The Daily Chain and Blockfyre Present: COTI AMA


On Wednesday the 19th of February 2020, Efrat, Nim and Shahaf of the COTI team took part in The Daily Chain and Blockfyre’s fourth Community AMA based in their joint Telegram

The session lasted for around 45 minutes and featured a number of wide ranging topics related to COTI product news and updates.

The AMA took place on February 19th October in the FyreChain Telegram Channel

Below is the full transcript of the AMA:

Blockfyre: Let us begin with a very short introduction for the 1% in the crypto space that probably doesn’t know COTI yet 🙂

Could you give us the highlights on what COTI does?

Efrat: COTI is a fully encompassing “finance on the blockchain” ecosystem that is designed specifically to meet the challenges of traditional finance (fees, latency, global inclusion and risk) by introducing a new type of DAG based base protocol and infrastructure that is scalable, fast, private, inclusive, low cost and is optimized for real time payments. The ecosystem includes a DAG based Blockchain, a Proof of Trust Consensus Algorithm, a multiDAG, a Global Trust System, a Universal Payment Solution, a Payment Gateway, as well as consumer (COTI Pay) and merchant (COTI Pay Business) applications.

Blockfyre: Could you share the latest updates?

The launch of decentralized community nodes. The first month was a lucrative month for COTI’s stakers and node operators, as they reached around 50% annual return rate collected from fees!

A DeFi partnership with Celsius – enabling consumers and merchants to easily earn interest and access loans directly on the COTI platform.

Received the highest rating to date from our lovely hosts for this AMA,  Blockfyre.

Blockfyre: Let’s jump into one of the most recent and definitely most exciting news about Coti: Credit Card Processing. How many companies are you speaking to at the moment are interested in using COTI to process their credit card transactions?

Efrat: We have approached around 20//30 merchants and most have said yes and are now in the onboarding process. The process includes Merchant Application Forms with banks and then some minor tech integrations. It usually takes a few weeks to have a merchant approved and ready to go on the network.

Note this only has to happen once and that if they decide they’d like to use other features of the COTI network, these can be easily enabled within their Merchant account, without having to go through another approval process.

Blockfyre: Wow 20-30 merchants already!

What sort of merchants are you aiming to? What sort of volume do they process?

Shahaf: It makes more sense for us to focus on mid-size merchants that process several million of  USD a month and to take some share from that, rather than speaking with hundreds of merchants that are smaller and process tens of thousands of dollars.

It also makes sense for us to focus on merchants that need us most, specifically merchants that are considered “high risk” and pay the highest fees.  These merchants are the ones that need a solution like COTI the most, so it’s an easy sell to them. They’re mostly in lucrative industries who process huge volumes, so that works well for COTI as well.

We’re targeting some of the “bigger fish” early on to expand the processing volume on the network significantly before we move onto the “smaller fish”.

Blockfyre: Just to clarify this a little bit more. Can you explain what a high risk merchant is and provide a real world example of one for us?

Shahaf: High risks merchants are merchants that are considered with a higher risk of a charge back (cancellation of a transaction) by the banks and card networks (more than 1% chance). It doesn’t mean that they pose risk to their consumers, of course. 

The obvious example that everybody thinks of is that any merchant that does gaming or anything related to cryptocurrencies is considered “high risk”. But, you’ll be amazed to know that a lot of verticals are considered high risk, like travel, software as a service, consumer electronics and many more.

So, for instance, even EXPEDIA is high risk as it belongs to the travel industry. 888 gaming, another highly regulated public company also falls into this high risk category, as they’re in the gaming industry. I think you’re starting to get the point I’m trying to make…

This product we’ve created has a hugely addressable market that affects all sorts of industries and merchants and our solution can not only make their lives a lot easier and take the hassle out of dealing with being “high risk” but we can also save them significant amounts of dead money, money that’s written off as a “cost of doing business”.

Go to any business and tell them you can easily increase their margins with a few lines of code and no change to their current processes and see what they say.  I think you’ll find it similar to what they’ve been saying to us of late…YES!

Blockfyre: That totally makes sense, I agree!

The article above mentions that you expect credit card processing to triple the volume of transactions processed on the COTI network in the short term.  Is this from new or existing merchants?

Shahaf: Obviously our existing merchant base will process credit cards with us, but also new merchants, as offering CC processing is part of our merchants acquiring strategy.  As I mentioned previously we’re in talks with dozens of merchants of which a good portion of these are in the process of being on boarded onto the network. Now that our credit card processing is live, we’ll ramp up these efforts and start talking to even more merchants.

Efrat: If you are or know of a merchant who would meet the criteria for this service on the COTI network, you can get them to apply here –

Blockyre: How much do you expect this processing volume to grow past the short term? $5m USD to $15m USD in the short term, what about past that?

