In order to better align with the current activities and practices within the Merit Circle ecosystem, this proposal seeks to convert the MC token into the BEAM token on a 1:100 basis. The BEAM token will have the same utility as the MC token currently has. It is suggested that the Merit Circle name continues to be used as the overarching “brand” relating to Beam networks and the BEAM token. The token migration contract is proposed to be accessible for migration until the end of year 2023. Those that are eMC holders at the time the token migration contract is deployed will also have the possibility to migrate.
The vote for this proposal commences at 5pm CET 22 September and ends at 5pm CET 24 September. The vote is available here.
Edit to the proposal: The authors see the need for, and benefit of, providing additional technical details about the token migration before asking the community to vote on such details. Therefore, the authors have decided to limit the scope of the proposal to concern the question of whether the MC token should be migrated to the BEAM token.
Specification of the proposal
The Merit Circle ecosystem has evolved tremendously over time. Since starting on the foundations of the Play-To-Earn era, the DAO has progressed significantly, and today such activities are almost non-existent within the Merit Circle ecosystem. Initially, parts of Merit Circle could arguably have been framed as a gaming guild. However, shortly after its inception and already by the time the MC token was launched, this term became irrelevant in the context of Merit Circle, as it simply did not then (and particularly not now) reflect the state of the organization or ecosystem. Externally however, the DAO is inaccurately still categorized as such by some.
Databases, marketing outlets, and social media often base their research and information on the token that is affiliated with the ecosystem, and in turn, the organization. Likewise, researching parties will use information typically found on platforms such as CoinGecko and Datadrops to form an opinion. All of this information currently leads to the MC token, which in one way or another, is still associated with outdated information from the initial phases of the DAO.
With the introduction of Beam, a blockchain network specialized for gaming and the connecting name for all the gaming adventures within the Merit Circle ecosystem, the scope of the Merit Circle ecosystem is growing exponentially. By building important gaming infrastructure, such as an open source blockchain, smart contract account solutions and various other open source SDKs for game developers, the Merit Circle ecosystem is positioning itself into becoming an important web3 gaming player, with the MC/BEAM token in the center of attention powering this ecosystem of games utilizing blockchain elements.
The Beam chain utilizes a native gas token solution, and currently this role is fulfilled by the MC token. However, it is more logical that the BEAM token fulfills this role, and positions itself as the central token for the Beam chain.
Despite changing the token used to power the ecosystem, the Merit Circle name would still continue as the overarching brand relating to Beam networks and the BEAM token.
What changes are suggested in this proposal?
- Converting the MC token to BEAM on a 1:100 basis. Meaning every 1 MC will grant the holder 100 BEAM. All Merit Circle DAO’s MC treasury tokens will be converted from MC to BEAM.
- Develop and deploy a permissionless and autonomous smart contract on Ethereum that enables the migration of MC tokens into BEAM tokens. As the source code will be open source, others will also be able to implement a user interface (frontend) to interact with such smart contracts. It will also be possible to connect directly to the smart contract on Ethereum. The smart contract is intended to be deployed as soon as possible if the proposal passes (will be duly informed about it beforehand in public channels) and remain accessible until the end of the year 2023. After this, conversion won’t be possible anymore. However, those (and only those) that hold eMC at the time the token migration contract is deployed and that are unable to convert such eMC into MC prior to the end of the year 2023 because of ongoing vesting, will have the access to migrate for a reasonable period after the time their respective ongoing vesting period ends.
- Change the native token for Beam from MC to BEAM and adjust the bridge and native minter accordingly.
- Withdraw the LP position of the DAO from MC/ETH and deposit an equal amount into BEAM/ETH as soon as the BEAM contract is successfully deployed.
The changes 1-4 above must be read in conjunction and any proposed change may only be conducted if all changes are meant to be conducted (e.g. changes referred to in 1, 3 and 4 all rely on the deployment of the smart contract referred to in 2).
On 14 August 2023, the Beam mainnet launched in developer preview mode. The work towards transitioning the network into a permissionless and trustless state (with the transition to PoS) is ongoing. With Beam expected to become available for public access in the near future, we believe it is timely to carry out the proposed token migration, and thereby direct focus towards Beam and the ongoing developments around that network.
