Implementation of DW20 Decentralized Standard currency

——Perfecting the Bitcoin Standard through the ERC20 Protocol——

Revised Edition

October 16, 2025

Authors: Weisha Zhu, Lu Tiegeng, Cui Qi, Liu Chunyuan

Acknowledgments: Ray Yang, Shi Guangrong, Xiu Wu, Lu Bo, Miles, Ren Leipeng, He Bing, Li Pengyi, Hu Xiangyang, Zhou Haibo

Revision Notes:

This document is a revision of the article “Implementation of DW20 Decentralized Standard Currency” published on May 26, 2023. More than two years have passed since the original publication, and we launched the airdrop event on December 24, 2023. We sincerely thank the early participants for their support when the product features were not yet fully developed, allowing us to gain a deep understanding of market demand and continuously optimize the product accordingly.

Currently, the product is nearing the release of the official version and is about to enter large-scale promotion. As of now, approximately 6.5 billion DW20 tokens have been used for market promotion, accounting for 67% of the originally planned 9.6 billion promotion tokens. According to Clause 3.1.5 of the original whitepaper, the project team has the right to adjust the airdrop distribution method. To enhance promotion efforts, it has been decided to increase the total number of promotion tokens to 30.6 billion, accounting for 14.57% of the total 210 billion tokens; the registered airdrop ratio is reduced from 80% to 70%, with a total of 147 billion tokens, and the airdrop coverage is expanded from 50 million to 200 million people. The allocations for the Stability Fund and the team remain unchanged. Ambiguous parts regarding decimal points have been clarified to avoid future disputes.

Starting from cycle 8, regardless of whether the user holds a Bitcoin address, the number of gifted tokens will be the same, but users with Bitcoin addresses will have a shorter lock-up period. This rule remains unchanged.

The gift scheme for the first 7 cycles remains based on the original calculation method. The number of participants in the 7th cycle has been increased from 780,000 to 975,000. Due to differences in registration gift rules between Bitcoin users and non-Bitcoin users, if there is a small remaining balance after reaching 200 million users, it will also be allocated to the market promotion tokens.

This adjustment involves community interests and was reviewed and passed by the community assembly on October 12, 2025.

Another important improvement in this article is the migration of the protocol DW20 relies on from BRC20 to ERC20. This decision was made primarily considering the controversy within the Bitcoin community regarding the SegWit area, based on a comprehensive assessment of security, reliability, and determinism. This change does not affect the core ideas or product performance of the original text, nor does it affect the use of already airdropped tokens.

The section “Chapter 2, 2.2 Collateralizing Bitcoin to Issue and Release Collateral Procedures” has been rewritten, making the processes of collateralization, release, and liquidation more concrete, and adding a liquidation fund. This fund is managed by the Chainless team. When selling liquidated assets, profits are calculated, and 6% of the profit is taken as the Chainless platform’s handling fee income. The principal and the remaining profit belong to the Stability Fund. If a loss occurs that the liquidation fund cannot cover, it will be covered by the Stability Fund. The Stability Fund is owned by all token holders.

Since DW20 is generated on the Ethereum system, users can construct the program to release collateral and destroy DW20 themselves and broadcast the transaction to retrieve their BTC. This means the Chainless ecosystem cannot prohibit the execution of expired contracts. This is the biggest difference from centralized systems, thereby making the Chainless system’s degree of centralization over asset control only equivalent to Ethereum’s.

The hash values of all ledger records will still be uploaded to the Bitcoin network.

Expressions that do not affect the original meaning have not been corrected in the text, such as analyses based on data from that time. Only necessary corrections and deletions have been made to some text.

The original version of the document will continue to be preserved, and previous versions have not been modified. All future matters shall be based on this revised version.

Chapter 1 The Implementation Logic of DW20 Decentralized Standard Currency

Introduction

DW20 decentralized standard currency is different from various stablecoins in cryptocurrency. Its pricing mechanism is similar to the US dollar, i.e., it adopts a market pricing mechanism. This is the pricing method adopted by various standard currencies such as the US dollar and the euro.

DW20 does not have an issuing entity similar to the Federal Reserve. Like Bitcoin, its issuance is distributed. Therefore, it requires a process of consensus growth, just like Bitcoin.

The design of the DW20 decentralized standard currency references the issuance principles and methods of the US dollar, Bitcoin, fiat stablecoins, algorithmic stablecoins, and collateralized stablecoins, absorbing their advantages and improving upon their shortcomings. Currently, stablecoins issued in the cryptocurrency field do not meet the conditions to become a standard currency. DW20 possesses the conditions to become a standard currency.

Becoming a standard currency is our pursuit, and also the pursuit of cryptocurrency elites represented by Satoshi Nakamoto. If one day the decentralized standard currency DW20 becomes a standard currency, it carries the efforts and dreams of all participants in the cryptocurrency industry. We feel very honored to be the ones filling the final gap.

The most important difference from Satoshi Nakamoto is that the team members have chosen to make their identities public. In fact, “public” is the core concept demonstrated by Bitcoin. It must be emphasized that anonymity is not the core concept of Bitcoin; “privacy is not secrecy.” The essence of privacy is that “an anonymous system allows individuals to disclose their identity.” One can understand this by reading Eric Hughes’ “A Cypherpunk’s Manifesto.” Otherwise, Satoshi Nakamoto would not have placed Wei Dai’s article as the first citation in the Bitcoin whitepaper because of the phrase “all transactions must be publicly announced.” We do not need anonymity. Being public is a responsibility; being public is an undertaking. When someone has public responsibility, being public is a must. What can be made public should be made public; not making it public is a shame, and anonymity is a helplessness.

Building on the foundation of predecessors, we have designed the Chainless Platform, also called the Boundless Platform. Boundless refers to the integration of Web2 and Web3 technologies, making the two boundaryless, surpassing current Web3 and Web2 projects. The term “Boundless” is widely registered, making it difficult to protect intellectual property. This is a transparent platform based on the Near blockchain, embodying the “public” Satoshi Nakamoto ideology, as well as the ideology and technological achievements of cryptocurrency. This includes the ideas of tiered privacy rights and user control over privacy decisions. Through the Chainless Platform, we utilize the ERC20 protocol and the Chainless Platform’s smart programs (smart contracts) to issue a decentralized standard currency, DW20. It will serve as a demonstration example of smart program applications on the Chainless transparent platform, and it is also a basic application of the Chainless system (Note: Regarding the Chainless Platform, refer to the Chainless Whitepaper).

This scheme is an alternative method to achieve the Bitcoin standard using distributed ideology. We believe that after the invention of Bitcoin, the birth of the distributed DW20 standard currency will likely make the Bitcoin standard the second phenomenon-level hotspot in the industry.

This scheme is an invention, consisting of four chapters in total. Chapter 1 is the implementation logic of the DW20 decentralized standard currency and is therefore the most important. Chapter 2 is a functional description; the related functions are very simple and mature. For detailed descriptions, please refer to the “Chainless Whitepaper.” Chapter 3 is the method for DW20 token distribution and stabilization, introducing how consensus value becomes stable. Chapter 4 is an outlook on competition. Understanding the first chapter is a challenge because it requires knowledge spanning both cryptocurrency and finance. This article does not explain the basic concepts involved.

1.  Overview of the DW20 Standard Currency Scheme

1.1 DW20 Inherits the Ideology and Technological Achievements of Cryptocurrency

Satoshi Nakamoto, after 15 years of financial and technical cultivation, designed a genius solution to the problem of monetary credit by adopting a combination of imitation, modification, and innovation. In his inaugural announcement on January 9, 2009, he raised three issues: central bank over-issuance of currency, commercial bank bubble lending, and the inconvenience of micropayments. He prepared a rich script instruction space for this. From practice, the Bitcoin system is the most suitable system for issuing stored value currency. The so-called most suitable system means that in terms of specific implementation, using other technologies and methods is not as suitable as using the Bitcoin system. If one insists on using the Bitcoin system to solve bank bubble lending and replace fiat currency for micropayments, it would require adding many functions to the Bitcoin system, making the system overly complex and affecting its stability and security. Subsequent people of lofty ideals have contributed their intelligence and numerous cases to solving the latter two problems. These contributions have been added to the content available for imitation and modification, becoming human wealth for future innovation. The emergence of DW20 is still the result of a combination of imitation, modification, and innovation.

1.2 Summary of DW20 Scheme Features

To allow users to quickly gain an overall impression, this section first states the conclusions. The following sections explain these conclusions and discuss related details.

1.  The formation of DW20 consensus is divided into three stages: value discovery and consensus formation, i.e., the memecoin stage; consensus stabilization, i.e., the stablecoin stage; and consensus solidification, i.e., the standard currency stage. After the first stage, the airdrop stage, DW20 will have as many or even more users as Bitcoin. As applications expand, DW20 will gradually stabilize around $1. In the second stage, DW20’s fluctuations will gradually narrow. DW20’s market automatic adjustment mechanism is more sensitive than the Fed’s manual mechanism, resulting in smaller fluctuations than the US dollar. See “5.1 DW20 Pricing Mechanism” for this. Together with Bitcoin, DW20 can ultimately realize the Bitcoin standard, with DW20 becoming a commodity measure replacing or competing with the US dollar.

Using the consensus method to form a standard currency is an imitation and improvement of Bitcoin’s issuance ideology.

2.  If DW20 is viewed as an independent system, it has no controlling entity. The same is true for Bitcoin.

3.  DW20 has no maintenance team; it is an application project of the Chainless Platform.

4.  DW20 has a community decision-making mechanism, similar to Ethereum’s community mechanism.

5.  DW20 tokens are issued via airdrop as seed capital. The role of seed capital is similar to a bank’s capital, providing financial security for the system and solving issues of system elasticity and early system fragility. The vast majority of the seed capital is issued over 30 cycles (see Chapter 3 for details), also possessing the characteristic of “the earlier you participate, the more advantage you have,” similar to Bitcoin.

6.  Over 85% of the seed capital is owned by independent individuals. Therefore, the DW20 system is not a bank in the traditional sense. Like the Bitcoin system, the DW20 system is not a center; DW20 does not represent the value of any system; DW20 only perfects Bitcoin’s role as a medium of exchange and measure. The DW20 system itself does not generate profit. As a medium of exchange, the demand and supply sides of the currency trade through the Chainless Platform, and the platform charges handling fees. This is a process of disintermediation, defoaming, and also the “peer-to-peer” transaction pursued by Satoshi Nakamoto.

7.  A Stability Fund is designed to form the market making fund. Market makers are externally hired. Although market makers have income, they do not own the Stability Fund. The Stability Fund is owned by the broad token holders. The operational goal of the market making fund is to stabilize DW20’s gradual growth and complete the transition to a stablecoin. The handling after the transition is completed will follow community proposals.

8.  Bitcoin collateralizers are also issuers of DW20, maintainers of the DW20 system’s financial stability, and beneficiaries of the DW20. Profit comes from balancing the growth of DW20 demand.

9.  DW20 is not linked to any national economy. The same is true for Bitcoin. Therefore, for measuring economic value, DW20 is also objective. The reason a ruler exists is that it is independent of the object being measured. Gold is independent of the economy, while fiat currency is related.

10. In addition to the above characteristics of DW20, after issuance, it is imported into the Chainless Platform, a high-security circulation and settlement platform. Through the Chainless Platform, all current blockchain single-signature wallets can be turned into multi-signature, multi-backup wallets. Combined with the inheritance program set by Chainless, the security of personal assets exceeds that of current banks. The wallet is completely controlled by the individual.

11. The operation of cryptocurrency systems does not involve system management fees. The Chainless Platform retains this characteristic. The operating management cost of the Chainless system is extremely low, and fees are lower than banks. When DW20 becomes a stablecoin, on the Chainless Platform, transfers of less than 1 DW20 are free, and the speed is comparable to centralized payment systems, solving the micropayment issue raised by Satoshi Nakamoto in his inaugural announcement.

12. DW20 and the Bitcoin system, together with the Chainless system, will constitute a complete Bitcoin standard financial system. This value will inevitably be reflected in the price of Bitcoin. See “8.2.3 Exploration of the Capital Pool Issue” for a detailed discussion.

People familiar with Bitcoin will find the above scheme familiar. We will explain the scheme in detail below.

2.  Micropayments

2.1 Transition from BRC20 to ERC20

In the first version, we planned to issue DW20 using the Bitcoin BRC20 protocol. At that time, Ethereum had just completed its upgrade, and we were concerned about its system instability. Now, Ethereum’s post-upgrade security has stood the test of time, and it is reliable enough to serve as a credit root. After careful consideration by the team, it was decided to issue DW20 using the Ethereum ERC20 protocol and cross-chain the DW20 token to the Chainless Platform. The Chainless system is a transparent platform equipped with multi-signature, multi-backup wallets and smart programs (see Chainless Whitepaper).

The multi-signature, multi-backup wallet of the Chainless system is a simple cluster system controlled by the user itself. It can be expanded infinitely, has the ease of use of centralization, and has customizable privacy capabilities. It has a very meaningful function: it can turn all current blockchain single-signature wallets into multi-signature, multi-backup wallets. Combined with its set inheritance program, the security of personal assets exceeds that of current banks.

Smart programs are more flexible and powerful than smart contracts, and the migration of existing smart contracts is very easy. The Chainless system is a transparent platform. Paired with ERC20 smart contracts, the functionality becomes even more powerful.

2.2 Utilizing the ERC20 Protocol to Achieve Micropayments

Micropayments are not suitable for settlement on Bitcoin Layer 1 but should be settled on Layer 2. The Chainless system is a transparent payment platform (see Chainless System Whitepaper). The hash value of the Layer 2 Chainless system ledger is uploaded to the Bitcoin system, and the ledger can be queried using the Chainless browser. This gives the unilateral ledger system the credit of the Bitcoin system.

2.3 Reasons for Naming the Micropayment Token DW20

To pay tribute to Bitcoin! To pay tribute to Satoshi Nakamoto!

The reason we chose DW20 is: DW is the abbreviation of Dai Wei’s Pinyin, meaning Dai Wei; it also represents our research strength and style—not simply using Satoshi or Sat to represent the token, but deep thinking that directly addresses the essence of the problem. Dai Wei is the true identity of Satoshi Nakamoto and the sole original creator of the Bitcoin system. Please refer to Zhu Weisha’s article “Invite Satoshi Nakamoto, Welcom to the New World” for this. The article puts forward many important assertions and discusses the clear view that Satoshi Nakamoto is Dai Wei. Here is a small example to support that Dai Wei is Satoshi Nakamoto. According to the habit of Bitcoin’s numerical definition, 21 million Bitcoins are measured in units of ten thousand, while 100 million Satoshis(Sat) equal one Bitcoin, using a hundred million as the unit. “Ten thousand(Wan）” and “hundred million（Yi)” are not British measurement units; these are Chinese measurement habits. It seems destined by fate; the carry of Bitcoin and Satoshi always feels like the span is too large. Adding a ten-thousands(Wan) place in the middle aligns it with Chinese measurement habits. Thus, Bitcoin, the anonymous one, and Satoshi form a chain. Finding the anonymous one, Dai Wei, completes the chain as Bitcoin, Dai Wei, Satoshi, and the measurement units become perfect. The history of Bitcoin representing the real person Dai Wei and the anonymous Satoshi Nakamoto is also perfected. Adding DW20, the sequence from Satoshi to Bitcoin perfectly conforms to the Chinese ten-thousand carry measurement order. The step from Satoshi to DW20 is a ten-thousand carry unit, but there is no relationship where one Bitcoin equals 10,000 DW20 carry. Dai Wei (DAI WEI) is unique, closely associated with Bitcoin, has good recognizability and commemorative significance, making it difficult for similar imitators to gain market recognition. DW20 easily makes people think of a token following the ERC20 protocol.

3.  Issuing DW20

3.1 Reasons for Issuing DW20

Why do we issue a new token instead of using existing stablecoins? Because no existing cryptocurrency stablecoin can become a standard currency. The DW20 token has unique distributed characteristics and advantages like seed capital, and does not involve the centralized issuance of fiat stablecoins or the centralized market making of DAI and Luna, etc. In the stablecoin stage, DW20 is market-priced, making long-term preparations for the future era of the Bitcoin standard. The Bitcoin standard requires a standard currency for pricing and also a token for micropayments.

