Chronobank Whitepaper

Tuesday, June 19, 2018
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CHRONOBANK - REVOLUTIONARY PLATFORM FOR CRYPTO ASSETS MANAGEMENT THE CHRONOBANK TEAM CHRONOBANK.IO [email protected] Abstract. This whitepaper abstractly describes a system designed to tokenise labour-hours using blockchain technology. ChronoBank is a proposed implementation of the described system that can be deployed in several economic localities. The proposed system leverages smart contract techniques to automate a process whereby a country-specific ‘labour-hour’ token may be redeemed for real labour-hours via legally binding (traditional) contracts with labour-offering companies. ChronoBank is also the platform with the wide functionality that may become available for Time Token holders. 1. Introduction centralises the entire wealth of the system. Typical stable- coins are also subject to fluctuations in the value of their With the advent of cryptocurrencies, relatively in- underlying asset. While these fluctuations are usually very stant low-cost transfers of value have become a reality. small when compared with fluctuations in traditional cryp- Blockchain technology, which is a defining feature of most tocurrencies, they are still significant. For example, USDT cryptocurrencies, has recently been applied to solve a great is subject to the devaluation of USD due to inflation. variety of problems. Currently the most widespread imple- In this paper, we propose a stable cryptocurrency sys- mentation of blockchain technology is Bitcoin [1], which is tem which addresses the aforementioned drawbacks of a simple asset transfer system. The asset in Bitcoin’s case existing stable currency solutions. Specifically, we propose is a bitcoin (BTC). The value of this token has seen rapid a new type of token which is not backed by any existing variation since its inception in 2009, which has hindered fiat currency or physical store of wealth, but instead is its feasibility as a global currency. backed by legally binding contractual obligations to pro- There have been a variety of attempts to realise the vide real-world labour-hours. As such, the system and its advantages of blockchain technology while simultaneously controlling entity are not responsible for the centralised mitigating issues regarding the stability of value for cryp- storage and management of wealth. Further, the value of tocurrency applications. To achieve this, many attempts an unskilled labour-hour in a particular geographic region employ the notion of a stable-coin, whereby each token of naturally adjusts according to economic conditions such value in the system has a counterpart of equal worth stored as inflation, thereby maintaining the long-term intrinsic in a non-digital and tangible form in the ‘real world’. value of the cryptocurrency. Two example implementations of the aforementioned This paper is organised as follows: In Section 2 we pro- stable-coin paradigm are listed below: vide an overview of the system as a whole before discussing the technical details of the necessary system components USDT by Tether[2]: and processes. Section ?? provides economic consider- Each USDT token is backed by an equivalent ations in brief, regarding the real-world deployment of amount of United States Dollars (USD) held in this system and its feasibility. Finally, Section 3 discusses a reserve account by the private company Tether future directions and applications of the system and of Limited. ChronoBank. The appendix of this document provides sup- Digix[3]: porting reference of several concepts introduced throughout Each token is backed by an equivalent amount of the paper. gold, which is stored in reserves by a dedicated precious metal storage custodian. In both examples, it is always possible for a token holder 2. The ChronoBank System to redeem that token for its counterpart, thus ensuring its fundamental ‘stable’ value. Similar to existing stable-coins (such as USDT by Tether Another notable example of a stable-coin is Bitshares [4], and Digix), we propose a centralised entity that coordinates which attempts to decentralise the entire system through the creation, redemption, and destruction of Labour-Hour the use of digital Contract For Differences (CFD) [5] inter- Tokens (LHT). We refer to this entity as the ChronoBank actions. The system presented in this whitepaper does not Entity (CBE). It is responsible for the acquisition and coor- attempt to achieve decentralisation, but instead attempts dination of legally binding contracts for labour, in addition to address some of the drawbacks surrounding existing to the creation and dissemination of LHT. Ultimately the centralised stable-coins. These drawbacks include difficul- role of the CBE is to ensure the stability of the LHT system ties regarding the storage of physical or economic wealth, through careful management of the system’s underlying and the increasing likelihood of attacks, as a single entity processes. This section will provide details describing the 1