Shahaf: The processing business is a business of very high volume by nature. All the money processed in the world goes through processing companies. Growing from $5M to $15M is very realistic when you consider that. 

Where do we project this can grow? I’ll answer by giving you some context: Adyen, a pretty big payment processor, but in no means a giant in the field, also aiming at mid size companies – has processed about $120B USD last year.

Blockfyre: Well and I thought 15M is already massive lol. The targeted market is indeed insanely big.

How does this increased volume on the network affect stakers and your staking program?

Shahaf: it has a great effect as all transactions are mirrored on the Trustchain and so this increased volume will mean hundreds of millions of extra COTI being processed, growing the fees and the rewards to all stakers. It’s going to be very big in that sense.  

Remember all transactions processed by a node result in a fee that is paid directly to the node owner, and/or their stakers  There’s a direct relationship here.

Blockfyre: I read that you plan to launch a coin purchase program, how does the volume you process affect it?

Shahaf: All fees paid to COTI by merchants are turned into buying power in the market. These coins aren’t supplied directly by COTI from any funds we hold, we have to buy them on behalf of the merchant on the open market.

As we take a few percent from this volume, you can do the math…

Blockfyre: That seems like a lot of additional demand for the coin. Now the big question: can you tell us when you plan to buy coins from the market?

Shahaf: Of course I can, but I won’t 🙂

If we let people know that will leave us open for exploitation and may even be deemed as price manipulation, which is something that we are very cautious of, as we want to be sure we play the game the right way.

Blockfyre: You mention in the credit card article processing credit cards is being used as a customer acquisition strategy for COTI.  Can you expand upon that for us?

Efrat: Credit card processing also acts as a customer acquisition and growth hack strategy for other elements of the business. This allows us to quickly and easily onboard businesses with a product they are used to using, while being able to expose them and “upsell” them to the other many features of the COTI network.

So, for instance, we do credit card processing for a merchant in the gaming space. He is doing well but still limited with some cards and we offer him to process Bitcoin and get FIAT instantly. Suddenly he sees that he can process more and get his money right away. That opens up the conversation for deeper and deeper integrations. Most merchants don’t know the benefits of digital currencies but love it when they actually get it.

Blockfyre: What are the advantages for merchants over traditional payment networks?

Efrat: A merchant would prefer COTI Pay to his traditional solution because COTI gives him everything that he gets with his previous solution (like credit card processing) but adds some very important benefits like INSTANT payment, low transaction fees (sometimes 90% cheaper), Defi based Savings account and global access to the underbanked. 

When compared to a crypto processing solution, like BitPay, we offer a complete solution by allowing credit card processing, which is most of the merchant’s business and access to loans and savings. We are the only true universal solution out there.

See table:

Blockfyre: Exactly how does a merchant process credit cards on the COTI network?  Is this part of the merchant tools spoken of in the article?

Efrat: When a merchant signs up to use the COTI network they’re assigned a merchant account which contains a few lines of code they can add to their website that allows their consumers to use our solution as a payment gateway.

In the merchant tools backend, the merchant can simply click a checkbox to enable different payment options.  As you’ve seen in our previous releases, we’ve already released a BTC and ADA version of the gateway, and now of course we have credit cards.

So the merchant currently has the ability to select between or all of the 3 current options and instantly enable these for their business.

Of course, these 3 options are just the start.  We’ll soon be adding in ETH and ERC20 options, various stable coins and tokens from some projects you might already know quite well…

Blockfyre: Hmmm, that makes me curious. Am I right in saying the cost per transaction would be the same for a low risk merchant and high risk merchant on COTI and that this is part of your pitch to such merchants?

Shahaf: You’d be right but it goes deeper than that as COTI assess merchants by their individual Trustscore and not by the industry they are part of. So, we PERSONALIZE the risk assessment to the specific merchant and not broadly categorizing the merchant according to the industry he is in.

Other than being more fair, this really opens up possibilities for merchants to process more revenue and for COTI, of course, to do better with fees. It goes even deeper as this Trustscore can serve as the basis for other applications, like loans. A merchant with a high Trustscore may be eligible for a bigger loan at a lower fee. Trustscore, to my opinion, is what’s missing from financial systems on blockchain today – and we aim to solve it.

Blockfyre: Let’s move over to another exciting topic. You have recently launched MultiDAG. Can you explain to us what that means?

Nir: The MultiDAG is a tremendous achievement, being the first-ever DAG structure that allows token issuance on top of our DAG-based Trustchain protocol. The COTI MultiDAG ecosystem is similar to Ethereum, in the sense that both are common decentralized infrastructure acting as the basis for a multitude of different tokens and smart contracts while utilising one main coin for all fees and staking within their respective ecosystems.