3.2 Issuance Target

During issuance, users with Bitcoin addresses have an advantage. The issuance amount is only related to the issuance cycle, not to the amount of Bitcoin in the address. This is very beneficial for users whose small change in the address is insufficient to pay transaction fees. DW20 and Bitcoin become integrated, with Bitcoin being the support behind DW20. There are tens of millions of addresses with balances less than the Bitcoin transaction fee. The gifted DW20 tokens indirectly revitalize these assets.

3.3 Explanation of DW20 Issuance

Issuance Code is DW20.

A total of 210 billion tokens are issued, which is ten thousand times the number of Bitcoins. By 2140, the growth of human wealth after deducting inflation factors (GDP) is approximately 70-80 quadrillion US dollars. If one DW20 is $1, from a measurement perspective, the reasonable capacity is 210 trillion US dollars, which is clearly the most reasonable for connecting with the current monetary system. DW20 is issued according to the ERC20 protocol and is an ERC20 token distributed algorithmically based on the Chainless system.

3.4 Issuance Methods

3.4.1 Issuance Method One

Issued to users with Bitcoin addresses.

Since Bitcoin addresses can be randomly generated, eligible addresses have requirements for address age and holding amount. Bitcoin issuance is halved periodically. DW20 also has a set of issuance mechanisms, the principle of which references the issuance method of Chainless Coin. Of the 210 billion DW20, 70% of the issuance is carried out over 30 cycles. The distribution method is also similar to Bitcoin, with limited amounts and reduced issuance, but DW20’s issuance is more uniform compared to Bitcoin. For specific issuance methods, refer to the content in Chapter 3.

3.4.2 The Role of Bitcoin Addresses

Bitcoin addresses only serve as proof and do not require collateral. The purpose is to revitalize very small amounts of Bitcoin. Since Bitcoin has transfer costs, the mainstream fee standard charges per byte: 0.0001 BTC per kilobyte (transactions less than one kilobyte are calculated as one kilobyte). When Bitcoin is congested, the fee will be higher than this standard, so small transfers are not cost-effective. According to Table 1.1 below, about 80% of addresses hold Bitcoin less than 0.01 BTC. About 60% of addresses hold less than 0.001 BTC. This means that in 60% of addresses, most account balances are insufficient to pay the transaction fee when exchanging. If Bitcoin reaches $200,000 each, 0.001 Bitcoin is $200. If Bitcoin reaches $10 million each, 0.001 Bitcoin is $10,000. This is an enormous waste. The coins and address age of these address accounts are valuable and can be indirectly revitalized using DW20.

It can be seen that the actual effective Bitcoin addresses on the chain, i.e., addresses with more than 0.01 Bitcoin, are only over 10 million. Many non-zero addresses belong to the same person, making it difficult to estimate the actual number of customers. However, continuously transacting customers are also high-quality active users.

3.4.3 Proportion of Coin Holders

According to the Bitcoin holder data in Table 1.1 above, it can be seen that only over 100,000 people hold more than 10 Bitcoins. That is, there are actually not many people who can become gold medal winners. The conditions for obtaining gold medals are detailed in Chapter 3, “4. Lock-up Mechanism”.

3.4.4 Issuance Method Two

Issuing DW20 by collateralizing Bitcoin.

Bitcoin is collateralized to the Chainless system. The Chainless system is a transparent platform where collateralized coins are controlled by the user’s private key and the system’s multi-signature. The number of signatures required is determined by the user. When releasing collateral, it is also controlled by multi-signature. The Chainless system’s private key only plays a verification role. Therefore, after the user’s private key signs, without the system’s private key signature, the funds cannot be transferred. This ensures the transparency of the entire system and prevents misappropriation.

The entire collateral process is a smart program, similar to a smart contract. Conditions are selected and set, and the program executes automatically. This is a very mature automated method in cryptocurrency.

The collateral method is: collateralize how much, can redeem how much.

Our goal is to hope that when the market demand for DW20 increases, DW20 can be issued by collateralizing Bitcoin to adjust the market price of DW20.

The collateralized DW20 is calculated at $1, and Bitcoin is collateralized at a 50% to 65% collateral rate based on the market price. We are considering giving users the right to choose the collateral rate, with users bearing the corresponding risks.

When redeeming Bitcoin, the corresponding DW20 will be destroyed.

This provides two uses for Bitcoin: market making profit and micropayments.

3.5 Current Stablecoins Are Not Standard Currencies

Comparing DAI and Luna, their market making is done by themselves, and the assets they rely on are assets issued by themselves. Frankly, their hardness is insufficient, not as good as fiat stablecoins. The assets used for market making by fiat stablecoins are the fiat currencies themselves, such as the US dollar.

The US dollar is the current standard currency, as are the euro, etc. Compared to the US dollar, the US dollar does not have a market making mechanism like DAI and Luna; the US dollar is priced by the market. In other words, a standard currency must be priced by the market. DW20 can also achieve market pricing through the Bitcoin collateral redemption mechanism. One reason for the failure of algorithmic stablecoins is that they are not market-priced. Not being market-priced carries risks. Cryptocurrency needs a market-priced standard currency.

USDT and other fiat stablecoins are pegged 1:1 to the US dollar. The problem is that their elasticity is still insufficient (their profit can serve as elasticity). The Hong Kong dollar’s linked exchange rate has great elasticity, i.e., it has a large US dollar reserve itself, hence dares to implement the linked exchange rate. When USDC had problems with $3 billion stored in Silicon Valley Bank, it immediately depegged, showing a lack of elasticity. So, although US dollar stablecoins may not necessarily collapse, depegging often occurs. Depegging means instability, which affects credit. They are fine as pegged stablecoins, but if such coins are used as standard currencies, their stability is definitely insufficient.

DW20 is centerless, and stability requires elasticity. How to ensure it? The DW20 issued via airdrop forms a capital pool, solving the elasticity and fragility problems. Elasticity is further explained in “8.2.2 The Need for Seed Capital is Determined by the Nature of DW20”. Regarding fragility, see “8.2.4 Anti-Fragility Attack Resistance”.

4.  Minting and Distribution of DW20

In the DW20 address of the Chainless system, the DW20 indicator displays the total number and the number issued. It corresponds to the Ethereum address. The tokens are then distributed to four addresses. The above four addresses are all multi-signature addresses.

• User Address Allocation: 147 billion tokens
• Stability Fund Address Allocation: 21 billion tokens
• Team Address Allocation: 11.4 billion tokens
• Market Address Allocation: 30.6 billion tokens

It can be seen that the team’s share of the total allocation is lower than that of the Ethereum Foundation. the team’s amount is equal to the amount of Bitcoin held by Satoshi Nakamoto (Bitcoin experts estimate Satoshi Nakamoto holds 1.14 million Bitcoin).

Market fees are used for market activities, with the vast majority rewarded to token holders and partially rewarded to peripheral contributors.

DW20 tokens have two forms. The on-chain token is the ERC20 protocol DW20, cross-chain mapped on the Chainless system, also called Chainless DW20, with the symbol still DW20. The fees for DW20 within the Chainless system follow the Chainless system’s fee standards. The fees for the ERC20 protocol DW20 on-chain token are the same as Ethereum’s fees.

5.  Pricing Principle of DW20

5.1 DW20 Pricing Mechanism

Currently, for the US dollar, roughly $200 billion pricing tens of trillions of US dollars. The pricing mechanism is market pricing. Pricing funds have a leverage effect; generally, US dollar market makers provide 20-50 times leverage, and even higher leverage rates. The US dollar is priced through secondary market trading and does not directly inject liquidity into the market. The liquidity injection from Bitcoin collateral is uncontrolled, making DW20’s pricing mechanism different from the US dollar and more complex than fiat stablecoins. We feel that after DW20 enters the standard currency stage, its adjustment mechanism will be more sensitive than that of the US dollar. The adjustment of the US dollar is divided into two parts: the market is “responsible” for adjusting pricing, and the Federal Reserve is responsible for adjusting liquidity. However, the data used by the Fed has two problems: data delay and data distortion. DW20’s adjustment directly faces real market demand, representing genuine market feedback. The adjustment is equivalent to a negative feedback mechanism in automatic control, and its level is unmatched by manual adjustment. The US dollar’s adjustment is a lagging manual adjustment, and the phenomenon of overshooting is inevitable. In the stablecoin stage, DW20’s scale is not large enough, so the market making funds will not withdraw all at once but will gradually withdraw. This is a rescue measure to ensure no depegging.

The issuance of US dollars is influenced by market pricing. Price fluctuations depend on the market’s understanding of the demand for US dollars. The issuance of fiat stablecoins is unlimited but requires a price stabilization mechanism. The situation for DW20 needs to be segmented into growth and stable periods. Please refer to the introduction in section 5.2.

The pricing of the US dollar is based on two factors: liquidity and economic expectations. Generally, the domestic US economy affects currency supply in US dollar pricing. The price of the US dollar is determined by two indicators: the supply and the interest rate. These two indicators are also reference indicators when comparing prices with other fiat currencies.

US dollar stablecoins are pegged to the US dollar and are affected by it. Since DW20 is not linked to any national economy, it directly depends on the demand for DW20 and the market’s adjustment capacity. The same is true for Bitcoin.

5.2 Predicting DW20 Price by Stage

Stage 1: Airdrop stage, estimated to be about 1.5 to 3 years after listing on centralized exchanges.

In this stage, DW20 is particularly similar to Bitcoin’s early “mining” stage; it has no value at the beginning.

Bitcoin’s cost price is the price of computing power. Initially, it was just electricity consumption, and the computing power cost has been continuously rising.

How was the price of the US dollar determined? Its printing cost has always changed little. Clearly, the value of the US dollar is the result of market consensus, and the scope of this consensus is very broad, making it the measure of value, i.e., the standard currency. Initially, the US dollar was pegged to gold. The initial setting of the Bretton Woods system fixed the ratio of gold to the US dollar at 35 dollars per ounce. This was the value the US dollar “borrowed” from gold, just as fiat stablecoins peg to the US dollar, relying on the value of the US dollar. But as Satoshi Nakamoto said, central banks continuously destroyed this trust. Hence, the advent of Bitcoin.

Clearly, DW20, like the US dollar, only has value under broad consensus, i.e., widespread use. Before applications have developed, it only has the value of a memecoin. This article will later analyze how to value memecoins. The rise in DW20’s value is discovered by market makers, and the long-term trend is stabilized by market makers. However, market makers have risks and could cause a crash if not handled properly. Therefore, rules must be followed.

As the number of users increases, consensus grows. After Stage 1, it will eventually reach a value of $1 per DW20. If it reaches $1, DW20 would have a market capitalization of $210 billion, ranking third in the current crypto circle—a massive market cap. We will explain this process in detail in Chapter 3.

Stage 2:Stablecoin formation stage, estimated to take about 10-12 years.

Candidate for standard currency: Concept is “decentralized standard currency or stablecoin adjusted with Bitcoin participation.” Price $1, which is currently the most reasonable psychological suggestion. At this point, the automatic collateral stabilization mechanism appears. This principle is the same as the Bretton Woods Agreement for the US dollar. Similarly, at the price of $1 per DW20, using Bitcoin as collateral is also a practice of “borrowing” value from Bitcoin.

Stage 3: Measure of commodity value, estimated to take about 24-28 years.

Candidate for the global commodity value measure: Concept is “replacing or competing with fiat currency as the standard money.” At this stage, the price of DW20 is most likely $1. Market capitalization exceeds 2100 + 1/2 of total Bitcoin. Market commodities are priced in DW20. In this stage, Bitcoin is used to measure global wealth and growth, while DW20 is used to measure the prices of specific goods. At this point, economic growth fluctuations are reflected in Bitcoin, while DW20 can replace the US dollar in measuring commodity. This means DW20 has become the standard currency. In other words, Bitcoin’s price continues to rise, while DW20’s price remains stable.

Figure 1.1 shows the division into three stages. The value of a memecoin is consensus value, also known as value coin.

6.  Stability Principle of DW20

We listed three stages for DW20 because DW20’s development follows Bitcoin’s principle, relying on natural market growth. Stablecoins like USDT and DAI do not have this growth stage; their price is set at $1.

6.1 Role of the Stability Fund in the First Stage

6.1.1 The Stability Fund Determines DW20’s Appreciation

In the first stage, DW20 will fluctuate with the market. Since its price is very low, no one will collateralize for market making. Its value at this time reflects market demand and expectations, and also depends on the market’s evaluation of DW20’s advantages. Its advantages include:

1. It has credit and legitimacy advantages equivalent to Bitcoin;
2. Advantage of revitalizing Bitcoin small change;
3. Advantage as a Bitcoin micropayment tool;
4. Advantage of certifying the value of Bitcoin customers;
5. Advantage of being a decentralized standard currency; real market adjustment;
6. Advantage as a solution to Satoshi Nakamoto’s legacy issues;
7. Advantage as a price measure under the Bitcoin standard condition;
8. Advantage formed by the capital pool;
9. Advantage of psychological suggestion.

As we stated in section “3.4.4 Issuance Method Two”, DW20 issued through collateral is calculated at $1, implying that one DW20 is $1. If Bitcoin’s market capitalization reaches $20 trillion, DW20 will follow suit and rise. So, without an adjustment mechanism, it would not reach a stablecoin state; it would fluctuate with Bitcoin, becoming Bitcoin’s shadow currency, just like BCH and LTC, and would not bring added value to Bitcoin. Therefore, the first stage requires a Stability Fund. This may bring added value to Bitcoin.

6.1.2 Market Making Coordination by the Stability Fund

As shown in Figure 1.1, the Stability Fund is 10% of the total issuance, totaling 21 billion tokens.

Initially, the Stability Fund has no money, only coins, and no independent operator. It needs to integrate funds to form a new market making fund, managed and operated by other teams. The first phase involves an independent market maker investing $10 million, meaning the 21 billion DW20 are valued at $10 million, and the entire DW20 valuation is valued at $100 million. The valuation of one DW20 is 0.05 cents. The Stability Fund pays management fees. The profits of the Stability Fund are retained to expand the fund’s size and are not distributed. As the token price gradually rises, the scale expands to enhance DW20’s strength. Fund managers will be selected globally through open selection starting from the second phase. Management fees are extracted at 1% to 2% of the profits.

The fund’s market value should continue to grow. For example, the first phase ends when the market capitalization reaches $200 million. The second phase starts from $200 million and ends when the market capitalization reaches $1 billion. Then, the third phase starts from the second phase’s $1 billion and ends when the growth reaches a market capitalization of $3 billion.

At this point, investors in market making may hold a large amount of DW20 tokens, just as Bitcoin constantly changes hands, and the tokens eventually flow to large holders. See Table 1.1 above. In an upward trend, the risk of market making is not significant.

For operational rules, see Chapter 3, “8.5 The Method from Memecoin to Stablecoin”.

6.2 Stage Two: Market Making by Collateralizing Bitcoin

Laszlo used 10,000 Bitcoins to buy two pizzas, completing Bitcoin’s amazing leap from “air” to commodity. The mark of the second stage is someone collateralizing Bitcoin to issue DW20. At this point, DW20 embarks on the journey to becoming a stablecoin. In other words, external funds are no longer needed to join the market making fund; external funds should gradually withdraw from the market making fund. The market making fund becomes a bottom guarantee fund, similar to the operation of the Chainless Coin bottom guarantee fund in the Chainless Whitepaper. The fund maintains a “50%:50%” ratio of DW20 to US dollars or US dollar stablecoins.

In theory, DW20, as Bitcoin’s shadow currency, should rise with Bitcoin’s increase. This rise is a comparative effect, like the rise of BCH and LTC. Additionally, DW20 has payment characteristics, and its price is determined by supply and demand. If the price is to remain constant, the issuance volume must be increased. Collateral issuance expands the issuance volume. Therefore, the profit that should have risen with demand is taken by Bitcoin market makers who collateralize Bitcoin to issue DW20. This hasn’t even considered the expansion of DW20’s own demand, only the impact of Bitcoin’s price increase on DW20.

Since DW20 is not linked to any national economy, how do collateralizers judge DW20’s value? Simpler than stocks, it’s based on two factors: the growth in the number of customers and transaction volume.

Customer numbers conform to Metcalfe’s Law: “The value of a network is proportional to the square of the number of connected users.”

Settlement transaction volume growth: Conforms to the rule of linear value growth. This is the linear correspondence between the Fed’s currency issuance and economic growth.

Note that these are only considered factors, not quantitative indicators.

