The Next Eco Era: A proposal for what's ahead

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.

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We, the Eco Association, are very excited about the Era 2 proposal. We were one of many contributors in the development of the proposal itself and we believe this direction represents the highest impact near-term focus for the project-at-large.

Some brief reflections from our perspective:

Throughout Era One, we’ve been in the trenches with the Trustee group as they have navigated experimenting with monetary policy at this stage of the currency. We’re incredibly proud of the work completed in that vein to date, and of the history that has been made in exploring new frontiers of currency governance (much of which is logged onchain, and can be viewed on Eco Atlas). As Ryne points out in this post, however, we have not seen the currency concept proven out in gaining the trust of the broader market, and to that end, the currency hasn’t really broken through from the experimental stage.

At the same time, we’ve been watching the onchain payments space closely and are seeing the screams from the market for the payment protocol that Ryne contemplates in the post — this gives us the potential, collectively, to insert ourselves as a project into a space where there is a real, acute market need today, during this very cycle — and one where we have contributors with the deep expertise & ability to do so effectively — all in service of the longer-term currency vision that remains our driving motivation.

We’re incredibly excited about Eco’s future and to boldly enter this new Era, together, with the entire Ecommunity.

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Trustee Group Meeting
Hi Everyone, I’m Pete Dattels, one of the current Trustees. Here’s a statement on behalf of the 2024 Trustee group, and I encourage other Trustees to weigh in individually as well.

The Trustee group met in Denver to assess the past year’s experience with monetary policy and the future path for the Eco protocol. The Trustee group was in broad agreement that costly frictions stymied the transmission of governance and monetary policy tools in support of the currency and its adoption. The group concurred that the currency’s ultimate success depended on first improving the infrastructure for digital payments. In this connection, the development of Beam as a friction-free mechanism to transfer value across diverse chains, coupled with an easy user interface, is potentially a giant leap forward. The Trustee group agreed with Eco Inc and the Eco Association that limited resources are best focused on the launch and further development of Beam and its underlying infrastructure, and ‘strike while the iron is hot’ with a clear communication of Eco’s vision. Monetary policy governance would therefore be paused until such a time when prerequisites outlined above are in place and the environment is ripe.

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The question we have to ask ourselves is what we can do to make ECO, or now ECOx, succeed. When I was asked this question, as a trustee, and given what our options were and the state of the industry, there was no pause in my response to support the move that Ryne has suggested. I fully endorse it, and still have confidence that we have the right plan, team, and leadership to achieve the vision we’ve all chosen to endorse. This is just the next chapter in the ECO story, and I’m looking forward to pursuing it with the rest of you.

Subspace

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Well, when the work is in full swing, I think these changes will help us in the future.

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How many networks will Ecox have?

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Thank you Ryne for sharing the vision for the next era of Eco. I am very excited about the Era 2 proposal as it allows us to make necessary adjustments based on the demands of the market and to further improve the Eco protocol.

The novel concept behind the Eco currency was ahead of its time. The focus on payments allows us to introduce Eco to the broader market as a frictionless option for crypto payments across chains that abstracts the complexities of crypto (such as blockchain fees on different chains). At a later stage, we can use the generated momentum to strategically reintroduce different aspects of Eco’s original vision.

Thank you for taking the Ecommunity along so that we can boldly enter this new and exciting Era of Eco.

I fully support the proposal! Exciting times ahead.

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Do you mean supported chains? Good question… If Eco goes the route of a cross-chain transaction system, I assume multiple chains will be involved. Right now, Eco tokens live on Ethereum, Optimism, and Base. Looking forward to more updates about this in the future.

I would like to point out that not all of the blockchains you mentioned are fully supported. Support implies the ability to freely buy/sell the token, which does not seem to be the case on the Optimism blockchain (judging by the lack of liquidity, as evidenced by messages on Discord), as well as on the Ethereum network (given the extremely high cost of gas, which makes active buying/selling with small amounts impossible).

I hope that the existing shortcomings will be taken into account and corrected in the new era.

