[SCP-68] Foxchain x Coinbase Cloud: Support Proposal

Foxchain x Coinbase Cloud: Support Proposal

Summary

Coinbase Cloud understands that launching networks is a difficult task and doing so successfully requires reliable partners. We have a comprehensive cross-functional team that would partner with ShapeShift to enable best practices in design, build, ecosystem development, GTM, and positioning.

Abstract

ShapeShift DAO is looking to launch Foxchain, a data availability network, on Tendermint with the objective of decentralizing blockchain data. Foxchain is a purpose-built blockchain designed to store metadata for every blockchain supported by ShapeShift. Operators running CoinStacks register their CoinStacks in Foxchain to earn passive income. Users find and connect to CoinStacks with Foxchain. There is no cost for anyone to use the network. Users can also delegate their FOX tokens to validators they believe are serving the community well.

Our proposal addresses the terms of engagement and deliverables that would govern a partnership between ShapeShift DAO and Coinbase Cloud with regards to Foxchain and the infrastructure required to power the network.

Motivation

We are beyond excited to be exploring this opportunity with you all. We see our partnership as a fundamental enabler for the evolution of one of the most important blockchain ecosystems out there.

Coinbase Cloud is a long-time supporter of the Cosmos ecosystem. We’ve been running validators for Cosmos since its inception and power infrastructure for a number of major participants. We also support other Tendermint-based protocols including Terra, Oasis, Crypto.org, Cronos, Provenance, Osmosis, and Evmos — allowing us to implement best practices and learnings that provide a seamless experience across protocols. We have grown to power a significant amount of staked assets on Tendermint protocols while ensuring high-level performance for both our public community validators as well as the private, dedicated validators we run for our customers.

Our cross-functional teams include:

  • Protocol Operations
    • Protocol Specialists that provide a scarce and coveted resource within the crypto community by providing deep expertise across protocols, ensuring best practice implementation
  • Product, Engineering, and Design
    • Product Managers, Engineers, and Designers that focus on and support Tendermint-based protocols
  • Business Development
    • Business team support for Foxchain rollout to provide infrastructure for your token holders and developers, and to enable custodians and other partners to add staking support
  • Product Marketing
    • Product Marketing team support for co-marketing and GTM efforts to increase brand awareness, recognition, and positioning, subject to Coinbase Cloud’s reasonable approval

Specification

In the following section we outline the terms of engagement we propose.

Phase 1: Design, Build & Launch Support

  • Technical Design:
    • Partner with ShapeShift, providing technical and protocol expertise to help establish world class infrastructure operations. Our engineering team has experience across a number of blockchain protocols.
    • Advise on blockchain network best practices to the Foxchain Team including:
      • Node Architecture Design
      • Key Management
      • Monitoring and alerting
      • Testnet/Incentivized Testnet/Mainnet rollout
  • Protocol Design:
    • Share learnings and best practices from expertise in 25+ protocol launches, including multiple Tendermint protocols
    • Provide hands-on protocol design support on token economics, governance design, penalty and slashing parameters
    • Connect ShapeShift team to other best-in-class protocol teams for collaboration and learning
  • Testnet Support:
    • Provide temporary operational node support, including running short lived testnet validators to test different types of conditions simulated by the ShapeShift team
    • Provide guidance on upgrade and incident response best practices
  • Launch Support:
    • Partner with ShapeShift in order to drive value in co-marketing and branding efforts, subject to Coinbase Cloud’s reasonable approval
    • Support ShapeShift with launch efforts by facilitating introductions to relevant protocol, custody, and/or investor relationships