Although the factors are simple, due to individuals’ different judgments of value, there is a foreign exchange speculation market and capital pools. Speculative funds for the US dollar are over $200 billion, with a daily trading volume of $3 trillion, compared to the Fed’s total issued money supply of over $30 trillion. DW20’s position is very similar to the Fed’s currency, belonging to base money issuance. They are not bubble lending by banks; perhaps the two can be compared for reference. As an analogy, if DW20’s total pool is 210 billion, then speculative funds of about $1.4-1.5 billion could pricing it. In section 6.1.2, we estimated a pool of $3 billion, with no predictions after that. Since DW20’s adjustment is more sensitive than the US dollar’s, the amount of funds needed will be seen in operation.

By the way, Bitcoin is also not linked to any economy and should follow the same patterns as DW20. However, Bitcoin has no market makers and no ecosystem. Apart from the halving every four years, its rise is entirely determined by speculative trading. When speculation ends, it falls back near the computing power bottom, storing energy for the next speculation.

6.3 Stage Three, The Benchmark for the Bitcoin Standard

The mark of the third stage is that DW20’s fluctuations are smaller than the US dollar’s, and there is no depreciation in the price ratios of bulk commodities. At this point, the market naturally anchors to DW20. The original “50%:50%” ratio of DW20 to US dollars in the fund begins to change. DW20 still accounts for 50%, but the other 50% corresponds not only to US dollars but also includes BTC. Eventually, the fund maintains a “50%:50%” ratio of DW20 to Bitcoin. At this point, the DW20 standard currency is established. Conversely, the DW20 fund is a Bitcoin stability fund.

7.  Value Analysis of DW20

DW20’s value varies at different stages; only part of it is listed here. Its actual value far exceeds the listed values.

7.1 Value as a Memecoin

DW20 has the properties of a memecoin, comparable to Dogecoin and SHIB, but with better performance. Dogecoin’s market cap is $12 billion, SHIB’s is $4 billion. DW20 comparses to SHIB, with a value of 2 cents per token. Memecoins, like Bitcoin, have a bottom price and a top price. The bottom price is generated in two ways: one is algorithmically generated, like POW “mining,” e.g., Dogecoin; the other, like SHIB, has no “mining.” The standard for measuring its bottom is the number of participants. In the Internet era, the value of a registered user is about $50, which is the valuation method venture capital uses for a non-profitable enterprise.

When Facebook acquired WhatsApp, each customer was valued at $46. Financial customer values are different; market-recognized valuations are higher, reaching $500-$1000 per person, also called customer acquisition cost. This can be used to calculate the value of acquired companies. If SHIB has no other application value, corresponding to its $4 billion valuation, it is at least the value of 4 million users. From this perspective, assuming Bitcoin has 50 million address users, the total customer value is $50 billion, which is lower than Bitcoin’s total bottom price valuation of $400 billion estimated based on the current computing power bottom of $20,000. A normally operating project would have a valuation far above the bottom price. Luna had 4 million users before its collapse. Under normal operating conditions, the market gave it a bottom valuation of $4-$5 billion. Luna’s peak valuation exceeded $40 billion due to amplified trading volume; the market had imagination for its application demand. However, Luna did not hold when it fell to $4-$5 billion. Currently, Luna’s market valuation is a residual value valuation because it only has customer value, roughly $200-$300 million. Even so, it is still valued at about $50 per customer. This is the M&A valuation for internet companies.

It must be noted that when a project loses its imagination, its valuation will definitely fall back to the bottom; Bitcoin is no exception. Bitcoin’s current valuation is only about 30% higher than its computing power bottom, a ratio far inferior to gold. For gold, some promote the gold standard, giving people new imagination. Gold’s market price is more than double its cost bottom price. Bitcoin’s four-year halving is a favorable expectation and may form a market wave, but we do not know how big this wave can be. However, for the decentralized standard currency DW20, because it has the prospect of the Bitcoin standard, it will enhance Bitcoin’s future imagination space.

DW20 has designed 147 billion airdropped tokens targeting Bitcoin customers. Bitcoin’s market capitalization accounts for about half of the cryptocurrency market capitalization, all being the highest quality customers in cryptocurrency. It is unreasonable for DW20’s valuation to be lower than SHIB’s. Just from the characteristics of DW20 as a memecoin, user value is its bottom price.

DW20 has value in other aspects.

7.2 Value of Historical Proof

Bitcoin participants previously lacked an objective symbol to prove their historical status in the Bitcoin system. Bitcoin addresses can serve as objective proof of user history, thus having value. It should be said that early users were very few, possessing scarcity. This proof of scarcity is verifiable. Our medal system combined with NFT technology can produce unique proof. The significance of this proof can help determine how much Bitcoin might be dead coins. Dead coins refer to coins where the private key is lost or sent to illegal addresses and can never be moved. If the Bitcoin standard is realized, the value of dead coins would be enormous. The recovery of this value requires none other than Satoshi Nakamoto and could benefit Bitcoiners and world peace.

7.3 Revitalizing the Residual Value of Small Change in the Bitcoin Transaction System

In “3.4.2 The Role of Bitcoin Addresses” above, it was mentioned that about 60% of addresses hold Bitcoin whose value is less than the transaction fee, becoming accounting losses. According to Bitcoin principles, change is always generated. Revitalizing these Bitcoin change coins will be a source of continuous demand for DW20. We have funds reserved for various activities to continue revitalizing change addresses. DW20 provides an outlet for change funds, which will improve the efficiency of the Bitcoin system and the wealth of Bitcoin users, and also benefit Bitcoin’s popularization.

Increasing the historical assessment of Bitcoin user credit and revitalizing Bitcoin change funds add value to Bitcoin users, which will be welcomed by Bitcoin users.

7.4 Pioneering Value

Pioneering value. Seeking novelty, seeking difference, and hype are determined by the characteristics of cryptocurrency participants. Pioneering value is the most recognized value in cryptocurrency. DW20, through the ERC20 protocol and the Chainless Platform, utilizes the Bitcoin system ledger as Layer 1, serving as a demonstration of how to correctly use the Bitcoin system. Cryptocurrency has no patents, so the market has an unwritten rule: pioneering innovations are greatly respected.

7.5 Constructing a Standard Currency Based on Bitcoin

7.5.1 Providing a Support Environment through the Chainless Platform

DW20 supports the ERC20 protocol and, by adopting the method of smart contracts on the Chainless transparent platform, can be traded more conveniently.

ERC20 tokens are universal tokens, easily supported by many exchanges.

They can also be traded through the Chainless Platform and stablecoins.

7.5.2 A Standard Currency Reliant on Market Adjustment

Issuing a large amount of DW20 provides market liquidity. The characteristic of the Chainless Platform is ease of use, convenient liquidity, which can compensate for Bitcoin’s poor liquidity. Bitcoin’s liquidity problem lies in its inability to adjust monetary policy. DW20 is different; when market scarcity appears, situations where Bitcoin is collateralized for arbitrage will occur, which plays a role in monetary policy adjustment. DW20’s stability is adjusted by the market; DW20 is similar to algorithmic stablecoins, but the support behind it is different. It does not rely on centralized algorithmic adjustment like algorithmic stablecoins but is adjusted by the market. Is DW20 a competitor to current stablecoins? We look forward to this.

DW20, as a market-adjusted stable currency, is different from both DAI stablecoin and USDT stablecoin. It neither pegs to fiat currency nor to Bitcoin, ultimately reflecting the market price. This best conforms to the free currency principles of Mises and Hayek and the financial principles of Satoshi Nakamoto’s Bitcoin design.

7.6 Several Value Characteristics of DW20

In addition to the above value characteristics, DW20 has the following features:

1. Increases the possibility of profit from Bitcoin.
2. Represents a new approach different from US dollar-pegged stablecoins and algorithmic stablecoins.
3. Serves as an auxiliary tool for the Bitcoin standard.
4. US dollar inflation affects the value of US dollar stablecoins, while DW20’s issuance is independent of the US dollar and not directly affected by US dollar inflation. It must be stated that before reaching the third stage, i.e., before becoming the standard currency, it is still affected by some inflation.
5. The value support and algorithms behind algorithmic stablecoins are problematic, while DW20 relies on market adjustment.
6. DAI’s approach is good; its collateral issuance model is most similar to our idea. Their Peg Stability Module has a bit of a capital pool flavor, i.e., they considered the seed capital issue. Although formally similar, the biggest difference is that it needs to make a profit. The use of its capital pool is exactly the same as USDT’s, collateralizing part of user funds for profit. DW20’s seed capital does not need to be profitable. The DW20 system, like the Bitcoin system, itself does not generate profit. For related discussion, see Chapter 3, “9. The System Itself Not Profiting is a Core Concept of Bitcoin’s Distributed System”. The DAI settlement platform lacks competitiveness against centralized exchanges. DW20 does not have the above defects.
7. The issuance ideology of the DW20 airdrop part is the same as WorldCoin and PI; they are all free.
8. Finally, at the monetary ruler stage, DW20 does not need the US dollar’s value endorsement; it is fully marketized. We believe it is a strong competitor to fiat currencies and their stablecoins.

8. Technical and Financial Characteristics of Implementing DW20

The combination of technology and finance reflects a cross-border capability. The creation of Bitcoin is the embodiment of this cross-border capability.

8.1 Smart Contracts and Smart Programs

Smart contracts borrow the concept from cryptocurrency. On the Chainless Platform, we prefer to call them smart programs, plugins, and A applets. Because these are far more flexible and powerful than smart contracts, and they adhere to the principles of open-source code and voluntary user upgrades. We can also use the POS method and ERC20 through the Chainless Platform as Layer 2, targeting the Ethereum model. The Chainless system’s fees do not have Ethereum’s self-limiting nature; Chainless fees have an upper limit, at most unilateral fees like banks, significantly reducing the cost of using smart contracts for transactions on platforms like Ethereum.

When using the Chainless Platform modules and wallet modules, project demanders can not only use Chainless for verification but also organize their own verification teams, issue their own tokens, use the POS method, and select verifiers from the users of the verification pool. Verifiers have collateral and collect verification fees. This is obviously more expensive than Chainless’s three-party confirmation.

The advantage of verifier verification is that it can replace Chainless’s transparent verification, but the accounts are still recorded on Chainless’s ledger, and the hash of the ledger is stored on the Bitcoin system. This fully enjoys the achievements of cryptocurrency and opens up rigid so-called “blockchain” thinking. This verification system can be independent of the Chainless system and is an APP application of the Chainless system. At this point, the Chainless system is like WeChat Pay within WeChat.

Unilateral accounting with result hashes on-chain is theoretically progress, but blockchain evolved, and this does not conform to traditional blockchain concepts. Some people might not be able to accept it, insisting that multi-party verification is necessary to prevent cheating. Considering this factor, POS witnessing can be chosen. Implementation is very simple; it just replaces the role of the system’s final confirmer. Originally, after system confirmation, the account was recorded; now, a multi-party confirmation witness program is added before system confirmation. The confirmation in current blockchain is by unrelated parties, which is backward compared to Chainless system confirmation. But in reality, there are scenarios for multi-party witnessed payments, so this is the practical significance of POS witnessing.

8.2 Financial Characteristics of DW20

Our previous articles systematically discussed the [Bitcoin Dollar Standard] viewpoint. The market thought this idea was good but would face some specific obstacles when implemented, mainly putting fate in others’ hands—one requiring Satoshi Nakamoto’s cooperation, the other requiring approval from authorities. DW20 pricing has a process of free-floating market pricing. This process is not needed for the Bitcoin dollar standard, while DW20 has a stage of consensus building. Fortunately, the successful experience of Bitcoin and other cryptocurrencies can be used as reference for imitation and modification.

With new stages come new phenomena. We must learn from Satoshi Nakamoto’s design approach of thinking thoroughly before acting. All methods should have origins, not be iterative thinking. Below, we deeply explain the new concepts from “1. Overview of the DW20 Standard Currency Scheme”.

8.2.1 The Role of Seed Capital and Maintenance of the Capital Pool

Why do banks need reserves? Because this is necessary for credit. Without credit, no one would deposit money in a bank. DAI using smart contracts to generate credit is one method, but we remember it was almost broken early on. We always believed it relied on external forces to resist the crisis. So when we are not strong, we need seed capital to enhance credit.

If there is neither a bank nor capital, where does credit come from? We thought of Satoshi Nakamoto’s Bitcoin practice. This practice process is a process of gradual consensus accumulation.

Assuming DW20 reaches $1, the seed capital would be $210 billion. Currently, the total market capitalization of stablecoins in the blockchain market is roughly this amount. These funds constitute the basic liquidity of the market. What is this money for? When the US tightens US dollar liquidity, the global economy is affected. This action is equivalent to us redeeming and destroying DW20. Assuming DW20 had no seed capital and was only issued through collateral, when all collateral is redeemed, it would be equivalent to liquidity drying up. But with $210 billion in seed capital, liquidity will never be drying up. Some say you don’t control this part of the funds. Actually, history has already concluded: storing wealth among the people is better than storing wealth with the government; the modern conclusion is that a market economy is better than central planning. The depth of the DW20 pool is determined by the release and retrieval of collateralized Bitcoin and automatically adjusted by the market. Seed capital solves the system’s elasticity and early fragility problems. The elasticity issue is discussed in the next section “8.2.2 The Need for Seed Capital is Determined by the Nature of DW20”. The fragility issue is explained in “8.2.4 Anti-Fragility Attack Resistance”.

Commercial banks fear bank runs the most. Their funds need to be used to make money, and liquid funds are often less than capital, requiring interbank lending or the central bank to release liquidity. But the central bank cannot accurately judge whether market balance has been guaranteed. When the market is imbalanced, it must retrieve the excess liquidity released, making monetary adjustment an unpredictable behavior. Therefore, the entire monetary system is logically incomplete. Due to the existence of seed capital, when the market knows that “a certain unattended bank” never fears bank runs, people in the market know their money is predictable and safe. Such a system possesses logical completeness, unlike current fiat currency where people can only rely on trust in the central bank. As Satoshi Nakamoto said in the Bitcoin inaugural announcement, central banks often betray this trust. Both central banks and stablecoins like USDT need to profit from their currency; they are the profit entities. USDT’s profit is understandable, but the central bank has interest demands mixed in, making it hard not to doubt its fairness.

The Bitcoin system is not like this; it does not belong to anyone. This is a principle. The beneficiaries of the Bitcoin system are not the owners of the system but the “miners.” The profit entities of DW20 are the collateralizers and market makers, whose status is like “miners.” Its maintainers are also third parties, i.e., the Chainless system, which has a handling fee profit model. A DW20 that itself has no owner embodies the spirit of Bitcoin.

Commercial banks cannot afford to maintain large amounts of liquid funds as seed capital because then the bank couldn’t make money. Liquid funds are only prepared to handle customer exchanges and withdrawals. When liquid funds are insufficient, banks first solve it through interbank lending. This is the second issue Satoshi Nakamoto mentioned in the Bitcoin inaugural announcement on January 9, 2009, i.e., the problem of bubble lending by commercial banks. DW20 with $210 billion “capital” is far greater than China Merchants Bank’s $100 billion capital. This money doesn’t need to be used to make money; it only guarantees liquidity. What would be the result of doing this? The approach of pre-setting a capital pool is currently a monetary experiment never conducted before. This experiment, combined with the Chainless Platform, might help solve the bubble lending issue discussed in Satoshi Nakamoto’s inaugural announcement. In the future, banks can lend, but without absorbing deposits, everyone starts on the same level, competing on profitability, just like how big Vs and TV stations are now competing on the same level. TV stations have no absolute advantage. On the YouTube platform, TV stations and big Vs are no different. On the Chainless Platform, banks and big Vs are no different.

8.2.2 The Need for Seed Capital is Determined by the Nature of DW20

Can DW20 replace the US dollar? Initially, it does not possess the reserve currency properties of the US dollar, so it is not a complete monetary concept. DW20 is only Bitcoin’s payment tool. Therefore, it must have elasticity. Let’s look at a few examples.

New gold is mined every year. If the amount of newly mined gold equals economic growth, gold could directly serve as a ruler. When economic development speed exceeds the mining output of gold, it causes deflation. Gold lacks elasticity in adjustment, which is the reason people abandoned it.

Fiat currency was designed to overcome gold’s lack of elasticity. It is regulated based on predicted total economic volume from market data, aiming to ensure the amount of fiat currency issued equals economic growth. But this prediction is inexact and often too elastic, resulting in inflation. Repeated adjustments instead become the eye of the economic storm. For those in power, they found they could cover up financial storms by over-issuing currency, a good way to maintain social stability. Because the public doesn’t notice a slow change; they just feel money is becoming less valuable. But doing so, the principles of a market economy are completely lost. Market retribution will surely appear, also slowly. The emergence of Bitcoin can also be seen as a phenomenon of market retribution.

