LUCIAP

David Chapman

Factomize
Thank you so much for your application! I'd like to get started with some questions.

A. You stated,
We are initially planning to sell for the following purposes:
▪ quarterly to pay our income tax to Canada Revenue Agency.
For clarification, does this mean once per quarter you will sell some FCT to cover your quarterly tax liability?
 

Paul Bernier

LUCIAP
Core Committee
Core Developer
Hi David,

From our computation our tax liability in Canada would be quite a big settlement due every quarter, and I believe we have to liquidate some FCT to cover it (otherwise our initial capital would vanish fairly quickly). That said it doesn't mean we'll dump on the market a big lump sump at a given day every quarter. We'll strive to move the market as little as possible when selling our FCT by spreading the orders over time. If the order book is too thin, we'll try to hold off as much as possible. We do not have an OTC solution as of now unfortunately.
 

David Chapman

Factomize
Thank you @Luap

B. Based upon your stated Efficiency of 50% (with one server) and your estimated expenses, at what USD (or Canadian Dollar) price does FCT need to be for your Authority Node operation to break even on a monthly basis with one server?
 

Paul Bernier

LUCIAP
Core Committee
Core Developer
A ~$5 FCT would give us: 73000 / 65 / 2 * 5 = $2800/month which covers all our operational cost for 1 authority server (which in practice means at least 2 guard nodes + 1 authority node + 1 follower node + 1 node committed to testnet). $5 is only the price of FCT exactly one year ago, so it's not impossible it goes back to this value, but we still have a good safety margin for our operations. Thus we are pretty confident that this efficiency of 50% would allow us to keep operating long term without any loss.

Of course that would mean no additional income for any of our members during those times. We hope our initial capital plus the FCT accumulated during more prolific periods of time would make up for that. Otherwise we would have to temporarily froze some of our side development activities related to Factom (cf our projects list) if we didn't manage to generate other types of incomes at that time. But the operation of 1 server is pretty much guaranteed.
 

Niels Klomp

BI Foundation
Core Committee
Governance Working Group
Hi @Luap. Thx for your application. My technical heart liked it.

NK01)
Am I understanding right that you both are willing to do 24/7 standby for 7 days a week for 365 days a year? Do you believe that to be possible from both an organizational and emotional/psychological perspective?
 

Niels Klomp

BI Foundation
Core Committee
Governance Working Group
NK02)
I get that you probably wouldn't comment in public about the future of your current day jobs. Given that the both of you won't be taking FCT for the time spent on FCT projects, I get that you plan on being employed full time with current jobs. How can you make sure to be available at these times?
 

Niels Klomp

BI Foundation
Core Committee
Governance Working Group
NK03)
Do you plan on adding additional members to your company in the future? Do you plan to remunerate yourselves in the future?
 

Niels Klomp

BI Foundation
Core Committee
Governance Working Group
NK04)
You talk about funding development from the node operation. One of the reasons is that the grant pool won't be ready in time. On the other hand you refrain from taking FCT in the beginning. I cannot fully rime these points. Could you clarify?
 

Paul Bernier

LUCIAP
Core Committee
Core Developer
Thanks Niels. Excellent questions.

NK01) You are right on spot, I'm regularly on call for Amazon, and this is constraining and not fun. But yes we believe it's critical to be operating the node ourselves at least during the first few months and the burden is shared. The main reasons is we don't know what to expect at the launch. How could we direct an external party on what to do? It won't be standard processes initially. We'll both have direct knowledge of what we are operating and be able to efficiently react. We feel like delegating that job to an external party would be risky. Related to NK03 we would totally consider onboarding additional persons once we are confident with delegating this aspect (basically when we have a better idea of how things work on mainnet).

NK02) This boils down to the 2-3 months transition/evaluation period. It is correct that we are not going all-in on day 1 with LUCIAP. During that time we still believe we can operate our servers: if there is any planned event (maintenance, update...) our developer jobs are flexible enough and one of use can easily arrange time for that (work from home). For non planned events (outage), again we have computers with us at all time and is is not hard to step out temporarily. Coordinated restarts of the network is just about typing few commands, this shouldn't be too much of a burden if properly organized. Also we believe that our operational excellence, the automation we put in place and the redundancy we'll have will considerably reduce the time required for us to act. This is not an ideal situation but that is the price of the transitioning period.

NK03) If we transition to dedicated development work related to Factom we'll need to start selling some FCT to remunerate ourselves. At that time we would gladly add a member to handle the operational aspects of Luciap while we focus on developing.

NK04) Just to be clear, we pledge 50% efficiency, so Luciap will be taking some FCT but not selling them to pay ourselves an income in fiat intially. This allows us to be building some FCT stack if we ever get the chance to transition to work only on Luciap projects later. With the grant pool not being ready we don't even know when we could get any form of reward.
 

Niels Klomp

BI Foundation
Core Committee
Governance Working Group
Thanks Paul for the honest answers.

I know from personal experience that being 24/7/365 available is really straining. Have done that for more than 4 years wayback when things got tough in one of my companies. Had to lay of some personnel due to personal reasons of my former business partner, which was also not available anymore. It is not something I would recommend anyone doing tbh ;)
 

Paul Bernier

LUCIAP
Core Committee
Core Developer
Hello Guides @Niels @MattO @quintilian @DChapman @briandeery,

I'd like to bring to your attention a new element for our application.

