Oath is a decentralized dispute resolution and governance protocol. Modeled on the common law jury system, it combines one of the most reliable real-world legal systems with blockchain technology, cryptography, computing algorithms, game theory reputation system, and other concepts. Oath provides a layer 2 cross-chain infrastructure for a decentralized, standard, and extensible public chain-agnostic protocol that protects dApp users’ rights and assets.
The Oath Protocol Token (OATH) will be an essential part of the Oath Protocol Platform and will facilitate engagement among participants on the platform.
The overarching goal of Oath Protocol is to build a standard, transparent, and fair dispute resolution system for the decentralized blockchain ecosystem. For more information on our dispute resolution mechanism, please see the Oath Protocol white paper.
OATH Utility
OATH is an ERC-20 (Ethereum-based) token intended to provide three utilities: (1) it allows participants to access the dispute resolution and governance platform, (2) it rewards jurors for making good decisions (voting for the winning party), and (3) holding OATH will give jurors the ability to increase their “credit level” and, as a result, be eligible for higher awards.
1. Case Initiation
To initiate Oath Protocol, users (dApps and chains) will have to deposit an agreed-on amount of OATH tokens into the smart contract. This deposit is intended to reward jurors’ for their decisionmaking, and it will be returned in full if no one initiates a dispute.
2. Juror Awards
If one (or both) of the parties open a case, the OATH token deposit will be used to incentivize the jurors to accept and decide the case. Only the jurors who make the right decision, and correctly vote for the winning party, will be awarded OATH tokens for their service.
3. Credit Level
Within the Oath Platform, each juror’s case award is proportional to that juror’s “credit level,” calculated based on several factors: voting history, response time, appeals history, amount of OATH held, and token holding period. The credit level system incentivizes jurors to hold OATH to increase their OATH-based case awards, thereby reducing token velocity.
OATH Design
OATH token design is fundamental to Oath Protocol, and we designed OATH with the following goals in mind: (1) healthy circulation with relatively stable price, (2) “invisible hand” within the shared economy, and (3) cross-chain token compatibility.
1. Healthy Circulation
Initially, our partners (public chains and dApps) will need to hold OATH to provide the benefit of Oath Protocol to their users and facilitate dispute resolution on their platforms.
For example, a partner may purchase 10 million OATH to use our protocol for governance and dispute resolution on its platform. The partner would use those tokens to reward jurors for deciding cases. Once the tokens are awarded to the jurors, they will have two options: (1) hold OATH to increase their credit level and generate more OATH-based income (explained above) or (2) convert OATH to fiat on secondary market. Because the jurors are incentivized to hold OATH to increase their case awards, they are unlikely to sell all of their OATH tokens, choosing to hold onto some of them instead. Let’s assume, for the sake of this example, that the jurors sell half of the tokens and hold the remaining half, thereby reducing the flow of the token back to the market.
Although only half of the juror tokens flow back to the market, thereby decreasing total supply, the partner’s demand remains the same, and the partner needs to purchase additional tokens on the secondary market. With decreased supply due to juror holding and constant (or increased, as new partners start using Oath Protocol) demand, the OATH value in the ecosystem may increase, which in turn may incentivize jurors to release more of their OATH back to the market, maintaining the token value equilibrium and preventing extreme price or trading volume fluctuations due to speculation.
2. Invisible Hand
We will issue and maintain a supply of 10,000,000,000 (10 billion) OATH tokens. With increased use of the protocol and natural growth of the community, the demand for OATH will increase as well. Oath Protocol will not increase the token supply, nor will we decrease the barriers to obtaining OATH for any party.
Oath Protocol is premised on the idea of autonomy within its community. The parties will decide how many OATH tokens they want to allocate for dispute resolution, and the jurors will independently decide whether to accept the case based on, among other criteria, the reward pool. This mechanism creates a free market, regulated by the “invisible hand,” that prevents extreme fluctuations in the cost of dispute resolution due to changes in the token supply or community size.
In other words, as the jurors — motivated by OATH awards — make good case decisions and increase the reputation of Oath Protocol in the blockchain ecosystem, more and more chains and dApps will want to use it for their governance and dispute resolution. This, in turn, will increase the demand for OATH on secondary markets, making OATH more scarce and increasing its price, incentivizing more jurors to join the juror pool. As more jurors join and begin to compete for cases, the amount of OATH necessary to attract jurors will decrease. Conversely, if there is a surplus of OATH in the ecosystem, the amount of OATH needed to attract jurors will increase, and our partners will need to purchase more OATH to meet the juror demand.
3. Cross-Chain Compatibility
Our official token, OATH, will be an ERC-20 token on the Ethereum network. For our public chain network partners, like Quarkchain or NEM, we will release alternative versions of the token (e.g., OATH-Q or OATH-N, respectively) to facilitate cross-chain exchange. To maintain the 10 billion total OATH supply, we will lock the amounts of ERC-20 OATH equal to the amounts of issued alternative versions, released once the alternative versions are swapped for the ERC-20 tokens by users.
By way of an example, if Oath Protocol releases 10 million of OATH-N for NEM, at the same time, we will lock the same amount of OATH in a smart contract. OATH-N will be used as a payment method for any services provided by Oath Protocol on the NEM network. Any users holding OATH-N will be able to exchange it 1:1 for OATH, and vice versa, transacting with OATH’s smart contract and therefore maintaining the total OATH supply.
At the outset, Oath Protocol will control the cross-chain token exchange for security purposes, but as we integrate with more partners, the exchange process will become more transparent and efficient.
A Path Forward
We believe that, through its utility and design, OATH will enable us to build a true, successful sharing economy. We look forward to building this new ecosystem with you. Stay in touch with Oath Protocol by joining our official channel on Telegram at https://t.me/oathprotocol and following us on Twitter at https://twitter.com/oathprotocol.
Disclaimer
We will test the OATH utilities and design as described above. Like many others in the ecosystem, we strive for decentralization and we will attempt to get there with the above methods. However, we may have to iterate and change our design, and the above descriptions are subject to change by the team and community.
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