Team Synrgy

David Chapman

Factomize
Thank you for the application. To start:

A.
We are looking at options and consulting lawyers. We are considering running as an offshore corporation, or alternatively we would set up two corporations, one in Canada and one in Australia. We can have a corporation set up in a few hours.
Can you provide clarity for me as to why you would offshore or use two separate entities?
 
Hi David and other Guides, this is Dave aka jack russell.

In regards to our corporate structure I wish to ensure we are compliant in regards to taxation and regulation. I'm not a super expert in Australian business structures, and especially with both of us being located in different countries, I wish to ensure that all our i's are dotted and our t's crossed. Within Australia a PTY Ltd corporation seems the logical solution and best fit. My attitude and approach to things I'm unsure of, especially when we are crunched for time, is to hire an expert and listen to what they have to say. We have a conference call in two hours with a senior lawyer in a firm that specializes in crypto. I believe, from our initial brief pre-consultation yesterday, that the Pty Ltd is the way to go, but I would not be doing my due diligence without seeking legal advice for both this issue and any regulatory compliance issues that we may not be aware of. I would not wish to make any errors or go blindly ahead with a business that deals in crypto without ensuring we are 100% compliant in all regards, especially when compliance, or errors implementing it might impact Factom Inc's public profile or liability/compliance itself.

I can say with 100% certainty that we will be incorporated and if we are doing the Pty Ltd then it is a very simple process to initiate.This process can all be done online in a short amount of time. I mentioned offshore corporations as we are both located different countries and I thought that maybe this might offer us advantages. I'm not saying or suggesting that this is the correct solution, but this is on the agenda for the conference call. The legal service I have contracted asked the same question as you, why do you need or want an offshore corp when a Pty Ltd suffices. Thats fine with me, the main thing is that I am seeking counsel and will go with their recommendations, which we will know in a couple of hours. Also I will have peace of mind knowing that going forwards that we are 100% legally compliant with no chance of any blow back to the project. My motto is "do what you do best, and hire experts for the rest".

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I will be 100% funding this business for 2 years. I am fine with just accumulating factoids in the server wallet for future voting weight - I'm in this to be a player in the factom space not to make a living off of the server(s).

Michael (aka C5) will need to take compensation at some point and we have discussed that he will go one year minimum without touching the factoids. He also wishes to participate with voting weight so our long term strategy is to build up our sever wallet holdings, and use them to accumulate voting weight in the future.

At two years (if we are selected for maninet) I need to be compensated for the costs I am incurring. Being a long time factom community member, I am confident that the factoid price will increase substantially within that time. Meaning that compensation for my expenses will be far less factoids than it would be now. After two years I will revisit where I am at in regards to this business and I want to be able to take some profits also then.
 
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Pursuant to our conference call we will, if selected, be forming two corporations, one in each our respective countries, with a Joint Venture Agreement. Upon consultation we have found that we require two corporations as otherwise one party would be subject to double taxation.
 
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Niels Klomp

BI Foundation
Core Committee
Governance Working Group
Thank you for the application

NK01)
Our nodes are scalable and will be expanded as required, to always be at a higher spec than is required. We are not concerned about an “arms race” as factoids are distributed evenly,
Could you elaborate on the latter and the relationship to any arms race?
 

Niels Klomp

BI Foundation
Core Committee
Governance Working Group
NK03)
Although you are in different timezones, it would mean you would be on call every day of the week, every day of the year. Do you feel that is feasible?
 

Niels Klomp

BI Foundation
Core Committee
Governance Working Group
In you application you stated to defer 30% to the grant pool with both one and 2 nodes. You also state to be only taking minimal amounts of FCT and even funding the servers out of pocket. This could mean you could potentially be a large standing party in the future. So some questions

NK06)
Could you provide us the reasoning for taking the minimal amounts and include in the answer the 30% deferement

NK07)
From a decentralization perspective, do you see goods and/or bads taking this route?