CHRONOBANK - REVOLUTIONARY PLATFORM FOR CRYPTO ASSETS MANAGEMENT 2 proposed processes, practices, and operations undertaken ChronoBank system doesnt require technical knowledge by the CBE and its associates. or a deep dive into it to start use of the system. All the fea- The system as a whole is designed with the intent of a tures that are based in ChronoBank can be easily applied single deployment per economic region. For instance, the if the user wants to. It provides the unique functionality system could be deployed once in Australia using the value to manage the Assets: easy Asset creation, manage the of one labour-hour in the Australian economy, measured in owners of the Asset, create an Asset Buyback or start a Australian dollars. As this document is an abstract descrip- Crowdsale campaign for their Asset. Crowdsale feature tion of the system, it does not refer to any region-specific has extensive possibilities to sell for ETH, ERC20 tokens, implementation but instead refers to generalised system launch external services automating sailing and funds man- parameters that must be tailored for each region. With few agements from other blockchains, Bitcoing for example. exceptions, all processes and structures described in this To use these system possibilities there is a need to have a document may have slight variations in implementation Time Token. between regions in which ChronoBank operates. Time Token will allow the users to unlock the system The initial implementation of the CBE utilised the unique functionality by means of deposits in Time To- Ethereum[6] blockchain; however, future implementations kens to TimeHolder contract. The purpose of TimeHolder may tokenise assets on alternative blockchain systems (e.g. contract is to keep track of user Time Tokens which are Waves [7], Bitcoin [1]) when it is deemed appropriate. allocated by the user for operations within the system. In most cases Time Token is used as fuel to perform required system functionality. This means that for the use of the 2.1. TIME Tokens functionality users will be charged a fee. Charging will In order to fund the development and operation of the be taken by ChronoBack in Time Tokens that the user ChronoBank system, there was a fundraising phase known previously deposited to the TimeHolder contract. Fee value as the crowdsale. During the crowdsale, individuals could is defined by system administrators that are permitted to purchase TIME tokens at a fixed rate. Time Token provides manage it. There are the following features that requires the token holder admittance to the ChronoBank system fees in TIME tokens during their invocation: operations, which means that the Holders of TIME To- kens will extend their possibilities by unlocking the unique functionality available in the system: to create new brand (1) Create Platform - The Platform is a central point platforms, to create assets and crowdsale campaigns, to of user assets management. It provides the possi- Buyback ERC20 tokens, to create and remove wallets, and bility to easily and quickly create new Assets. to vote on important decisions regarding the ChronoBank (2) Create Assets (with and without fee) - Assets are system. ERC20 tokens that are created by users. Users TIME tokens are developed utilising the Ethereum that created their Assets can further operate with ecosystem, specifically leveraging the ERC20 token them, for example Assets can be Crowdsaled. standard[8]. The ERC20 specification is extended to pro- (3) Create token crowdsale - When users want to vide the functionality mentioned above; this is discussed Crowdsale their tokens they may create a Crowd- further in Section 2.1.2 below. sale and get funds in any token registered in the ChronoBack system. (4) Create token wallet - There is a possibility to cre- 2.1.1. Crowdsale ate two types of wallets: a) multi-signature wallet with given parameters and b) multi-signature wal- During the crowdsale, TIME tokens were created as let with 2 factor authorization necessary and sold at the fixed price of 100 TIME tokens (5) Create Buyback - This is the instrument allowing for 1 bitcoin (BTC). There was no limit to the number of to regulate the market value of the ERC20 tokens. TIME tokens generated during the crowdsale; however, no One Buyback is created per one token. further TIME tokens were generated after this phase of the project. All TIME tokens purchased during the crowdsale con- From time to time, the CBE may hold polls on the stituted 88% of the total TIME tokens generated dur- Ethereum blockchain to elicit the opinion of TIME to- ing the initialisation of the ChronoBank system. The ken holders. Poll results will be incorporated into decisions remaining 12% of tokens were split with 10% given to made by the CBE concerning the financial or technical the team (for ongoing research and devel- direction and/or implementation of the CBE system. Only opment) and 2% to advisors and early adopters of the TIME holders are authorized to participate in a poll. system. For the Voting feature there is only a need for the user to have a Time Token deposit where the voting weight is calculated according to the rule: deposit amount defines 2.1.2. TIME Token Use voting weight. No fee will be charged for participation in ChronoBank provides extensive possibilities to its users. a poll. It allows to manage your own Platforms and Assets that TIME holders may deposit and withdraw their TIME are based on Ethereum ecosystem. Platforms act as a tokens at any time. Withdrawing TIME tokens will influ- base for all token operations as issuing, balance storage, ence the voting weight of active polls in which the user transfer; Assets define some custom internal logic to allow participates. When the user withdraws the Time token implementing different behavior, for example, adding a fee from the TimeHolder contract the voting weight of this to token transactions. user is re-calculated according to the rule.