You can read more here:

Blockfyre: I understand that you can issue a token on a DAG and it’s a world’s first, I actually got quite excited about it when you announced that. 

Can you explain how that is different from the other DAGs out there?

Nir: Other DAGs out there, can’t issue new tokens on their network. What they do is duplicate/fork the entire network and just call the token with a different name. This is very different to MultiDAG which is the same network with different clusters handling different tokens. The COTI MultiDAG ecosystem is similar to Ethereum, in the sense that both are common decentralized infrastructure acting as the basis for a multitude of different tokens while utilising one main coin for all fees and staking within their respective ecosystems.

 However, unlike Ethereum, the COTI MultiDAG is a series of permissioned instances that allows the token issuer and owner of the individual MultiDAG instance to set their own rules specific to their needs and/or use case. In addtion, Issuing COTI DAG tokens does not require coding smart contracts, of any kind nor at any level of network interaction. 

The MultiDAG transactions can also be  “multi-currency”, meaning a transaction bundle can contain base transactions nominated in different tokens. Since our DAG as a data structure is agnostic to the transaction payload, this means the flow of attaching transactions to the DAG and TrustChain consensus stays the same for MultiDAG.

This is also an advantage that allows us to focus on our primary target of adoption, enterprise clients. Enterprises by their very nature demand a controlled environment that delivers certainty of network availability combined with sufficient flexibility and scalability. 

This creates the confidence that enterprises need to have a long-term corporate approach using COTI. With the COTI MultiDAG, enterprises can now build upon a network they can truly trust. Remember, one enterprise = many users!

Blockfyre: Changing token metrics is always a risky topic in crypto. You have recently changed yours and have received great applause for it. Could you run us down with the changes?

Efrat: – COTI is moving from a monthly release schedule to a semi-annual release schedule, so that tokens will be distributed twice a year (February and August)

– Changing the lockup schedule to seed, private and advisers allocations (restructure to major holders, including extending some of the allocations and accelerating some portions – to support the semi-annual release schedule)

– We locked up a very substantial amount of token supply, 400M / 20%, for 12 years behind a smart contract, effectively lowering the total supply and ensuring these tokens cannot be accessed outside of the set schedule (i.e no team dumping ever!)

– Extending team lockups for 10 years

– Introducing a buyback framework

Here is the full article:

Blockfyre: What is a vault and a cliff in this case and how does it work?

Efrat: A vault is a mechanism to lock tokens without the team’s reach. We’ve created an article that describes what the Vault is and how it functions.  

Please refer to the following article:

In it, you can view the code for the smart contract and verify the release schedule has been coded into it as per the new release schedule.

The 3-year cliff is a period in which the tokens could not be accessed under any circumstances.  As you can see from our Valut smart contract, we cannot access any of these tokens within this 3 year period and once that period has finished, the smart contract will release tokens to us according to the described schedule.

This means we are LOCKED IN to this schedule and as stated in the announcement, and this should reduce the community fears of the team selling or dumping these tokens on the open market. After the 3 year cliff, in which tokens are fully locked, tokens in the vault will start to be released on a gradual basis for the next 9 years.  

You can see this schedule in the following table:

Blockfyre: You have added a lot of supply to circulation, but price hasn’t declined, but actually gone up. How did you manage to achieve that?

Shahaf: We don’t discuss prices. But i think it would be fair to say that we didn’t achieve that ourselves, but the wider community did. 

It’s always a question of supply and demand and in this case, demand exceeded the added supply. 

That’s a tremendous vote of confidence and demonstrates the strength of the coin.

Blockfyre: How are all these changes of benefit to current token holders?

Shahaf: Moving to a twice-a-year distribution model is expected to bring more stability to the COTI coin in the shorter and longer terms and reduce the stress of the monthly release schedule has placed on both current token holders and the company.  This was the number one objective we had in making these changes and was based on overwhelming community feedback.

You spoke, we listened.

Of course, there were some trade offs that had to be made along the way and our hope is the community is understanding of this fact.  By locking 400M tokens (20% of the overall token supply) behind a smart contract, this not only reduces the amount of circulating tokens in both the short and long term but also ensures there is no speculation as to team selling or dumping tokens, as even if we wanted to (we don’t) we can’t.

We have also significantly extended team lockups, again showing our long term commitment to COTI and COTI token holders and our hope is that this should offset much of the effect of the immediate release and improve the token economy. 

Lastly, we have secured further commitment from seed, private and advisers by prolonging 332M coins for 6-42 months.

Blockfyre: As a long term investor, staking is a big topic for me. This year you have launched decentralized nodes and staking. Can you tell us a bit about that?

Efrat: COTI’s staking model is built to be competitive to DeFi income models and provides a means to generate a steady income from the process of transaction approval in the COTI network.

