Minerva’s OWL Token Fights Inflation and Offers Merchants Unique Revenue Stream

Luxembourg-based Ethereum startup Minerva has developed a platform that will reward merchants for using its tokens. Through a system of “reverse transaction fees,” Minerva will supply merchants with its newly minted OWL tokens when they agree to offer discounts on goods and services that can be paid for in the cryptocurrency.

In other words, merchants who accept the OWL as a form of payment will receive more tokens simply by propagating its use.

The Decentralized Central Reserve

Observers and participants of the cryptocurrency market are no doubt aware of the volatile nature of this new asset class. Just last week, the global crypto market shed $65 billion – some 40% of its value – after China launched an attack on the blockchain community by banning ICOs and bitcoin exchanges.

Minerva’s platform aims to do much more than just incentivize the use of digital tokens; it seeks to tame volatility once and for all. This can be accomplished through the Minerva Volatility Protocol (MVP), which in some way functions like a “decentralized central reserve.”

MVP works by smoothing out price movements in the OWL token. When the price of OWL increases, Minerva’s algorithm mints new coins for approved merchants during transaction. This is the “reverse transaction fee” everyone is talking about. When OWL’s price drops, the platform incentivizes users to temporarily take coins out of circulation with smart contracts that resemble bonds.

Targeting Inflation

OWL is essentially modelled from basic economic theory, which states that a currency – be it crypto- or fiat-based – is determined by the law of supply and demand. The price of a currency rises when its demand outstrips supply, and falls when its supply exceeds its perceived utility.

The smart contracts implementing OWL work to ensure that the basic law of supply/demand is maintained by targeting currency fluctuation. The algorithm does this by targeting the supply of OWL under present conditions to achieve zero or near-zero inflation.

When the inflation rate is smaller than targeted, additional OWL tokens are created; these OWL tokens are delivered to approved merchants, with a portion “taxed” and placed into a reserve vault. When the inflation rate exceeds the target, additional MVP contracts are made available for purchase at a calculated incentive rate, which is paid at a future time from the reserve vault. No MVP contract is offered for sale unless there is sufficient OWL reserved to pay the incentives.

Key Challenges Facing Adoption

OWL’s impeccable delivery method isn’t without its challenges. While cryptocurrency is the biggest thing since sliced bread, the market is still in its formative stage. This means ease-of-use and broader mainstream appeal remain limited for now.

“Our biggest hurdle is what we look forward to solving the most: achieving the mainstream adoption of cryptocurrency through ease-of-use and utility incentivization” Minerva co-founder Kevin McSheehan told Hacked.com.

Although many in the industry have told McSheehan that integration with merchant processing ISOs is a non-starter, Minerva appears to be ahead of the curve. The company has a long and established working relationship with some of the world’s biggest merchant processors. We’ll just have to wait a little while longer to find out who they are.

Regulatory uncertainty and volatility surrounding the crypto-sphere more generally are also key challenges companies like Minerva are facing. These issues have spawned another community pushing SAFTs as the next major breakthrough in the debate over regulation.

To combat these and other challenges, Minerva has put together an impressive team of advisers, tech gurus and legal counsel. There’s even an economist on board. The ensemble of powerful minds clearly shows there’s still a lot to think through in this uncharted industry.

Minerva is planning to launch its ICO in the near future. According to the website, 60% will be allocated to presale and final public ICO.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi