The Hacash whitepaper describes a mechanism for BTC one-way transfer with three objectives:
- To promote the early development and rapid consensus of Hacash by inheriting the value of Bitcoin (allowing BTC to run on Hacash’s chain and participate in various DeFi and applications), and ensure the sustainable survival of Hacash in its early stage.
- To regulate the currency supply of HAC by using BTC as collateral for borrowing and lending on the Hacash chain, which is an important mechanism for stabilizing the purchasing power of HAC.
- To achieve the sustainability of Bitcoin’s value by improving the circulation of BTC in the real economy through Hacash’s L2 payment network, L3 multi-chain scaling, and multi-layer ecosystem.
To achieve the significant mission of compatibility, inheritance, and extension of Bitcoin’s value, Hacash has designed a set of incentive mechanisms (referred to as “black hole rewards” in the whitepaper’s “Currency” section), which reward those who transfer BTC to the Hacash network earlier with more network-increased HAC.
The black hole reward uses a halving mechanism similar to the Bitcoin mining reward to incentivize early participants and compensate them for the risk they take. The first BTC transferred to the Hacash network will receive more than 1,000,000 HAC in total as a reward, which will be unlocked at a rate of 1024 per week over a period of about 20 years. The second and third BTC will also receive more than 500,000 HAC rewards, which will be unlocked linearly over a period of 10 years, and so on. The HAC reward will be halved as more BTC is transferred.
Before the launch of the black hole rewards, HAC will already have a market circulation price as it is produced through PoW mining. At that time, the BTC value locked in the black hole rewards may be much lower than the mining cost of HAC at the time, so the early transferors may receive a large amount of network-increased HAC below the market price until the reward quantity continues to decrease to a certain level.
This raises a very important fairness issue: who will be the first to transfer the first or several BTC?
This proposal suggests that the black hole should be launched when Hacash has already entered the mainstream view, and the order of one-way transfer should be determined by BTC bidding (donation to the Hacash ecosystem fund).
However, this raises a new question of how to identify the mainstream view.
This proposal believes that Hacash has gained enough attention from the industry mainstream when multiple mainstream crypto investment institutions participate in the bidding donation.
The following is a bidding order plan for a non-deterministic number of participants and investment institutions.
The order of one-way transfer will be determined by BTC bidding (donation to the Hacash ecosystem fund) and divided into two parts: “Investment Institutions” and “General Anonymous.”
The specific rules are as follows:
- Establish the “Hacash Ecosystem Incentive Fund” as the recipient and management institution of BTC bidding donations (hereinafter referred to as the “Foundation”).
- The first BTC black hole reward (about 1 million HAC) is owned and managed by the Foundation, and one BTC used for transfer will be paid from the donation.
- Starting from the second BTC, the rewards are divided into two lists: “Investment Institutions” and “General Anonymous”, which are ranked according to the amount of the donation.
- The address with a larger donation will have a higher chance of receiving a one-way transfer reward. An investment institution can only have one chance to transfer one BTC.
- By a certain deadline, the sorted list of all addresses that donated to the Foundation will be published, including the “institutional participation” list and the “general participation” list. Donations received after the deadline will not be counted, nor will they be refunded.
- The BTC transfer to the black hole will take one month, and all addresses participating in the sorting need to transfer one BTC to the Foundation’s announced “black hole address” for destruction. Any donations received after the deadline will be considered abandoned, and the donated funds will not be refunded.
- After the deadline, the list of valid black hole reward participants will be published, and approximately 28 days later, BTC will be minted on the Hacash chain and HAC rewards will be distributed.
- Addresses that participated in the black hole transfer but did not donate to the Foundation before the deadline will be sorted according to the confirmation time of the transfer, and will be placed after the addresses that made a donation.
- The three ranking lists of institutional donations, general donations, and non-donation names will be filled in ascending order to complete each level of the black hole sequence.
