N.B: In the spirit of full transparency, the following Coin Report on COTI is a Sponsored Post.
Welcome to the 46th Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of COTI (Currency of the Internet). This will be comprised of an analysis of a number of significant metrics, an evaluation of the project’s community and development and an overview of its price-history. The report will conclude with a grading out of 10. I hope you enjoy the read!
Prior to conducting my research for this report, I had been hearing a lot about COTI, with many on Twitter very much excited by the project and this no doubt piqued my interest. Moreover, I had also been a fan of the chart, from a purely speculative perspective, as you will discover. Beyond this, I did not know much about COTI itself, particularly regarding its underlying technology and its vision.
I hope this report will prove objective where it must be and fair on more subjective matters. For those who’d like to learn a little more about COTI prior to reading this report, here are some primary links:
Algorithm: ERC-20, BEP-2 and DAG Mainnet (Proof-of-Trust consensus)
Exchanges: Kucoin, Binance DEX, Bithumb Global and BitMax
COTI (Currency of the Internet) was conceptualised in 2017, utilising DAG technology as opposed to a traditional blockchain and implementing their own novel Proof-of-Trust consensus mechanism via Trustchain. The team raised funds via three token sales, beginning with a seed round that raised $3.5mn, a private sale that raised $16mn and a public IEO that raised $3mn. In exchange, investors were issued with mainnet COTI tokens upon its launch in June 2019, with the funding facilitating the development of said mainnet. Seed investors paid $0.06 per COTI, private sale investors paid $0.08 and public investors paid $0.065 per COTI. Overall, 2bn COTI were created, with seed investors receiving 2.89% of these; private investors receiving 10.04%; and public investors receiving 2.3%, equating to 304,753,846 COTI issued to investors. COTI later became interoperable as the mainnet was launched on June 4th, 2019, and now users can swap between ERC-20, BEP-2 and Mainnet COTI tokens.
As COTI was only issued in June 2019, following the launch of the mainnet and the IEO that took place on Kucoin, there is only ~8 months of available price-history, but from this it is quite clear that COTI has never experienced a bull cycle. I will discuss this at length in the Technical Analysis section, but for now it will suffice to say that COTI formed its all-time high against Bitcoin at 1306 satoshis shortly after trading began in June 2019, with much of its subsequent price-action consisting of bleeding to new lows, with its all-time low forming at 81 satoshis in November 2019. Against the Dollar, COTI formed its all-time high at $0.127.
Though, at first glance, COTI may seem somewhat complex, with its DAG-based platform and terms like interoperability, arbitrator decentralised governance, multiDAG and Proof-of-Trust, at its core it is a rather straightforward project. In short, COTI is seeking to bring payments systems into the modern era, as they believe such systems have fallen behind in recent times. The core aim of the project is to facilitate payments in the most cost-effective, scalable and convenient manner for both buyers and sellers, allowing global commerce to continue to flourish.
As stated in their whitepaper:
“It has been long anticipated for cryptocurrencies to significantly alter the online payment landscape. To accomplish this, it is necessary for cryptocurrencies to be user friendly, convenient and highly scalable. Several blockchain based technologies have been created to tackle the challenges posed by attempting to provide high transaction throughput while remaining inexpensive, but these have been met with little success. Another challenge faced is the lack of trust between unknown parties, which leads to countless chargebacks and transaction cancellations. Moreover, merchants are often classified as ’high-risk’ or ’low-risk’ based on their association with a particular industry, rather than on their actual behaviour.
COTI, Currency Of The Internet, solves these challenges by using an innovative base-layer protocol in the form of a directed acyclic graph-based ledger, built from transactions connected through time, by harnessing trust-based algorithms. Trust should be based on a combination of the network participant‘s historical behaviour data and objective information about them. COTI takes this into consideration, calculating trust using a unique machine-learning algorithm. Trust is used in the Trustchain Algorithm to validate and confirm transactions faster. Trust chains grow as new transactions attach to two prior transactions which have similar degrees of trust as themselves. This results in an innovative consensus-based confirmation mechanism, where every user is incentivised to have a high level of trust while engaging in trust-building behaviour due to the benefits associated with having a high level of trust (i.e. faster confirmation times). COTI has built mechanisms to monitor, detect and defend against possible attacks, ensuring network security. An example of such a mechanism is COTI’s Double Spend Prevention (DSP) Nodes. COTI also introduces novel protocols to address disputes that may arise when sending
transactions, a much required feature which is not possible with other cryptocurrencies. Dispute resolution is achieved by the use of an Arbitration Service. This service takes advantage of the principles of game theory to ensure a fair outcome in the case of a dispute and votes to determine which of the two disputing parties is right.