CHRONOBANK - REVOLUTIONARY PLATFORM FOR CRYPTO ASSETS MANAGEMENT 3 2.2. Labour-Hour Tokens context. This will necessarily be performed before a real- world implementation is constructed. Labour-Hour Token (LHT) is the fundamental unit of LaborX. The digital asset management system described value within the ChronoBank system. The purpose of it in this document is proposed as a first step towards a larger is to provide a non-volatile, inflationary-resistant digital decentralised labour system. LHT as described by this store of value on various blockchains. We envisage LHT paper forms the base currency for a decentralised labour ex- for utilisation in future systems, such as LaborX. LHT change platform entitled LaborX. The intention of LaborX value is non-volatile and inflationary-resistant because it is to enable peer-to-peer exchange of labour-hours with is managed with BuyBack contract that inherits buyback LHT, thereby reducing the centralisation of the proposed process aiming to provide value stability for LHT or ERC20 ChronoBank system. LaborX will incorporate a rating tokens. system whereby holders of LHT can identify fair trades by LHT is the main means of payment for people’s work examining the quality and/or specialisation of the labour in LaborX sidechain, as well as ETH in mainnet. LaborX provider, given their history on the platform. By enabling will be deployed in sidechain which its effective consensus, direct exchange of LHT with labour-hours, the system’s high performance, low-cost transactions and a progressive dependency on contractual arrangements is significantly reward algorithm for block mining. That allows to scale reduced. This potentially reduces the cost and increases our current system. It is also important to note that there the stability of the system as a whole. is no PoW in sidechain - but there is PoS. LHT will be mined on LaborX sidechain. The miners (validators) will receive LHT for the work of their nodes. 4. Conclusion To start mining there is a need to make a deposit in Time- Holder. Deposits can be opened in Time or any other This paper proposes a non-volatile, inflationary- ERC20 token. It is important that deposit will play a role resistant, digital asset management system. This innova- of a warranty to provide protection from faulty states and tive system is only made possible by recent advancements fraud it will be lost by unfair validator once the fraud is in blockchain and cryptographic technologies. Leveraging detected. Further, there is a need to run our private node these technologies, this system tokenises contractual debt with the private key of the account on behalf of which the in a manner that can be both economically feasible and deposit was made, and it will be automatically allowed to highly practical for digital platforms, such as LaborX. start mining the blocks, getting LHT from the sidechain. LHT can be used as a ”fuel” for LaborX. It is also planned to add the possibility of exchanging LHT for ERC20 tokens References or ETH in mainnet. [1] Satoshi Nakamoto. Bitcoin: A peer-to-peer electronic cash sys- tem. 2008. [2] Tether: Fiat currencies on the bitcoin blockchain. 2014. 3. Future Work [3] Anthony C. Eufemio Kai C. Chng Shaun Djie. Digix’s whitepa- per: The gold standard in crypto-assets. 2016. [4] Fabian Schuh Daniel Larimer. Bitshares 2.0: Financial smart Economic Models. Key to the success of the ChronoBank contract platform. 2015. system is an informed choice of the aforementioned eco- [5] Investopedia. Contract for difference. nomic parameters. It is essential to perform further analy- [6] Gavin Wood. Ethereum: A secure decentralised generalised transaction ledger. Ethereum Project Yellow Paper, 2014. sis so as to determine how parameter modification impacts [7] Sasha Ivanov. Waves whitepaper. 2016. the feasibility and sustainability of the system in a wider [8] Ethereum Request for Comments (ERC) 20.