Approved Grant Anchor Master Initial Grant

Secured
#4
Thank you for submitting this grant.

Will the Anchor Master pay all anchoring fees? Or they just maintain an account in case of an increase in fees?

Anchoring fees are currently paid for by Factom Inc, correct?

Is the 600 FCT for the development of the Ethereum anchor? Or is 380 FCT for the Ethereum anchor and 220 FCT for the first month's "Monthly support"?

Thank you.
 
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Secured
#8
Thanks Paul. Some more questions.

1. At some point the Authority Set is supposed to handle anchor fees. Once that is live, if the 600 FCT (or whatever it is converted into) hasn't been used as fees have been sufficiently covered by the 220 monthly FCT, what do you propose be done with it?

2. At $15.00 FCT, for 220 FCT monthly you receive $3,300 per month. At current rates, anchoring into BTC and ETH would be about $1800 meaning at current FCT and current BTC/ETH fees, Factom Inc would get $1500 per month. I'm ok with this since there will be work conducted as well. In three months the develpment work will be done and then it will be maintenance so I'm still fine with the amount Factom Inc receives being more than the fees. My questions are:

A. At what FCT to BTC/ETH fee ratio would you tap into the 600 FCT fund?
B. At what FCT to BTC/ETH fee ratio do you feel that Factom Inc would be receiving too much FCT on a monthly basis and the 220 FCT per month should be re-evaluated?

Thank you!
 
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Secured
#10
1. At some point the Authority Set is supposed to handle anchor fees. Once that is live, if the 600 FCT (or whatever it is converted into) hasn't been used as fees have been sufficiently covered by the 220 monthly FCT, what do you propose be done with it?
The blockchain fees themselves are actually a small part of the cost of doing the anchoring. (There have been 17 BTC paid since 2015. https://blockchain.info/address/1K2SXgApmo9uZoyahvsbSanpVWbzZWVVMF) They are the most visible, but there are many other costs. First, a dedicated server needs to be run for each coin type that is beefy enough to handle both factomd and the anchoring blockchain. These servers are not cheap. Then there is the engineering overhead of maintaining it. This is variable based on how problematic the various blockchains are.

This also doesn't take into account fixing and modifying of the software as the enviromnments in the supporting blockchains change.

There is also a non-trivial overhead of the accounting around the anchoring process. Dealing with coinbase, reconciling of accounts, auditing of accounts. These all take human effort and payments which are not reflected in the on-chain fee.


2. At $15.00 FCT, for 220 FCT monthly you receive $3,300 per month. At current rates, anchoring into BTC and ETH would be about $1800 meaning at current FCT and current BTC/ETH fees, Factom Inc would get $1500 per month. I'm ok with this since there will be work conducted as well. In three months the develpment work will be done and then it will be maintenance so I'm still fine with the amount Factom Inc receives being more than the fees. My questions are:

A. At what FCT to BTC/ETH fee ratio would you tap into the 600 FCT fund?
B. At what FCT to BTC/ETH fee ratio do you feel that Factom Inc would be receiving too much FCT on a monthly basis and the 220 FCT per month should be re-evaluated?
A. I don't think of FCT in relation to BTC, but instead USD. With the anchoring, this way of thinking would be the closest if chain fees were related to the token price. That has not proven to be an accurate comparison though.

B. This is a calculated risk on factominc's part, and one that has a higher chance of being a bad deal for the company than a good deal. The it is far more likely that the bitcoin or ethereum fee rate will go up 10 or 50x and remain there for an extended period of time than if the FCT price goes up by the same amount and stays there. You are asking about where the cap to up upside is, but the downside should also be considered. I don't have a good answer right now, but I think the standing parties would be able to come to grips on that later on.


Keep in mind, this isn't perpetual. Anchoring does a few things.
1. The most perceptable is that anchoring allows a single entry to be proved to be timestamped when it is put into factom. This makes everything in factom timestamped. Timestamping is of limited usefulness to the world, going back to the timestamping vs publishing arguments from before.

2. Anchoring protects against undetectable long range historical chain rewrites. If enough of the federated servers keys get leaked years later, an attacker can forge a blockchain fork that won't be perceptible as a fork on the p2p network. Everything would check out with the appropriate signatures. Checking the anchors, however, will show that the fraudulent blockchain that was downloaded was in fact not old enough to be genuine. This point is most of the value the anchoring is generating now, as there are many timestamping services that have less complexity.

3. Bitcoin is a sibyl resistant communication channel. no one can forge the electricity in a bitcoin header. Eventually all the federated servers will be anchoring some of the blockchain themselves. (this was seen in the bitcoin keys in the identity creation process when you setup your identity last month). If there is a disagreement between the different servers, they can each anchor their different views of the blockchain or anchor alerts that something has gone wrong. Even if the different servers or followers around the network were being sibyl attacked, they can still get a clear picture of the anchors by looking in bitcoin. This is several years down the line though.

Some of this thinking goes back to 2014.
https://bitcointalk.org/index.php?topic=850070.msg9754449#msg9754449
 
Secured
#11
Thanks for the info Brian. I obviously support the idea of this grant as I understand the value and necessity of anchoring. I also understand there is risk for Factom. As this grant is perpetual until this functionality is automated into the protocol, I feel your risk as well as upside needs to be somewhat limited. I'm ok with Factom making some profit per month for providing this service but if the price of FCT goes up to $1,000 and the cost of anchoring remains the same, then that upside per month is excessive. If you guys end up shelling out $5,000 per month to anchor, that's not fair either. I've added an additional question below to support your downside risk but the first questions were not answered. Please answer the following:

1. At some point the Authority Set is supposed to handle anchor fees. Once that is live, if the 600 FCT (or whatever it is converted into) hasn't been used as fees have been sufficiently covered by the 220 monthly FCT, what do you propose be done with it?
2. At what FCT to BTC/ETH fee ratio would you tap into the 600 FCT fund?
3. At what FCT to BTC/ETH fee ratio do you feel that Factom Inc would be receiving too much FCT on a monthly basis and the 220 FCT per month should be re-evaluated?
4. At what FCT to BTC/ETH fee ratio do you feel that Factom Inc would be receiving too little FCT on a monthly basis and the 220 FCT per month should be re-evaluated?

Thank you.
 
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