Our vision of COTI is to empower users to freely exchange value as simply as information is exchanged on the Internet. To achieve this, we are developing the Trustchain Protocol based on a directed acyclic graph (DAG) distributed ledger, which creates a scalable blockless protocol that can be utilised by any industry that needs high throughput and trust to operate.“
I look forward to evaluating their progress in this respect.
Let’s begin with some Metric Analysis:
Below are listed a number of important metrics, all of which are accurate as of February 19th, 2020. For anyone reading this who has yet to read a Coin Report, it might be worth reading this section of the first report, where any potentially unfamiliar terms are explained. For any terms or metrics specific to this post, I will provide explanations besides the figures.
Price: $0.0244 (248 satoshis)
Circulating Supply: 305,658,854 COTI
Total Supply: 2,000,000,000 COTI
Exchange Volume: $1.585mn
Network Value: $7.445mn (758.03 BTC)
Maximum Supply: 2,000,000,000 COTI
% of Max. Supply Minted: 100%
Network Value at Max. Supply: $48.717mn
Exchange Volume-to-Network Value: 21.29%
Average Price (30-Day): $0.014
Average Exchange Volume (30-Day): $872,222
Average Network Value (30-Day): $3.36mn
Average Exchange Volume (30-Day)-to-Network Value: 25.96%
Volatility* (30-Day): -0.1991
Average Daily On-Chain Transactions (30-Day): N/A
Average Daily Transactional Value** (30-Day): $166,667 (source)
NVT*** (30-Day): 44.67
% Price Change USD (30-Day): +149.1%
% Price Change USD (1-Year): N/A
USD All-Time High: $0.127
% From USD All-Time High: -80.1%
Premine % of Max. Supply: N/A
Premine Location: N/A
Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 5.52 BTC
Liquidity-to-Network Value %: 0.73%
Supply Available on Exchanges: 67,079,560 COTI
% of Circulating Supply Available on Exchanges: 21.95%
*Volatility is calculated by taking the average price over the given time-period, calculating the difference between it and the highest price and it and the lowest price over that same time-period, and multiplying those figures together. The closer to 0, the less volatility during that period, and vice-versa. Read this for more on volatility.
**Transactional Value in $ is calculated by taking the daily transactional value in COTI and multiplying it by price. As there was no reliable on-chain for this, I have used the figure of $5m/month processing on the network stated in the Medium article sourced.
***NVT is calculated by dividing the Network Value by the Average Daily Transactional Value. See here for more on NVT.
Supply Emission & Inflation:
Block Reward Schedule: N/A (Emission Schedule printed below)
Average Block Time: N/A
Current Block Height: N/A
Annual Supply Emission: 164,141,146 COTI (407.07 BTC at current prices)
Annual Inflation Rate: 53.7% (decreasing annually, as per the table above)
Circulating Supply in 365 Days: 469,800,000 COTI
Staking & Masternodes:
Staking ROI (Annual): N/A (Table provided below of possible returns via node staking)
Masternode Collateral Size: Either 100,000 COTI for a Basic Full Node or 250,000 COTI for an Advanced Full Node
Masternode Price: Basic Node = $2,436 Advanced Node = $6,090
Masternode ROI (Annual): For the first year, Basic Node operators will receive the full amount of their collected fees and Advanced Nodes will be guaranteed 25%. Community Nodes will be guaranteed 30% (more on all nodes a little later). Currently, returns are in excess of 50% annually.
