you in like some other staking models.

Daniel Dal Bello
What’s the rationale for creating this staking platform? We’re used to hearing about staking for PoS systems to secure networks, but this isn’t the case, right?

Ian Friend
We saw the market heading in a particular direction and staking becoming more popular, so we wanted to get involved with it in any way we could and did not want to wait until mainnet. About 2 months after our ICO we launched this smart contract staking. The community loved it and this is why we are now opening up a second round of staking.

Another interesting thing about our staking is that it is designed for everyone, not just large holders of FRM. The minimum to participate is just 2,500 FRM.

Finally, there is a gamification/competition element because if you stake until full maturity, you will get a share of tokens forfeited by those who unstaked early.

Daniel Dal Bello
How many tokens are being released through this? Are the tokens coming from a team allocated token balance from the ICO?

Ian Friend
Yes we allocated a total of 5% of total tokens for staking activities. This includes staking 1.0, 2.0 (this one), UniFyre Wallet staking and mainnet staking.

The total amount of rewards given out for staking 1.0 and 2.0 is around 6 million tokens, but given that these two rounds locked up about 20% of the supply and the rewards are given out over a period of years, we view this as an acceptable level of inflation.

Daniel Dal Bello
How does Ferrum as a business make money and be self-sustainable? What is your revenue model?

Ian Friend
This goes back to what I said earlier about building useful products rather than just a protocol. Our business model revolves around our fiat gateways, the first one being our African product called ‘First Kudi‘.

First Kudi is a fiat gateway and payments app. We earn money on fees and for products like our app-connected bank card. It is our primary revenue driver at the moment but part of our business model is to expand similar fiat gateway and payments products into different markets. The fees are collected in fiat, although for the bank card we accept payment in Bitcoin, Ether, and FRM.

Daniel Dal Bello
Ok, so the revenue model is based around apps developed by Ferrum to capture fees at fiat gateways?

Ian Friend
Yes, although some of our future products will have a fee-based component, like we will create an enterprise version of the ‘Sub Zero Wallet‘ (cold storage app) which will have monthly subscription fees.

Daniel Dal Bello
Let’s go on to First Kudi then, a lot of your initial energy as a company has gone into this product. How successful has this app been since launch, and is it only available for specific locations in Africa?

Ian Friend
Yes, fortunately we have partners on the ground in Nigeria who do a lot of the day to day work, in fact we are mostly just the technology providers at this stage. The app has been quite successful given the fact it is still being bootstrapped and we only launched 6 months ago. Presently we have over 5000 active users and 100 merchants using the product. We have found product market fit with the Kudi bank card and it has been selling at a nice clip.

The app is available for download to anyone but since the fiat in the app is the Nigerian Niara, most people would not find it terribly useful unless they have a connection to that country.

Fortunately Nigeria is one of the biggest markets in the world for Bitcoin/cryptocurrency, and has clear needs for an instant fiat payments product as well. Its also a huge country with 200 million people.

I should also note we are expanding to Ghana next.

Daniel Dal Bello
The Unifyre wallet is due for version 1.0 this current quarter. What’s the status as of today? How do you plan to onboard users with so many digital wallets that will be competing with yours?

Ian Friend
Ok, so UniFyre Wallet is our next product and is due for release in Q1 2020. It’s an app-based non-custodial wallet similar to Trust Wallet but with many unique features that we believe will add real value for our users.

For one it will have in-app staking which will make it very easy to stake any ERC-20 token and receive rewards.

Second, we are building a feature we are calling ‘Link Drops’ which allows you to send cryptocurrency via a link that you can send on Telegram, WeChat, or Messenger.

Third, it will have a decentralized private key recovery mechanism that will allow you to recover your cryptocurrency if you lose your phone or private key, while still maintaining privacy. And in later versions we will add a fiat gateway component so you can buy/sell cryptocurrency for fiat. The idea is to create a wallet that makes non-custodial wallets safe, useful and accessible for everyone, not just hard core cryptocurrency users.

Frankly the wallet space is very crowded so we needed to build out unique and valuable features in order to compete. I believe we have done that, but of course the market will dictate that and we will take our early-adopter feedback and constantly improve the product.

Daniel Dal Bello
Are you on track to meet your revised test and mainnet goals?

Ian Friend
It’s always difficult to predict when technology will be completed but I am confident we can release the mainnet at the end of Q2 2020. UniFyre Wallet is progressing nicely but you never know when you will encounter roadblocks. Either way our community has been very understanding because they see the progress we have been making and appreciate that we launched four products since the ICO in August [2019].

The text in this summary has been edited to correct grammatical errors and for presentation purposes. We thank Ian Friend for joining us for this AMA. For more information on Ferrum Network, visit https://ferrum.network.