Insights into LOC Economy 2.0 – LockTrip
We are quickly progressing towards the production version of the LockTrip marketplace. A fundamental milestone on that front was achieved last week with the biggest deployment we ever made.
The deployment marked the completion of two out of four tasks that were outlined in our mini-roadmap (new UI and Crypto payment).
- Integration of 521,000 Hotels & Properties ✅
- Deployment of the new UI ✅
- Introducing payment with Cryptos ✅
- Deployment of LOC Economy 2.0 ⏳
We have already completed the conceptualizing process and outlined internal sub-tasks towards LOC Economy 2.0 development. In the coming week we will be commencing the coding work.
In this article we want to answer some of the questions we received from our community over the past weeks.
1. What are the key elements of LOC Economy 2.0?
The new economy will come with a 5% lock-up for 6 months and a 5% burn ratio. A room that costs $100 will thus result in $10 worth of LOC being bought from exchanges, with half of it being locked up in the booking smart contract for 6 months and the other half being burnt permanently.
LOC will experience a growing scarcity as each booking reduces the total supply.
2. Which exchanges will be used to buy LOC?
Our system is currently connected to HitBTC and Bancor. We are planning to add Kucoin to this list in the medium term. Algorithms make calculations to determine the optimal combination of purchases depending on price and liquidity available on these exchanges. The calculations are based on real-time order books.
3. Will LockTrip recycle LOC that were released from the smart contract?
No. LOC that were released from the smart contract will be sold on exchanges and will not be used for future lockups.
4. How will LOC be burnt?
We consider every transaction that leads to this address a burning transaction. This is industry-wide common practice as the address does not belong to anyone, which means that the LOC stored there can never be returned for circulation.
5. What happens to the burnt LOC when a booking is cancelled?
As explained above, burnt LOC are impossible to be recovered. This is why we will be using a “parking wallet”. When a booking has been made, LOC will be bought immediately from exchanges and sent to the parking wallet.
Cancelling the booking will trigger the parking wallet to send the LOC back for liquidation. If there is no cancellation event, the parking wallet will automatically engage in the burning transaction as soon as the customer has checked into the hotel.
6. What happens to the locked up LOC when a booking is cancelled?
Locked up LOC will remain in the booking smart contract for the full 6 months, regardless of cancellation events.
7. Will 5% of my payment be used for the purpose of burning?
Not exactly. We are using 5% of the room price for burning purposes. Your gross payment represents 100% of the room price + 5% burning fee, which results in a total amount of 105%. If you want to calculate the burning ratio from your gross payment, you will end up with 5/105 = 4.7%.
As a result, you should expect 4.7% of your actual payment to be burnt, which still represents 5% of the initial room price. The same rational goes for the lockup mechanism.
8. Will the marketplace become more expensive with LOC Economy 2.0?
We don’t expect so. Yes, prices will be lifted by 5% due to the burn fee. But there are many counter-balancing factors.
- LOC Economy 2.0 reduces slippage costs drastically
- We have recently integrated Bancor to our system, which reduces slippage costs further
- We have recently integrated Stripe to our marketplace, which reduces credit card fees
- We are continuously integrating new inventory, making our offers more and more attractive. There is still untapped potential on that front.
- LOC Economy 2.0 allows for a much more efficient cash-flow. We will be able to reduce financing costs by 95%.
As a result, we expect our core value proposition to remain unchanged. If you want to learn more about LOC Economy 2.0, we recommend to read this document, which we specifically prepared for our community.
We are looking forward to complete this last milestone from our mini-roadmap and to launch the production version at LockTrip.com.