Both of the above monetary systems have problems. We need a currency with a negative feedback mechanism like in automatic control systems, which is automatic market adjustment. So-called adjustment requires market adjustment margin, just as machines need lubricating oil. Seed capital has no profit at all; it is the lubricating oil of the Bitcoin payment system. Automobile lubricating oil can be judged by a dipstick for too much or too little oil. The question is, where did this dipstick come from? Guess it might have been calculated initially, then adjusted through practice.

To solve the elasticity and fragility problems, DW20 issues 210 billion tokens, completely without the financial basis it should have. It just assumes the future is the Bitcoin standard. The 210 billion DW20 and 21 million Bitcoin look coordinated and corresponding, constituting a ten-thousand carry unit; perhaps it’s right. But DW20 and Bitcoin do not have a direct correspondence.

8.2.3 Exploration of the Capital Pool Issue

Bitcoin emerged to solve financial problems. After its birth, Bitcoin has been lame, hence DAI and USDT stablecoins emerged to compensate for Bitcoin’s shortcomings. This direction is correct, but they have defects. People have explored solutions to these problems from another angle.

Worldcoin and PI are explorations from another angle. They both chose the method of giving away tokens first to acquire customers. Genius intuition told them to do this. They adopt the approach of having a capital pool and user first, i.e., having consensus before applications, hoping their tokens become the world’s universal currency. Worldcoin and PI lack profound financial expertise and do not understand the need for a correspondence between total money supply and total wealth. Satoshi Nakamoto’s thinking was not to give away coins first but to start from the total money supply, making it correspond to the total social wealth. That’s why Hal Finney guessed about $10 million corresponding to one Bitcoin.

We adopt these genius ideas of a capital pool, combined with the ERC20 protocol to issue DW20 tokens, giving us the opportunity to make up for Bitcoin’s shortcomings and also giving us an experimental opportunity with alternative thinking. Comparing with current bank data, the most similar to seed capital is demand savings. Referring to the world’s top bank, Industrial and Commercial Bank of China (ICBC), it has approximately $2.1 trillion in demand deposits. The DW20 capital pool is small compared to this. The airdropped portion won’t all lie idle. For example, well-performing financial institution nodes on the Chainless Platform, if they absorb DW20 tokens and pay users interest, and this interest rate is equal to or higher than bank demand deposit interest, might guide users to lend DW20 to financial nodes for their use. If not fixed-term, the capital pool funds won’t decrease. If it’s fixed-term deposit, it would cause the DW20 price to rise. Since the entire platform data is transparent, all financial institutions compete on the same stage, and the head financial node effect will be more obvious.

Another meaning of the capital pool is user traffic. The more users, the more applications, the more funds flow in, and the larger the capital pool becomes. Assuming $210 billion is the “principal,” referencing ICBC data, demand savings are 5 times the principal. DW20 would be almost a trillion-dollar capital pool.

This capital pool forms naturally. Market demand leads to increased DW20 issuance through collateral, causing retained funds to increase and the capital pool to grow. But Bitcoin’s market capitalization determines the total amount that can be collateralized, indirectly determining the size of the capital pool. When collateral is insufficient, causing DW20 to rise, someone will buy Bitcoin to collateralize, pushing up Bitcoin’s price. That is the principle of adding value to Bitcoin we mentioned earlier.

Separating Bitcoin’s store of value and measure functions is crucial in financial significance. Gold’s measure and store of value are not separated, leading to deflation. For this, refer to Chapters 12 and 13 of our “Invite Satoshi Nakamoto, to Welcoming the New World” regarding the Bitcoin dollar standard and predictions of Bitcoin’s rising curve; the principle is the same.

Is it allowed to collateralize other valuable assets to hybrid issue DW20? Our view is that it is feasible as a pegged stablecoin, but as a standard currency, which is a ruler, people require the measure to be as precise as possible. Precision requires fewer influencing factors.

8.2.4 Anti-Fragility Attack Resistance

Bitcoin describes the 51% attack problem and provides a clever solution. But Bitcoin did not solve the fragility attack problem. What is a fragility attack? It’s the phenomenon of sharp rises and falls in tokens during their early stages. A little capital can manipulate the token’s sharp fluctuations, making the price far higher or lower than its intrinsic value. We detailed the solution in the Chainless Whitepaper, turning token growth from uncertain to deterministic. Fragility attacks only occur in market-priced products, commonly known as secondary market-priced products. With secondary market pricing, there is primary market pricing.

What is primary market pricing? USDT, USDC, Hong Kong dollar, and Renminbi, etc., all belong to primary market pricing.

• Taking USDT as an example:

If it strictly maintains a 1:1 reserve between USDT and US dollars, even if all are exchanged, customers face no risk. But what does Tether company earn? It uses the US dollars obtained by exchanging its own currency USDT to buy bonds in banks, keeping part in cash to maintain the 1:1 parity between USDT and the US dollar. This operation is profitable. The profit method is buying low and selling high based on the US dollar price benchmark.

Please note, here is a very key concept: there is a benchmark.

USDT’s risks are divided into normal risks and abnormal risks.

1.  Its normal risks:

A. Bond value risk. They use diversified investments, so the risk is not significant but exists. Their money is stored in one bank; if the bank fails? In that case, the liquidation time would be long, and USDT’s value might drop to zero before liquidation ends.

B. Insufficient position risk. When market risk comes, if the withdrawal amount exceeds its reserves, a bank run could occur. In the recent crypto circle risk, USDT’s market cap fell from $80 billion to $60 billion but held. It seems Tether’s reserves and borrowing capacity were sufficient.

C. USDT can experience depegging risk, reflecting insufficient elasticity. The Hong Kong dollar has never depegged because it has sufficient elasticity.

D. Because it is pegged to the US dollar, US dollar risk is also its risk.

2.  Abnormal risks:

E. USDT is over-issued too much, insufficient for redemption. From the accounts, USDT has over $60 billion in deposits, over-issued by over $10 billion; still relatively transparent, far from a bank run.

F. Centralized issuance faces uncertain regulatory policy risks.

3.  Possibility of attack:

Whales holding over $10 billion USDT could try under specific conditions. But exchanging cheap USDT for US dollars incurs losses. This is equivalent to gambling against the market maker, with low winning odds.

Please note, here is another key point: primary market pricing requires a market maker.

Primary market pricing requires pricing rules. The least transparent Renminbi says it “references a basket of currencies.” Referencing is not pegging, only a soft peg, with large room for manipulation, which is why the market says the Renminbi is manipulated.

The Hong Kong dollar’s market maker is the Hong Kong Monetary Authority.

• DW20 has different pricing methods at different stages

DW20 in the first stage is primarily primary market priced. In the second stage, DW20 is primarily market priced, belonging to secondary market pricing. The growth of DW20 tokens is divided into three stages. Only the first stage has fragility issues, so it must reference the successful experience of primary market pricing. We issued 10% as a Stability Fund to form the market making fund, equivalent to the “market maker”; the market making fund operates based on the DW20 value benchmark, equivalent to USDT using the US dollar as a benchmark. Having a market maker and a value benchmark forms operational rules through these two points. Theoretically, it can maintain DW20’s upward trend and avoid sharp fluctuations. The principle is similar to the stabilization method of the Chainless Platform token. See Chapter 3.

Legal market making that is open and transparent; both USDT and the Hong Kong Monetary Authority use this method, indicating the law does not prohibit it. The risk lies in whether DW20 has a long-term upward trend. Is this trend reasonable? Does the market agree? If not, market making will fail. For example, once Hong Kong’s economy can no longer support the linked exchange rate, the HKMA’s market making will fail.

How does DW20 rise and stabilize? Determined by demand, meaning the scope of demand must continuously expand.

8.3 DW20 Adjustment Principle

Any adjustment involves three steps: consumption, injection, and tightening.

8.3.1 Liquidity Consumption

Cryptocurrency has no funds in transit issues. When flowing cross-border, its speed and efficiency are unmatched by the fiat currency system. Chinese bank funds have the shortest in-transit time domestically, achieving second arrival. This speed is DW20’s target speed and is fully achievable. Liquidity consumption is only handling fees, but this does not affect the total amount of the DW20 currency pool.

8.3.2 Liquidity Injection

When Bitcoin is collateralized to issue DW20, it is liquidity injection, automatically injected based on market demand. US dollar liquidity injection is controlled by the Fed, based on indicators, and is manual injection. The total amount of DW20 injection is not less than half of Bitcoin’s market capitalization. Injection causes the DW20 price to fall. According to Hayek’s market theory, market methods are the most effective. DW20 automatically adjusts supply and demand. But DW20 in the first stage does not have DAI’s stabilization mechanism targeting the US dollar, because DW20 is not a stablecoin initially.

8.3.3 Tightening Liquidity

DW20 collateral redemption will destroy DW20, leading to an increase in the DW20 price.

9. Future Trading Token for the Open Financial Platform

We envision DW20 divided into three stages: the first stage is the memecoin stage, the second is the stablecoin stage, and the third is the standard currency stage. The goals and nature of DW20 are different at each stage. DW20 is a demonstrative application of the Chainless Platform.

Finance is the last fortress of Internet disintermediation. DW20 is the first standard currency with a mechanism similar to the US dollar. DW20 and Bitcoin will be accepted by the existing financial system together. DW20, Bitcoin, and the Chainless Platform will become tools for the existing financial system to move towards openness.

The above envisioned scheme is another implementation form of our Bitcoin dollar standard ideology, referring to the ideas in the article “Invite Satoshi Nakamoto, to Welcoming the New World.” Readers can refer to Chapters 12 and 13 of that article. The difference between this method and the original method is that the Bitcoin dollar standard is a transparent centralized method, while the Bitcoin standard relying on market adjustment is a distributed method. This method better conforms to Satoshi Nakamoto’s spirit and cryptocurrency practice. The next chapter will elaborate on the specific functional implementation of this method.

Chapter 2 System Function Implementation of DW20 Decentralized Standard Currency

1.  DW20 Standard Currency is a Basic Function of the Chainless Platform

1.1 Origin of the Chainless Platform

As seen in Chapter 1, when discussing DW20, using cryptocurrency terminology focuses more on its attributes as an asset and financial tool rather than the underlying blockchain technology itself. Traditional public chains face speed bottlenecks in handling high-frequency transactions. For example, even high-performance blockchains typically have block times on the order of seconds, and transaction finality time requires even longer. Taking BNB Smart Chain (BSC) as an example, although its current block time has been optimized to about 0.75 seconds, and transaction finality time has been shortened to within 4 seconds, this is already a huge improvement. However, compared to the response speed of traditional centralized payment systems (like VISA or Alipay), this duration is still not competitive in many payment scenarios. Therefore, in the cryptocurrency ecosystem pursuing extreme transaction experience, centralized exchanges (CEX) and many Layer 2 projects involving transactions still tend to use centralized or semi-centralized technical solutions at the transaction settlement layer. Blockchain ledgers provide immutability and transparency but serve more as credit roots for scenarios not requiring high speed (like value storage, asset issuance, slow governance) rather than direct high-speed payment infrastructure. As Satoshi Nakamoto initially envisioned, large-scale payments might need off-chain or child node solutions to solve efficiency problems.

The core value of the cryptocurrency field lies in its innovation capability, such as the programmable finance and smart contract functions provided by Ethereum, which are not available on any traditional Web2 financial platform. However, given that centralized technology is still the mainstream and efficient path for current Internet development, the solution lies in combining the advanced ideas of cryptocurrency with centralized technical frameworks. The Chainless Platform is a product proposed based on this concept: it adopts a transparent architecture aimed at providing a platform similar to Ethereum, conforming to cryptocurrency concepts. By leveraging mature centralized technology, the Chainless Platform can not only easily achieve all the smart contract functions of Ethereum but also surpass them in functionality and ease of use.

The core architecture of the Chainless System, although following the block and chain structure, has a fundamental difference in the accounting mechanism from the current cryptocurrency competitive accounting model: transaction verification and accounting work are completed centrally by the Chainless System. To solve the trust issue of unilateral accounting, the Chainless Platform innovatively implements a timestamp service: it utilizes the massive credit of the Bitcoin public chain, anchoring and storing the hash of the block ledger into the Bitcoin network. This method cleverly uses the security and irreversibility of the Bitcoin chain to replace the cost of multi-party competitive accounting, providing powerful credit enhancement for the Chainless System.

We believe that this idea of using public chains as credit roots to expand the credibility of unilateral accounting will broaden the application prospects of cryptocurrency and adhere to the core characteristic of Satoshi Nakamoto’s creation of cryptocurrency—the concept of no need for regulation, avoiding unnecessary regulatory approaches.

The design philosophy of the Chainless System is to fully utilize existing human technological achievements and facilities and optimize and improve upon the shortcomings of existing systems, rather than repeatedly building infrastructure from scratch. This pragmatic strategy of integration and improvement constitutes the core development path of the Chainless Platform. This is the origin of the Chainless System.

1.2 Brief Introduction to the Features of the Chainless System

1. Chainless adopts a general ledger – sub-ledger architecture, balancing public transparency and tiered privacy protection.
2. Chainless adopts an indexed general ledger structure. The general ledger data remains transparent, and users can view it using chainless browser, balancing the auditability of decentralized systems.
3. The Chainless sub-ledger cluster is responsible for personal identity authentication and managing the disclosure level of external transactions.
4. Chainless achieves arbitrary expansion and high availability with no downtime through a multi-cluster system distributed globally.
5. Chainless is a reconciliation system. The three parties for reconciliation are the sender, the receiver, and the system. The latest transaction results can be found in the general ledger, and past transaction records can be found in the running ledger. Different from the current cryptocurrency third-party verification accounting system.
6. Chainless only verifies user transactions, ensuring transaction validity, and does not custody user assets.
7. Chainless innovates credit enhancement mechanisms. It uses the credit of the Bitcoin chain to obtain credible endorsement, enhancing security and irreversible accounting.
8. Chainless rapid staking redemption mechanism. In traditional chains, users must wait for a long unbonding period (usually 21 days) when withdrawing to prevent attacks after they leave. With the timestamp service, after users request unbonding, they only need to wait for Bitcoin to confirm their unbonding request is anchored. If a fork occurs, users can simply check which fork has an earlier Bitcoin timestamp to determine the canonical chain. This shortens the unbonding period from weeks to about a day, greatly improving fund liquidity.
9. Chainless implements multi-signature multi-backup wallets. This wallet is essentially simplified cluster technology, controlled entirely by the individual, possessing high security. It can upgrade all cryptocurrency single-signature wallets to multi-signature wallets.
10. The security level of the Chainless sub-ledger is guaranteed by multi-signature and multi-backup. The system provides tiered privacy schemes to balance security and convenience of use.
11. Chainless user-controlled privacy disclosure. The system supports anonymity and real names; the decision right on privacy lies with the user, and the degree of privacy disclosure is entirely determined by the user.
12. Chainless allows anonymous transfers. Unlike Ethereum, there is no need to expose one’s account assets to the receiver. Overcomes the privacy defects of cryptocurrency.
13. Chainless transaction privacy. The reconciliation system maintains high privacy; the transferor’s identity cannot be confirmed through the running ledger.

The functions and structure of the Chainless System can be referred to in the Chainless Whitepaper. Figure 2.1 is a technical framework of the Chainless System.

2.  Methods to Acquire DW20

2.1 Airdrop

1. Download the Chainless wallet.

2. Enter the airdrop program. Supports anonymous registration. Anonymous users can also provide contact information to the Chainless Platform; the provision method is described in the section “5. Anonymity and Security”.

3. Follow the airdrop program operations. Example steps:

1. The user provides a Bitcoin address to the Chainless System;
2. The system verifies the user’s address eligibility. After Chainless verification, it prompts which medal level the address qualifies for, then sends this information to the user, followed by the user signing with their private key;
3. After the system verifies without error, it sends the medal qualification certificate;
4. The user confirms it’s correct and clicks Yes;
5. The system transfers Chainless DW20 tokens to the user’s Chainless wallet, in a locked state.

4. Check the DW20 release status on the “Airdrop” page.

The user’s Chainless wallet displays the DW20 value.

