Sia Blockchain Changes to Address Outstanding Issues
To Joshua Langsam, Drew Volpe, David Vorick, Luke Champine, Nebulous Team

Current legal efforts by some Obelisk ASIC customers for missed shipment dates and units delivered at possibly lower than promised specifications could have the effect of negatively impacting the Sia project through the cross-linkage of the Obelisk company and the primary Sia developer, Nebulous Inc. The Sia community is asking the Nebulous development team, management and board members to consider the following proposal to help community members who purchased Obelisk SC1 units through a pathway to Return on Investment (ROI). It is not a community goal to protect the Obelisk company, its principals or future ASIC development. This is simply a community initiative to help fellow community members and to protect the Sia network project at a pivotal time in development.

It is our understanding that Obelisk SC1 units contain specific code able to mine a slightly modified version of the blake2b algorithm and that switching the Sia network to this algorithm would create a circumstance where only these units can operate on the network until such a time that others develop new ASICs or alter current systems. Enabling this alternate algorithm requires a soft fork of the Sia blockchain.

The community also believes that current development funding for the Sia network is hampering the project and the ability to come to market. The project vision includes a token mechanism to extract fees from host/renter contracts once the network is fully operational. Between now and then efforts to increase funding through private capital raises and the sale of assets have been suboptimal. The project is moving towards completion with several challenging milestones to achieve. A capital injection over coming periods could allow for additional developer support, third-party participation, bounty programs and a project evangelist role to initiate corporate trials and industry marketing. Implementing a block reward grant to provide development funds is a clean method for a capital raise that should have a positive impact on project timelines, developer enthusiasm and token value.

The proposal
Create an Obelisk Exclusive Mining Period
The community calls for a scheduled algorithm change to implement the exclusive code inside the Obelisk SC1 units with a further scheduled change reverting to the original algorithm at a specified goal of between 10,000 and 12,500 blocks. This number of blocks should cover strict ROI for all purchasers including shipping, VAT and other expenses incurred outside of electricity. After the second switch, Obelisk owners would be able to compete fairly against all other ASIC miners.

Because of a batched sales structure with declining prices, the community recommends that Obelisk consider a small shipment stagger to give Batch 1 and 2 purchasers the advantage expected. The community also recommends there be a difficulty adjustment to allow for a smooth transition with the expected large drop in network hash rate.

Interim Development Block Reward Fee/Inflation Adjustment
The community is proposing a new development fee to be implemented into the block reward. The fee should be reasonable without putting exorbitant strain on mining profitability and should be date limited. The proposal is to set a yearly declining schedule over the next 4 years commencing on or around 9/1/2018 of 6%, 4%, 2.5% and 1.5%. How the fee is drawn from the block such that the Nebulous company can convert it to fiat is up to the team and will likely take into consideration tax efficiency and securities laws.

The development fund should include a transparent accounting for the community to understand how and where funds are spent. It would further strengthen the project if the Nebulous team considered a mechanism for the community to provide feedback/input into the project roadmap. This would increase community participation and ownership and provide a sounding board for development strategy.

In addition, the team proposed a change to the monetary policy schedule of block rewards to enhance the development fee and is a concession for miners to remain profitable over the life of the project. The current schedule drops to a 30,000 SC block reward in a few years without a similar fee capture such as Bitcoin has. The proposal is to raise the minimum to 100,000 SC, which will occur in late May of 2019. This inflation adjustment mitigates the lower amounts miners will earn due to the dev reward and ensures that miners will be incented to continue mining well into the future. It is not expected such a change will dramatically affect coin price with the number of tokens in the circulating supply. An inflation adjustment will also dilute current top holders who could be positioned to control token pricing once the network is at or near capacity.

Finally, the above proposals do not fully assist community members that purchased Obelisk DCR1 units, which are similarly late, and purchasers are seeking the same legal redress. The community cannot directly assist these individuals but is suggesting some of the first development fee payments be channeled to cover partial refunds.

The community recognizes the above may be enacted (fully or partially) and the issues at hand could still deliver significant challenges to the Sia network project. A community-driven effort to prevent these challenges is meant to be extraordinary and due to the difficulty in achieving community consensus, a rare event. It is intended that no precedent is set here that compromises long term decentralization.