IEO Period: June 4th 2019
Total Tokens: 2,000,000,000 COTI
Total Tokens Available for Sale: 46,153,846 COTI
Total Raised: $3mn
Average IEO Price Per Token: $0.065
Total Tokens Sold: 46,153,846 COTI
Further Details: There were three rounds of fundraising, beginning with a seed round in Q1 2018 that raised $3.5mn for 2.89% of total supply, at an average price of $0.06 per COTI; a private round that raised $16mn for 10.04% of the supply in June-December 2018 at an average price of $0.08 per COTI; and a public IEO on Kucoin that raised $3mn on June 4th 2019 at an average price of $0.065 per COTI.
Address Count: 593 (ERC-20) and 15,000+ on Mainnet (sourced from the team)
Supply Held By Top 10 Addresses: 5.65% (112.9mn COTI)
Supply Held By Top 20 Addresses: 7.69% (153.8mn COTI)
Supply Held By Top 100 Addresses: 11.46% (220.1mn COTI)
Inactive Address Count in Top 20 (30 Days of No Activity): 6*
*Only ERC-20 data is available for address balances. The #1 address contains 400mn COTI that have been locked for 12 years, so this has been excluded from both inactive address count and supply distribution calculations. More on this in the next section.
Regarding token supply distribution, 59.75% of the original 2,000,000,000 COTI is allocated to the ecosystem reserve; 15% to the team; 10% to advisors; 10.04% to the private sale; 2.9% to the seed sale; and 2.31% to the IEO.
There is quite a lot to work through here, so I will refrain from any preamble.
To begin with, I’d like to take a look at the data we have for on-chain transactions, as, given COTI’s primary aims of being a Universal Payments System, this is most relevant. Unfortunately, I was unable to get collate any significant amount of clear data myself, but I do have a source that illuminate this matter a little.
In a Medium article linked in the section above, COTI state that they are currently processing $5mn of transactions per month (with an expectation that this will double this quarter, I might add). This would give us Average Daily On-Chain Transactional Value of $166,667, giving COTI an NVT ratio of 44.67. This is extremely promising, as it is indicative of serious undervaluation of the network, particularly when one considers the NVT of Bitcoin is currently ~80. No figures were provided in the article for the number of transactions being processed, however.
Moving onto some more of the General metrics, let’s take a look at Volatility:
I calculated this to be -0.1991 for the past 30 days; this places COTI 6th-highest amongst prior reports for 30-day volatility, indicating that a new cycle may be underway, as price has emerged from consolidation, at least against the Dollar.
Next up, we have the metrics relating to Liquidity:
Firstly, I found that there was 5.52 BTC of buy-side liquidity within 10% of current prices to be found across all exchanges, equating to 0.73% of its Network Value. This places COTI 6th-highest among prior reports, indicating relatively high demand at current prices.
As for sell-side liquidity, I found that 67,079,560 COTI was available for purchase in the orderbooks, equating to 21.95% of the circulating supply. This is the highest figure ever recorded in these reports by some margin, suggesting that a large proportion of supply ownership is currently speculative, as holders are holding their COTI in orderbooks as opposed to off-exchange. That said, this may also be a symptom of liquidity provision by the team, allowing for greater overall liquidity for buyers.
Moving onto volume, COTI is reported to have traded $1.585mn of Exchange Volume over the past 24 hours, equating to 21.29% of its Network Value. Impressively, given the exchanges that it is listed on, it is highly unlikely that any significant percentage of this is wash-traded. Further, Average Exchange Volume was $872,222 for the past 30 days, equating to 25.96% of COTI’s Average Network Value for the same period. This is the 3rd-highest figure recorded in these reports and highly indicative of speculative interest. Promising stuff.
Now, let’s take a look at Supply Emission:
Using COTI’s emission schedule, I calculated that it is expected to have annual supply emission of 164.1mn COTI (407.07 BTC-worth at current prices). This gives COTI a moderately high annual inflation rate of 53.7% and places its circulating supply at 469.8mn COTI in 365 days. Moreover, in a recent Medium article, COTI provided a revision to token metrics with an accompanying emission sheet that made its commitment to reducing the rate of emission clear. In it, the team stated that 400mn COTI (comprised of 100mn from the team’s allocation and 300mn from the ecosystem reserve) will be locked out of circulation for 12 years. Further to this, COTI will be conducting periodic buybacks of their tokens on the market using revenues from those utilising the network. Finally, the new emission schedule represents a reduction in emission over the next 365 days of ~239mn COTI.
