Global Stable Value Token

local tokens

Local Tokens are a non speculative stable value digital currency using distributed ledger technology for security, assurance and transparency for accounting, payments, transfers, conversions and smart contracts.

Stable value tokens are especially suited for transactions, financial contracts and applications, as they retain a known value during the process of execution.

The smart contract technology allows for innovative applications such as incentive rewards, peer lending, merchant prepaid subscriptions and automated conversions with any of the multiple collateral assets held in reserves.

Multi-Collateral Liquidity Reserve

Local Tokens will have a multi-collateral liquidity reserve, a basket of crypto tokens and tokenised assets. Assets will be convertible to and from Local Tokens through an automated liquidity smart contract.

The majority of collateral reserves, for example 80% will be of the most stable value, such as those pegged to major currencies as well as fairly stable highly liquid tokenised assets.

A second portion of the collateral reserves, for example 10% will be held in the most liquid of crypto currencies. A third portion, for example 10% will be held in specialized or user generated tokens (merchant, club, org, fund raise, voucher etc – see “long tail“).

multi-collateral liquidity reserve

When the least stable value collateral asset exceeds an acceptable proportion of the reserves, a portion will be converted (using Bancor protocol, Uniswap and Liquality) to the more stable value collateral assets. Collateral asset ratio re-balancing could occur, for example twice a day or as appropriate, according to governance of the foundation and eventually stakeholders.

Collateral Conversion – Local Token Exchange Rates

Co-here Local Tokens aims to maintain a stable value based on the holding of a collateral reserve with 80% stable assets and 20% non stable assets.
The 20% non stable portion of the reserve has two parts. The first part includes the most liquid of crypto currencies which provides Local Token liquidity with in the wider crypto market.
The second part are user generated tokens, their convertibility with Local Tokens are required to serve automated conversions in smart contracts for participating merchants, clubs, orgs, fund raises, voucher systems etc – see “long tail“.
In order to reduce speculation and dampen volatility when converting Local Tokens with non-stable tokens, an automated higher conversion fee will be incurred during price volatility and higher demand.

See Collateral Conversion with Price Stabilisation

Local Token Price formula

The aggregate value of all collateral and the known total supply of circulating and reserved Local Tokens form the basis of calculating a non speculative price for Local Tokens. The price formula and converstion rate for Local Tokens with the collaterlised assets will be transparent in real time and open source.

Local Token Price = Collateral Reserve Balance /
Local Token Total Supply x Fractional Reserve Ratio

Local Tokens price will be calculated using a Fractional Reserve Ratio or Bonding Curve price formula (possibly augmented).

Additional tokens issued and budgeted for incentives, development and operations will be value matched with an issuance of staking tokens placed in the collateral reserve available for user acquisition (see below).

Network wide acceptance for the price value of Local Tokens allows for stable non speculative automated conversions and smart contract financial applications.

Continuous supply to demand

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BUY: When the liquidity smart contract receives crypto collateral from a wallet to be converted to Local Tokens, the collateral is added to the reserve and Local Tokens are issued and sent to the wallet.

SELL: As Local Tokens are sent to the liquidity smart contract to be converted to crypto collateral, the collateral is taken from the reserve and sent to the wallet, while the “converted” Local tokens are destroyed.

Incentives, development & operations

An additional amount of Local Tokens are issued and placed in a budget reserve, for incentives, development and operations, when new Local Tokens are issued on demand. When wallet users convert Local Tokens to collateral assets those Local Tokens are then destroyed.

These additional Local Tokens will be value matched with a parallel issue of Co-hereDAO staking tokens added to the collateral reserve. The Co-hereDAO staking tokens can be acquired through conversion with Local Tokens.

Co-hereDAO staking tokens can be converted to Local Tokens via decentralised nodes which each have their own Local Token liquidity reserves.

Note: Additional tokens will be introduced, issued, budgeted and implemented, in 3 stages (see roadmap).

For example for every 7,000 Local Tokens issued through sending collateral to the reserve, another 3,000 (+43% more than the value of collateral) Local Tokens are issued, reserved and budgeted for incentives, development and operations.

While they are in reserve they will be transparently accounted for in circulating supply. The initial amounts shown below are to be reviewed with further research, parameterised and governed, initially by the foundation and eventually by staking token holders.

  • Collateral backed Local Tokens issued (ex. 7,000 – 70% of 10,000)
  • Incentives, development and operations (ex. 3,000 – 30% of 10,000)
allocation of local tokens

Half (ex. 1,500/ 3,000) of the additional tokens issued are budgeted to incentivise specific kinds of participation in the network which are considered an aim and benefit of the ecosystem.

  • localisation fund (400) stage 1
  • peer lending loan pool (800) stage 2
  • co-op seed fund (300) stage 3

Note: Additional tokens will be introduced, issued, budgeted and implemented, in 3 stages (see roadmap).

Half (ex. 1,500/3,000) of the additional tokens are issued and budgeted for development and operational purposes.

  • foundation – brand, legals, licenses (200)
  • foundation – support, docs, media, meetups (200)
  • development – technology ecosystem (800)
  • development – integration, partnering (200)
  • network – signup invite bonus (100)

Note: This additional Local Token issuance is an initial adoption phase funding requirement which could be gradually replaced, as the network adoption grows, by
1) portion of stable collateral earning interest (see Dai Savings Rate)
2) lateral transaction fees (example 0.1%)
3) asset conversion fees (example 0.3%)
4) asset withdrawal fees (example 0.5%)
– actual interest and fees to be determined.

Bonus tokens incentivise and recirculate

The localisation incentive bonus (2.41% transferring to an inner locality) distributed to users, will circulate at that locality until it is transferred to a more inner locality (and receive another 2.41% bonus) or to an outer locality (see below).

Transferring to an outer locality incurs a 5% disincentive fee, which is returned to the localisation incentive fund.

localisation disincentive graph

Note: In order to take advantage of the localisation incentive you would need to spend more than half your tokens in an inner locality if you were planning to transfer the entire remainder to your global wallet.

In stage 2 of Co-here ecosystem development, additional tokens are provided to a Common Loan Pool to help fund peer lending. These tokens can be borrowed to pay a reputable merchant for cash purchases or prepaid subscriptions. As the Common Loan Pool is repaid with interest, it is able to make these funds available to new loans, to recirculate inside the ecosystem.

In stage 3 of Co-here ecosystem development, additional tokens are provided to a Seed Fund for local social impact co-ops. The seed fund principal will not need to be repaid to the Seed Fund, but the principal must be spent in the Local Token economy, to recirculate inside the ecosystem and any interest due to staking or investing in the co-op will be returned to the Seed Fund.