Catapult (v2) Update + Community Feedback

[cryptonit]

thats the 2 chain 1 coin approach i did describe above. its clear as state of the art blockchain we need to find a way without 3rd party to move coins from nis to catapult chain.

regarding all the japanese tax fears that ideal solution no tax relevant event happens if u transfer from a address u own towards a address u own xem (coin name and trading value would be identical its XEM on both chains and not a single fresh one created) technical to power the bridges and bridge fees maybe the first 1 xem on new chain must be hardcoded “transfered” by burn it on nis side and create it in catapult genesis block. but all following xem can run over crosschain bridge transactions

[jelin1984]

I believe solution of 2 chain is best for all
also a gift that will attract a lot of new investors
like airdrop
all coins do AIRDROP
ONLY NEM does not do until now
so best solution is 2 chain for me
also why everyone from foundation post awfuls and unproffesionals twitter and crash the price of NEM
I think this started off falling when one of the Devs made some comment about not being wise to release Catapult in December. Price movement was a gradual decline before then.

[salaryman_tousi]

I’m Salaryman from Japan. Thank you for give me chance to show my opinion.

I guess many NEMber desire new NEM2 public chain launch with all history of NEM1 in NEM2 native data.
Following procedure is my idea to realize such a migration.
Is it possible?

1. Develop automatic conversion tool from NEM1 TX data to NEM2 TX data.
2. Convert from all past NEM1 TX data to NEM2 TX data with 1st tool.
3. At the same time, Regenerate structure of NEM2 blockchain with NEM2 TX data (converted from past NEM1 TX data).
4. After 2 & 3 process catch up to NEM1 highest block height, Make both NEM1 nodes and NEM2 nodes (only regenerated from NEM1 TX data) online. In this period, all nodes reject NEM2 format TX and handle only NEM1 format TX.
5. After enough nodes have done 4th process, Drop NEM1 nodes and only NEM2 Nodes start to make blocks with NEM2 format TX.

What I want to know is…

• Is it possible or impossible to convert from past NEM1 TX data to NEM2 TX data without each user’s private key?

If it’s possible, following is my opinion.

Development and test of conversion tool will be very very tough.But, in the future, on the private chain (for example mijin or open source Catapult), many enterprise user will demand their platform’s version up to next version (for example NEM3?).In such a situation, conversion tool will be very very helpful.It will strengthen NEM ecosystem so much totally.

Maybe development of such a tool is painful for short period.But for long period, it is very important.

I hope successful NEM1 and NEM2 migration.
Thank you for reading.

Salaryman

[nthng1]

2

[greentea]

Not to derail the thread, but regarding the tax issue for new coins, (in the US, 100+ supernodes) the American Bar recommended that the received forked coins be treated on a zero cost basis, and report capital gains when sold … Granted this is debated on both sides (seek a CPA)

Source:

American Bar Association Offers IRS Guidance On Rules Around Forked Tokens

https://www.americanbar.org/content/dam/aba/administrative/taxation/policy/031918comments2.pdf

[cryptonit]

even if going 2 chain path we should avoid two coins. by burn on old chain what u want to recieve on other or by utilize cross chain bridge protocols that can be done.

in both cases its a value transaction from yourself towards urself and no tax relevant event

[gentlemand]

Erm, am I alone in being slightly appalled that this subject is still up in the air? It’s been literally years in the making.

[Inside_NEM]

Hi Owon, thanks for the feedback. I appreciate the candor. I want to make sure there’s clarity that migration announcements are not specific to NEM Foundation. It’s a group effort between Foundation, Studios, Ventures, Tech Bureau with input from core devs.

Regarding the feedback “I think now is the time for NEM Foundation to show they really care about the community and fix this issue ASAP.” – I think it’s helpful to know Foundation doesn’t drive final decision and tax implications have been an important part of the discussion. All migration contributors do care about community and also this issue in particular. I do think it would have been helpful to frame up various tax scenarios (publically) earlier.

