Satoshi Nakamoto’s 2008 white paper originally envisioned Bitcoin as a tool for electronic payments, enabling secure, non-reversible digital transactions without the need for a trusted intermediary.
Instead today Bitcoin has evolved into digital gold, functioning almost exclusively as a store of value, with very low velocity. With a throughput of only 5.5 transactions per second and relatively high fees (average $10+ and higher for time sensitive 1-block situations), the Bitcoin blockchain is simply not suitable for day-to-day commercial activity.
Many other cryptocurrencies have been created since Nakamoto’s breakthrough, each seeking to address some subset of the world’s financial transaction needs, with varying degrees of success. None has taken a holistic approach to the entire problem space and none are in common use among the general public.
The Epicenter project was launched in 2017 by a team of crypto and finance veterans to address the full set of financial transaction needs. The team recognized the tremendous importance of the Bitcoin model, in providing a cryptographic store of value that was immune to arbitrary inflation… but they also recognized that real-world transactions today still require a seamless transition from digital into fiat currencies.
It was easy enough to provide one or the other; the challenge was to provide both, and still comply with all the regulations emitted by the various sovereign issuers of fiat currency. Fortunately the Bitcoin revolution sparked a wave of technical innovation in the world of cryptography and the Epicenter project has been able to put these new technologies to good use.
Many of the digital currency solutions offered to date have been Layer-2 solutions, which attempt to address the scalability problems of an underlying blockchain such as Bitcoin by adding a network layer on top, effectively preprocessing and bundling transactions. While this can improve throughput, the overlay approach inevitably requires some degree of centralization, which ultimately leads to problems of its own (add-on fees, censorship, lock-ups, etc.).
The Epicenter ecosystem starts with the assumption that a Layer-1 solution is inherently more robust and secure – and with modern technology can be made extremely efficient. We deemed that an acceptable solution must satisfy the following requirements:
- Scalable – The solution must be lightweight and fast and be capable of maintaining these attributes over time as the system grows.
- Censorship Resistant – The system must be open to all, immune to censorship.
- Centralization Resistant – Elimination of intermediaries was Nakamoto’s original goal; a true community-based solution will limit the opportunities for power centers to develop.
- Accessible – Users should have fast, unfettered access to their digital assets.
- Fungible – All units of currency must remain interchangeable; significant friction would be introduced if users had to be continually on guard against “tainted coins”.
- Regulatory Compliant – The solution must adhere to the laws and regulations of all controlling jurisdictions.
The bedrock of the Epicenter ecosystem is the Epic Cash coin, which was designed to meet all of the above requirements. It is a novel, Rust-based implementation of the Bitcoin Standard, with full Nakamoto consensus, a fixed emission schedule and the same hard limit on the ultimate supply (21M). Epic Cash was launched in September, 2019, under the ticker symbol, EPIC.
To address scalability, EPIC uses the Mimblewimble protocol to keep the blockchain size to a minimum and to ensure a modest rate of growth, such that home computers and even smartphones will be able to host a full node, both now and in the future. A full EPIC node currently only requires about 1.2 Gb.
To help resist censorship, EPIC adds the Confidential Transactions (CT) and CoinJoin technologies to scramble the details – participants and amounts – of all the transactions included in a block. Particular addresses cannot be sanctioned because they are not visible.
To combat centralization in mining activity, EPIC employs a range of different Proof-of-Work schemes that can be hot-swapped on the fly (RandomX, ProgPow, CuckAToo31+, …). The mix of these algorithms will allow home computers, and soon even mobile phones, to successfully compete with special purpose ASICs in mining EPIC. The potential for the unbanked citizens of developing economies is enormous.
By remaining a Layer-1 solution, EPIC makes accessibility trivial – transactions take place directly on the chain, with fast settlement times and low fees. There can be no discrimination against small transactions because all transaction amounts are blinded.
Fungibility is guaranteed by the same technologies that deter censorship – if all transactions are opaque then coins cannot become tainted.