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I wholeheartedly endorse this proposal. It is a thoughtful and strategic approach to our current circumstances. Implementing it will enable us to progress and further advance ECO vision. Over the past year, we have accumulated a wealth of valuable data, experimented with different monetary levers, and tested the limits of our control over the economy. Transitioning to the next ERA should be a crucial component of our growth, as it will facilitate more efficient resource utilization and help us achieve more substantial results in a shorter time frame.

As a community representative, I believe this initiative will enhance the value of the ecosystem by making it more focused, more liquid, and more appealing to new investors. I anticipate this move will generate additional value for ECO and all stakeholders. Furthermore, this proposal aligns with our long-term vision of expanding our reach and revolutionizing on-chain payments. The increased focus will allow us to more effectively allocate resources, accelerate innovation, and deliver greater products. I’m confident this strategic shift will position us for continued growth and success in the years to come.

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As for the proposal, I didn’t really understand its long-term goals and how to measure them.

I would like to remind you that there is (I assume) a roadmap. Andy somehow asked in the Discord what should be in the roadmap and I remember giving suggestions like this Discord and the following one too.

Rereading my own suggestions, I understand that in general nothing has changed, I also understand that there is no need to do everything at once, and therefore it would be interesting to look at the Beam Wallet roadmap in its current form so that I can make suggestions if possible and get opinions and recommendations from the community.

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This proposal is more about introducing a purpose built protocol that whose primary function is to reduce the need for projects to deploy their tokens across many different chains / networks / rollups in the first place. Ideally the protocol would facilitate seamless value transfer across many networks without the need to deploy ECOx on all of them to do so.

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just want to point out quickly that that focus of this proposal has to do exclusively with a realignment of priorities for protocol growth in the near / mid term and how we may go about implementing that. It doesn’t cover ECOx token specifics or functionality right now. You’re point is well made and very much something we need to dive into in the coming weeks but just for clarity it’s outside the scope of this particular post.

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Dave, thank you, I understand, but I hope you will forgive me.
I don’t often have the opportunity to wait for the message I need to appear, and I rarely have the opportunity to take the initiative myself, so…:

Wallet Beam needs a killer feature that solves ONE well-defined and very big problem. And here it is important to choose the right audience, whether we focus on crypto adopters or those who are still thinking and will soon come to crypto - the problem should be equally big for both. Solving it is what we need to do to be successful.

And to me, the problem looks simple and complex at the same time: Beam wallet need the ability to WITHDRAW digital dollars - to turn crypto into fiat. The obvious solution is P2P trading, but we need to think about the less obvious ones.

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I just have one question, can I get a grant to sell rubber products (rubber gloves for cottage, cleaning, swimming caps) under the new Eco protocol.

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Yeah I generally agree on your points with regard to Beam adoption. Finding quality On/Off ramping solutions is one of the hardest problems for Web3 products building for everyday users. It’s a space that the Beam team has spent a great deal of time researching and getting the right solutions, in the right markets, for the right audience will definitely be a focus.

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I support the changes, moving forward is also development.

In connection with plans to make changes in tokenomics I have the following question:
The eсoX token was deflationary, are there plans to keep its concept the same?
( as an example : transaction fees are paid in ecoX token )

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I fully support this decision.
I was looking forward to the move for the growth of the EСO .
I am sure that the new vector will help to unlock the full potential of the EСO.

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The function of ECOx within the new protocol is one of the next main design decisions that needs to be fully assessed. As of now there seem to be a number of different ways that the ECOx token might be built into the foundation of the new Eco protocol. As of yet nothing has been finalized tho. That said, all of the options up for exploration are being judged on how they might maximally spur the growth of the protocol. Lot’s more to come on this topic soon.

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I also feel very passionately about this feature being accessible to everyone around the world. That’s one of the goals! adding as many banking partners/offramping solutions as possible. the unfortunate truth is that each and every country and even states (in the US) have different rules for crypto which can make it hard to get offramping solutions for everyone everywhere!

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