Session Token Swap Program: Community AMA

We understand the community has queries and concerns following the announcement of the Session Token Swap Program. As always, we are committed to you — we want to do everything we can to provide our answers and insights.

To that end, we put out a call for questions from the community with the aim to address any concerns that may have arisen. 

Taking part in the AMA we had Chris, our CEO; Kee, our CTO; Josh, our CMO; Jason, our Chief Software Architect; and Alex, who moderated the discussion.

If you want the full experience of the AMA as it happened, check out the video here. (there is also a second AMA here!) For the main thrust of the answers in a condensed state, read on below.

Q&A Summary:

How much runway does the OPTF have, and what is our runway goal?

In terms of where we are at the moment, we’ve got a sizable allocation of Chainflip, but it’s important to remember that it is locked up. If you look at the balance sheet it’s around 20 million USD, but that’s  locked up and not readily available. Our operational funds stand at about 600k AUD, and a recent sale added 2.4 million USD to our treasury. As for our runway goal, we want to go big. We envision a larger financial cushion of 50 to 100 million USD to support team expansion, set up another office elsewhere in the world, and support Session as it reaches 1 million users and beyond. This significant treasury would allow us to maintain momentum and execute our plans without constant financial scrutiny, especially as we maintain the momentum of Session’s growth.

Why did we need to raise funds?

We recognized the need to secure funding to avoid dependence on Chainflip. Moving to a layer 2 is a costly endeavour, requiring substantial momentum. Raising funds not only ensures financial stability but also presents an opportunity to collaborate with third parties. We’ve had conversations with several different web projects that will be able to support us through the transition. In essence, the fundraising serves multiple purposes: ensuring financial momentum, reducing reliance on Chainflip, and facilitating collaboration with third parties for accelerated development.

Why can’t the OPTF just sell its FLIP to secure that runway?

The vast majority of our FLIP is locked, but we’re able to use it for staking. Currently the OPTF has 15 validator nodes, and we’re going to be bringing 5 more online shortly. Our goal is to earn revenue through staking FLIP and use that to bolster the project. Long-term though we don’t want to rely on that FLIP, because we have to be realistic — this is crypto, we have no idea what FLIP will be worth in a year from now and beyond. So the things we’re doing at the moment are to give us a solid foundation to not be totally dependent on our FLIP reserves.

Can I change the ETH address that staking points are linked to?

Yes, you’ll be able to change the ETH address at any time up until probably two weeks before TGE. We’ll give more info on that once we approach the date but you’ll definitely be able to update your address.

Please note that if you have been staking since September 25, please make sure to sign up your address before January 1st to make sure you get the backdated points for that!

Will Session Token be on a layer 2, or will we be dealing with Ethereum fees & wait times?

Yes, Session will be on a Layer 2. All of the important contracts will be on the L2 so that when you stake, receive rewards, transfer between individual accounts you it will be low-fee and won’t rely on Ethereum wait times.

Can I sign/verify my address from the Android wallet for the staking bonus?

Unfortunately not, the mobile wallet doesn’t have all the capabilities of the Desktop GUI/CLI wallets. To sign up for the staking bonus program you’ll have to use one of those.\

Since Session token won’t have a native wallet, I’m going to need a wallet. What would you recommend?

Moving to the ERC-20 token brings fantastic advantages, especially in terms of compatibility with various wallets. While some wallets may require manual whitelisting, popular ones like MetaMask seamlessly support the ERC-20 tokens. This means users can easily utilize MetaMask and connect hardware wallets for secure transactions. Gnosis and Trustwallet are other options for users exploring the functionality of ERC-20 tokens. 

Will KYC be required for staking, withdrawing funds or running a node?

Nope, everything to do with Session token is smart contract based. So the only time you’re going to run into KYC is in areas we can’t control, such as centralised exchanges, but you’ll also be able to use decentralised liquidity pools if you’re already hooked into the Ethereum ecosystem. 

Is the OPTF working with centralised exchanges to have Session Token listed at TGE?

At the moment it’s a bit early to start this process as we’re still working on the transition itself, but we’ll absolutely be in discussions with CEXs closer to TGE. One of the great things about being in the EVM space is that listings will be much easier to get and much less expensive too. We probably won’t be able to share too much news about it though because these things are always wrapped up in NDAs.

Can you provide some more detail about the Session Ecosystem and Community Fund?

In the past, we've faced challenges with token scarcity, particularly in supporting community initiatives like bounty programs, rewards, social media marketing, and research activities. To address this, a specific token allocation has been designated for these purposes, gradually released over several years. The goal is to enhance community engagement and growth by incentivising participation. The tokens may be used for activities such as development bounties, aiming to foster a robust development community and generate broader interest in the coin. Much of this is stuff we did quite early on in the project’s lifespan to pretty good effect, but as we grew it became harder to do with the amount of tokens we had set aside for it, so that’s what the fund is for.