2.2 Bitcoin Collateral and Release Procedures

2.2.1 Adopting Bitcoin Chain Collateral Method Eliminates Need for Cross-Chain

To achieve the coin standard, BTC is transformed into a staking asset through Chainless’s Bitcoin remote staking protocol, utilizing market mechanisms to regulate DW20 prices, further integrating BTC assets and their holders into the Chainless ecosystem.

Bitcoin holders can stake by locking their BTC through special transactions on the Bitcoin network.

After locking, new DW20 is issued on Ethereum based on the staked Bitcoin and enters the Chainless ecosystem. These three links are interconnected, greatly enhancing the security of both BTC and DW20, as shown in Figure 2.2.

Automatically adjusting the market price of DW20 through the market provides stakers with new profit methods, e.g., arbitrage profits.

This section briefly introduces the BTC staking protocol content.

2.2.2 Principle Summary

The BTC staking protocol components consist of 2 parts: the Bitcoin on-chain staking protocol and the Ethereum contract DW20 issuance protocol. Collectively called the Chainless Protocol.

The Bitcoin Staking protocol transaction specification is largely based on Bitcoin’s Taproot upgrade, which introduced Schnorr signatures.

The Bitcoin staking protocol involves the following stakeholders:

• Bitcoin Stakers: Bitcoin stakers are the controllers and beneficiaries of the staked equity. The staker’s identity is determined by their Bitcoin public key (<StakerPk> referenced in the staking script).
• Covenant Committee: The Covenant Committee (identified by its members’ Bitcoin public keys CovenantPk1…CovenantPkN) is responsible for protecting the DW20 ecosystem from attacks by BTC stakers. It achieves this by representing itself as an M-out-of-N multisignature (or using MPC-TSS implementation) that co-signs BTC transactions with the BTC staker. Through co-signing, the Covenant Committee enforces spending rules on the staked Bitcoin, ensuring these Bitcoins can only be used in a manner compliant with the protocol. Apart from refusing staking requests from stakers, the Covenant Committee cannot take any action against stakers.
• Liquidators: In the Staking protocol, participants responsible for monitoring and executing the liquidation process of Collateralized Debt Vaults. Their main responsibilities include monitoring collateral ratios, executing liquidations, confiscating BTC collateral, etc., ensuring that when the collateral value is insufficient to support the borrowed DW20, the system can timely sell the collateral to cover potential shortfalls, thereby protecting the stability of DW20 value. The protocol stipulates the Liquidation Fund acts as the liquidator. The liquidated Bitcoin belongs to the Liquidation Fund. The Liquidation Fund is managed by the Chainless team. When selling liquidated assets, profits are calculated, and 6% of the profit is taken as handling fee income. The principal and the remaining profit belong to the Stability Fund. If a loss occurs that cannot be covered by the Liquidation Fund, it is covered by the Stability Fund. The Stability Fund is owned by all token holders.

2.2.3 Bitcoin Staking Protocol Interaction

BTC staking is an asset locking scheme based on a Time-Lock mechanism. The entire scheme consists of two phases: the Staking Period and the Unbonding/Unlock Period.

• Staking Period

Refers to the effective time period for asset locking committed and customized by the user when initiating the staking operation through the Bitcoin on-chain staking protocol. During this period, the collateral assets are in a locked state.

• Unbonding Period / Unlock Period:

Refers to the time period when the Chainless System begins to take over the asset release process. It aims to ensure all necessary settlement and risk management operations are completed, consisting of the following three sub-phases:

• DW20 Redemption Window

The Ethereum contract DW20 issuance protocol begins tracking and verifying whether all anchored debt assets DW20 have been fully redeemed from the ecosystem and returned to the ERC-20 Peg Pool. At the end of this phase, final statistics and confirmation of the number of redeemed DW20 are completed.

• BTC Liquidation Period:

If preset risk trigger conditions are met (see 2.2.6), this phase initiates the liquidation procedure for the collateral BTC.

• Grace / Cool-down Period:

Also known as the Liquidation Buffer Period. Its function is to provide additional execution time for the liquidation process, ensuring liquidation operations have sufficient window to complete before the final timelock expires, thus avoiding potential system risks due to incomplete liquidation.

The above principles are illustrated in Figure 2.2.

Lock time calculation method:

The Total Lockup Duration calculation follows the Inclusion Model, where the Staking Period includes the Unbonding Period.

The Staking Period is equivalent to the full total lockup time. This means all internal processes of the Unbonding Period must be completed within the user-set Staking Period.

The following figure shows the staking/redemption/liquidation path, Figure 2.3.

2.2.4 Collateralizing Bitcoin to Issue DW20

The core principle of the Chainless Protocol is to utilize the Bitcoin UTXO model and Bitcoin scripts (Timelock Script) to anchor BTC staking on the Bitcoin mainnet.

Prerequisite: User staking BTC usually requires locking for a minimum period (e.g., 1 year).

• The user does not send BTC to a third party or a smart contract (like traditional cross-chain or wrapped assets) but initiates a transaction through a special Bitcoin locking script (usually involving a timelock, i.e., Timelock Script).
• This transaction locks the user’s BTC, forming a new UTXO. This UTXO is multi-conditional; it defines three possible paths for future BTC withdrawal (normal withdrawal, early unbonding, liquidation).
• The user always retains the private key, so the assets remain in self-custody, and BTC always remains on the Bitcoin mainnet.
• While staking Bitcoin, new DW20 assets are generated on Ethereum, automatically entering the Chainless System, changing the total ledger DW20 indicator value, and depositing DW20 into the staking user’s DW20 account. At this point, the collateral Bitcoin price and quantity can be checked in the Chainless account.

2.2.5 Releasing Bitcoin Collateral

The withdrawal mechanism of the Chainless Protocol is executed around the preset conditional paths in the Bitcoin locking script:

Prerequisite: Choosing unbonding requires waiting for an unbonding period to ensure staking security.

• The user initiates an unbonding request on Chainless. Simultaneously, the same amount of DW20 generated during staking is destroyed, and the total ledger DW20 indicator value is changed.
• If the staking period ends, the normal withdrawal path (based on timelock expiry) preset in the BTC locked UTXO will be activated.
• If Early Unbonding: Allows users to request unbonding before the lock period ends but still requires waiting for the unbonding period.
• After the unbonding period ends, the user can execute the final Bitcoin transaction, spending the originally locked UTXO and transferring it back to their fully controlled address. Requires Bitcoin chain transaction fees.

2.2.6 Liquidating Bitcoin Assets

Liquidation is a key mechanism to protect the stability of the protocol, ensuring there is sufficient collateral in the system to support all DW20 assets.

2.2.6.1 Triggering Liquidation

A. DW20 Verification Failure Triggers Liquidation

When a staking position transitions to the DW20 Redemption Window, the liquidation role (Liquidator/Guardian) in Chainless will strictly monitor and audit the DW20 tokens associated with this BTC collateral.

Chainless confirms that sufficient DW20 tokens have been redeemed and securely locked in the DW20 Reserve Pool.

• If the condition of sufficient DW20 locking is met, these tokens will be destroyed during the subsequent BTC Liquidation Phase, completing the asset closed loop.
• If the number of tokens locked or redeemed to the DW20 Pool fails to meet the corresponding amount required by the protocol, the system will immediately trigger the liquidation process for the BTC collateral assets to perform partial liquidation. (This liquidation aims to cover the risk exposure caused by the insufficient DW20 quantity.)

B. BTC Collateral Ratio Falls Below Minimum Requirement Triggers Liquidation.

The BTC staking protocol requires over-collateralization and has a minimum collateral ratio requirement. Once the collateral ratio falls below the standard requirement, the liquidation process is triggered. (Collateral Ratio = (Loan Principal / Collateral Market Value) × 100%).

C. Chainless sets the Bitcoin collateral ratio at 50%. When the Bitcoin price drops to 70% of the collateral price, a margin call notification is sent; when it drops to 60%, another notification is sent; when it drops to 50%, liquidation is triggered. This ratio can be set by the user, with a maximum ratio of 65%. When it drops to 85% of the collateral price, notify for margin call; at 75%, notify for margin call.

2.2.6.2 Executing Liquidation

The protocol stipulates the Liquidation Fund acts as the liquidator. Its liquidation process is as follows:

• The liquidator first locks the collateral BTC.
• he liquidator supplements the missing redeemed DW20.
• The liquidator retains the collateral BTC at a certain price as compensation for the DW20 value they provided.
• The remaining BTC is returned to the staker.

The liquidation mechanism aims to penalize stakers with excessively high risks and sell the collateral to cover the debt, thus ensuring the stable value of DW20.

2.2.7 Security of Platform User BTC

The most critical innovation of the Chainless Protocol lies in its non-custodial, decentralized design, greatly ensuring the security of users’ BTC. The security of user BTC is guaranteed by Bitcoin’s own underlying code and timelock mechanism. As long as the Bitcoin chain is still running, users can wait for the timelock to end to retrieve their BTC.

2.2.7.1 Asset Security: BTC Never Leaves the Bitcoin Mainnet

• User BTC always remains locked on the Bitcoin chain in the form of UTXO, controlled by Bitcoin scripts (Timelock Script) rather than the smart contracts of the Chainless Protocol.
• User private keys are never handed over.

2.2.7.2 Timelock Guarantee

• The user’s locked UTXO transaction includes a timelock, as long as one waits for the lock period to end (after the maximum lock period passes), the user’s UTXO will automatically meet the withdrawal conditions.
• Since DW20 is generated on Ethereum, users can construct the program to release collateral and destroy DW20 themselves and broadcast the transaction to retrieve their BTC. This means the Chainless ecosystem cannot prohibit the execution of expired contracts. The key here is the Bitcoin timelock control process; when the timelock activates, the process executes automatically. This is the biggest difference from centralized systems, thereby making the Chainless system’s degree of centralization over asset control equivalent to Ethereum’s.

2.2.7.3 No Bridging Risk

• Traditional cross-chain staking requires wrapping BTC or depositing it into a cross-chain bridge’s smart contract. Once the wrapping contract or cross-chain bridge is attacked, assets are lost.
• The Chainless Protocol provides secure staking through signature commitments and Bitcoin scripts, eliminating the core systemic risks brought by cross-chain asset custody.

2.3 Earning Rewards

The 30.6 billion market fees are mainly used for various new user acquisition promotion activities, partially rewarded to peripheral contributors. Each phase is announced on the website. These rewards are different from registration rewards.

2.4 Market Purchase

Market purchases are divided into on-chain purchases and internal Chainless purchases. Chainless internally supports exchange trading. On-chain purchase refers to purchasing on exchanges outside Chainless.

• 1.  Within the Chainless Platform, transaction fees are very low.
• 2.  On-chain Purchase
  1. Exchanges supporting DW20 on-chain have high fees.
  2. External centralized exchanges supporting DW20 tokens.

Chapter 3 Methods for DW20 Token Distribution and Stabilization

1.  Overview

1.1 Resonance between the Chainless Platform and Application Projects

The progress of DW20 is divided into three stages:

1. Memecoin;
2. Stablecoin;
3. Bitcoin-supported Standard Currency stage.

The success of each stage depends on active user participation. How to get users to participate? Besides traditional methods, we have the resonance effect.

What is the resonance effect?

DW20 is an application project of the Chainless Platform, its status equivalent to Ethereum’s “smart contracts.” While issuing tokens, the Chainless Platform is also issuing tokens; Chainless Coin has its own issuance logic, see Chapter 2 “Incentives” of the Chainless Whitepaper. Because DW20 users are also Chainless Platform users. When there are more application projects on the platform, there are more platform customers. The more platform customers, the more application projects, forming a positive cycle—this is the resonance effect.

When an application project brings real customers to the Chainless Platform, the Chainless Platform must give platform coins to the customers. If the application project does not bring new real-name registered customers to the Chainless Platform, no coins are given.

Why do application projects come? Chainless has an ecosystem support fund, reaching 30% of the total coin supply, the largest ecosystem support share in the cryptocurrency field.

DW20 customers receive DW20 tokens and also receive Chainless Platform coins (CLY), allowing them to participate in various activities on the Chainless Platform. Our policy is to reward real customers because many applications require real names, especially financial applications.

In the cryptocurrency field, no platform project has this resonance effect. This is the platform competition strategy of the Chainless team. Existing cryptocurrency projects can easily switch to the Chainless Platform. The Chainless Platform project support fund is an incentive for project parties; giving Chainless coins to users is an incentive for users. Both the project and its customers receive incentives simultaneously. Combined with the platform’s advantages like multi-signature multi-backup wallets, technical and ease-of-use advantages, it is very attractive to project parties and their customers.

1.2 Initial Valuation and Basic Parameters of DW20

Several important data serve as basic conditions for design:

1. Airdrop 147 billion DW20 tokens;
2. Airdrop targeting 200 million users;
3. Divided into 30 cycles;
4. Each user valued at $100;
5. Currently already in the 7th cycle.

In the early first stage, DW20 also uses customer value as the valuation basis, the same as the Chainless token valuation method. A token issuance formula structure similar to Chainless Coin can be used, only adjusting the formula parameters. The adjustment principle is in: “7. Method for Determining the Token Issuance Model”.

1.3 Airdrop to 50 Million Bitcoin Addresses

70% of DW20 is issued via airdrop, totaling 147 billion. We expect about 50 million Bitcoin accounts to receive the airdrop.

Using “mining” terminology, it’s called “Register to Mine.” It revitalizes the value of Bitcoin users.

The number of tokens a DW20 customer receives differs based on whether the customer is real-name or anonymous. Both real-name and anonymous customers can receive airdropped tokens.

Anonymous Registered Customers:

Anonymous customers must have a Bitcoin address.

Initially determined based on $100 per Bitcoin address. The number of tokens received varies depending on the cycle.

Real-name Registered Customers:

1. Those with eligible Bitcoin addresses receive the same DW20 tokens as anonymous registered customers. That is: calculated at $100 per Bitcoin address, the number of tokens received varies depending on the cycle.
2. Receive Chainless Platform coins (CLY) equivalent to $50, and can also participate in various activities on the Chainless Platform, and receive airdropped tokens from other smart contract projects on the platform (if any).

It is worth mentioning that regardless of the airdrop cycle, the customer’s value is the same, but the system’s value increases with the number of customers. In other words, the number of coins given away continuously decreases.

That is, in the memecoin stage, when the token is not yet on exchanges, the coin-giving logic is based on customer value. This model is called the “User Model” in the Chainless Whitepaper.

Still in the memecoin stage, if the token is listed on exchanges, the model must consider the impact of token price changes on customer value. This is called the “Circulation Model” in the Chainless Whitepaper.

1.4 Airdrop After 50 Million Bitcoin Addresses

After the airdrop to 50 million addresses, new addresses will continuously generate, but new addresses are easily created and lack time precipitation. To distinguish effective customers, real-name registrations will receive coins, while anonymous customers need sufficient time (address age).

1.5 What if Issuance Falls Short of Expectations?

Theoretically, the coin issuance rules cannot be changed, but we cannot know in advance how many of the 60 million accounts are dead accounts. For example, if there are only 30 million active accounts, what should we do? Wouldn’t issuance get stuck? Situations like this require adjusting monetary policy to ensure smooth customer growth. The team proposes a plan for community vote approval.

We are unable to make specific regulations on such matters in advance. But learning from the experiences of PI and Luna, adjustments will be made very cautiously.

2. The Value of DW20

The value of the DW20 token has been discussed repeatedly in Chapter 1. Here we look at it from a different angle.

2.1 Characteristics of DW20

1.  Has three stages

1. Commodity stage is the memecoin stage
2. Stable currency stage, using the US dollar as the measure
3. Standard currency stage, commodities using DW20 as the measure

2.  DW20’s attributes are different at different stages.

4. Does not represent the value of the ecological community platform or user community platform.
5. The token issuance method is “Register to Mine” with limited conditions. Allows anonymous and real-name registration.
6. DW20 token is an ERC20 token, with the total number recorded on the Ethereum system. Can be traded within the Chainless system.

2.2 DW20 Value Narrative

1. First stage has total supply control, reduced issuance, over 70% airdrop.
2. The team only holds 11.4 billion tokens, the same proportion as Satoshi Nakamoto’s Bitcoin holdings.
3. No market financing; value generated through consensus, not considered a security.
4. Decentralized standard currency, market-priced stablecoin.
5. Uniqueness of the DW20 name.
6. Best companion measure for Bitcoin.

3. Distribution of DW20

Since distribution is everyone’s biggest concern, the DW20 distribution method was already stated in Chapter 1. Below is some supplementary introduction.

