As NEM’s exposure is growing within the crypto scene and new partnerships and alliances are being formed, interest is currently at its highest level. This has led to a lot of people who have not been involved in the community and history of NEM, wanting an update.
History of the Redemption Process
The redemption process for NEMStake, the original token for NEM, occurred in two different ways depending on how the NEM project was contributed to. There were two main methods for contribution: a BTC contribution via the Bitcointalk forums or a NXT contribution via the NXT Asset Exchange. Secondly, stakes were also given for free to users who contributed to the initial development and promotion of NEM. These contributions were meant to result in a fair distribution of XEM when the project rolled out. However, as stated in the Original Poster (OP) and here, contributing participants were asked to make sure they were responsible keeping themselves updated of frequent notices and act accordingly, as the project was very dynamic and needed change to keep going. This is explained in part 3 of the FAQ.
Eventually, NEMstakes were defined, and participants were required to submit and redeem their NEMstakes. The process of enrollment varied slightly between BTT stakeholders and NXT AE stakeholders.
The redemption for stakeholders via Bitcointalk was carried out with Private Messages (PMs) being sent to all stakeholders containing a token that acted as a coupon. Stakeholders could then use this token with a redemption webpage.To complete the redemption process, all that was needed extra was a NEM address and a private key. Once that was created, stored, and backed up, stakeholders were then asked to register their address along with their token at (https://secretaddress.com) to complete the redemption and be entered into the Nemesis block (NEM Genesis block).
Stakeholders were told in the original instructions that in order to claim a NEMstake, they would be given at least one month’s grace period to use their coupon token to claim their NEMstake. More specifically the instruction was, “You will need to access your BTT account to send a PM or make a post confirming the ownership of the account to claim your share. Detail [sic] instructions in an announcement will be posted here, NEM reddit, NEM facebook, ournem website and the announcement will last at least 1 month. It is your responsibility to read and follow the instructions to claim your shares. So please check back frequently. Thanks.” The initial one month period for redemption for BTT stakeholders started on 4th October 2014.
NXT stakeholders faced a similar but simpler approach to redemption. Stakeholders from the NXT AE were required to simply generate a NEM address and key via the same method as the BTT stakeholders above and then send their NEMStake asset to a provided NXT address leaving their NEM address as the message. Once this had been done, that was it.
Although these deadlines were set, the first extension past one month was given to the deadline to help facilitate users who missed the original deadlines. The first extension of the redemption period brought the closure date to the 29th of November 2014. Another extension for NXT stakeholders was granted, and the final deadline was set for the 26th of February 2015. BTT stakeholders were then granted a last final deadline for a full two months past that.
Therefore the final deadline itself was also extended repeatedly for both redemption methods. This was due to a high amount of unclaimed stakes towards the end of the redemption period and to give stakeholders every chance to redeem their stake.
And then again an additional extended redemption period was announced on the 1st of April 2015 and continued until the end of May 2015 providing holders with a last chance to claim their stake. All in all, the redemption grace period was ongoing for eight months, a full seven months more than the original instructions. A fair amount of time had been given, and all interested claimants should have made their claims, especially if they were told at the onset that they should check at the various places diligently so as not to miss out.
The extension of time led to an additional 149 NEMStakes being sent to late redeemers.
The initially planned distribution amount was 3000 NEMStake however, via a public audit to weed out a number of sock accounts, 155 stakes were found to be socks and forfeited. Before launch, another exercise was carried out to try and find as many socks as possible and ensure a fair distribution of the stakes. As a result of this exercise, another 623 socks were found. Socks marked out were given an appeal process to prove or explain their genuineness.
Naturally, all detection systems have the chance of a false positive and over the course of the appeal process, suspected sock NEMStakes were handled on a case by case basis with a final number of 51 cases cleared between 27th of April 2015 and 22nd of July 2015 resulting in these stakes being returned to their owners.
From the distribution of 2,845 NEMStake, a total amount of 572 sock stakes were therefore eventually forfeited.