Why did we choose to have the Session Ecosystem and Community Fund be the size it is?

In assessing a crypto project's momentum and user engagement, simply having and staking tokens is beneficial, but the key focus should be on building sustained engagement over time. The goal is not just to distribute tokens immediately, but to use them strategically as a tool to attract and retain users, creating a thriving and engaged community. Taking a long-term view, the emphasis is on continuously supporting and growing the ecosystem. This approach involves incentivising community participation through activities like bug bounties and social media engagement, fostering a collaborative environment where everyone works together and earns rewards, contributing to the overall vibrancy of the community.

Will the team members get an allocation of SENT? And what vesting schedule?

Yes, there's a team allocation for Session Token. It will contain a three-year lockup, which is the longest lockup that there is. In terms of the actual schedule it's completely locked for 12 months, and on the 13th month it starts unlocking around 3 percent each month after that for two years. 

Why is there a forced lockup for a year for the staking bonus program?

We value community feedback and are actively addressing concerns to improve the user experience. Acknowledging feedback about the staking bonus lockup, we initially implemented it to make sure we had network consistency during the layer 2 transition. However, we recognise the community's input on this matter and we’re looking at options currently to scrap it.

How many Oxen coins does the OPTF currently hold?

Our current holdings are 7.9 million Oxen, most of which is in staked nodes. To put that into perspective, it’s about 12% of the current circulating supply. 

Why is the OPTF not participating in the swap/bonus programs and instead awarding itself 25% of the supply?

So this can be broken down into two concepts, firstly, we are refraining from claiming tokens to ensure that service node operators and those transitioning session tokens can optimise their rewards. As for the 25% allocated to the foundation, it will be divided into various areas. A significant portion will be reserved for operating service nodes, and a minor portion will be allocated for activities such as partnering with exchanges. More detailed information, including a breakdown and release schedule, will be provided in the coming days. It's important to note that the 25% allocated to the foundation will not be immediately liquid on TGE.

With the current blockchain you would need 40 years to achieve a circulating supply of 240 million Oxen. Why do you feel that Sent should be this large?

The circulating supply of SENT will also take a long time to reach 240 million. Even within the 40 million rewards portion, there's a substantial lock-up, and the tentative plan is for the reward pool to release about 14% annually. This means it will take several years to distribute even half of that amount. Many tokens, including those from the token swap, have long lock-up periods. Despite concerns about dilution, the supply on day one will include a significant amount of locked-up tokens, providing a more favorable situation than implied by the dilution percentage. It's crucial to note that the 240 million SENT is not intended to be a one-to-one swap with OXEN, and the token swap is not based on a one-to-one ratio. The reason we chose the numbers we did is to make it easy to explain the token economics in future.

Will ONS registrations be preserved after the migration?

Short answer: Yes. 

Long answer: Yes, there are some complications but we’re working through them. For some older registrations it may be necessary to manually reclaim them but you will still own any ONS registrations you have at the moment.

The first item listed in the plan for Session Token is "transact and pay for premium features in Session". What's the progress of actually implementing the capability to spend my session tokens in-app?

There’s a few parts to this question, so let’s start with Session monetisation. Progress has been made with UI mock-ups for initial features. The first step involves introducing badges for donations and support to the session project, allowing users to spend session tokens or donate fiat currency. This is expected to be implemented by mid-next year. In-app payments using session tokens will require wallet integration into the session application, which is now more feasible with an EVM-based coin. Premium features in the application may be paid for using session tokens, with plans to include other payment methods such as Apple Pay and Google Pay, which is more of a longer term concept. The goal is to offer diverse payment options while making wallet integration more accessible.

What will the team do differently this time to avoid the failures of OXEN? 

We’re looking at this transition as a pivotal moment aimed at learning from past mistakes and steering clear of previous failures. The crux of our strategy lies in fortifying our treasury, a move borne out of painful experiences with missed partnership opportunities. In the past we’ve had potential collaborations fall through at the last minute due to our insufficient token holdings, hindering our ability to entice partners and bring them on board. The realisation that this limitation has held us back in the competitive crypto space has become a driving force in our current transition.

Comparing our situation to other top 100 coins, it's evident that a more substantial treasury offers flexibility and options, especially when engaging in partnerships. While we understand the importance of channelling funds back into our projects as a foundation, we're actively working on recalibrating our tokenomics to create a more favourable situation for the entire ecosystem. This transition is not about greed but about setting ourselves up for success by addressing fundamental issues that have impeded our progress.

