What are SiaPrimefunds and Why Would Anyone Want Them?

Update as of 7/15/2019

We’re making a slight change to the information previously released. We still plan to create an additional 20,000 SPF as discussed below but we’re planning to separate the new units as SPF-A and SPF-B. SPF-A will earn 10% of all transaction revenue and SPF-B will continue to earn 3.9%. A discussion of what SPF are follows.


The software underlying SiaPrime (Sia) has a number of features, of which two are cryptocurrency coins/tokens. On the Sia network, Siacoins purchase and serve storage through allowance and collateral mechanisms, while Siafunds are a secondary token. There are only 10,000 SF in existence and they cannot be mined or created without a hard fork and code change. At the SiaPrime fork, 10,000 SiaPrimefunds were created and airdropped to the holders of Siafunds in a gesture of goodwill.

Every transaction on the Sia network has a 3.9% surcharge. Fees are collected automatically from contracts and distributed equally to the 10,000 Siafunds. The actual returns are minuscule but if the project achieved cloud storage scale, they would become significant passive revenue devices and the Sia team is banking on them for long term revenue generation. In fact, this is the primary goal as they do not have a strategy to sell storage directly.

Our roadmap and internal list of proposals deviates significantly from Sia though a strong case can be made we are focused on the same roadmap Sia use to focus on toward a business cloud. Even so, there is still a large amount of the core protocol and host software that we plan to continue to use and support. First a quick note on the licensing schema chosen by the Sia development team.

MIT License

Sia software is fully open-source and delivered under an MIT license which grants the following (Note there are no requirements other than keeping the copyright notice intact.)

Permission is hereby granted, free of charge, to any person obtaining a copy of this software and associated documentation files (the “Software”), to deal in the Software without restriction, including without limitation the rights to use, copy, modify, merge, publish, distribute, sublicense, and/or sell copies of the Software, and to permit persons to whom the Software is furnished to do so, subject to the following conditions: The above copyright notice and this permission notice shall be included in all copies or substantial portions of the Software.

Precedent

With a solid technical plan for our product, we’re now seeking ways to raise funding for developers. Thus, we plan to fork and create an additional 20,000 for a total of 30,000. We will offer some in our current private capital raise efforts and perhaps find a way to offer them publicly in the near future. Best place to learn about this kind of news is our Discord.

The wrinkle in this reset is the original 10,000 are automatically diluted if we make no changes to the structure. 3.9% would be split over a larger population. One Siafund holder has made a stink and suggested this means we should never add new SPF. His short-sighted view is underpinned by the fact there was no consideration for the units gifted him, yet if we are successful he stands to gain significantly. To demand we never make another change to the emission schedule or payout structure is unreasonable and certainly not precedent-setting.

Further, he raised his issue before we ever made a definitive statement on our plans. We still have time before we need to do the hard fork required to issue the new units and the conversations are ongoing. Previously, we had considered softening the dilution by raising the payout percentage to 10%. The initial 10k would see a minor deduction from the original return.  We also gifted the Sia developers 300,000,000 SCP as a bonus and thank you.

Beyond this, we will build it into our corporate charter that this will be the only and last configuration change to the SPF mechanism though as with Sia, a change can be made by the developer at any time even though Sia devs like to suggest the community has a say (hint, they do not). Sia devs can change the schedule to 10 or 15% at any time and there would likely be little if any fallout.

The effect of this change will likely allow our project to get funded as we start in on core development. It will give our developers skin in the game and will incentivize our team and backers for the long run to come. It is a necessary and only mildly controversial move where we worked hard to find the right path for everyone involved. We thank our community for it’s continued support.