1.  Token Issuance Method

DW20 is not issued based on time like Bitcoin but based on the number of customers; it’s “Register to Mine.”

2.  Issuance Cycles

Referring to Bitcoin and the Chainless System, 30 issuance cycles are still chosen. Estimated to be completed in 3-4 years. Estimated total of about 200 million anonymous and real-name users. Airdrop quantity adjustments start from the eighth cycle.

3.  Issuance Structure and Quantity

In the first stage:

• DW20 total issuance 210 billion tokens, never increased.

• DW20 specific distribution as follows:

1. Airdrop: 147 billion
2. Stability Fund: 21 billion
3. Team: 11.4 billion
4. Market: 30.6 billion

In the second stage:

• In the stablecoin stage, DW20 can be issued by collateralizing Bitcoin, with no limit.

4. Lock-up Mechanism

4.1 Determining the Lock-up Period

Since Bitcoin addresses can be randomly generated, for fairness, we have defined different lock-up tiers based on coin holding amount and holding time. A Bitcoin address may appear many times in the ledger; address age should be calculated from the time the address was first generated. Address age is the length of time from the earliest generation time of a Bitcoin address to the time of applying for the DW20 airdrop. A full year of address age counts as 1 point, less than 0.5 years counts as 0 points. If over one year, each additional month counts as 0.08 points, less than a month counts as 0 points.

One Bitcoin in the account address counts as 1 point. Less than one Bitcoin also counts points based on face value, retaining two decimal places. The coins in this address may change over the entire time period. We calculate based on the holding amount in the address on the application date.

If the algorithm is simple, there will be fewer disputes.

• Regulations as follows:

1.  If the sum of address age and Bitcoin reaches 50 points, it’s called a Gold Medal account;

2.  Reaching 25 points is a Silver Medal account;

3.  Similarly, 12.5 points is Bronze Medal account;

4.  6.25 points is Iron Medal account;

5.  3.125 points is Tin Medal account;

6.  Paper Medal account needs to reach above 0.5 points.

7.  No Medal customers are those who do not meet the above standards. Can receive DW20 airdrop through real-name registration.

The six types of medals can be used to distinguish different lock-up periods.

• Explanation and examples of regulations:

8.  A new address holding 20 coins, held for over 6 years, is 26 points, Silver Medal.

9.  In the same issuance cycle, the number of coins received for all addresses is the same, unrelated to the medal.

10. For Gold Medal, at least two years of coin age; for Silver to Tin Medal addresses, at least one year of coin age. For Paper Medal accounts, at least hold a Bitcoin address for 5 months. That is, assuming a new user, whether purchasing on a centralized exchange or DeFi platform, eventually needs to send it to their own on-chain Bitcoin address once and maintain a non-zero address on the Bitcoin system for over 5 months.

11. Each cycle issues a different number of DW20 tokens for customer airdrops.

12. One address can only claim once.

This is a targeted airdrop token issuance model.

4.2 Lock-up Release

• Lock-up: Refers to the airdropped tokens not being immediately sellable. They are released linearly over a lock-up period, depending on the badge.

• Linear Release: The total amount of tokens received is divided by the specified number of days to determine the daily releasable amount. Different badges have different daily release amounts. Released uniformly per day.

• Airdrop Token Release Rules:

1. Gold Badge (50 points): 30-day linear release.
2. Silver Badge (25 points): 60-day linear release.
3. Bronze Badge (12.5 points): 90-day linear release.
4. Iron Badge (6.25 points): 120-day linear release.
5. Tin Badge (3.25 points): 180-day linear release.
6. Paper Badge (0.5 points): 270-day linear release.
7. No Badge customers: Linear release over 270 days.

• The number of DW20 tokens rewarded is independent of the customer’s badge; the badge determines the release conditions.

• The release day starts counting from the day the token is listed on a centralization exchange.

• The rewarded Chainless Coin (CLY) follows the rules of the Chainless Coin.

5. Airdrop Token Distribution

For the airdrop, we still adopt a diminishing distribution method, making the token distribution relatively even.

The data in Table 3.1 has been adjusted; the airdrop amounts for the first 7 cycles remain unchanged.

Starting from cycle 8, the airdrop distribution amount is adjusted.

5.1 Determining the Number of Airdropped Tokens

70% of DW20 is issued via airdrop, totaling 147 billion tokens, reaching 200 million people.

The airdrop is based on Bitcoin addresses, with each address valued at $100, far exceeding the value of small Bitcoin change. Both verified and anonymous users hold this value.

The principle formula is as follows:

Airdrop token amount g = $100 / Market token price …… Principle Formula

This is a principle formula. We use the following model for adjustment to suit various stages of project development.

The first cycle targets 24,000 users, distributing 2 million DW20 tokens. For a considerable number of cycles thereafter, the market price is still forming. We use a method based on the initial pricing of the first cycle, gradually reducing the distribution amount.

The parameters in the first row are manually specified.

The specific algorithm is:

Every three cycles, the airdrop distribution standard is reduced by nearly 60% (58.7%). This is much more stable compared to Bitcoin’s distribution algorithm.

Even though it’s more even, influenced by Bitcoin’s issuance, early customers have an advantage without risk.

5.2 Determining User (Address) Cycles and Cyclical Users

Users and addresses are used interchangeably in the following description.

Divide the 200 million addresses into 30 cycles to distribute approximately 147 billion tokens. x represents the x-th cycle.

Currently at cycle 7, airdrop token distribution is adjusted starting from cycle 8.

The formulas and parameters are as follows:

The number of addresses corresponds to the number of users u_X per cycle in the Chainless Whitepaper. Wherever ‘users’ are mentioned, it represents Bitcoin addresses.

u_x=2×(2+8×0.768^(x/3)-0.03345×(x/3))^((x-1)/3) _{。。。。。。。。。。。}Formula (1)

Formula (1) corresponds to the second column ‘Number of Addresses’ in Table 3.1.

Table 3.1 Simulated User Registration Token Distribution Table

x 周期 Cycle	ux 用户数 Number of Users （万人） (10,000 People)	dx 新增用户 New Users （万人） (10,000 People)	cx当期 发行量  current period issued （亿枚） (100000000 Pieces)	Cx累积 发行量 Accumulation issued（亿枚） (10000 0000Pieces)	gX 注册送币 Invite a friend and get coins
1	2.4	0.6	33.00	33	317258
2	3.6	1.2	34.00	67	157734
3	6.5	3.0	46.00	113	115266
4	13.2	6.6	60.00	173	84856
5	26.6	13.5	76.00	249	62738
6	52.2	25.5	92.00	341	46505
7	97.5	45.4	107.00	448	34528
8	173.6	76.1	61.31	509	8059
9	294.6	121.0	72.76	582	6012
10	478.0	183.4	82.36	664	4491
11	743.5	265.5	89.13	754	3357
12	1111.7	368.2	92.48	846	2512
13	1602.1	490.4	92.19	938	1880
14	2230.8	628.7	88.48	1027	1407
15	3008.2	777.3	81.93	1109	1054
16	3936.9	928.7	73.33	1182	790
17	5011.1	1074.1	63.55	1246	592
18	6215.5	1204.5	53.42	1299	443
19	7527.0	1311.5	43.61	1343	333
20	8915.4	1388.4	34.64	1377	250
21	10346.1	1430.7	26.81	1404	187
22	11782.5	1436.4	20.23	1424	141
23	13188.5	1405.9	14.90	1439	106
24	14530.4	1341.9	10.73	1450	80
25	15779.1	1248.7	7.56	1457	61
26	16911.0	1131.9	5.21	1463	46
27	17908.5	997.5	3.51	1466	35
28	18760.0	851.6	2.32	1468	27
29	19459.9	699.9	1.51	1470	22
30	20007.3	547.4	0.96	1471	18
8-30周期小计			1023

Symbols and Meanings:

1.  u_x represents users, and Bitcoin addresses are used interchangeably in the following description. It is the total number of addresses at the end of a certain cycle. When x=30, see the second column of Table 3.1, U30 = 200.073 million, which is the total number of users.

2.  Constant: 2, a target parameter for user growth in the startup phase.

3.  Exponential growth function: 2^((x-1)/3).

Excluding the influence of “8×0.768^(x/3)-0.03345×(x/3)“, the main body of the model is that the user quantity doubles every three cycles, i.e., 2^((x-1)/3).

4.  The user count for the first cycle is manually set. 24,000 is the adjusted target for the first cycle. 3.3 billion is the manually set initial DW20 token issuance amount, primarily based on the natural growth curve.

5.  Early-stage growth function:8×0.768^(x/3):

This early-stage influence function is mainly used for rapid user growth during the market launch phase, and its influence decreases exponentially with cycle progression.

6.  Late-stage correction function:0.03345×(x/3) :

This late-stage correction function primarily describes the slowdown in user growth as the market matures. The influence of this correction function increases linearly.

Figure 3.1 is the S-curve of user growth. It basically conforms to the natural S-shaped growth curve.

5.3 Determination of User Increment

7.  Incremental user count d_X in the current period. New users include both verified and anonymous customers. Corresponds to the third column ‘New Users’ in Table 3.1.

d_x=u_x-u_{x-1………………} Formula (2)

The new users in Table 3.1 correspond to dx.

5.4 Current Period Token Issuance Model (Excluding Token Price Adjustment Mechanism Influence)

8.  Total tokens issued in the current period: c stands for coin.

c_x=2×0.8^((x-1)/3)+d_x×20×0.413^((x-1)/3…………………… Formula (3)

cx is the number of tokens issued in the current period. dx is the number of new users in the current period, x represents the X-th cycle. Formula (3) corresponds to the fourth column in Table 1, the current period issuance of tokens.

Core formula for user token distribution: d_x×20×0.413^((x-1)/3).

Initially, 200,000 DW20 tokens were distributed per user registration in the first cycle. Thereafter, the reward standard decreases by 58.7% every three cycles.

Late-stage issuance correction function: 2×0. 8^((x-1)/3)) .

9.  C30 represents the total issued tokens.

C30 = (c₁ + ……… + c₃₀) ………………… Formula (4)

C_x corresponds to the ‘DW20 Cumulative Issuance’ column in Table 3.1. The cumulative DW20 issuance over 30 cycles C30 = 147.1 billion.

C_x is shown in the fifth column of Table 3.1. Figure 3.2 shows the cumulative total DW20 issuance.

5.5 Tokens Received per New User

10. g_x represents the number of tokens received by each user in cycle x, meaning ‘get’. Corresponds to the sixth column ‘Registration Tokens’ in Table 3.1.

g_x=c_x/d_x…………………………………… Formula (5)

6. Circulation Model (Model with Price Adjustment)

The circulation model differs from the aforementioned user model. DW20 is considered circulating once listed on a centralized exchange. Since the user value remains constant, but the token price may exceed the user model’s price, this would reduce the distribution amount.

Cryptocurrencies often use circulating market cap to measure project value. The circulation model’s value calculated based on circulating market cap may not necessarily equal the user model’s value. In the early stages of cryptocurrency, tokens are issued. If issued tokens are not circulating, the user model may apply. Once circulating, they are subject to the constraints of circulating market cap, and the circulation model applies.

The total value of the user model system is the total user value, denoted as Vx, where X represents a specific cycle.

Assume the cumulative number of users is 50 million, as shown in cycle 17 of Table 3.1.
Each financial user is valued at $500, so the total user value V₁₇ = $25 billion.

The total user value reflects how the price of a chainless system increases as the number of users grows. The price is denoted as Px, where X represents a specific cycle.

The formula is:
P_x = V_x / 2100 (unit: hundred million) …………… Formula (6)

For example: P₁₇ = 250 / 2100, which means P₁₇ = $0.119.

Corresponding to P_x, we use P’_x to represent the circulating token price in cycle x in the circulation model. Furthermore, in the user model for cycle x-1, i.e., the previous cycle , the token price is P_x-1. The market average price in that cycle, i.e., P’_x-1 in the circulation model, might also be higher than the current user model’s token price Px for cycle x. Considering the situation where the circulating market price P’_x-1 of the previous cycle is greater than Px, we need to work backward to reduce the number of tokens issued. We improve Formula (3) from the user model in the circulation model, with parameters having the same meaning. In any cycle x, let the average circulating token price from the previous cycle x-1 be P’_x-1. c’_x is the current period token issuance amount considering market price changes. New users dx and cycle x have the same meanings as in Formula (3). The current period token issuance model can be modified into a circulation model considering market price changes:

c’_x=2×0.8^((x-1)/3)+d_x×20×0.413^((x-1)/3)/（p’_x-1/p_x）………… Formula (7)

Where: P’_x-1 > P_x for the model to hold. Otherwise, it is undervalued, and Formula (3) applies.

P’x-1 is the average token price of the previous cycle (x-1) considering token price changes. c’_x is the current period issuance amount in cycle x considering token price changes.

In the design of the average circulating price, we did not adopt a method like the 20-day average price but chose the average price of the previous cycle. The length of this cycle is unpredictable, making it less susceptible to manipulation.

Figure 3.3 is a predicted curve considering token price circulation, shown in red. The blue line is also schematic diagram.

Blue line represents the token price supported by user value, orange line represents the token price supported by the rapidly growing DW20 ecosystem (unit: US Cents).

The rationality of the token distribution in this formula has not been verified. We drew a red S-curve in Figure 3.3, which is a conjectured curve.

7. Method for Determining the Token Issuance Model

Cryptocurrency issuance is basically halving issuance. The biggest drawback is that too much is taken in the first cycle, and it is not suitable for projects based on customer value.

The Chainless Platform is a project based on customer value, and so is DW20. The difference lies in the customer value, so the Chainless Platform’s token distribution formula is also suitable for DW20. However, parameters have been adjusted to suit different customer values and distribution conditions. Readers can compare the formulas for Chainless Coin (CLY) and DW20 to see this.

The basic assumption is the natural growth of customers, described using the natural growth curve. This is the theoretical basis for the entire set of formulas. If our parameter adjustments ultimately cannot present the S-curve of natural growth, the user distribution across cycles might be unreasonable.

The natural growth curve is typically an exponential formula, which is inconvenient to adjust. The formula we provide is a combination of two formulas, each with adjustment factors. They use the same formula, only with adjusted parameters. It seems the formula has good applicability.

Internet projects are mostly traffic-oriented. We hope the token distribution formula of the Chainless Platform has universal applicability for such projects.

DW20 starts as a commodity and later becomes a currency. Chainless Coin CLY is an equity token; the nature of the two tokens is completely different, yet both are fully applicable from the perspective of formula application. Acquiring user traffic is their commonality.

Formula parameters are determined through system simulation.

The data in the first row of Table 3.1 is generated by assignment.

The data in Table 4 of the Chainless Whitepaper for Chainless Coin CLY has been verified through calculations by the programming party.

8. Why Memecoins Can Become Stablecoins

This was the most puzzling question for us after releasing the draft for comments. Because stablecoins are all issued through collateral and have centers. A decentralized standard currency contradicts past experience and is hard to understand. In Chapter 1 of this article, it was said: “After 15 years of financial and technical training, Satoshi Nakamoto adopted a combination of imitation, modification, and innovation to design a genius solution to the money trust problem.” “The emergence of DW20 is still the result of a combination of imitation, modification, and innovation.” Let’s follow this line of thought and explain this issue through the following examples: Bitcoin, Dogecoin, Fcoin, and Luna.

8.1 Inspiration from Bitcoin

Bitcoin is a difficult project to understand, partly because Satoshi Nakamoto said he was good at programming but not at writing articles. Even now, few people understand Bitcoin because Satoshi didn’t explain it clearly. With the market being so impatience, who has the mind to study it? Cryptocurrency is different from AI; AI is about depth, cryptocurrency is about breadth. Cryptocurrency involves both productive forces and production relations. Depth can rely on iteration, but how to iterate breadth?

For breadth issues, one must think thoroughly in advance, not rely on iteration. Satoshi Nakamoto has a saying: “0.1 throughout.” Bitcoin has never changed drastically, reflecting the power of Satoshi’s comprehensive thinking. The whitepaper reveals whether the project team has thought deeply. Therefore, writing a good whitepaper is a basic requirement for cryptocurrency.

8.1.1 Writing a Good Whitepaper and Avoiding Excessive Regulation

The whitepaper is the “charter,” also the execution manual and task book, even detailed specifications. For an automated system like Bitcoin, full disclosure is necessary to avoid giving regulators a handle.