However, more significant than the supply emission itself is its relationship to traded volume. Given the above figures, we can work out that COTI’s average daily supply emission for the next 12 months is 449,791 COTI, equating to 1.15 BTC, or $10,954-worth. COTI’s Exchange Volume covers this supply emission by 144x and its Average Exchange Volume by almost 80x. suggesting that current prices are 100% sustainable and that emission should not really cause any downwards pressure on price. Moreover, its Liquidity of 5.52 BTC is almost five times as great as the average daily supply emission. As such, there should not be any real headwinds to price growth moving forward.
Finally, let us take a look at some Distribution:
Using the rich-list, I found that there are currently 593 holders of COTI on the ERC-20 standard. Having consulted the team, I found that there are 15,000+ addresses on Mainnet. Moreover, among the ERC-20 addresses is the 400mn COTI that is in lock-up for 12 years (the #1 address) and so this has been excluded from my following calculations.
I found that the top 10 richest addresses control 5.65% of the total supply; the top 20 control 7.69%; and the top 100 control 11.46%. Clearly, most of the supply is held on the mainnet. In fact, as there is ~665mn COTI stored in ERC-20 addresses in total (inclusive of the 400mn locked up), ~1.35bn COTI must be held in mainnet addresses at present. Regarding the activity of the top 20 richest addresses on ERC-20 over the past 30 days, 6 were inactive, 9 had net inflows, 2 had net outflows and 1 was flat.
And that concludes this section. Onto the COTI Community:
There are two primary aspects of community analysis: social media presence and Bitcointalk threads. I’ll begin with the former before moving on to the latter.
Concerning social media presence, there are four main platforms to examine: Twitter, Facebook, Telegram and Discord.
COTI is present on three of these platforms; all except Discord. To begin, let’s look at the various social metrics that I calculated from the COTI Twitter and Facebook accounts:
Twitter Followers: 17,420
Average Twitter Engagement: 1.25%
Facebook Likes: 23,179
Facebook Posts (30-Day): 0
Average Facebook Engagement: N/A
As usual, I will be using RivalIQ‘s social benchmark report for evaluation purposes.
COTI has a moderately-sized audience on Twitter of 17,420 followers, which is the 10th-highest of prior reports. Its engagement is equally impressive at 1.25% on average, which, though somewhere in the middle of the pack among prior reports, is higher than most of its equivalent audience size.. Relative to global benchmarks, this is 26x greater than the average across all industries. I think the team are doing a fantastic job here of creating consistent, informative content to share with their audience. Keep up the good work.
Unlike with the vast majority of cryptocurrency projects, COTI’s Facebook page is primary to its Twitter account, at least in audience size, with an audience of 23,179. That said, it appears that the Facebook page is neglected as there have been zero posts over the past 30 days. Given the quality of their Twitter account, this is a little disappointing, as it is extremely easy to maintain both audiences if content is already being produced for one.*
*Having consulted the team, I found that they are currently unable to update Facebook due to phishing scams appearing within comments that Facebook have been unable to resolve as of yet.
There are 431 members in the COTI Discord group, which is for technical discussion among developers and contributors.
There are 11,624 members in the COTI Telegram group.
I would usually include a summary of my findings regarding the project from the activity of the group, but the majority of this is covered in the next section, so I will refrain from repeating myself.
Discussion within the group is constant and there is palpable excitement, which is something I tend to look for. The community seem very much engaged and committed to the project.
The COTI BitcoinTalk thread was created on February 12th, 2018, and has since generated 911 posts spanning 46 pages in 737 days. This equates to 1.24 posts per day, on average. However, in the past 90 days, the thread has had 19 posts via 3 individual posters, giving an average of 0.21 posts per day; a significant decline in engagement.
