Hey Ecommunity,
I’d like to open up discussion about some proposals I have for Eco’s market positioning, system design and roadmap — and the steps I believe we need to take to raise our profile and attract volume in the present market cycle (and beyond). Some of my proposed actions, detailed below, represent significant changes in the protocol following several weeks of research, reflection and conversations with some of you as well as potential partners.
TLDR: I hope you’ll read my full post below, for more context and to understand my rationale, but here is the end state for what I am proposing:
- We would reposition the Eco Protocol as a cross-chain transaction system, with a focus on payments rather than currencies, for the foreseeable future.
- We would migrate the protocol from a two-token currency system to a single-token payment protocol, with ECOx serving as the governance token and having a role to secure the protocol.
- We would accomplish this migration by suspending monetary governance and removing the Trustees; and we would create a mechanism for existing ECO holders to swap their ECO for ECOx at a defined rate.
Many key stakeholders in our system — Andy and our other co-founders, the Eco Inc. team, Eco Association, the Trustees, early investors — are not only aware of my thinking here and aligned with it, but also informed this proposal with their own ideas and feedback. I trust that some of them will add their own thoughts and feedback to this thread. I’m excited to present these ideas and discuss them with you.
Origins
Eco is now six years old as a project. We started with a vision — An open financial system for the world, with better money — which remains our driving motivation today.
We began with the ECO currency model as a thought experiment: A money governed for its users, by its users.
In March 2021 the Ecommunity launched with Points. Thus marked the beginning of Era Zero.
In October 2022 the Eco protocol launched with the ECO and ECOx tokens. Thus marked the beginning of Era One.
This post summarizes a proposal for Era Two.
Note that this is how I think about “protocol eras” separately from our preexisting concept of Discord eras.
Payments Before Money
A pragmatic focus on products, distribution and user experience is something that grounds us. Any money must be accessible, and useful, to have a chance to succeed; in other words, money is only as good as its network effect.
So we’ve built various products to try to distribute and incentivize use of ECO in the interest of its broader adoption: the Eco App, Tender Merchant, and now Beam. You could even think of ECO’s monetary policy as its own product of sorts. Along the way we also trusted that other key components for adoption — in particular payment focused wallets and scalability infrastructure — would converge to enable use of not just stablecoins, but also alternative currencies like ECO. But that convergence hasn’t happened as quickly as we hoped, and for various reasons, adoption has been hard to come by. The market is not ready for the money we’ve been trying to build.
I believe that’s mainly because crypto is still not widely adopted as a means of payment. And until crypto scales globally as a means of payment — something we still believe is inevitable — people will not ‘graduate’ to thinking about alternative money. Let us not forget that Bitcoin was originally intended to be payment technology. We continue to see Eco as an extension of that unfulfilled original vision.
How to move forward? I believe that we should focus on building crypto payment infrastructure, agnostic to the Eco Currency for now. To that end, I propose that we focus our governance actions and collective efforts on making Eco the winning crypto payment platform, and only then do we return to build on the monetary foundations of the Currency itself (which remains my driving motivation and the long-term goal).
From Era 1 to Era 2
Era 1, the initial Currency Era, has been an attempt to prove the concept of the Eco Currency: the role of the Trustee group, the process of monetary governance, the technical functionality of monetary policy levers in the system. On that basis you might call the initial era successful, as we were able to:
- Recruit an incredibly high-caliber group of contributors to serve as Trustees and govern the Eco Currency
- Implement entirely onchain monetary levers (many of them not attempted before) and a voting system to enable human-governed supply & issuance
- Execute public onchain monetary policy decisions, every two weeks for the past year-plus, without system vulnerability or downtime
But beyond proving the concept, obviously we wanted to gain the trust of the broader market, and see ECO being used in a variety of ways. We have not seen that happen.