Does Bitcoin need regulation? It depends on which part. Mining machines are regulated; they must comply with the law, and operation is like company management. There is no dispute about this regulation. The Bitcoin maintenance team currently has no regulation; it’s community consultation, a small loophole in regulation. All maintainers are not under a company management system and do not receive salaries; how do you regulate them?

From Bitcoin, we conclude that opaque areas need regulation. The more transparent a project is, the higher its automation and marketization, the less regulation it needs. Conversely, if there is a control center, a profit center, opaque data, and noAutonomy and checks and balances mechanism, third-party regulation is needed.

One criterion for needing regulation is the number of people employed, which can be seen at a glance. Bitcoin now has about 4 people, Ethereum estimated to be no more than 15 people. Even if regulation were needed, it wouldn’t be traditional. Regulating Bitcoin and Ethereum with a centralized mindset would be a joke.

In comparison, DW20 tokens belong to different people. Theoretically, there is no DW20 system because even the operations are handled by unrelated platforms. And there is no actual controller. DW20 tokens are like gold; how to regulate them? Gold doesn’t need regulation, Bitcoin doesn’t need regulation, but funds composed of them involve operations and need regulation. Only the market-making fund of DW20 needs regulation, falling under the category of financial regulation. Project operations have a community consultation mechanism for democratic management. But unlike the management of the Bitcoin technical community, it’s more like the operation of the Ethereum Foundation, mainly dealing with token distribution. The Ethereum Foundation decides which technical projects to support with tokens. The DW20 project team and the Chainless community decide the deployment of the 30.6 billion activity fund. The DW20 team will absorb the successful experiences created by cryptocurrency.

8.1.2 Why Bitcoin Has Value

First, we must understand what value is. Value is divided into use value and asset value; what is tradable is asset value. Different value judgments of the same item can constitute a transaction. Free market transactions constitute the objective value of a commodity. Short-term may be speculation, long-term must be a weighing machine. The price forms a long-term trend through countless market transactions, finally reaching a price equilibrium. Can long-term trends be wrong? Yes. Then analysts’ value discovery is needed, and people swarm in. Buffett’s skill lies in value discovery.

Because asset value judgment is subjective, the recognition of value is consensus. It’s all paper; the “money” you draw is not money, but what the Federal Reserve prints is “money.” Behind it is credit.

The essence of Bitcoin is the establishment of a machine trust system. Its value comes from the increase in computing power. Hashrate constitutes Bitcoin’s price floor. Its rise above the price floor, like houses, requires a reasonable narrative. The basic narrative for houses is beating inflation, based on the expectation of supply and demand balance. Supply shortages cause housing prices to soar, and expectations of increased supply cause prices to fall. Tung Chee-hwa’s 85,000 housing units were not yet built, and Hong Kong housing prices fell drastically, eventually dropped dead. Bitcoin supply is fixed, thus eliminating the risk of increased supply. Bitcoin’s current inflation rate is 1.67%, meaning Bitcoin’s depreciation risk is lower than the nominal depreciation risk of fiat currency, and the actual depreciation risk of fiat is higher. Hence, the narrative of Bitcoin’s store of value arises.

The leading store of value is gold, currently at $11 trillion. Bitcoin’s characteristics are superior to gold, but its consensus is not as strong as gold’s, so it’s still in the value discovery stage. Generally, the value of the second player is 30% of the leader’s. If Bitcoin reaches the second position, it would be around $3-5 trillion. At $5 trillion, there’s still over an 8-fold increase. To replace gold’s status, another narrative is needed, namely the Bitcoin standard.

There isn’t a clear path for the Bitcoin standard yet. The best attempt is DAI, but they, like USDT, are centrally operated, operating the project as a bank. Additionally, stablecoins pegged to currencies themselves do not have the power to pricing money; pegging to a currency is not a standard. Bitcoin needs a standard, a standard currency. For this, see Chapter 1 “3.1 Reasons for Issuing DW20”.

If Bitcoin has a standard, the Bitcoin standard could be realized. Once the Bitcoin standard is realized, Bitcoin can be used to measure total human wealth, with DW20, as Bitcoin’s yardstick, measuring specific goods. This would push Bitcoin’s market cap beyond gold’s towards a hundred trillion dollars. This yardstick must be market-priced from the beginning, needing the same pricing mechanism as the US Dollar.

8.2 Reasons Why Memecoins Don’t Scale

Current memecoins don’t scale because they weren’t well thought out from the start, with limited consensus scope. An August 13, 2021, Chainalysis report showed that there were 4 million on-chain Dogecoin holders, but most of the supply was held by a few wealthy entities. 106 billion Dogecoins, representing 82% of the supply, were held by 535 entities. The customer value of 4 million is only worth about $4 billion, and this user data has not increased significantly.

Bitcoin’s narrative is store of value and the Bitcoin standard. Dogecoin’s narrative is tipping and payment. The 535 entity holders include exchanges. Speculation constitutes a large part of Dogecoin’s use, not its intended narrative. As Dogecoin’s price rose, tipping decreased, and payment volatility was too high; a 5% inflation rate cannot serve as money. Despite the lack of a credible narrative, consensus among a portion of people supports this price.

For a memecoin to scale, it needs tangible utility. This is why Dogecoin cannot scale; the market doesn’t see a path for it as a payment coin.

8.3 Lessons from Algorithmic Stablecoin Luna-UST

Luna is the token of the Terra ecosystem. Chai is a South Korean e-wallet app allowing users to pay in Korean Won (KRW). Transactions are processed on the Terra chain, with fees paid to the Terra network. In June 2021, Chai had 2.5 million customers; this was Terra’s starting capital. Note: they had users first.

Luna represented equity; UST was pegged 1:1 with the USD. Luna and UST formed an arbitrage relationship based on the USD. Up to this point, there were no issues. The problem was they used a treasury, offering 20% interest for staking UST. To obtain interest through staking, one needed UST, which required buying Luna to exchange for UST to stake, driving up Luna’s price. Starting from under $1 in 2021, its price exceeded $130 before the crash in May 2022, with a peak market cap of $43 billion. Terra’s core problem was how to pay the interest. Terra sold Luna tokens, using part to pay interest and part as reserves, reportedly accumulating over $1 billion in hard currencies like Bitcoin and Ethereum. Relying on selling stock to pay high interest was too burdensome. Terra decided to lower the interest to 5%, causing 70% of the locked UST to flood out. It fell from its position as the third-largest stablecoin, and its demise was inevitable.

• A Major Lesson:

Changes in monetary policy must be very cautious.

• A Direct Experimental Result:

Luna verified that algorithmic stablecoins can be accepted by the market, meaning algorithms can automatically stabilize prices. The core is that the algorithm must be reasonable and free of vulnerabilities.

• Lesson Summary:

1.  Price severely deviated from value. Luna represented the value of the Terra system. It had no hashrate floor, only a value floor constituted by users. Its user base was similar to Dogecoin’s; we can estimate Dogecoin’s $12 billion market cap, which Luna might support. $43 billion was too exaggerated.

2.  Why could they offer 20% interest? The story’s logic was incomplete.

3.  When collateral value surges, it often crashes. The quality of collateral must have consensus.

4.  Lack of risk control measures. At this point, Luna not only represented equity but also supported the stablecoin. What detected market risk? What means were there to control market risk? Luna’s algorithm only calculated the trading price difference, far from sufficient for risk control.

5.  The main flaw was that its collateral was the project’s equity, and the rise in equity was caused by staking UST itself. Then selling equity to pay interest had obvious Ponzi characteristics. This doesn’t mean there was no hope of success; they wanted to cash out at high levels to come back and defend the price floor. This was a very risky logic, but unfortunately, things didn’t go as planned.

• What Was Learned?

6.  Having users first, i.e., starting as a memecoin and then transforming into a stablecoin, is feasible.

7.  The value formation mechanism must be reasonable, and the logic must be complete. It must be thoroughly thought out from the beginning, like Bitcoin.

8.  There must be market risk detection means and risk control means.

8.4 Lessons from Fcoin

The FCoin exchange launched on May 21, 2018, instantly attracting many investors. On June 13 of the same year, the 15th day of trading on FCoin, the 24-hour trading volume reached 28.8 billion CNY. Not only did it rank first globally, but it also exceeded the combined total of the second to seventh places, including OKEx, Binance, and Huobi, hence jokingly called the “Universe’s First Exchange” in the industry. However, after hitting a high of $1.2567 on June 13, the platform token FT price began to plummet for several consecutive days; subsequently, the platform’s trading volume continued to shrink. On June 18, FCoin announced a stabilization fund subscription, hoping to use the fund to maintain the price of its platform token FT through open market operations, but it failed. Subsequent operations failed to save its fate.

What was the reason? They didn’t understand Satoshi Nakamoto’s principle of the randomness of hashrate and the basically linear block production. Applied to the Fcoin project, users randomly entered to trade and receive tokens, but the number of tokens distributed could not maintain linearity, causing random sell-offs. Without sufficient buying support, it led to a crash. A major design flaw destroyed the project.

Bitcoin distributes tokens every day without affecting the price. Why? Because it’s a deterministic event. Capital markets typically react to stock issuance with price drops because stock issuance is an uncertain event, requiring revaluation based on the issuance amount.

Summary:

An automated system must have a negative feedback mechanism to counteract uncertainty. Transforming uncertain user entry into linear release achieves trading balance.

8.5 The Method from Memecoin to Stablecoin

DW20 is divided into three stages. The second stage has already entered the stablecoin phase, where collateralized issuance is effective. Vulnerability manifests in the first stage. The first stage, like the Chainless Coin described in the Chainless Whitepaper, is a value token. The solution is similar. The Chainless Whitepaper Chapter 2 provides a detailed description.

• Customer Acquisition:

From the above, if not having money first like stablecoins, one must have customers first like Luna. Bitcoin’s token distribution method is worth learning from.

DW20 is based on a customer value floor. Gradually increasing customer acquisition raises DW20’s value floor.

Customer acquisition methods are airdrops and resonance with the Chainless Platform. Customers are reusable.

DW20 is the future stablecoin and transaction currency of the Chainless Platform. Chainless Coin CLY represents the value of the Chainless project.

Continuous diminishing airdrops will lead to sustained customer growth.

• Solving the Fragility Problem

Fragility is manifested as significant price volatility.

We believe the Bollinger Bands represent the market trend line. Bollinger Bands serve as a means to detect market risk. When the token price deviates from the trend line, adjustment becomes necessary. Bitcoin’s 10-minute block time central is also a detection mechanism.

As risk control means, Bitcoin uses difficulty adjustment. We have two weapons: lock-up and the stabilization fund.

The stability goals to achieve are:

During the value formation stage, i.e., the metamorphosis stage of the memecoin, maintain an upward trend in the token price.

In the stablecoin stage, achieve a Bollinger Band range gradually narrowing to less than 1.2% fluctuation.

In the standard currency stage, Bitcoin’s price increase corresponds to the increase in DW20 issuance. Since there will be different standard currencies, a foreign exchange market will certainly exist. If such a market doesn’t exist, we have ideas, but they are not yet at a level for public disclosure.

1.  Lock-up:

Since our airdropped tokens are given for free, customer entry is random. We have different lock-up periods for customers. However, this cannot prevent the random selling of unlocked tokens. When the token price reaches 10% below the Bollinger Lower Band, we will temporarily add lock-up for tokens still in the lock-up period until the price recovers to the Bollinger Middle Band, then lift the added lock-up. If the added lock-up is three days, it means an additional three days are added beyond the original one-month lock-up period. Fcoin had difficulty implementing this because their FT tokens were bought by others.

When the token price reaches 10% above the Bollinger Upper Band, double the unlocking. Tokens scheduled to be unlocked the next day are unlocked one day early, until the price falls back to 5% above the Bollinger Upper Band, then stop the additional unlocking.

This principle adjusts supply and demand. Tokens purchased on the market and already unlocked tokens are not subject to this restriction.

These operations are automatically executed by machines on the Chainless Platform for locking.

2.  Stabilizing the Upward Trend:

We introduced the stabilization principle of DW20 in Chapter 1 “6. DW20’s Stabilization Principle”; here are the specific operations.

The market-making fund is a stabilization measure used when the above lock-up is ineffective. Start accumulating positions when the price is 20% below the Bollinger Lower Band (i.e., 10% lower than the lock-up trigger point). The accumulation range can be up to 3% above the current price, stopping when reached.

A. Start selling reserves when the price reaches 5% above the Bollinger Upper Band, stopping when the price reaches the Bollinger Upper Band.

B. Stop selling when the market-making fund returns to a 50%:50% ratio of USD to DW20.

C. When the fund maintains a 50%:50% ratio of USD to DW20, do not sell even if the price rises above the Bollinger Upper Band.

The above stabilizes the trend, allowing DW20 to rise according to the Bollinger Band fluctuation trend. Predictable upward movement is a never-before-seen approach. Due to the lack of uncertain factors like stocks, judgment factors are very simple: only the increase in DW20 users and Chainless Platform users; increase in trading volume.

The first stage, like Bitcoin, relies entirely on narrative to generate consensus. The basic narrative logic is: decentralized standard currency, the yardstick for the Bitcoin standard, and the transaction token for the Chainless Platform. For a detailed narrative, refer to Chapter 1, Section 6.

3. Stabilizing the Value Floor

The stabilization fund has no money, only tokens initially. External funds are divided into two parts, each 50%. One half is used to stabilize the trend, the other half is responsible for stabilizing the floor price.

The floor price is the user value floor.

D. Accumulate at the value line, can accumulate up to 3% above the current price, stopping when reached. Sell at the Bollinger Middle Band or Upper Band, depending on the cash ratio on hand. Sell at the Middle Band if the cash reserve falls below 25%; otherwise, sell at the Upper Band.

E. If selling continues after the market-making fund has fully deployed its buying power, this is a rare opportunity. The market-making fund is responsible for raising cash from the market to defend the value floor.

The fragility issue is addressed through the above three means: lock-up and release, trend stabilization, and price floor stabilization. Similar to primary market market-making, based on rules.

• Role of the Fund in the Stablecoin Stage

During the stablecoin period, the market-making fund’s role is to narrow the Bollinger Band width. Start accumulating when the price falls to the Lower Band and sell when it reaches the Upper Band. Stop operations when the fluctuation range between the Upper and Lower Bands is less than 1.2%.

• Bitcoin Standard Stage

In this stage, the use of the fund and how to handle it are unprecedented matters requiring thorough deliberation and community input.

• Other

F. Market-making fund operators sign contracts with the team; specific terms will be based on agreed-upon contracts at that time.

J. The market-making fund is subject to regulation by securities authorities.

9. The System Itself Not Profiting is a Core Concept of Bitcoin’s Distributed System

The stabilization fund does not aim for profit but for stability. We will contract market makers to operate according to our conditions.

DW20 has four profit-makers: BitcoinMortgage arbitrageurs, fund market makers, the Chainless Platform, and users.

Bitcoin has two profit-makers: miners and users.

As a system, DW20 shares the commonality with the Bitcoin system that the system itself does not profit. However, DW20 does not require system maintenance or separate ledger keeping. In the first stage, the DW20 community needs maintenance, involving mainly one issue: the distribution of the 14.82% tokens. The purpose of token distribution is to incentivize user participation. The Chainless team is responsible for organizing a separate market maintenance team.

Why does cryptocurrency advocate for decentralized systems Once a centralized system structure exists, a profit model emerges. With a profit model, the orientation becomes profit-driven. Whether it’s banks, stablecoins, or the Federal Reserve, they are all centralized institutions. How can fairness be achieved? Without fairness, how can there be a standard?

At the internet infrastructure layer, profit-seeking protocols have disappeared, leaving only non-profit protocols.

In real life, we rarely see scale fee. The inflation of current fiat currency is like ascale fee. The internet’s free model has defeated charges models. If a standard doesn’t charge fees, can scale fee still stand? The Bitcoin system does not profit; the profit-makers are distributed. The profit-makers of DW20 are also distributed.