Regarding the announce itself, it provides an extensive overview of the project, detailing the nature of COTI (a DAG-based payments network with a novel consensus mechanism). It advertises the Token Sale well and all social links and relevant resources are provided below this advertisement. Following this, we are given much more detail about the project itself, beginning with the fact that COTI is a payment network with its own native token that is able to process more than 10,000 transactions per second with zero fees for buyers, low fees (sometimes no fees) for sellers and buyer protection.
We are told about the advantages of COTI, including: intrinsic scalability to process hundreds of millions of transactions per day; instant payment settlement; a trust scoring system that rewards high trust users with zero to low fees and low trust users with high fees; plus decentralised mediation facilitating buyer-seller protections for transactional disputes.
COTI believe that payment systems are falling behind as the world moves towards new forms of commerce, such as cross-border e-commerce and peer-to-peer transactions in online marketplaces. At present, we are told, 99.997% of all global transactions are fiat.
COTI is built specifically for payments and the concept of trust is integral to the system, allowing for greater usage by both buyers and sellers. This is where we are introduced to the Trust Protocol, which is an algorithm that scores trustworthiness of buyers and sellers based on prior behaviours, providing zero processing fees
for sellers with high trust. This is built within a decentralised system, where consensus on disputes is achieved via crowdsourced mediators, with these mediators receiving rewards in COTI for their services.
Following this, the announcement makes a mention of the Universal Payments System, which is COTI’s comprehensive payments platform that will be available via
user-friendly consumer apps, as well as merchant integration tools, all with intuitive interfaces to ensure ease-of-use. Within this UPS, transactions will be possible via fiat and other digital currencies, not just COTI, with all transactions guaranteed by the platform’s DAG technology. Moreover, compliance will be achieved by COTI working with international regulators.
Regarding the activity of the past 90 days, most posts are from COTI themselves. It is good to see a commitment to keeping the thread up-to-date regardless of user activity. Among recent posts, there are quite a few important updates, summarised below:
- Released COTI Payment Gateway allowing merchants to accept Bitcoin directly within the COTI UPS, with more currencies to be added. This includes an easy to install and user-friendly widget, where merchants can opt to convert payments to stablecoins or fiat automatically. In the future, settlement will be immediate and occur on COTI-X, their native settlement layer; this will facilitate BTC payments without BTC settlement times.
- Mainnet was launched in June 2019, with Mainnet Nodes released in December 2019: within this, COTI will offer staking as a service via delegated stakes. They plan to scale up the node network to achieve decentralisation over time. Regarding the nodes, Testnet nodes require 100k COTI to be staked with 10% annual returns. Staking as a service will be achieved via Community Nodes, operated by a community leader and staked by the community. In total, 500k COTI will be staked per community node with 30% annual returns guaranteed. The leader stakes 100k COTI and the team will pay leaders $100 per month in addition
for the first year to cover costs. The community can choose to stake the 400k COTI remainder with a minimum of 5k and maximum 10k COTI per month staked. To begin with, Full Nodes will be operable by users, with DSP and Trust Score nodes to be operated by users in the future.
- COTI is interoperable between Mainnet, BEP-2 and ERC-20.
- COTI partnered with Fantom, where COTI will integrate Fantom-based mainnets (Xar Network) to facilitate FantomPay and XarPay; within these, merchants will be able to accept CSDT (collateral stable debt tokens).
- The team extended token lock-ups to June 2023, with token metrics revised as covered in earlier sections.
- Celsius Network integrated into COTI (they have $4.25bn in loan originations and $400mn of managed assets); COTI Pay and COTI Pay Business will enable consumers and merchants to earn interest on stablecoins and crypto via Celsius Network.
- BEP2Pay was released, facilitating Binance Chain payments. Using COTI’s white-label infrastructure, they will be able to provide payments networks for all sorts of protocols (ADAPay was also recently released for Cardano).
- MultiDAG was launched, with the code being publicly released. Using this, clients can issue tokens on MultiDAG. This is the first ever DAG that facilitates issuance.
Overall, extremely informative, transparent, consistent and clearly ambitious. Very much impressed.
And that concludes this section on the COTI Community. Onto Development:
For the following Development analysis, I will be evaluating project leadership, the website, the roadmap, the whitepaper, the wallets and finally providing a general overview:
There are 20 team members listed on the website and 39 employees listed on LinkedIn.
