tl:dr – Removing the original Siafund units
Based on community interaction, we have decided to rescind the “airdrop” of the original 10,000 ScPrimefund (SPF) tokens in a hard fork scheduled for block height 109,000. These tokens were never offered or sold publicly. Anyone who purchased units in private transactions prior to the date of this post is encouraged to contact us to discuss options. Nobody should purchase units between now and the hard fork. The primary reason for rescission is questionable legality of the distribution.
SCP arose out of disagreement within the Sia community to provide an alternative after mining was centralized with Obelisk. We are developing a serious and significant alternative for a distributed cloud storage product/company. Our expectation was collegiality, providing additional value to the core Sia protocol and bringing more use to the ecosystem. The lead developer of Sia stated their team and community would support the fork as long as a single condition was met; preservation of the Siafund mechanism.
Siafunds are a taxing device that take a percentage of every storage network transaction and return SC coins to the holders. 10,000 were initially created on Sia, envisioned as a funding mechanism for Sia developers. The lead developer sold just over 1000 units to the public in an illegal offering of securities, even calling the sale an Internet Public Offering and generating several hundred thousand dollars (later clawed back by the SEC in fines/penalties). The issue was publicly selling unregistered securities not falling under defined exemptions (usually laid out in Regulation D). By 2018, the Sia team held ~8800 units with a few hundred community members/investors holding the balance.
In our first year, we worked to create an appropriate emission providing units for our team and supporters while preserving originals already instantiated at addresses on the blockchain (the Airdrop). During this process, vocal Sia community members excoriated the SCP team for considering anything beyond providing the original units or modifying calculations of payouts. Most of the business assumptions made by the Sia team in 2014/2015 turned out to be sub-optimal, making any current protestation misguided at best. But we received a threat from the lead Sia developer that he would personally contact our entire team and ask them to quit if we didn’t honor the original 10,000.
Where Things Went Bad
By this time, there had been no “support” from Nebulous or the Sia community. In fact, the project weathered a near constant barrage of attacks from known members and newly created sock accounts. Even so, we intended to leave the units in place. Though Siafunds do not exhibit profitability based on current storage trajectory, they have sold for as much as 1BTC when bitcoin was worth $20,000. When our project is successful at scale, the expectation is the ScPrimefund (SPF) would be worth substantial value due to scarcity and direct equity relationship in the network.
Today, inappropriate actions by the Sia developers force us to reconsider. In 2018, they organized a legal public sale and sold 231 units from their holdings to investors at $7500 ea. Two addresses acquired 80 units each which represented $600,000 investments. Most in the crypto community agree Siafund units already paid for at the time of our hard fork accrued airdrop corollaries on our blockchain.
Once we determined an appropriate emission in early 2019, we inquired how to deal with these units. Legally, the Siafund sale required a 1 year lockup period before they could be distributed and so we were instructed to send the units to the lead developer, who said he would distribute them “if necessary”. In hindsight, it appears his initial intention may not have included giving them to people who purchased Siafunds. When Siafunds were distributed, we asked about a distribution. It is possible, likely even that most current Siafund holders have no idea this secondary asset (SPF) even exists as we have no way to contact them or even know who they are.
The lead developer engaged briefly before cutting off discussion and leaving our community. He banned all discussion of our project in their community, while allowing continued discussion of known fraudulent forks of Sia. The SCP network has capacity of over half a petabyte and more than a thousand community members. The lead Sia developer has made a legal assertion that the units he demanded we leave in place are actually unregistered, illegal securities; something our legal representation disputes vigorously as we have never offered for public sale any units. Still, we would never want to force something on someone that they believe to carry legal uncertainty.
Fork and Removal
Thus, it is our intention to remove the original 10,000 units by sending them to an unspendable address at a future block height of 109,000. Original Siafund purchasers or individuals who have purchased after the initial SPF distribution should contact us directly to discuss options. The current structure allows for a 15% fee distributed across a population of 30,000 units. After the fork, a 10% fee will be distributed across a population of 20,000 units.