Last Friday, Steven Masley from Factom Inc. asked us if we could help him by making some tool for the launch of the coinbase transaction on the testnet today. During the weekend we coded some functions to parse and update Factom identities and we made out of it a command line tool (https://github.com/PaulBernier/factom-identity-cli) and a user friendly website (https://www.luciap.ca/identity-management). I'd like to put forward 2 points about this:
  • Steven trusted us to help alleviate his work. It effectively freed some of his time to work on other aspects of the M3 launch.
  • We delivered multiple functional tools from scratch in a weekend (well, not working on it all weekend either...) having never worked with Factom identities before.
Thank you for your attention :)
 
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David Chapman

Factomize
C. Let's say you get an Authority Node. Observing the health of the Node is a given. The Standing Parties will likely want to see what progress you're making with your development work since it was part of your campaign. My questions are:

1. How would you communicate with the Standing Parties. Examples would be blog, twitter, Discord, Reddit, etc.
2. What would you communicate and how often?
3. What metrics should be used to gauge your success?
 

Matt Osborne

Go Immutable
Exchange Working Group
Legal Working Group
We have an initial capital of 40,000 CAD immediately available...
I understand running lean, but I'm a bit confused: If you have 40,000 CAD, why not find a third to help with support?

Also, can you explain why you would not incorporate immediately (choosing to wait 3 months) and instead remain a Partnership? I am unfamiliar with Canadian law/business structure. Thanks!
 

Paul Bernier

LUCIAP
Core Committee
Core Developer
@DChapman

C. 1. We would publish monthly update of our activities on a blog hosted on luciap.ca. I think it'd be nice to have a channel on Discord and a monthly Reddit post for operators to publish a link to their own reports: it gives 2 central places for people to look at while letting operators free to express themselves on the platform of their choice. If there is any other structured mechanism put in place by the community (like usage of a forum ;)) we could adopt it.

C. 2. The content of the monthly update would be about:
A) Operation of our node(s): any outage, anything changing in terms of architecture/tech...
B) Progress of our developments (our point of reference would be something similar to https://blog.0xproject.com/development-update-7-march-2018-4b2b675bf5ef)
C) Others, like communication, events... (our areas of focus are point A and B, hence a broad category "other")
D) KPI metrics (related to your 3rd question)

Also when achieving important milestones we won't wait for the monthly update. Let's say factom.js reaches version 1.0, we will communicate about it immediately: on our blog, on Reddit, on Discord #development and we'll reach out to one of those future Factom news aggregators that are in the making.

C. 3.
First there will be metrics about the quality of operation of our node. I believe this will the same for everyone so I'm not sure it's worth expanding further on that point (but if you wish we can). Basically, uptime, stability, responsiveness... Hopefully we (the community) build some unified automated tools ultimately.

Second it will be metrics about our development progress. Our initial proposals are open-source so everyone will be able to track the progress and the frequency of contributions. If selected we'll put a roadmap in place for our projects with milestones and it will be possible to check if those deadlines are met.

Third we need metrics about the success of what has been built. For our library factom.js for instance it'll be how many developers it reaches, how many times it is listed as a dependency on NPM, how many stars on github... For web app we'll track usage. For instance how many people use our web UI to update their Factom identity. Those metrics should be defined in our roadmap too. That way we'll track how useful our developments are allowing us to know if we want to put more effort in a given direction or not.

-----------

We are still unsure how those interactions between operators and standing parties will play out... But our developments will be transparents so it'll be easy for them to judge at least. We believe the metrics mentioned above will make it pretty clear if we perform well or not.
 

Paul Bernier

LUCIAP
Core Committee
Core Developer
@MattO

Those 40.000 CAD were in our mind a mean to have liquidity for smooth operations, and also a safety reserve. The FCT market is relatively non liquid and as stated previously we don't want to hit the market in bad times. Or our exchange could close the FTC pair. Or we know it could happen that banks suddenly stop wanting to work with crypto related clients. We didn't want to be trapped because of such a situation and that's why we stated that we have money available as a buffer. Does 40.000 CAD sound a lot to you? By our calculation it would only be 5-6 months of operational cost of running 2 servers. That's why we didn't intend to use that money for additional manpower.

Canadian Partnership are easy to set up, it's mostly online which allows us to be ready immediately. And that structure is enough initially because we won't have any customers, won't be selling anything and won't have employee. The incorporation would come with us having completely transitioned out of our current jobs and working on more ambitious Factom projects that could start generating other income (aside from the fed server payout).
 

Paul Bernier

LUCIAP
Core Committee
Core Developer
So to sum up, Canadian Partnership allows us a smooth and safe transitioning while not having much drawback during that initial period of time. (we understand the liability point)
 

Matt Osborne

Go Immutable
Exchange Working Group
Legal Working Group
Does 40.000 CAD sound a lot to you? By our calculation it would only be 5-6 months of operational cost of running 2 servers. That's why we didn't intend to use that money for additional manpower.
Well, your financial say "$5667/month with a 10% safety margin" built in, so that gives 7 months of conservative cushion without selling any FCT at all. So yes, I'd say that's pretty good cushion for a startup. Plus, it's my belief that if FCT doesn't have traction half a year from now, then we've all got big problems :)

I'm all for running lean, but as someone who has also done the 80 hour week, 7 days a week thing (like Niels has), it's not a healthy situation to be in. Maybe you've done it also, I don't know. I'm not suggesting bringing on someone full time by any means, but finding a part-timer to maybe take at least one weekend day off your plate or every other weekend off your plate may help keep you from grinding yourself into the ground :) That scenario is not good for anyone. Please understand that I'm coming from a place of good intentions.
 

Paul Bernier

LUCIAP
Core Committee
Core Developer
Oh, please note that the numbers in the sheet are in USD (because AWS only display prices in USD) and that 1 USD = 1.3 CAD, Canadian dollar is kind of weak... sorry for the currency exchange confusion...

I understand your point and I see your good intentions :) We can already balance the time between Lucia and myself. I'm the public figure of LUCIAP but I'm not alone. But I take the advice of having some occasional trusted 3rd person to alleviate the burden few days a week, thanks!
 
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