The CEO is Shahaf Bar-Geffen, co-founder of Web3; the CTO is Dr Nir Haloani, owner of 14 patents and former Head of Research for IBM with two decades experience in R&D; the COO is David Assaraf, former Chief Internal Auditor at HSBC; and the CFO is Yair Lavi, former Finance Director at Plus500.
The team also includes a great deal of experience in all relevant areas, including marketing (6+ years experience), business development, operations, technology, programming and PR.
The strength and depth of the team is impressive for such a small project, market cap-wise, but, given that there are 39 employees and that the business itself is processing $5mn a month, this comes as no surprise.
Regarding advisors, the board includes:
- Dr Matt McBrady, former CIO and MD at BlackRock
- Greg Kidd, former CRO at Ripple Labs
- Steven Heilbron, former CEO at Investec Bank
- Lindsay Maule, CEO at Luna Capital
- Nimrod Lehavi, co-founder of Simplex
- Zvi Gabbay, partner at Barnea & Co.
Overall, strong leadership and an equally strong team alongside them.
The COTI website is well-designed, modern and intuitive, with clear branding.
Beginning with the homepage, COTI describes itself as “the ultimate power grid of payments”, with links provided to an introductory video and the COTI wallet, ensuring user accessibility. The primary problem being solved is also outlined here, as the costliness of using banks and Paypal is made prominent, with cash payments highlighted as the cheapest form of transaction. We are told that “COTI is the first enterprise-grade fintech platform that empowers organizations to build their own payment solution and digitize any currency to save time and money.” We are also told of blockchain’s issues, such as its complexity and lack of scalability, with COTI providing 7 elements that comprise a more complete payments system: scalability to over 100,000 transactions per second, simplicity of user and merchant tools; buyer-seller protections; cost-effectiveness; price stability; instantaneity; and security.
Beyond this, there is an overview of Trustchain, COTI’s primary infrastructure that provides consensus for the network by utilising a machine-learning algorithm. COTI’s ecosystem is also highlighted, including COTI Pay for payment processing online and offline in all possible forms of currency with built-in financing; White label payment networks for merchants; stable coins that can be issued by merchants on COTI’s network to ensure price stability; loyalty networks to incentivise customer retention with loyalty tokens issued by businesses for their customers; and remittance technology for efficient cross-border payments. We also find a list of the core team and advisors at the bottom of the homepage, along with links to various further reading materials and social links.
Moving onto some of the pages, the Technology page provides some greater detail on the platform itself, with three layers built in: the Infrastructure layer consisting of DSP Nodes, Full Nodes and History Nodes; the Services layer consisting of KYC & compliance, interoperability, stability framework and buyer-seller protections; and the Applications layer consisting of the wallet, debit card, point-of-sale support, externally developed payment apps and stablecoins. Here, we also find that COTI opted to build using Directed Acyclic Graph (DAG) technology due to its throughput capacity and cost-effectiveness, as highlighted above, making it optimal for payments. There is also an introductory video to the mechanisms of transaction processing, as well as a list of advantages of Trustchain, summarised below:
- One-click payment requests
- Arbitration service to resolve transaction disputes
- Node manager
- Privacy via multi-address
- Proof-of-Trust consensus that confirms transactions based on Trust Score, with faster confirmations for high-trust users.
- A transparent fee model
- Trust Score Update Algorithm that collects data on user behaviour, transmitting this to decentralised Trust Score Nodes that then update the user’s Trust Score.
- MultiDAG that facilitates issuance of tokens and smart contracts by merchants.
- Smart contracts on the DAG platform are first of their kind, with smart contracts recorded in the COTI MultiDAG cluster ad verified several times.
- Stablecoin framework
We also find a roadmap here, which is covered in the next section.
Lastly, the website also has a sub-menu for the Mainnet, with links to node reward calculators, node maps, explorers, the cross-chain bridge and wallet.
Overall, highly informative and well-designed.