Regulatory compliance is relatively straightforward for EPIC, by itself, since it is pure open source software, with no controlling entity. Where regulatory compliance really comes into play is with EPIC’s paired stablecoin, EUSD, which functions as the bridge to the fiat world of commerce.
EUSD is an ERC20 token that can live on Ethereum, or on any one of a number of other smart-contract blockchains, including Polkadot, Binance Smart Chain, Tron, Avalanche, Solana, and many others.
One EUSD token is always and instantly redeemable for $1 worth of Epic Cash. A holder of Epic Cash can create EUSD, as needed, by staking ECR tokens, which are discussed below, and pledging EPIC in an (overcollateralized) smart contract. Receivers of EUSD might ordinarily be expected to redeem it right away, either for Epic Cash, which would cost them nothing but the smart contract gas, or for dollars, with a 1.2% transaction fee. Depending on the EPIC dollar price history, some users can be expected to prefer to hold EPIC rather than fiat.
The goal is to minimize currency risk for a receiver of EUSD, but to do so without a hard peg to the US dollar, as that would entail substantial regulatory hurdles. Instead, therefore, EUSD is soft pegged to the dollar, through its pairing with EPIC. Of course this means that there is always some slight amount of skew, either up or down, between $1 and amount of Epic Cash redeemed by one EUSD… but the Epicenter ecosystem comes equipped with a wide range of tools to minimize that skew and maintain the soft peg, even in the event of a sudden, sharp drop in the dollar price of EPIC.
The final component of the Epicenter ecosystem is the ECR token which, like EUSD, is an ERC20 token that can live on a number of different smart-contract blockchains. ECR will have its genesis on February 28, 2021. On that date there will be a snapshot of ownership on the Epic Cash chain and all Epic Cash owners will be able to claim ECR tokens, one for one, on March 28, 2021.
Since there will be approximately 10M Epic Cash coins on that date, approximately 10M ECR tokens will be distributed. These tokens can be sold immediately, or they can be retained to generate income through staking. An additional 15M ECR tokens will be created on that date and either distributed to team members and ecosystem partners, or sold to investors to raise capital that will be kept in reserve, to backstop the EUSD soft peg.
Holders of the ECR token are essentially trustees for the Epicenter ecosystem, in the sense that they have voting rights – one vote per token – when it comes to setting the policies and parameters that govern the system. ECR holders have skin in the game: they can expect to profit from seigniorage and transaction fees when the system is functioning smoothly, but they also assume the risk if the EUSD token comes under attack: the Epicenter protocol will automatically dilute the ECR token as necessary to maintain the EUSD soft peg.
If a user’s Epic Cash account can be considered their savings – their digital gold – then EUSD could be considered a checking account for dollar-denominated expenses. In the same vein, ECR could be thought to fill the role of the Federal Reserve for this monetary universe: it stabilizes the currency (EUSD) and the ECR holders are compensated for the risk they assume.
ECR is equivalent to an investment, with both risk and reward, but through their voting rights – selecting the parameters that govern the system – ECR holders can have a direct impact on their own success. This structure was designed to ensure that the ECR token cannot be construed as a “security,” as defined by the Howey Test, since its profits are not solely derived from the efforts of others.
Rather ECR holders are directly involved in the profitability of the token by choosing the goldilocks levels for all of the system parameters – not too hot and not too cold… and the incentives are structured so that ECR holders will not actually profit unless they participate in the Epicenter governance.
The design of the Epicenter ecosystem was a painstaking process, years in the making, which is now coming to fruition… and not a moment too soon: there are increasing signs of severe stress in the current financial system, leading many to fear that a tipping point is near. Epicenter is ready. The ecosystem was designed from the ground up to harness the power of modern cryptography to finally realize Nakamoto’s original vision and address the full set of financial transaction needs.
So what’s ahead? In the near-term, EPIC will soon upgrade to Mimblewimble++ which will give the cryptocurrency a strong move forward in terms of both fungibility and scalability. In addition, more partnerships will be announced, including with a major crypto that will strengthen EUSD’s decentralization. 2021 is shaping up to be a ‘Epic’ year, pun intended.