It’s important to know the migration group has been working with legal advisors on the various scenarios. For example, I’m American and the same tax concerns the Japan community has I have too since America and Japan have similar tax rules.

It wasn’t clear in the beginning of the migration committee if it would be one chain, two chains, etc. It’s not black or white. There’s stuff that came up that proved this to be a bigger challenge than many realized. There was a ton of research done by the teams to get to a place where we could confidently vote on how to move forward based on the information presented.

There’s a comment you made that I find interesting. NEM is THE platform for timestamping and proof of origin, this is imo. the main attribute that gives value to NEM at the current time and that makes it stand out.

I think this is too narrow of a view of NEM’s capabilities and would challenge you to think bigger.

“If you want to build a brand, you must focus your efforts on owning a word in the prospects’ mind. A word nobody else owns” – Al Ries

Let’s look at Volvo. Volvo was born as a practical solution to a practical problem. Volvo owns safety as their brand identity even though they score very high with comfort ratings. They don’t promote the other aspects because they wanted to 100% own the safety image. To this day it’s been a successful strategy for decades. So I’d ask you and the rest of the community… What is the benefit we want to own for decades to come?

I don’t think it’s timestamping for NEM now or in the future. Last year I used to think of NEM as the brand where you could tokenize the world but my own thinking evolved. We need to think bigger than that. I personally view Catapult as being the network of networks. A month or so ago we wrapped up the market research analysis (SWOT) for Catapult/NEM and shared it across the entities. It was great work done by the branding agency and Studios. It helped shape a clear picture of opportunities. There’s still some work being done on this so we’ll communicate more on this in the future.

Anyway, thanks again for the feedback. It’s nice to see longtime community members resurface and weigh in.

[nzminer]

It should be pointed out that multisig accounts
make a single chain approach virtually mpossible.

I’m treating catapult as a new product. Some might not agree, but it’s how I see it.

Tax implications can be mitigated by letting members opt in when they are happy with the market price and can prepare when they want to pay the tax.

Having 2 chains operating makes sense and allows the continued use on the NIS1 chain.
Could open up some interesting use cases with both chains if cross chain support is added to old chain.

I agree with the suggestions of snapshoting the old chain much in the same way ardor did with nxt.

[Skyisthelimit725]

Thanks for the clarification Alex. Really appreciate the hard work you have put into the project so far and your dedication is much appreciated. You are right this is not a simple NEM Foundation issue.

You have set up NEM as a well-oiled machine, had to make tremendous changes with relatively little resources and little time during turbulent times and the rising tide of competition. There is plenty of professional planning, orientation, hard work and organizing going on, great progress is being made.

That being said, I think It’d be a pity if all of that hard work and dedication gets thwarted by uncertainty caused by the xem migration issue of the Catapult update. In order to retain confidence I hope the migration group will take into account the info in this thread and eventually present us with a series of alternatives mentioning the advantages and disadvantages, and then let the community vote (either binding or non-binding).

[owon]

Hi Alex,
thanks for your reply, much appreciated!

Regarding the feedback “I think now is the time for NEM Foundation to show they really care about the community and fix this issue ASAP.”

This is not my point, I think you took that from a different post but anyway, thanks for the clarification.

There’s a comment you made that I find interesting. NEM is THE platform for timestamping and proof of origin, this is imo. the main attribute that gives value to NEM at the current time and that makes it stand out.

I think this is too narrow of a view of NEM’s capabilities and would challenge you to think bigger.

I think I haven’t expressed myself clear enough and i feel you misunderstood me here. It’s not about reducing NEM to timestamping, the opposite is the case. It was meant to be an example that the current chain, the current NEM, is so much more than just a balance of assets in someone’s account that is just captured by an easy snapshot and applied to a new chain. A blockchain and especially NEM is there to proof that a specific event happened in the past. This proof gets more and more secure with each and every new block created. This applies for all events happened, may it be a timestamping event, a message, a financial TX - everything. The NEM blockchain has proven to do this for a long time now with never having an security issue, and people payed TX fees to get the events recorded on chain. If all that is discarded and forgotten during an “update” (sorry for the term), you lose a lot that makes NEM valuable today (including trust that NEM is a consistent platform).