The economic model of COTI nodes is designed to be fair, efficient and flexible and is based on finely tuned fee distribution mechanisms and staking requirements.

COTI’s staking model allows users to run Full Nodes, which are decentralized servers processing wallet requests, receiving transactions, and performing the required Proof of Trust work (PoT).

Full Node operators receive fees collected from transactions. The more transactions a Full Node processes, the more it earns.

Blockfyre: Can you summarize what staking programs are available and what are the rewards?

Efrat: Of course, please see below:

Blockfyre: What have the rewards been so far for stakers.

Efrat: In January they reached around 50% annual run rate collected from fees!

Blockfyre: Thats huge. Do you plan to launch the program on a reward platform so people can follow in real time?

Efrat: Yes, we are working on it and it will be implemented in the next few days.

Blockfyre: So one last question to cover your DeFi developments as well:

What is it that the Celsius partnership brings to users and merchants?

Efrat: Thanks to this new partnership, both our COTI Pay and COTI Pay Business applications will enable both consumers and merchants to easily earn interest on stable coins and cryptocurrencies, while also gaining easy access to loans, all powered and secured by Celsius Network.

Access to loans for most merchants is limited to the bigger payment networks, such as PayPal. COTI offers a superior product that distinguishes itself by offering something no other payment networks offer: a new revenue stream from stored balances for both consumers and merchants alike.

Blockfyre: Alright that would it be from our side, thanks for these amazing and thorough responses, super informative already!

Are you ready to open up the chat and take the community’s questions? 🙂

Opens up to community questions…

Community: When new exchanges?

Shahaf: With regards to exchanges, you know well enough about us not being able to give you a direct answer. What I can say is that we think you’ll be quite happy with what we’ll deliver.

There’s a saying in Hebrew that translates to something like “Patience is bitter, but it’s fruits are sweet”

Community: Will staking be available to all at some point in the future?

Shahaf: the plan is to widely expand it. We are working on Staking 2.0 these days with that in mind

Community: Congratulations on achieving the first credit card payment on COTI. Does this mean COTI can broaden its target merchants and lower the required $50k minimum monthly sales transaction volume?

Efrat: $50k is still the minimum but not the target as we aim to mid-cap merchants that do a few millions a month (USD).

Community: Can you tell us how many merchants you are working with at the moment?

Shahaf: The more interesting question is about processing volume as the number of merchants in itself is not a real indication. That said we are working with a few tens of them and processing a bit more than $5M / month now. 

With the new Explorer coming soon you’ll be able to track this

Community: Is there a location where we can view SDK’s and a “how to” toolkit to integrate COTI into current online and fixed payment systems?

Nir: Yes, the SDK will be deployed to the public gitHub soon but we work closely with any merchant that works with us. In the meantime, you can view COTI-PAY integration and COTI-Shop which are available as a demonstration.

Community: How does Coti manage to overcome high speed retail transactions on slow transaction DLT’s such as BTC, ETH etc and the lack of interoperability?

Nir: Well the way that it overcome the BTC/ETH network scalability issues is using bridge payment which is used for quick approval (maintained and operated by us) and we do the assessments on when to accept the transaction. So merchants are credited immediately but crypto full cycle till confirmation takes longer.

Community: Do any of Dr Nir patents offer any protection to Coti?

And Are there any outstanding patents waiting approval?

Nir: The past patents were mostly written while working in IBM and related to data storage and data analysis. Since crypto based solution are in most parts open source everything that we delivered is not protected through issuing patents but rather protected through open source license.

Community: Would you consider COTI ready for large volume clients such as London Underground or US Postal Service and if not what do we need in place before being ready for these sorts of clients?

Shahaf: i think the Tech can be there, but these type of clients require a support system of account managers, finance auditors etc – which will require us to grow the team substantially. 

We have a lower hanging fruit we’ll pick first

Community: What would be the most important thing I should tell my friends who are considering investing in Coti?

Efrat: I’ll give you more than one:

1. Huge 20$ Trillion market 

2. Real proven business model that is already generating revenues

3. Utility for holders: price increase as the network grows, running nodes to gain more coins

4. Superior Tech – high reviews by experts

5. Proven team with a track record of success

6. Strong partnerships – Cardano (ADA), LINK, DAG, FTM, Celsius, Simplex, Japan’s biggest internet conglomerate – Recruit, and more

Additional COTI Content on The Daily Chain:

The Daily Chain Primers: An Introduction to COTI

The Daily Chain
Inform. Educate. Succeed.

*Disclaimer – This was a sponsored AMA.

Alex Smith
Alex is the Founder of The Daily Chain and has been in the space for just over two years. Fascinated by the community and everything that blockchain has to offer, Alex dedicated himself to creating content and contributing back to the industry.

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