Adding to this, a total of 494.5 NEMStakes remained unclaimed by the stakeholders. 14 NEMStakes were scammed from NEM during the distribution of NEMStakes into the NXT Asset Exchange. A further 11.15 NEMStakes were awarded to contributors during this period that was taken out of the Sustainability Fund. Finally, the original record of 2845 NEMStakes was also in error as there were double entries and a couple left out. The actual final figure was 2840 NEMStakes that were actually distributed. This leads to an amount of 1046 left from the above exercises. The count at launch is tabulated below:
During the redemption and appeal period, the following were given out:
Total Late Claimers, Socks appeals, and Genesis missed out
Allocation of Unclaimed NEMStake
It was foreseen that some of the NEMStakes distributed would go unclaimed and in some cases, there would be some deception from holders creating sock puppet accounts to try and claim extra NEMStakes. The general idea of the original distribution was to have an even sum sent to each individual, and that naturally sock puppet accounts create an imbalance of wealth in the distribution needed to be stopped. For this reason the right was reserved to remove sockpuppets and refund their donation as stated in part 4 of the FAQ, “Accumulating many NEM stakes goes against NEM’s principles of fairness and equality, therefore the development team reserves the right to refund you the money if an effort to unfairly accumulate NEM stakes is discovered”. Based on the original Draft Development Contract sock stakes were destined to be added to the development bonus whereas unclaimed stakes had no plans for distribution.
Based on the Disclaimer notice as stated here,
- While we are committed to the idea of " Completely Fair Distribution - Equal Shares for ALL”; the fundraising terms are subject to changes upon the discretion of the development team.
- There is no refund. Nothing comes out of NEM’s receiving addresses until the genesis block is launched. We are committed to move the project forward. However, in the unlikely event that the project disintegrates and no one picks it up, the remaining development fund will be sent to a charity of the community’s choice.
- No contractual promise is made to anyone.
- Be patient”,
the developers made the decision that they did not want to just take and have complete control over the unclaimed stakes but instead the stakes should be reserved for development of the NEM platform and should not directly benefit anyone on the core team personally. Following this, it was decided that the unclaimed stakes would be pooled together to form part of the Sustainability Fund. The idea of the Sustainability Fund is that the unclaimed XEM together with some of the forfeited sock fund could be redistributed into other multi-sig sub-funds with cosignatories being members of the development team and/or its trustees and/or selected community members.
As outlined above the main precursor for the creation of the Sustainability Fund was to avoid a sizeable portion of the community distribution being under direct control of the development team as a result of unclaimed stakes. To mitigate this, a number of sub-funds would be declared with each sub-fund being allocated a percentage of the Sustainability Fund.
An outline of the allocation of funds can be seen below:
Although the Sustainability Fund was planned and outlined from Final Development Contract accessible here,
there remained an uncertainty as to how many unclaimed stakes there would be. Due to the unpredictable amount of unclaimed stakes, the fund’s allocations were initially shown in percentages in the Final Development Project, however, now that we know 2,354,280,307 XEM remained unclaimed we can accurately evaluate how much of the fund has gone to each of the sub-funds.
Unclaimed NEM Allocation
If you are reading this blog post and if you did not claim your NEMStake, then unfortunately, it is too late. The original community distribution was neither an ICO nor a pre-sale, nor was there any contract. It was a call for participation that required more than simply contributing around .05BTC/450NXT and forgetting about it. There were many opportunities to redeem the NEMStake coupons including a lengthy redemption period lasting eight months, well beyond the one month originally planned and even a late redemption period which resulted in 149 NEMStakes being awarded.
It was made clear in the BitcoinTalk OP that participants are to check frequently for any updates. Additionally, participants were also forewarned to take note that there was no contractual promise given to anyone. Lastly, participants were made known that the dynamicity of the project required frequent changes to be made by the development team. Moreover, many stakes were given to those who contributed to the project and answered the call for participation with work or contributing ideas instead of donations.
A deadline was necessary because the people responsible for managing redemption were not permanent. No one would or could manage it on a permanent basis. In fact, those who were taking charge of redemptions are no more with the NEM core team as they were mere volunteers who helped in the redemptions. Even the original project leader, Utopian Future, who organized the initial contribution and funding left NEM before launch. Consequently, the whole NEM project is a project based on people coming together to get this project off the ground. Some will come, and some will go. This is the nature of this project and of open source projects in general.
NEM has been growing exponentially in the amount of users and developers becoming aware of the platform, however it is still not too late to invest in what NEM has to offer even if you are one of those who did not claim your stake in time. For example, at the time of this writing, NEM is in a testnet/mainnet testing phase for its mobile apps and NanoWallet as well as looking for blog writers and prototype projects meaning that the opportunity is still there to join the NEM platform and become a member of the community with bounties given for participating. If you find yourself wanting to join the platform but are lacking the funds or if you are one of those who lost their stake, becoming a part of NEM does not require you to invest large sums of money to take part, bounties are regularly given for helping the community directly or by producing resources which help to drive and further the exposure of NEM as a whole.
NEM would like to thank Flash Harry for writing this.