Figment’s First Look: e-Money
Nov 2, 2020 update: The e-Money network is scheduled to relaunch with an upgraded protocol on Nov 4, 2020. There will be substantial changes, which include new issuance NGM tokens. Notably, NGM will be unlocked and freely transferable. See our FAQs for more information.
The e-Money network launched on March 25, 2020, and Figment is active in the validator set. If you’re looking to stake e-Money NGM tokens, head here. If you would like to purchase NGM tokens, the e-Money presale registration will be open until April 1.
Here’s a quick look at the e-Money proof of stake network:
- What is e-Money?
- Acquiring & exchanging NGM tokens
- NGM staking rewards
- NGM staking risks
- Future of e-Money
What is e-Money?
e-Money will issue a set of currency-backed tokens (similar to stablecoins). The e-Money network will also support the decentralized exchange of these and other digital assets, meaning that owners maintain custody.
e-Money will create fully compliant, interest-bearing currency-backed tokens. e-Money will enable sub-second blockchain payments settled immediately and on a global scale. These currency tokens are backed by deposits and government bonds–collateral held at commercial banks. This collateral is insulated from the finances of the e-Money A/S company by being kept in segregated accounts.
e-Money will initially issue EUR and CHF tokens compliant with European legislation, with a long-term vision to support all global currencies, beginning with the top ten currencies by trading volume. Similar to bank account savings, these tokens are interest-bearing, meaning that interest is applied without the need to lock up funds according to the rate set by the central bank of the respective currency.
As a layer of added protection for token-holders, funding is reserved to finance the liquidation process in case of insolvency, which includes redeeming all issued tokens. Auditors at Ernst & Young will provide quarterly proof of funds.
The transparent network that secures e-Money transactions will be decentralized and secured by a digital asset called the NGM token. Participants will use the NGM token to earn rewards for helping to secure the e-Money network.
Acquiring & Exchanging NGM tokens
If you would like to purchase NGM tokens, the e-Money presale registration will be open until April 1.
NGM tokens are not currently transferable, however, NGM will be able to be exchanged via e-Money’s coming decentralized exchange (DEX). NGM will only be used in a transfer or trade on the DEX if e-Money A/S is on one side of the transaction. Why? The e-Money company was advised to structure the NGM token so that it is non-transferable.
The e-Money company expects to periodically revisit the question of transferability of the NGM token, the first time being March 2021. The company will then reassess the risks and exposures associated with a possible transferability of the NGM token, with the aim of eventually making it freely transferable. There will be a fixed supply of 100 million NGM.
NGM Staking Rewards
Staking entitles you to earn rewards for securing the network. Looking for staking instructions? Here’s our guide. There are two sources of NGM staking rewards:
- Transaction fees
- 1% of all e-Money currency tokens
The second source of staking rewards is the annual 1% inflation markup on each currency-backed token, so the rewards that are distributed to NGM stakers are tied directly the supply of e-Money currency tokens. This markup is applied continuously and distributed pro-rata. The e-Money team posted FAQs here.
We can expect rewards to be relatively low until the e-Money network begins issuing currency tokens and transaction volume begins increasing.
NGM Staking Risks
If you’re delegating NGM, you can lose part of your stake (via “slashing”) and miss out on rewards (via “jailing”) if your validator breaks protocol rules. There are two ways this can happen.
1. If your validator is offline for long enough that it misses 10% of blocks in one hour, two punishments happen:
- you will lose 0.01% of the stake that you have delegated to this validator
- you will not earn rewards for at least an hour or however much longer it takes for your validator to resume operations
2. If your validator signs two blocks at the same height (“equivocation”), two punishments happen:
- you will lose 5% of the stake that you have delegated to this validator
- you will not earn rewards until you redelegate to another validator (since the validator that breaks this rule is permanently jailed)
Future of e-Money
Now that the mainnet has launched, the e-Money team is focused on:
- Accelerating expansion of supported currencies and regulatory regimes, such as North American and Asian currencies
- Stepping up marketing efforts to drive community growth and adoption
- Establishing additional partnerships with banks, networks, exchanges, wallet providers, integrators, etc.
Hopefully you found this useful. Questions? Comments? Feedback is always welcome! I’m on Twitter.