October 31st: Bitocracy 3.0 and Bitcoin 2.0

Fellow Sovryns,

On October 31’st, 2008, Satoshi Nakamoto released the Bitcoin Whitepaper. He released the Whitepaper in advance of the network so that others would have the opportunity to participate in mining - so that Bitcoin could start life as a decentralized effort. 

Today, October 31’st, 2023 - 15 years later - we have added a new layer of decentralization to Bitcoin. We have added a protocol that allows trade, lending and the creation of BTC-backed stablecoins. Sovryn is now directly controlled by Bitocracy.

Bitocracy itself is one of the most important innovations of Sovryn and sits at the heart of much that we do. Trading, lending, Zero, stablecoins — these are exciting and useful things and they generate revenue. Together with the SOV token price, these are the things that most easily garner attention. 

Bitocracy, however, does not so easily elicit attention. Products and prices attract far more attention than process and persistence. But it is process and persistence that dictates everything else. In Bitocracy, we have created a process that guarantees decentralization, good governance, and incentive alignment. We have created a system through which this process can persevere beyond the efforts or lifetimes of any individual. 

Our world is afflicted by many ills. The root cause of many of them is coordination failure. Bitocracy is a tool aimed squarely at this root problem. It is the glue that holds us together, as an alliance of Sovryns. And it is the means through which we, as stakeholders in this alliance, direct its energies. 

In the latest series of decisions around Bitocracy 3.0, we saw complete consensus and phenomenal stakeholder participation.

SIP-47: Changing of the Guardians, passed with 100% approval and 31.5% turnout

SIP-46: Transfer of Contract Ownership, required four votes and passed with 100% approval and 28.6% turnout.

Pause for a moment and let that sink in. We have a community of disparate individuals, who don’t know each other, from around the world — but who are united by a common purpose and have elected to be governed, voluntarily, by a system of rules, not rulers. Two years into this experiment we are still participating, contributing, and moving forward — we are uncompromising in our persistence, uncompromising in our process, and uncompromising in our principles. I think Satoshi would be proud. 

Now, we can turn our attention and efforts to the next phase of our plan. The first signs of spring are starting to show: Interest and attention in BTC is again on the rise. We are beginning now the long road back up to new all-time highs. 

We have a lot of work before us.

We must reignite Zero.

We must increase protocol revenue and revenues to SOV stakers.

We must create opportunities for the scattered individuals of Sovryn to form bonds in person.

We must introduce many more people to Sovryn and the opportunity for self-sovereignty.

We must bring rollups and new layers of trustless functionality to Bitcoin. 

We have been through a long winter, a time for repair and consolidation. We made significant improvements to the infrastructure of Sovryn. It is more secure, easier to maintain, easier to expand. We improved the UX, we decentralized the contracts, we introduced Bitocracy 3.0, and we ran experiments with both Zero and perps. And we prepared the groundwork to lead the coming Rollup revolution. We have not wasted this very valuable winter. 

Over the course of winter, we discovered that Zero is a very powerful tool but can also be a two-edged sword. Strong demand  exists to take no-interest loans, but we need to create a more robust market for Sovryn Dollars.

We also recently discovered that the BabelFish incentive curves work—they create a marketplace that was missing for Sovryn Dollars to be traded for imported stablecoins. This provides us with the outline of a path to reignite Zero:

1. We should continue to grow the value of imported stables in BabelFish—this will create a ready market for Sovryn Dollars and provide a path for Sovryn Dollar value to be materialized as USD. Growing the supply of stables to about 50% of the pool will cost in the vicinity of $40k.
2. We should introduce similar curves into the Sovryn Mynt. Instead of modulating origination demand through the manual process of Origination fee SIPs, this would create dynamic fees that would automatically adjust to market conditions. 
3. We should reduce the redemption fee. We need market makers of all sorts to feel comfortable holding Sovryn Dollars. This means they need to have assurance that they can cheaply realize the value they hold in Sovryn Dollar, in BTC terms. This will make market makers, institutional savers, and others feel more comfortable holding and relying on Sovryn Dollars. 
4. We should smooth the flow of Sovryn Dollars to fiat USD. Having less friction on on/off ramps to DLLR will make it easier to use as a currency.
5. We should make it easier for people to borrow Sovryn Dollars with BTC. This can be done with our existing lending pool. With the right UI, it can even be used to lever up BTC holdings without the complexity of margin trading. This would also generate more demand for Sovryn Dollars as a yield-bearing asset that can earn interest in the lending pool.

I believe that we can achieve these goals by the end of Q1 2024 and should dedicate the effort required to do so. 

Now, as the frost of winter begins to thaw, we are positioned to focus once more on growth. Through continued dedication to principle, process, and perseverance, the seeds we plant in the coming months will, over the next two years, deliver groundbreaking growth.

We will reignite Zero.

We will increase protocol revenue and revenues to SOV stakers.

We will create opportunities for the scattered individuals of Sovryn to form bonds in person.

We will introduce many more people to Sovryn and the opportunity for self-sovereignty.

We will bring Rollups and new layers of trustless functionality to Bitcoin. 

We will build a world on Bitcoin. 

Stay Sovryn.