[Ann] Hong Coin: DO & Man+Machine Teaming

  • Welcome to the New Beginning: DO & Man+Machine Teaming

    How It Works

    Ver 0.91, updated on July 22, 2016

    . Useful links

    Website: http://www.hongcoin.org

    Github: http://github.com/hongcoin

    Slack: http://slack.hongcoin.org

    Email: [email protected]

    Twitter: @hongcoins

    Medium: @hongcoin


    1. DO, not DAO

    The DAO, the Distributed Autonomous Organization that lives on the Ethereum blockchain, was supposed to take money from investors and invest it in projects voted on by the investors and administered through smart contracts. Then one exploitation of smart contract bug made the whole system irreversibly lose over 50M USD.

    Although no team claims that they are responsible for the loss, should we blame machine or blockchain for this havoc? We trust it is the error of human being, not machine. However, once we pass the control to machine, we should be able to take it back anytime. The errors created by human should be corrected by human. We cannot change history, nonetheless, the best way is to make sure we design a better system based on the lessons we learnt, and evolve.

    We still believe decentralized organization(DO) will prevail, because intelligence comes from the crowd. However, “brute computing force alone can’t solve the world’s problems”. In a successful system, there should be feedback loops, there should be accountability, there should be fine tuning time by time. Otherwise, it cannot be a viable system, only with fragility. To build a sustainable ecosystem, we should start somewhere manageable, before it is too late.

    2. Our vision

    We share most of Ethereum’s vision, which is to foster a globally decentralized platform to enable everyone to run smart contracts in their daily life and remove most annoyance we meet today with traditional islanded organizations.

    Nevertheless, we envision more on a better world on the blockchain based on “Man and Machine Teaming”(MMT), which requests man and machine both to perform their best collaboratively. We should provide people with more powerful tools to enable them to control their data and assets, instead of being hijacked by the coded machines and surrendering to any problems just because of flaws running in machines.

    Based on this vision, a new type of organization will emerge.

    3. Hong Coin: A Decentralized Organization plus MMT

    To realize such vision, one of the best ways is to set up an investment mechanism on blockchain but also based on MMT to enable high deliverable performance, supporting people and their projects to develop with solid results, and eventually generate reasonable ROI.

    So we designed Hong Coin, a venture fund on blockchain.

    Hong Coin’s fund will be fully distributed on blockchain, thus the whole investment process can be in a decentralized way. Similar to The DAO, the whole organization is transparent to the public. However, there is a fundamental difference: Hong Coin is not only decentralized, but also manageable and accountable.

    From the first moment a user invests into this fund, he/she will hold tokens with this subscription. The tokens, then, will be used by the token holders in voting and decision making in admission of projects and throughout their lifecycle, and/or key issues of the whole community in a decentralized manner. On the other hand, the management team will facilitate the investment process and portfolio management, including due diligence, daily operation, outreaching, marketing, monitoring, reporting, as well as connecting to real world issues. Unlike conventional venture funds running in a closed chamber, the activities of management team will be totally transparent to the token holders.

    Hong Coin is named after Hong Kong because the team designed this system loves this place on its profitability and efficiency. Hong Kong is the financial center in Asia, for times crowned by IMD as the most competitive economy in the world(IMD, 2016 Competitive Ranking). “Hong Kong encouraged innovation through low and simple taxation and imposed no restrictions on capital flows”, and the management and professional system are the key to assure this success as well. Hong Coin shares Hong Kong’s strength in the blood. Moreover, as a cryptocurrency fund without geographical border, the participation and investment in Hong Coin will be borderless as well.

    4. Issuing a new token

    The initial coin offering(ICO) of Hong Coin token(symbol: Ħ, or HON, or Hongcoin) will last 30 days with 4 stages:

    1. 1st stage(3 days), 0.80 ETH for 100 Ħ;
    2. 2nd stage(12 days), 1.00 ETH for 100 Ħ;
    3. 3rd stage(10 days), incremental 0.05 ETH for 100 Ħ each day, ending at 1.50 ETH for 100 Ħ on day 25;
    4. 4th stage(5 days), 1.50 ETH for 100 Ħ.

    We are discussing with community to design some bounty schemes to encourage participation before ICO. The whole community can jointly decide whether to extend the ICO period, or issue additional tokens at any right timing after ICO, subject to a maximum total token number in the market. The new issuing will be added up to the whole fund pool and open to a wider range of investors.

    Since the whole fund after ICO is on blockchain with its whole lifecycle, it will be regulated by smart contracts on its spendings, investments and future harvesting related manners. With this mechanism, the fund will be running with complete transparency to the Hong Coin community.

    In the meanwhile, token holders can also join the community to review, discuss and vote on the project business plans submitted. Each token holder has one vote on every community decision, but the weight of the vote is decided by the number of tokens in his/her possession. We believe this design encourages the token holders’ intention to participate and to well use their right to contribute to deciding how the fund will be used.