I’m not able to tell if a one chain approach is technically achievable or if Catapult’s logic is too different, but because of my points from above we should do everything possible to follow that path. And it will void out all discussions about having a second coin and how it is taxed - which is also a big concern on my end btw.

Thanks again for your time and all the hard work you do!
Cheers
Owon

[nzminer]

I don’t know how others have been affected tax wise with airdrops in the past such as ardor and ignis.

Cross chain transactions as suggested sounds an interesting alternative but I would imagine require a huge amount of work on NIS1 to make possible sending tokens between both chains possible.

Keeping both chains going independently gives everyone the best of both worlds and there are some interesting use cases for NIS1 which could come out of making it open sourced.

[Shingen_Takeda]

This is an opinion from an engineer who previously migrated an internal system of a company.

The highest priority is to ensure a successful migration.
Even if it doesn’t succeed perfectly, it will have to limit the scope and impact of the bug.

I do not agree to consider the low priority content and migrate in a way that increases the risk.

From an engineer who previously failed to migrate

[Inside_NEM]

I agree with you 100% @Shingen_Takeda .

[GodTanu]

We don’t know what’s problem.
We can’t give feedback.

Because we don’t know the problem.
nem2Slack hasn’t talked about any migration topics.

https://github.com/nemtech/NIP/blob/master/NIPs/nip-0008.md

[SJM211]

The migration team have obviously spent a lot of time researching this problem already. Can you share what their list of potential options are and the perceived pros and cons of each as they see it? It would be good to know what the committee is considering and make have some insight into their thinking so far.

It’s obviously a really important decision and as far as I can tell there hasn’t been much communication of what is being considered and what the preference of the committee is. It does seem pretty late in the day to open this up to the community, I guess by know you must have a pretty good idea of the route you want to take.

[meyns]

This just an idea that pops in my head:
1- Make a snapshot of every balance at a specific block number in the old chain (including every mosaic with the correct timestamp) and start the new catapult chain with these nemesis balances at block height 0.
2- In the new catapult nodes, keep the whole pre-catapult chain available, where node owners can turn the loading of the old chain on or off in a setting.
3- Make sure this update is mandatory for supernodes a while before the actual snapshot so the whole network updates before catapult goes live.

That way if anyone needs to verify any data from the old chain they can access it through the nodes that have the old chain loaded. In time the old chain will no longer be needed and nodes will drop loading the old chain.

And please just get some decisions going please, if we are close to a release there has to come some news to the outside, or the price will drop even further. No info on supernodes, no info on migration, …

[GodTanu]

Please don’t give any opinions.
First, please clarify what is the problem.

If the migration team thinks the community ’s opinion is noisy
Please share the problem first.

[cryptonit]

We need to think bigger than that. I personally view Catapult as being the network of networks

if this is the direction and i full support it

then a 2 chain 1 coin approach and move XEM between chains as needet is the prefered one because there we can also show our cross chain value transaction capabilities

and once again such a approach would be tax neutral in any jurisdiction because its a transaction from a address u control towards a address u control its not a ownership change its not a sale/buy/trade event its nothing else then move a 1$ node from one left leg pocket in right leg pocket. just change of local just keep ownership

it also solve give supernodes a role in ecosystem issue because it would be world best secured bridge protocol if its monitored by a few hundret independet but together consensus creating organisations/servers

[nzminer]

2 chain one coin would be a great approach if its possible, I just dont know how much work would be required to make this work.
Im sure @Jaguar0625 will be able to shed some light on this, but I would imagine it would require significant changes made to NIS1 and possibly to the existing catapult build.