The roadmap is presented as a chronological timeline native to the website. It is concise and clear and visually appealing. Where most projects stop with this kind of brief roadmap, COTI have taken it a few steps further and produced a roadmap document to accompany it, with 26 pages of detail on the multitude of goals for the ecosystem. I can honestly say this is a first in my research.
Looking at the visual roadmap on the site, this begins in Q3 2019 with the release of the crypto gateway and testnet node managers, followed by MultiDAG support and COTI Pay releases in Q4 2019. In Q1 2020, the Global Trust System is set to have an open API, followed by dispute arbitrator decentralised governance in Q2. By this, they simply mean that the means of transaction dispute mediation will be decentralised, as mentioned earlier, via crowdsourcing and reward incentives. In Q3, we will get a universal wallet and in Q1 2021 there will be e-commerce payment request support. In Q3 2021, MultiDAG smart contracts are scheduled for release and, finally, in Q4 2021. a stability framework will be released. If I had one suggestion, it would simply be to provide a one-sentence overview of these goals to alleviate the need for new users to read through the entire roadmap document in order to find out a little more; that said, this is not a fault of COTI’s but rather the end-user.
More detail is available on each of these goals (and more) in the document, which I have linked above. (I have refrained from attempting to cover this document here, as it would shift this report from its current dissertation length to that of a novella.)
Beginning with the former, this is a 9-page document focused on the COTI token itself, beginning with an overview of token supply. More specifically, COTI has a maximum supply of 2,000,000,000 COTI that were all created upon network genesis, distributed between the team, advisors, token sale and ecosystem reserve as specified in earlier sections (the figures here are a little out of date).
Beyond this, we find a page on the protocol economy, with COTI comprising a multi-layered system consisting of: applications such as COTI Pay and COTI-X; tokens such as COTI, COTI-USD, COTI-BTC and other DAG-based tokens; services such as transactions, balances, KYC and arbitration; implementations such as Full Nodes, DSP Nodes, Trust Score Nodes and the KYC server; and abstractions such as DAG, Trust Score and TrustChain.
Transaction fees are stated to be the primary income source for the network. Full Nodes function as fee collectors, redistributing fees to the network pool who in turn redistribute to DSP Nodes, Trust Score Nodes and the KYC Server, though keeping a portion of fees for their services. The value of the token itself is derived from its utility as a means-of-payment and medium-of-exchange, with COTI being used for staking by node operators, payment fees, transactions, service fees, merchant services and other applications.
Regarding incentives for consumers, these are as follows:
- 100 COTI free for opening a wallet and 100 COTI per referral
- Cashback in COTI for transactions made when 1,000 COTI or more is staked
- Discounts and loyalty plans
- Yearly bonuses for maintaining a high Trust Score
Regarding incentives for merchants, these are as follows:
- 10,000 COTI free for opening a wallet and 5,000 per merchant referral
- 1,000 COTI per user referral
- Bonuses for high processing volume
- Fee discounts for staking 1mn COTI or more in a merchant wallet
We are also provided with a model that assumes a 1% share of online retail sales attributed to the COTI network, which would give the network an annual turnover of $40bn and 10 million customers; this is COTI’s goal for three years post-mainnet launch.
Turning the latter document, here we find a thorough overview of COTI Pay, updated June 2019:
This begins with an executive summary that details COTI’s vision of becoming a prominent, decentralised, scalable payments network for global commerce. Within this, COTI Pay assists merchants and consumers by improving payment experience, utilising COTI Dime (a stablecoin on the network). Moreover, COTI Pay is partnered with Processing.com, who serve tens of thousands of merchants and handle tens of billions of dollars in payments annually. COTI being integrated will allow it to be used seamlessly by their clients.
Moving through the document, we find a comprehensive series of pages on COTI Pay itself, comprised of the Trustchain protocol, Trust Score, Arbitration System, COTI Dime and COTI-X.
Trustchain, as previously mentioned, is their novel consensus mechanism that utilises machine-learning algorithms to assign trust scores to consumers and merchants, as well as to transactions, which are clustered to increase processing speed. When coupled with low energy consumption, the network is able to operate with near-zero transaction fees. Trustchain itself is comprised of Full Nodes, Double Spend Prevention Nodes, Trust Score Nodes and History Nodes, creating a trust layer on top of the DAG, ranking users by their trust and decreasing or increasing fees based on this, as well as processing speed of transactions. Further, this same node network is able to operate for a multitude of DAGs.