Phase 1 Deliverables

  • Commit resources from Coinbase Cloud’s Protocol Operations & Product, Engineering, and Business team covering Cosmos, for real-time advising until genesis block (~mid-2022)
    • 1 Lead Engineer, 1 Product Manager, 1 Protocol Specialist, 1 Business Manager
    • 1 synchronous, recurring meeting with 1 Protocol Engineer, 1 Product Manager, 1 Protocol Operations Specialist, and 1 Business Manager to collaborate on above items
      • 1 hour / week
      • Commitment from Coinbase Cloud’s team supporting Foxchain to allocate time and resources to ensure synchronous meeting is productive and action-items are addressed prior to attending
  • Provide feedback and advice on an ad-hoc and recurring basis with regards to:
    • Technical Architecture
    • Protocol Design & Mechanics
    • Testnet Rollout
  • Establish a dedicated private channel for asynchronous discussion and ideation
  • Include Foxchain in relevant Coinbase Cloud public-facing material for prospective and current Coinbase Cloud customers/users
    • Documentation
    • Website
      • Under the “in development” section or equivalent prior to mainnet launch
  • Conduct joint promotional, marketing, and other business activities in relation to Foxchain mutually agreed upon by ShapeShift DAO and Coinbase Cloud prior to publication, subject to Coinbase Cloud’s reasonable approval
    • Social Media
    • Blog Post
    • Other applicable communication channels

Terms for Phase 1

  • ShapeShift DAO provides Coinbase Cloud with a token grant:
    • 2,500,000 FOX tokens
    • Tokens to be paid in accordance with the following schedule:
      • 25% upfront within 30 days of execution on the agreement
        • 625,000 FOX tokens
      • 75% via streaming payments per block over a 12-month period
        • 1,875,000 FOX tokens
        • Streaming payments made through Sablier
  • Coinbase Cloud provides the services listed above as (1) Phase 1: Design, Build & Launch Support (2) Phase 1 Deliverables
  • Termination
    • Either Coinbase Cloud or ShapeShift DAO may terminate this proposal at any time for convenience upon written notice to the other party.

Phase 2: Mainnet Support

Technical & Operational Support

  • Mainnet Support
    • Build, maintain, and offer dedicated validator nodes (Participate) to be generally available for large token holders, ShapeShift DAO members, custodians, exchanges, and other prospective customers
      • Build, maintain, and operate a public community validator for delegation on Foxchain network.
    • Build, maintain, and offer full node services (QT) to be generally available as HA RPC endpoint access capabilities for the developer community
      • Support mainnet rollout plans, launch coordination and onboarding with external partners
    • Create guides for developers, users and partners to understand key protocol functionality
  • Ongoing Support
    • Offer direct line to Protocol Specialists, Engineers, and Product Managers to work on roadmap features and ecosystem development
    • Aggregate insights and relay prospective and committed customers’ feedback
    • Provide ongoing guidance on product features and protocol improvements
    • Continued testing, feedback and troubleshooting on bugs or potential issues

Phase 2 Deliverables

  • Coinbase Cloud commits to building and offering our Participate (dedicated validator nodes), Delegate (public validator nodes), and QT (full nodes) services to the broader community
  • Coinbase Cloud commits to standard SLA terms for validator nodes (Participate) including missed rewards coverage and 99% uptime guarantee
  • Coinbase Cloud commits to standard SLA terms for full nodes (QT) including 99.9% uptime guarantee and downtime-related service credits
  • Include Foxchain in relevant Coinbase Cloud public-facing go to market material for prospective and current Coinbase Cloud customers/users, subject to Coinbase Cloud’s reasonable approval.
    • Documentation
    • Website
      • Under supported protocols after mainnet launch
  • Conduct joint promotional, marketing, and other business activities in relation to Foxchain mainnet launch mutually agreed upon by ShapeShift DAO and Coinbase Cloud prior to publication, subject to Coinbase Cloud’s reasonable approval
    • Social Media
    • Blog Post
    • Other applicable media channels

Terms for Phase 2 (Indicative)

  • ShapeShift DAO delegates FOX tokens to Coinbase Cloud’s public, community validator:
    • 40,000,000 FOX tokens
      • ShapeShift DAO shall use reasonable efforts to ensure that the delegation referenced in this proposal will not exceed 20% of actively staked FOX tokens
      • Tokens to be delegated within six months of mainnet launch for a minimum consecutive period of 12 months
      • Delegation to be phased in the following schedule:
        • 30% within 30 days
          • 12,000,000 FOX tokens
        • 30% within 60 days
          • 12,000,000 FOX tokens
        • 40% within 180 days
          • 16,000,000 FOX tokens
  • Coinbase Cloud provides the services listed above as (1) Phase 2: Mainnet Support and (2) Phase 2 Deliverables
  • Coinbase Cloud commits to setting a validator commission fee in line with similarly sized, premium infrastructure providers on the network, to the extent doing so is commercially reasonable
  • Termination
    • Either Coinbase Cloud or ShapeShift DAO may terminate this proposal at any time for convenience upon written notice to the other party.