To give Eco the best chance to win — as a community, a payment protocol, and ultimately an economy unto itself — in this market and in the long term, it does not feel like the best use of our resources to continue focusing on monetary governance as we have been. In my opinion, we must move quickly and decisively in this market, because this is the first time I think our project narrative lines up strongly with the leading themes of the moment. So we must seize it. Therefore I propose that we halt monetary governance and reposition Eco as I describe below.
Era 2 would position Eco as a payment protocol rather than a currency system. We would accomplish this by building a cross-chain transaction protocol and a dedicated rollup to secure it, seeking to make Eco the default protocol for projects building the best crypto payment applications.
Within the Ethereum ecosystem today, which would remain our starting point, inefficient liquidity fragmentation and a lack of fast and trustless interoperability mean that the payment user experience is (ironically) not dissimilar to the issues we have with banking today: slow, expensive transfers between siloed systems built on different sets of rules. These fragmentation problems were predictable but are becoming more acute, such that “interoperability” and “shared trust/security/liquidity” are themes dominating the current market.
Our proposed solution — which would not be another general purpose silo but a system optimized for sourcing and sharing liquidity across valuable payment routes — is designed to address these problems, enabling transactions across the Ethereum ecosystem in a way that is fast, permissionless, and ultimately the most capital efficient. Within this framework, ECOx will play a role in governing, securing and collateralizing certain functions (a separate post will focus on details for updating the tokenomics).
This is not hypothetical or a mere exploration. The Eco Inc. team has been thinking about the design space for months. With Beam, development of an early version of this solution is already underway to power its seamless user experience across Optimism and Base. This proposal has been informed by solving our own product problems, and would have us generalize and open source that work as the backbone for the Era 2 protocol, secured and governed by ECOx.
Beyond removing monetary governance, I am also proposing that we sunset the ECO token for now, to migrate the Eco protocol from a two-token currency system to a simpler single-token transaction protocol. This will focus the market on the utility of ECOx by itself. We would incentivize existing ECO holders to return their tokens to the protocol treasury in exchange for ECOx at a fair rate.
These would be the changes that define Eco Era 2. Below I outline the governance actions I believe are required to upgrade the system accordingly.
Proposal: A Two Step Migration
I believe multiple governance steps are necessary to migrate Eco from its existing two-token currency system to a single-token payment protocol.
We would still want to execute the existing plan to upgrade to a more modular, maintainable “1.5” system design. However, we would implement Eco 1.5 without Trustees or monetary policy enabled.
We would also want to build some default mechanism for existing ECO holders to easily swap to ECOx, to maintain their existing governance stake and economic stake in the revised system. Determining the exact ECO-to-ECOx mechanism is obviously important and will be discussed in its own proposal. This also includes a proposal for swapping unclaimed ECO tokens that community members are eligible to from the original Community Claim.
Finally, we would complete the sunset of the ECO token by removing its governance rights and encourage LPs to remove ECO liquidity to avoid confusion. I would propose that we return the circulating supply to the system treasury (although some small balances will inevitably remain in dormant wallets).
Together, these actions would make the ECOx token the focal point of the protocol, while ensuring existing ECO holders retain their governance stake after migrating their ECO. It would also leave the base contracts and governance system in a place that is simpler to maintain and upgrade going forward.
Conclusion
This would be a big shift, but one I’ve discussed at length with the Association, Trustees, and some of you. It needs further specification and R&D, but I believe it is the right direction and represents an enormous opportunity for Eco. It leverages many of our best technical ideas and most important product learnings. I also believe it demands a sense of collective urgency. It’s a shift that I am excited about, and that I feel we are well equipped to accomplish — one which aligns Eco (perhaps for the first time) with several timely and valuable market themes in this cycle, while focusing our roadmap with a stronger sense of near-term direction. Crucially, this keeps us on the path to our original and ultimate vision. As always, we seek to all win together.
I would like to stage open discussion in this Forum about this proposed direction over the next few weeks. I welcome your commentary.