Trust Score is determined using the following parameters: account balance (the aggregate value of transactions over a specified period); dispute occurrence; disputes won; disputes lost; and user ratings. Trust Scores are updated with each new transaction in a user’s history, with the spectrum of scores available ranging from 0 to 100. Those with scores of 100 would receive maximally discounted fees and most primary processing.
The Arbitration System has been developed to provide buyer-seller protections against fraud, errors and counterparty abuse. Arbitrators are required to resolve disputes when issues such as billing errors, unauthorized charges or faulty/undelivered goods arise. Merchants have rolling reserve requirements based on turnover and Trust Score, where a fee is incurred and reserved for a number of days on each transaction; once the reserve term ends, this particular fee is refunded. When a merchant loses a dispute, this is taken from his rolling reserve. Moreover, this reserve is significantly lower than traditional payment systems with lower term-periods.
COTI Dime is COTI Pay’s native stablecoin, bearing a consistent value of $0.10 and facilitating price stability within the ecosystem. This stablecoin will be utilised for value transfer within the network, whilst the native COTI token will be used for fee payment, node operator incentives and arbitration.
Finally, COTI-X is the native currency exchange for COTI Pay, providing network participants with liquidity in an assortment of digital and traditional currencies. It has three primary functions: cross-currency payments; direct transfers and conversions; and liquidity. Further, COTI-X operates in the background for all of COTI Pay’s services and applications, making sure that exchange requests from merchants and consumers are fulfilled automatically.
There is also a 65-page highly-technical whitepaper that can be found here with further detail on all of this.
As COTI is interoperable between ERC-20, BEP-2 and its mainnet DAG token, it can be stored on a plethora of wallets, including hardware wallets that are ERC-20-compatible.
And that concludes my fundamental analysis of COTI.
Let’s take a look at its price-history:
As can be observed from the chart above, COTI has been traded for around 8 months, despite the project being in existence for two years. This is simply because the token itself was not issued until the IEO in June 2019, coinciding with the launch of the mainnet.
Firstly, price formed its all-time high almost immediately upon beginning trading at 1300 satoshis in June; a high that remains intact to this day. Subsequently, price spent a couple of weeks dropping off, finding support at 491 satoshis later that month. From here, we see a bounce back up towards the all-time high, but price falls short, closing below 1,050 satoshis. From here, we see a swift return back to the base at ~500 satoshis, with the then-all-time-low giving way in July, culminating in several months of bleeding, with price finding its current all-time low at 81 satoshis in November 2019. Most significantly, price created a range, with range resistance at 148 satoshis, which was adhered to for almost 4 months between mid-October and earlier this month. Since, price has rallied out of the range, closing above its 200-day moving average for the first time in its history. Price is currently pressing up against prior support turned resistance around 250 satoshis, above which is the next level of resistance at 320 satoshis. If we see a continuation from here, there is zero resistance between 320 and 490 satoshis.
I am quite confident that COTI has now begun its first bull cycle, having broken out of its accumulation range. As such, I will be buying dips with a view to hold my position for the cycle, as I believe that a ~$7.5mn market cap for a project that is processing $5mn on-chain a month with a NVT of sub-50 (and that is consistently growing its merchant ecosystem) is certainly undervaluation. My stop loss for this position would be to exit on a Daily close below the all-time low at 80 satoshis. I am targeting 490 satoshis firstly, but I expect much higher prices this year if the underlying business and ecosystem continues to grow as it is.
And that concludes my Coin Report on COTI.
This report is now over 6,000 words, and it is time to draw it to a close.
My final grading for COTI is 9 out of 10.
Here, you can find my grading framework, for reference.
Lastly, here is a link to a Google Sheets file with any significant data from previous reports compiled for cross-comparative purposes. I will keep this updated as I continue to write these reports.
I hope this report has proved insightful and that you’ve enjoyed the read! Please do feel free to leave any questions in the Comments, and I’ll answer them as best I can.