NK08)
Since you could potentially accumulate a lot of FCT. Could you comfort us in some way that you would not dump your holdings in the future?
 
NK02)

Could you elaborate on the specific factom servers?
Hello Niels and Guides. This is Michael, aka C5.

For each auth node, we are looking at at total of five servers overall . Three would be guard nodes, they would only have the required factom ports and SSH port open. These guard nodes would be open to the internet, allowing them to connect to any peer on the network. The authority node and the 'brain swap' node would be configured to talk to each other, along with the three guard nodes only. Using this technique, the authority node and brain swap node will kept up to date and the brain swap node can be used when doing updates to authority node. Note: SSH would be open on the authority node and brainswap server, however it would not be open from the internet. In order to get SSH access, you would have SSH into one of the guard nodes then connect from there to the authority or brainswap node (or use console access from service provider).
Currently only UFW was configured, which I know left a couple of holes due to Docker. We would need to update our iptables if M3 is moving ahead with Docker as well. Otherwise we will need to evaluate what is being used and determine if it's opening any additional firewall holes that would need to be closed down.
I've attached a crude diagram.
 

Attachments

NK03)
Although you are in different timezones, it would mean you would be on call every day of the week, every day of the year. Do you feel that is feasible?
Hello Niels and Guides, this is Michael aka C5

Being in opposite timezones does have it's advantages, as one of us is always in 'daylight' and we know that we can call upon the other person if the situation is warranted. In the short term, we could definitely manage this and I'm already doing this for my current position as I'm on call 7 out of 8 weeks (but at work I can make alternate arrangements if I need to). But you are correct, in the long term it's not easily possible or recommended and we need to be able to have some ‘time off’. I work with some VERY talented linux administrators who are very interested in what we are pursuing and would be excited to come on board. We would hire one of them to start with in order to expand our coverage.
 
NK04)

What would you backup and how would this performed?
Hello Niels and Guides, this is Michael aka C5

I’m very used to doing regularly scheduled backups and restores. However, being a distributed system any normal backup (ie at the file or image level) is going to be out of date before the backup even completes. However, it’s still worth doing a Docker backup at least once a week using the “docker save” command to create a tar image and then rsync the image to the brainswap node. I will come back to the Docker tar file in a moment. As for the other important info to be backed up, we would need the M3 versions of the factomd.conf along with the ufw firewall rules (and iptables if they had been modified) on all the nodes (guard, auth, brainswap) as well as documenting (for all nodes) the M3 versions of the blockchain ID, private address, private credit address, public address, and public credit address.

If you did have an issue with the auth node, you could move the identity of the auth node to the brainswap server by copying your auth node factomd.conf to your brainswap node and then restart Docker on the new auth node (previously the brainswap node -- making sure that Docker is stopped on your original auth node so not to cause any conflicts). Now the brainswap server will become the new auth node. Depending upon the reason for the original auth node going down, you could decide to either rebuild it from scratch, or restore from the tar file, thus eliminating some of the blockchain syncing that would be required (note: you would need to make sure that you moved your brainswap configuration file to the ‘bad’ auth server before bringing it online, otherwise there would be a conflict).
 
NK05)

Could you explain us how you would monitor the servers?
Hello Niels and Guides, this is Michael aka C5

We would be using Nagios to monitor all the nodes. We would need to add a new firewall rule to allow the Nagios port to be accessible from a specific set of IPs only (ie our normal management systems). We would also create a script one of the guard nodes to make sure that there is a connection from it to the auth and brainswap nodes and should the communication stop or amount of traffic stall, then send an smtp alert to our emails. We would also create a script on all the nodes to monitor the Docker service to make sure it’s running, and if not then alert us via email. My phone is configured with an application that can monitor my emails and SMS messages and generate alarms when specific criteria is met. Thus, when anything from Nagios, the guard node, Factom Guides or Factom Inc is received, it would alarm me and appropriate action would be taken. Dave’s phone (along with our potential third member) would also be configured similarly.
 