Furthermore, we believe that converting to a more Beam-focused ecosystem will improve brand recognition and strength. We believe that Beam is competing with other gaming networks such as Immutable and Ronin. Educating those outside the DAO about this, through means such as written pieces and ongoing reminders about the changes in our ecosystem, will take significant time and effort. Instead, a token conversion allows us to strategically align both those within the DAO and outside the DAO, with our vision in an efficient manner.
Other than time of the development team, the only thing that will be required are independent audits by Sherlock and Quantstamp. Estimated costs are approx. $50,000 to be funded by the DAO treasury.
We anticipate some will have questions for such a significant change. Therefore, we’ve pro-actively answered some questions we could foresee, but still encourage any further questions to be asked as a response to this thread.
What utility will the BEAM token have?
The BEAM token will become the native token of the Beam network, and is intended to have the same utility as the MC token currently has. The utility is multifold, and currently comprises of:
- Layer-1 token on Beam networks (validating and securing such networks), being the fuel of blockchain gaming and other activities on Beam networks.
- Governance (both of certain smart contract systems and the DAO treasury).
Consequently, the BEAM token will be the focal point for coordination and incentivization within the Beam / Merit Circle ecosystem.
Why a token migration period until the end of year 2023?
A token migration period until the end of year 2023 should provide every MC tokenholder with ample time to participate in the migration, should the proposal be approved. As explained in further detail above in relation to change no. 2, those that are eMC holders at the time the token migration contract is deployed will also have the possibility to migrate. Due to the fact that the BEAM token is meant to secure the Beam network and be used to validate transactions on such a network, we consider it beneficial to not have a too long migration period (as tokens are required in relation to such a network). If the proposal passes, the community will be notified about the expected time of deployment of the smart contract, once it is known. Other relevant details about the migration, including the deadline for migrating, will be posted through the relevant Merit Circle channels.
What happens to any MC tokens not migrated in time?
BEAM, in practice, will be an upgrade and renaming of the MC token, and will assume all utility that the current MC token has. The two tokens are not intended to co-exist, as the BEAM token will be created to replace the MC token. However, only the owner of each MC token has the power to migrate their MC tokens, meaning any MC token that is not migrated will simply remain as an MC token. For each MC token not migrated, the BEAM supply will effectively be relatively reduced (at a ratio of 1 MC : 100 BEAM).
We anticipate it is unlikely that 100% of the MC supply will be migrated to BEAM, due to reasons such as holders permanently losing access to tokens, and so it is likely a small amount of MC tokens will remain as MC.
Why not conduct an airdrop of the BEAM token?
There are mainly three reasons for why we propose to not structure this as an airdrop:
- The BEAM token is meant to replace the MC token and not coexist with it. With an airdrop, the tokens would have the characteristics of being two distinct tokens, rather than what is meant to be achieved here (replacement by way of upgrading and renaming).
- It is difficult to conduct a fair and accurate airdrop in this scenario, as MC tokens are more or less constantly changing hands. It is a risk that tokens might change hands after a snapshot is conducted and the outcome could be that someone who acquired MC after the snapshot was taken does not become eligible to receive BEAM tokens and vice versa.
- Conducting an airdrop of this character implies incurring substantial costs (including transaction costs).
Why is the token converted on a 1:100 base, and not 1:1?
Due to the expansion of products, and the fact the BEAM token will be the gas token for the Beam chain, we do think that an increase of the supply in units represents a more optimal supply number. As such, you are more likely to be using whole numbers when utilizing tokens, rather than decimals.
Does this mean there will be supply inflation?
There will not be any effective supply inflation. The tokens are converted on a 1:100 base, the numerator is increased, but there are practically no new tokens being issued. BEAM can only come into existence through a conversion of MC, and MC has a limited supply that cannot be increased. If every MC token converts, the supply will be exactly equal on a relative basis. The relative supply can only stay equal or decrease after the conversion.
Isn’t it dangerous to perform this conversion?
The conversion will be executed and peer reviewed by a wide variety of technical team members. The contracts will be audited as usual by both Sherlock and Quantstamp - audit reports will be shared publicly before the actual conversion happens.
Are you in favor of this proposal?
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