Minerva Will Distribute OWL To Merchants As A Reward For Accepting The Tokens As Payment
On August 16, 2017, Ethereum-based blockchain startup Minerva announced a platform that will fund merchants with additional revenue streams by introducing "reverse transaction fees" which will reward them with OWL tokens.
Minerva's system encourages merchants to offer discounts or bonuses for goods or services that can be paid for in OWL tokens, in order to propagate their use. As per the project's whitepaper, rather than charge a transaction fee to merchants that accept OWL tokens, "Minerva platforms are rewarded with new tokens at a variable rate designed to combat inflation." The tokens can then be stored in an ERC20 compliant wallet, traded elsewhere in exchange for other cryptocurrencies, or converted into fiat to cover any discounts or specialized pricing.
Founder and CEO of Minerva Kevin McSheehan explained to ETHNews details of the tokens reserved for merchant rewards, “2.5 percent (2,500,000) of all initially generated Minerva (OWL) tokens are set aside to serve as ‘signing bonuses’ for newly partnered platforms. These tokens will be distributed at rate of 5 percent per new platform on a first come, first served basis. This is to incentivize early adoption.”
McSheehan’s motivation stems from what he feels are unnecessary transaction fees. He said:
“By paying transaction fees as opposed to charging them, we give partnered platforms more wiggle room to provide their customers with discounts. All platforms should ask new cryptocurrencies a simple question: “Why should I accept your cryptocurrency and how does it benefit me, my users, or my platform?” Our answer is that if you motivate and allow your users to spend the OWL token rather than other payment methods, you will make more money. With this idea and smart contract system that makes it a reality, we anticipate partnering with additional large ecommerce platforms.”
Minerva plans to work with other groups in an effort to develop partnerships based on efficient transfers of value while prioritizing security for data exchange. A proposed consortium, the Minerva Smart Money Alliance, will bring together organizations that have strategically partnered with Minerva and/or accept OWL tokens. According to McSheehan, partner organizations will have exchange accounts which can make use of an API to provide instant liquidity. Initially, users will need to tender payments to merchants with an ERC20 compliant wallet and McSheehan’s team is prioritizing a user-friendly experience. In the future, Minerva will funnel users straight into an optimized user-friendly API.
To prevent variability in the price of OWL tokens, the whitepaper suggests two methods be used to increase and decrease the supply. When a partner platform accepts OWL tokens as a form of payment, a "reward rate" is calculated based on the current rate at which the tokens are entering the economy. It is directly proportional to the price of OWL; if the price rises, so does the rate, and it will go up "until it increases the total supply enough to prevent violent price swings."
If the price of OWL decreases, a second method is used. A system will be enacted by Minerva which incentivizes users to temporarily remove their tokens from the economy. Users can exchange OWL tokens for "MVP" (an acronym for "Minerva Volatility Protocol") tokens which represent a certain amount of OWLs and may or may not appreciate over a determined time period. The whitepaper states:
"In any instance of a price decrease MVP tokens will be sold, but the more drastic the price decrease at the time of purchase, the higher the potential appreciation value of these tokens. These MVP tokens will be able to be exchanged at a later date for the original Owl tokens paid in addition to a certain percent extra. In the event of a prolonged decline in which MVP vault funds are exhausted, the Owl token will have to naturally regain price stability."
McSheehan clarified further on variable rates, rewards, and stability measures, “As OWL/USD increases on the open market, the variable rate for reverse transaction fees increases as well. The opposite is true during times of price decrease. OWL/USD is broadcast to a smart contract inspired by Vitalik Buterin’s ‘SchellingCoin,’ and the bonus rate is determined algorithmically. We are also experimenting with oracle solutions associated with exchange API as we work to produce the most optimal and secure method of determining this bonus rate.”
The ecosystem rising up around blockchain technology is in a continuous state of evolution, which McSheehan believes is bringing big changes. “Ethereum, smart contracts and blockchain technology will revolutionize the world as we know it,” he said. “We are currently watching a new Internet and global economy take shape before our eyes. The vision Vitalik Buterin had for Ethereum is coming to fruition. The team behind it, including developers, ambassadors, and thousands of other contributors have created a platform that is steadily growing and improving. With Casper around the corner and the recent introduction of Plasma, we feel that Ethereum is going to lead the charge in blockchain technology. Because of that, and after careful consideration, our team determined that Ethereum was the best-suited platform for Minerva to be built on.”
For an immediate use-case, Minerva plans to partner with a streaming service that has 10 million users and $20 million in revenue, but has not revealed which. “The partnership has been finalized for months and will be announced in the near future,” said McSheehan.
Looking forward, McSheehan said, “Our vision is to create not only a cryptocurrency that will be used instead of almost exclusively a speculative asset, but also a platform and all of the tools necessary to allow businesses to accept Minerva and incentivize their users to spend its OWL token.”
As more details emerge, ETHNews will provide additional coverage.