The evolving landscape of the cryptocurrency industry has also been a big driving force for us. The shift from protocol coins to ERC-20 tokens signifies a broader trend, and we acknowledge the need to align ourselves with this new direction. We recognise the importance of having a token that seamlessly integrates with the broader crypto community while maintaining the privacy integrity of our products.

On the technical front, a lot of our mistakes have come from our development processes across different platforms. The inefficiencies and bugs resulting from this approach have been a bottleneck in our development process. To rectify this, we've started leveraging libraries for common code, streamlining our processes and positioning ourselves for faster development in 2024.

Addressing concerns within our community about perceived slow development, we want to clarify that much of the groundwork involves bringing functionality into these libraries. This might not be immediately visible progress, but it's laying the foundation for a more efficient and streamlined development process, with accelerated progress expected in the upcoming year.

Another crucial lesson learned revolves around focus and momentum. We've recognised the need to concentrate our efforts on areas that gain significant traction, even if it means letting go of projects that don't align with our goals. This strategic shift has fostered increased unity within our team, strengthening communication and enhancing our ability to overcome challenges.

Why isn’t the 1.6 million FLIP that was sold this year going to service node operators?

So to clarify, it wasn’t 1.6 million FLIP, it was 1.6 million USD worth of FLIP and it was sold last year. As for why we didn’t give it out, we have bills to pay. That money went into securing our continued operations. While we definitely want to support service node operators, it’s imperative that we continue to grow and build the network and our products.

Why did we pick September 25th to begin taking snapshots?

The only significance of that day is that it is around the time we had discussions about creating a program that rewards existing service node operators while maintaining a balance to encourage new stakers. We wanted to avoid abruptly starting the timer and wished to acknowledge the dedication of current service node operators. The date was chosen shortly after a thorough discussion, with the intention of striking a balance between rewarding existing contributors and attracting new ones. It’s possible that we could revisit the date if the program extends beyond our anticipated timeline in Q2. The focus remains on maintaining fairness and balance throughout the transition, carefully adjusting if needed to accommodate the evolving dynamics of the program.

Is there any way to reduce the amount of coins at TGE so that Oxen community members do not get diluted in the first year?

Yep, in fact the game plan is already that the majority of the tokens which will be unlocked at TGE will be coming from the token swap program and the staking bonus program. Stay tuned because we’ll be releasing more information about the economics of the situation during the coming days.

Where do you project the Session app user base to be in 1, 3, 5 years?

Our goal this year is to reach one million monthly active users, and despite initial doubts based on raw numbers, we see it as achievable. The growth in the user base aligns with the increasing importance of privacy in messaging applications. So far we’ve been  sustaining three to four times growth annually, with the product hitting an inflection point for product-market fit. The focus on community and family engagement is expected to drive a shift from three to four times growth to a 10x increase in new users, reaching 10 million by the end of next year. Comparisons with Signal's growth pattern, going from 500,000 to 12 million, to 40 million, inform our optimism about our potential trajectory. While we can't guarantee the future, we foresee substantial growth in the next year, possibly returning to a three to four times growth pattern after hitting 10 million users. The dynamics of competitors and our history align to support this perspective.

Your blog post says “over USD $2 Million of Session Tokens have been sold at a price of $0.20”, can you be more specific about how much specifically has been sold?

Sure, at the moment it’s somewhere between 2 and 2.5 million worth of tokens. Until that’s absolutely finalised we can give an exact number, but that’s the range we’re looking at. We’re only selling tokens at that $0.20 USD price point and the tokens we sell have a lock-up period too.

How can you consider it fair that existing Oxen holders are being diluted to 25% of the Session Token supply?

We recognize the frustration surrounding the concept of dilution, and it's essential to address this concern. Initially, when the SENT token launches, the majority of the supply will be held by those who have swapped tokens or received the staking bonus. Contrary to misconceptions, it's not a mere 25%, but a significantly higher proportion due to the lockups on the other tokens, and we're working on providing exact numbers soon.

Looking ahead over the next five years, increasing the token supply becomes necessary to bring in ecosystem partners and enable the foundation to seize opportunities it previously missed due to a limited treasury. The gradual release of tokens is structured to incentivise project progress at the right times. Bringing in ecosystem partners and fortifying the foundation's position is vital for sustained growth and scalability. Despite the understandable frustrations, we think this strategic move is essential for the project's longevity and success.

Wrapping up

We hope these insights were able to answer your questions and alleviate concerns. If you do have more questions or are looking for further clarification, feel free to jump into the community channels and ask your questions there and we can discuss it with you.

There’s a good chance we’ll hold another AMA in the near future, so make sure to keep an eye out for that.

Thanks for reading, see you next time.