Chapter 4 Analysis of the Bitcoin Standard and DW20’s Prospects

What is the future prospect of the decentralized standard currency DW20 cooperating with Bitcoin to realize the Bitcoin standard? DW20’s risks mainly come from three aspects: compliance, competitors, and its own logic and technical vulnerabilities. Analysis below:

1. Bitcoin’s Risks

Bitcoin has undergone 14 years of development, its legal risks are minimal, and its technical reliability has been repeatedly verified. Currently, Bitcoin still faces four main risks. There is still debate in the industry regarding these risk issues:

1.1 Carbon Emissions

Bitcoin’s mining hashrate is still growing exponentially. Many believe the resulting carbon emission issue could be one reason that destroys Bitcoin. The carbon emission issue is a compliance issue. We are not carbon emission experts. Those interested can refer to online discussions and opinions. Below are some representative viewpoints:

Pessimistic View:

Alex de Vries, a PwC analyst, estimates that the Bitcoin network now emits 475 grams of CO2 per megawatt-hour of electricity consumed. If this estimate holds, when Bitcoin reaches $500,000, it would emit 617 million tons of CO2 annually. Bitcoin mining’s annual carbon emissions would far exceed the UK’s 352 million tons, approaching Germany’s 696 million tons. The US currently emits 4.921 billion tons annually. At a Bitcoin price of $500,000, the global Bitcoin industry’s carbon emissions would equal 12% of the US’s. This is a staggering result.

Optimistic View:

Mining farms will switch to wind, solar, hydroelectric, hydrogen, and nuclear power. Bitcoin primarily uses “stranded hydropower” or “curtailed energy,” which is electricity that cannot be fully used or is wasted, such as excess hydropower in Sichuan, China.

The University of Cambridge provided a map in 2020 showing the changing locations of Bitcoin miners over time, coloring different grids based on carbon intensity. Currently, on an annual basis, the contribution of renewable energy to the Bitcoin network is still relatively low. According to a 2020 Cambridge survey, Bitcoin miners indicated that approximately 39% of the energy consumption for Bitcoin mining comes from renewable sources.

Elon Musk said:

When miners use more than 50% clean energy for mining, Tesla will resume allowing Bitcoin transactions, i.e., restore Bitcoin payments for cars.

Musk is an expert in carbon trading and energy storage. Perhaps if 50% clean energy is used for mining, carbon emissions and carbon credits would balance. So, when this indicator is met, he agreed to restore Bitcoin purchases for Teslas. This also indicates Musk is optimistic about Bitcoin.

Musk’s views are always avant-garde. When we don’t understand issues like carbon emissions, who should we believe? Believe the big experts. Let’s believe Musk.

1.2 Quantum Attack

Some believe quantum computing can break Bitcoin’s encryption algorithm. Regarding this, Satoshi Nakamoto said new encryption algorithms would emerge.

Actually, if Bitcoin’s encryption can be broken, then the encryption algorithms used by banks today can also be broken. Wouldn’t the entire financial security system then cease to exist? Comparatively, wouldn’t attacking banks and financial systems be more profitable?

In fact, according to Satoshi’s theory, if the benefit of honest mining outweighs the benefit of malicious acts, why would people choose malice? With quantum computing, like ASIC miners replacing GPU miners, mining costs would become lower, electricity consumption would decrease, thus making mining greener.

When reaching the Bitcoin standard stage, the Bitcoin ledger will become critical human infrastructure. Major institutions will cold-store backups of the Bitcoin ledger. In such a scenario, the possibility of destroying all ledgers is zero.

1.3 Man-Made Artifact

Bitcoin is, after all, a string of numbers. How long can it be preserved? It doesn’t possess gold’s ability to never perish. This point is indeed irrefutable. But today’s digital fiat is also digital; its nature is the same as Bitcoin’s. If Bitcoin disappears, would digital fiat also disappear? We believe in human innovative capability; where there is demand, innovation will emerge. Will Bitcoin disappear? This falls into the category of whether humanity will be destroyed; who knows the answer to such questions.

1.4 Other Potential Issues

Will governments worldwideJointly block Bitcoin? Compared to whether Bitcoin will disappear, the possibility of this happening is slightly higher. This issue is solvable because we have Satoshi Nakamoto. This will be analyzed further later.

In summary, after 14 years, Bitcoin has grown from a vulnerable seedling to a towering tree. All risks that could be exposed have been exposed. Actually, the biggest uncertainty was Satoshi Nakamoto’s identity, which has now been resolved. Therefore, no major risks exist.

2. DW20’s Risks

The risks described in Chapter 4 1.1-1.3 for Bitcoin also apply to DW20, albeit to varying degrees. DW20’s risks are primarily those of the “seedling” stage. Specific analysis follows:

2.1 DW20’s Actual Controller Risk

70% of DW20 tokens are distributed; the team cannot control them. Although the team doesn’t own the 10% stabilization fund, they have control over it. The team also has distribution rights over 20% of the tokens, including the 14.58% for market promotion. Ethereum’s approach has two points:

1. Transparency, as much as possible.
2. Community decision-making, consciously limiting their own power.

Ethereum set a standard for subsequent projects. The core idea is that transparency leads to fairness, and fairness builds consensus.

Currently, the distribution of market promotion tokens is proposed by a team composed of active market participants, with project involvement in decision-making. The expenditure of market promotion tokens for each cycle is published on the website.

As mentioned in the Chapter 1 introduction, the DW20 team members did not choose anonymity because the current legal environment is different from when Satoshi Nakamoto disappeared. “Transparency” indicates the DW20 team’s willingness to take responsibility. Bitcoin’s current maintainers are also publicly named for the same reason; they are willing to take responsibility. The departure of EOS founder BM and Vitalik’s stay with Ethereum illustrate this. Both were equally famous figures in the circle at the time, but the market ultimately chose Ethereum, while BM’s departure essentially sentenced EOS to death. Because Ethereum, unlike Bitcoin, is an ecosystem project that continuously needs development. The crypto community remembers Satoshi Nakamoto and also remembers Vitalik because they were both right.

The BRC20 inventor @domodata is somewhat laughable. He (they) originally didn’t need anonymity. Anonymity raised suspicions: Was it for opacity, making market manipulation easier? Did they distribute tokens to themselves? Perhaps the memecoin price rise was purely driven by speculation? Obviously, anonymity is more suspicious. We abandoned the BRC20 protocol in favor of ERC20 just before the final launch.

The total DW20 allocated to the entire team is proportionally the same as Satoshi Nakamoto’s Bitcoin holdings. DW20, as a token issuance project based on the same principles as Bitcoin, has the team’s token proportion matching Satoshi’s.

How much is the team’s 11.4 billion DW20 worth? Based on the earlier valuation where 10% of DW20 for the stabilization fund is valued at $10 million, the overall DW20 valuation is $100 million, making the team’s tokens worth $5.42 million.

Market-making fund operation involves interests. The actual controller and the initial market-making fund operation team are also related. But the initial project risk outweighs the benefits, equivalent to the DW20 team’s personal credit endorsemen the project for the market-making operator. Because the operator needs to invest real money, the project needs the market-making operator to provide the initial pricing for the project.

The Federal Reserve also has market-making characteristics, buying and selling assets to buy low and sell high. Isn’t this “manipulating” the market? Yes. The methods are similar. The difference is that one is legal manipulation authorized by law, the other is illegal manipulation targeted by law. The Fed doesn’t directly intervene in the market pricing of the USD. They’s standard operations are disclosed. We also have operational standards; please refer to Chapter 3 “DW20 Token Distribution and Stabilization Methods”. We will disclose these in the fund operation documents when selecting the operator.

The market-making fund is a traditional fund, subject to traditional financial laws and regulations.

The team’s power is reflected in the handling of the 14.58% DW20 tokens. There is no precedent for this; it belongs to market operations. But who receives the tokens is public. The team hopes for fair handling, but satisfying everyone is impossible.

Satoshi Nakamoto only took 5.42% of Bitcoin, far less than the stokes of early startup teams in all internet companies. Only after multiple rounds of investment and public IPOs do internet company controllers like Jack Ma and Pony Ma emerge with single-digit percentages. Actually, Bitcoin was circulate after issuance, equivalent to listing. Satoshi Nakamoto held himself to the high standards of the most outstanding individuals in listed companies regarding his Bitcoin holdings. So, we believe he had a dream to change the world. With such a dream, money isn’t the primary goal. Only with this view of wealth can one ultimately succeed. Now, Satoshi Nakamoto cannot directly address the public, but he has shown through facts that his Bitcoins have never moved; he sacrificed for changing the world.

2.2 Technical Risk

We chose the Near blockchain as the underlying public chain. Near is also under development, potentially having unforeseen risks. But before it’s fully mature, we keep the system closed-source until Near’s audit is complete, it has fully withstood market tests, and we have caught up with Near’s latest code; then we will open-source. Therefore, we estimated 2-3 years for the first phase of DW20 issuance, considering these factors. The product’s design logic is complete, but operational details need testing. Hence, the Chainless Platform will not be listed on exchanges during the public beta phase within six months of the official version launch.

2.3 Product Risk

1.  If the product has too many faults and cannot resolve them promptly, it will create negative word-of-mouth and cause user loss.

2.  The emergence of superior competing products surpassing DW20. Because once a project enters the main battlefield currently occupied by Web2, capital giants and skilled technical teams abound, their strength far exceeding ordinary small crypto teams, potentially intensifying competition in the entire cryptocurrency space.

3.  Product growth falls short of expectations; assumptions are overly optimistic.

4.  The product faces strong sniping and restrictions from interest groups.

2.4 Legal Risk

Normally, the likelihood of DW20 being classified as a security is very small. Currently, the world looks to the US, where the SEC uses the Howey Test as the criteria for discrimination. The Howey Test has four criteria, the latter three subordinate to the first. The first is “an investment of money.” If it’s not an investment of money, is it not a security? If judged this way, DW20 is definitely not a security.

The US uses case law. The US SEC has stated Bitcoin is not a security. Let’s compare DW20 with them.

• Comparison with Bitcoin:

The Bitcoin system did not raise funds. The system has no owner; the Bitcoin system does not profit. The maintenance team does not profit directly from the system. Token distribution follows rules. Buyers have a reasonable expectation of profit from the investment.

DW20 meets all the above conditions. The difference lies in the distribution rules; the DW20 team retains 5.42%. This retention is much less than Ethereum’s, equivalent to Satoshi’s holdings. The difference is Satoshi mined his. Early Bitcoin had few miners, so it was almost Satoshi allocating to himself. DW20 and Bitcoin only differ in method; the proportion is almost identical, the effect the same.

The US SEC stated that if the development of a digital asset depends on the efforts of a company or centralized entity, and buyers have a reasonable expectation of profit, then that digital asset is considered a security. The expectation of reasonable profit from investment also applies to Bitcoin. According to case law, this is a meaningless statement. So the core of this sentence is the existence of an operating entity where the project is a profit tool for that entity. Even without market fundraising, it could be deemed a security. The Chainless CLY token represents equity in the Chainless system; the CLY price reflects the system’s profitability.

Whether Chainless CLY tokens can be classified as securities is debatable. Such securities are clearly different from traditional equity, with high transparency. My opinion is that they should be regulated based on project transparency.

DW20 has market makers. Market makers and the DW20 team are not the same team. Market makers have the same status as mortgage arbitrageurs; the whitepaper imposes rules-based market-making requirements on them.

Market making is not illegal; the Federal Reserve, Hong Kong Monetary Authority, USDT all engage in market making. The core is rule-based market making.

Conclusion:

Under current conditions, it is difficult to classify DW20 as a security. Unless Bitcoin and Ethereum are also securities.

3. Competition Risks

Besides the product competition mentioned above, competition risks also come from competing solutions and differing development philosophies. Detailed below:

3.1 One Bitcoin Equals One Bitcoin?

This phrase in the blockchain industry means the Bitcoin standard. Initially, there were various trading pairs based on Bitcoin and Ethereum as the base currency. The emergence of these trading pairs was the result of implementing this idea. But the realitycruelly embarrassed. After stablecoins emerged, these trading pairs disappeared without a trace.

“One Bitcoin equals one Bitcoin” is a correct but useless statement. Those saying this are blockchain leaders; they might know some technology but completely lack understanding of finance.

Money has over 20 attributes, the main financial ones being three:

1. Store of value,
2. Medium of exchange,
3. Unit of account.

Bitcoin lacks the unit of account property, at least currently, and hasn’t shown a path to becoming one. Although this path is blocked, its influence is significant, hence highly misleading. Especially long-time Bitcoin believers think Bitcoin will naturally become the standard currency. Without solving the unit of account problem, Bitcoin has no possibility of becoming the standard currency.

3.2 Competition with Gold

Gold’s history in digital payments predates Bitcoin. As early as 1996, Douglas created e-gold. Unfortunately, this pioneer was convicted. To this day, attempts to use gold as a standard for payment or to issue virtual currency backed by gold have never stopped. But in the private sector, no influential large project has been made yet. This is because gold has its own problems, and the private sector path is impassable.

The other path is the government’s. Gold still has huge advantages over fiat currency. US Congressman Mooney promotes the gold bill, hoping to replace fiat with digital gold. He identified the problem. If the USD were backed by gold, excessive printing would be harder. Fortunately, he is not a genius like Satoshi Nakamoto nor an entrepreneur. Mooney didn’t propose a good solution; just shouting slogans is useless.

Without competition, the Fed has no motivation. Once competition arises, e.g., if DW20’s Bitcoin standard takes off, the US could leverage its credit and gold’s strength, possibly restriction private gold holding. What scenario would that create?

If the USD faces abandonment by various countries and the US government can’t stop it, might the US create something like a new Bretton Woods agreement? Non-USD countries holding US debt turn to increase gold holdings, gold over $4000/ounce, world central banks love gold more than Bitcoin; Bitcoin isn’t yet on their radar.

The collapse of fiat is very similar to the collapse of the Song Dynasty’s paper currency Jiaozi, with money printing increasing exponentially, benefiting financial behemoths. Chinese banks are already behemoths. US banks are catching up. The Fed plus a few member banks could rule the US, thus indirectly ruling the world. Because the EU finance is integrated, China belongs to the USD ecosystem, Japan follows the US’s lead; the US might do anything. For example, gold mining quotas could be similar a carbon emission agreement. When gold supply is limited, its characteristics approach Bitcoin’s. The drawback is gold isn’t evenly distributed, lacks fairness, making agreements hard to reach. This is just a hypothesis. Of course, gold has other defects. In business, it’s said: the best product doesn’t always sell the best. Financial products are the same. People can design gold token products, but since the Bitcoin standard is the best solution, why use the inferior gold standard?

In summary, if DW20’s Bitcoin standard competes with the gold standard, under traditional financial hegemony, DW20 doesn’t have absolute certainty of winning. But hegemon doesn’t always win. In the Gamestop case, organized retail investors defeated the big shorts. The Bitcoin community has the conditions to win in competition but needs strong leadership to emerge. This is the meaning behind “Invite Satoshi Nakamoto, to Welcome a New World”. One purpose of the article is to build the world’s premier Bitcoin community.

3.3 Competition with the Bitcoin-Dollar Standard

The Bitcoin-Dollar standard scheme is described in our article “Invite Satoshi Nakamoto, to Welcome a New World” Chapters 12 and 13. This scheme is feasible, but the key is Satoshi must appear and the US government must be proactive. This scheme benefits the US, the people, and Bitcoin, but it strips most of the Fed’s power. Self-revolution is very difficult; it requires visionary leadership in the government.

When will competition emerge? When Bitcoin reaches a $20 trillion market cap, the USD’s status will face issues. Perhaps only then will they pay attention to this scheme.

We would welcome the success of the Bitcoin-Dollar standard. But if DW20’s Bitcoin standard precedes the authorities, the USD’s monopoly might not hold. The world has the USD and the Euro; perhaps one more DW20 standard currency wouldn’t matter. History has windows of opportunity; by the time Bitcoin reaches a $20 trillion market cap, whether the US government can persuade Satoshi to cooperate is uncertain.

3.4 Competition with DAI

DAI is a mature system. If ported to the Chainless Platform, it would overcome its own shortcomings and constitute direct competition with DW20. It uses a hybrid mechanism of collateralized wrapped Bitcoin, Ethereum, and stablecoins like USDC. Its drawback is the lack of initial capital; how will it attract users? Its adjustment mechanism isn’t market-based. It wasn’t well thought out from the start; how will already issued tokens be handled? However, DAI is still a good project; it has conducted many beneficial explorations promoting the healthy development of the entire crypto industry, giving us useful inspiration.

Conclusion

In summary, the DW20 decentralized standard currency is a brand new, meaningful invention, but we haven’t applied for patents. We hope to contribute this to the cryptocurrency industry. We hope it helps realize the Bitcoin standard and that people’s wealth is no longer diluted.

This article incorporates opinions from many friends; thanks to all.