Conditions for opening one-way transfers
Establishing a foundation and announcing the black hole address for one-way transfer, we begin to accept donations, subject to certain objective and clear conditions:
- The only criterion for judging the opening of the black hole is the participation of investment institutions. Based on factors such as industry reputation, length of establishment, size of managed funds, and number of investments in cryptocurrency projects, we conduct comprehensive ranking of investment institutions. We integrate data from third-party industry statistical platforms to obtain the ranking list.
- At least one of the top four ranked investment institutions must participate.
- At least five of the top twenty ranked institutions must participate.
- Twenty or more of the top one hundred ranked institutions must participate.
The reasons for setting the above activation conditions are as follows:
- Hacash’s significant mission: BTC one-way transfer is Hacash’s most significant incentive mechanism and the core foundation of compatibility with and inheritance of Bitcoin’s historic goals. It requires close attention from the entire cryptocurrency industry. The participation level of investment institutions is an objective and simple criterion for judging whether Hacash has received the corresponding attention. Professional investment institutions have become an extremely important part of the entire industry as various aspects of the cryptocurrency industry gradually mature.
- Bitcoin upgrade: The transfer of BTC to the Hacash mainnet is a revolutionary upgrade method that does not require the agreement of the entire Bitcoin community and can be freely chosen by individual users. The attention and participation of investment institutions can greatly help to achieve the goal in the fastest, most efficient, and most thorough manner. The most significant events must include the most powerful participants.
- Historical fairness: The black hole reward is a significant part of the Hacash currency issuance system and involves critical interest distribution. Only by obtaining the attention of the entire industry and the participation of top institutions can we avoid questioning of the justice and fairness of this event by later entrants.
Operating Rules of Ecosystem Incentive Fund
The Hacash Ecosystem Incentive Fund is responsible for receiving and managing the BTC and the approximately 1 million HAC of the first black hole award donated by institutions and general public. The use of funds must comply with the following terms:
- The managed BTC and HAC cannot be converted into cash, invested, borrowed, or exchanged for any other cryptocurrency.
- The funds cannot be used for any financial growth objectives, such as market-making, price management, market repurchases, or participation in DeFi.
- All funds are divided into 20 parts proportionally, with annual expenditures not exceeding 1/20 of the total funds. (Funds received outside of the black hole award are not subject to this restriction.)
- The basic operational management expenses of the foundation shall not exceed 10% of the total annual expenditures.
- The expenditure for directly rewarding ecosystem developers, project parties, and service providers shall not be less than 60% of the total annual expenditures.
- The details of each expenditure must be fully disclosed to the public for financial transparency.
- The Foundation’s standing council members are composed of the top six investing institutions and Hacash.com, which donated the most. They hold seven seats. Important operational decisions require a majority vote to take effect, and any vacancies caused by members leaving will be filled by institutions in order of their ranking.
Hacash Ecosystem Incentive Fund Preparatory Committee
To promote the establishment and operation of the Hacash ecological incentive fund faster and more efficiently, the “Hacash Ecosystem Incentive Fund Preparatory Committee” (hereinafter referred to as the “Preparatory Committee”) is established with immediate effect. It provides membership qualifications for those who make promotional and publicity contributions, and receives corresponding incentives when the foundation is formally established.
The specific operating methods are as follows:
- Set up “membership points”, with the number of successfully invited members as the scoring rule. One point is awarded for becoming a member, and another one or two points are awarded for successfully inviting another member, without upper limit.
- The conditions for becoming a member are: a senior researcher or above in an institution focusing on the encryption market that can prove to manage funds of more than 50 million USD, or successfully inviting someone who meets the aforementioned requirements to become a member.
- Senior analysts who become members are awarded one point each for themselves and their invitees, while vice presidents (VP) and above are awarded two points each.
- Members must agree to have their avatar, name, and profile listed on the official website of the Preparatory Committee, and provide their “one-sentence evaluation” of Hacash.
- When the foundation is formally established, 5% of the total amount of BTC donations will be distributed to all members at once according to the point ratio to reward their recognition and contributions.