Benefits

Long-Term Collaboration with Coinbase Cloud

Our deep Tendermint-based protocol expertise has allowed us to implement best practices including but not limited to:

  • Remote Signer for Security
    • Running Tendermint infrastructure requires running a remote signer, which Coinbase Cloud does through our managed service provider (MSP)
      • Remote signers are one of the most secure ways to generate private keys and sign transactions
  • Managed Service Provider
    • Coinbase Cloud works with Packet, a leading MSP, to provision the signer and has a documented chain of custody into Packet’s secure data centers
  • Redundancy
    • Each Cluster* has redundant infrastructure that is deployed on a different cloud provider/data center and region than your primary Cluster, so you are protected from an outage
  • Double-Signing Protection
    • This unique process prevents a unique, block-signing entity from introducing an equivocation event — such as double-spending
  • Service Level Agreements (SLAs)
    • Market leading SLAs including 99% uptime guarantee
  • Security
    • You manage the authentication options for each node. Service includes bottom-up resiliency with proprietary non-custodial key management, multi-cloud provider, multi-region capabilities, and 3rd party security audits
  • Support
    • 24/7 support including around the clock monitoring, and proactive updates
    • Dedicated Coinbase Cloud team for your network: 1x protocol specialist, 1x lead engineer, 1x partnership manager, 1x customer success manager, directly available to you
  • Community Engagement
    • Continual community, protocol, and industry updates and education from our in-house team of protocol specialists
  • Payment Flexibility
    • Coinbase Cloud is committed to the growth of the industry and, as such, is able to accept payment in digital assets

Drawbacks

Opportunity cost for FOX token allocations.

Vote

For: Formalizes the community is “for” the details outlined in this proposal including partnership with Coinbase Cloud and Phase 1 & 2 Deliverables and Terms.

Against: Formalizes the community is “against” the details outlined in this proposal including partnership with Coinbase Cloud and Phase 1 & 2 Deliverables and Terms.

  • For
  • Against

0 voters

5 Likes

Question about Phase 1. It says Coinbase Cloud will “commit resources… for real-time advising”, and then lists: 1 Lead Engineer, 1 Product Manager, 1 Protocol Specialist, 1 Business Manager. The next bullet point says they will be available for 1 hour meeting each week, and promises a commitment to allocate time to ensure the meeting is productive. This means that the Coinbase Cloud resources will not be doing any of the day-to-day work to build Fox Chain, yes? Does Coinbase Cloud have plans for the 2.5M FOX at this point? I know this came up some at the AMA last week, and I remember that it was emphasized that the 40M FOX for phase 2 was delegated and will not be owned by Coinbase Cloud. I don’t remember if there were any comments about the 2.5M FOX from Phase 1. Thanks.

1 Like

Thanks for the question - yes, Coinbase Cloud will be serving in an advisory role in the build of Foxchain in Phase 1. In terms of the 2.5M FOX - this would be in the form of a token grant for Coinbase Cloud to hold and have aligned interests in the success of Foxchain.

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Was there any discussion around setting a lock up period on the 40M FOX? Like having it vest over a 3 year period? If the whole deal goes south months after mainnet launch, major pressure could be put on the price of FOX.

The 40M FOX is a delegation, meaning that ownership and custody of the 40M FOX tokens would never leave ShapeShift DAO.

Staked tokens also typically represent illiquid supply and tend to have positive price price pressure of the respective tokens (e.g., higher % of staked tokens vs. token supply > less liquid supply & more holding/staking > positive price pressure).

Termination clause is included in the proposal which means that if the “whole deal goes south” - ShapeShift DAO could simply unbond the 40M FOX tokens.

2 Likes

Got it, thanks @Lewis!

2 Likes