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Thank you for the application

Our nodes are scalable and will be expanded as required, to always be at a higher spec than is required. We are not concerned about an “arms race” as factoids are distributed evenly,
NK01)

Could you elaborate on the latter and the relationship to any arms race?
Hello Neils and Guides, this is Dave aka jack russell.

Running Factom servers differs from crypto mining in that in crypto mining the miners that solve blocks are rewarded and those that don’t aren’t. In the Factom server network we are processing transactions (factoids and entry credits) where each server is working together in unison. As such we wish to have nodes that meet or exceed specifications to deal with any network surges or potential attacks. Our priority is network security, we want the network robust and in that regard ensuring that our servers are more than adequate is of great importance to us.

I read on Discord some one posted in regards to a high spec server, that they were worried about an arms race. This would imply to me that the poster doesn’t properly understand the difference between how mining rewards miners, and how Factom servers work to compensate all servers within the mainnet equally.
 
Hello Neils and Guides, this is Dave aka jack russell.

In you application you stated to defer 30% to the grant pool with both one and 2 nodes. You also state to be only taking minimal amounts of FCT and even funding the servers out of pocket. This could mean you could potentially be a large standing party in the future. So some questions

NK06)
Could you provide us the reasoning for taking the minimal amounts and include in the answer the 30% deferement
I’m a long term Factom hodler. As such seeing the markets with more volume and liquidity would be very satisfying, and more exchanges also would be very desirable. My long term view is that Factom is going to succeed spectacularly, but at present the Factom markets are both low volume and with little liquidity. Hence we prefer to not sell any factoids at the present or immediate future time. With our respective holding periods we not only enable the markets to proceed unencumbered from sell pressure, but we also position ourselves better as we anticipate that the factoid price will be higher in a year, so when we do sell that we do not influence the markets unduly.

The 30% deferment we genuinely waffled with. At first we were going to go with 30% for two nodes, and 25% with one node. We chose to go with the flat 30% deferment as irregardless of the number of nodes we were to deploy (if selected), our commitment to the Grant Pool remains constant.

NK07)
From a decentralization perspective, do you see goods and/or bads taking this route?
I am hard core crypto and as such I want to see everything decentralized, as I like the disruption to legacy processes. But there are two sides to it. From an idealist point of view decentralization removes the loss of data should there be an event, and it removes the monopoly of power, and potentially the ability to alter or falsify records, and it allows redundancy.

However there are risks that need to be looked at and taken very seriously. When M2 went live there were network issues. The M3 testnet has gone down at least a couple of times while we’ve been running on it, and that is a major cause of concern. My biggest fear is that should a mainnet server go down, that the network stalls. Building upon this is the fact that from M2 to present all the servers have been in the possession of Factom Inc, whereby a quick response time and constant network monitoring is present, consistent,and maintained by the Factom Team. Going to M3 mainnet we are now looking at an increased number of servers operated by many entities around the world. This increases the risk to the stability of the network considerably and as such we are taking this very seriously.

NK08)
Since you could potentially accumulate a lot of FCT. Could you comfort us in some way that you would not dump your holdings in the future?
I’ve worked hard all my life (I’m 56 btw) and have been into crypto since 2013. I have no need or desire to dump or sell factoids. I’m a trader, not the best by far I assure you, but I do OK. My interests as a hodler are aligned with the interests of Factom Inc, and other factoid hodlers - I wish to see the network utility grow and usage expand.

I am in this to become a large standing party and for the voting rights. I will hodl for two years, at that point I want all my expenses to that point covered, and some compensation for my time and for paying the bills. Michael will be taking a salary when we have had the servers running for a year (if we are selected), but he will also be accumulating factoids jointly with me. That said when we do sell in the future we will place orders on the sell side and liquidate the desired amount over a period of time that the market can absorb, not by dumping through the order book.
 
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