    Token holders will be required to access their tokens with their email identity, which can help them to be notified with future proceedings in the whole system. Conventional notification system including emails is necessary to call for votes from investors, otherwise a disappearing quorum may inevitably happen.

    5. Investment principles

    Once endorsed by investors, the whole fund can be used as investment vehicle. Based on the successful early stage investment practices, we advocate to invest with small funds and aim for quick exit. This principle can help Hong Coin fund to accumulate investment portfolio and reduce the risks. We also believe that delivery of the project is the key to measure and iterate. Based on this logic, we set the principle of investing in each project with taking a partial equity of the project team, and funding with foreseeable milestones. The investment process, which is normally complex, will be handled by the management team on the ground and report back to community.

    Three categories of projects will be suggested to the community for consideration: Future techs(disruptive innovations or even some crazy ideas), Creative works(art creations and design), and Education(to apply technologies to daily learning and improve equality). We believe these are the key directions that blockchain will help solve some of the global problems and foster the future of the human society.

    6. Functions of management team

    After the fund is capitalised by the ICO, based on the investment principles, the management team of Hong Coin will start functioning to help through the lifecycle of the fund. The detail functions of the management team will include but are not limited to:

    1. Building infrastructure and facilitating community activities
    2. Sourcing, screening, and shortlisting business plans
    3. Interviewing project team, and propelling the voting process
    4. Financing projects across different jurisdictions and financial systems, and milestones accordingly
    5. Outreaching to public to introduce each project and whole ecosystem
    6. Reporting on finance and performance seasonally
    7. Other post-investment services
    8. Project exit and liquidation process

    The management team has a number of responsibilities as described above to help with the execution of the fund and delivery of the projects to a satisfied extent. It is important to incentivize the management team to fulfill such responsibilities and serve the stakeholders of the fund. The management fee serves this purpose to support the management team. Management team will keep operating as lean as possible and be thrifty in spending to comply with the principle of protecting investors’ interest, meanwhile strive to achieve the best outcome to enlarge the return of the fund.

    7. Investment and management process

    When a business plan is submitted to the Hong Coin community, the management team will start screening the project. If the business plan qualifies for the community to consider, the management team will put it on a shortlist, then token holders will be able to proceed to voting process. A minimum quorum of 20% of the total tokens(yet to be finalized) is required for the vote to be valid, accumulated till the voting period(10 days) ends.

    Once the voting reaches the required quorum and the result is in favor of the shortlisted business plan, the management team will initiate Due Diligence(DD) process on the project. They will also post the information from the DD to the community with their opinion as to whether to proceed further with the project.

    If the DD report shows a positive opinion, the management team will continue to communicate with the project team to finalize an investment amount in exchange to a negotiated stake of the project team’s share(preferred stock), and also the funding injection schedule. Such information will all be shared and updated with the community along the life of the project. The project thus becomes part of the fund’s portfolio. In case of any exit options of the project, they will need to go through the community’s collective decision as well.

    8. Fund’s lifecycle

    In Hong Coin, there are 3 years’ investment and 1 year’s liquidation periods. During this 4-year life cycle, an annual management fee(2%) will be allocated to the management team to support the operation. The first batch of management fee will be allocated after the first voting on the fund’s commencement is approved by the community(this part is regulated in smart contract). The rest of the three annual callings of management fee should also be approved by the community voting annually, or automatically allocated if no motion to decline is approved prior to the allocation(also smart contract will regulate this). Such fee is non-refundable but accountable for the health of the investment.

    Starting from the 4th year on, the fund will start seeking exit for the projects. After the liquidation of the portfolio is completed, 80% of the gain will be transferred to token holders, depending on the number of tokens in everyone’s hand, and all the tokens will be collected back to the fund. The rest 20% will be the carried interest of the management team.

    In case that liquidation of certain projects does not complete during the last year period, the community can vote for a motion to extend the liquidation period.

  • Pre-release of HONG contract v0.4

    Contract v0.4 has been deployed to Ethereum testnet with the following parameters. There are 2 versions of contract for easier testing with more cases.

    Short Lifetime Contract

    Contract configuration

    closingTime1471014600 (August 12th 2016, 23:10:00 (GMT +8))
    closingTimeExtensionPeriod3 hours
    tokensCreated steps10000
    lastKickoffDateBuffer1 hours

    Contract info

    Contract address0xF6324527A19E848D5C5dEE640Ffa98B63f50Cea0
    JSON InterfaceDownload v0.4_contract_a.json
    Deployed source code (with customized input)Download HongCoin_0.4_a.sol

    Check events at our Contract Event listener.

    Long Lifetime Contract

    Contract configuration

    closingTime1471071600 (August 13th 2016, 15:00:00 (GMT +8))
    closingTimeExtensionPeriod1 days
    tokensCreated steps10000
    lastKickoffDateBuffer12 hours

    Contract info

    Contract address0x0eE8717366b6cF3bBC9B03fDb864cdbC47fcE9e5
    JSON InterfaceDownload v0.4_contract_b.json
    Deployed source code (with customized input)Download HongCoin_0.4_b.sol

    Check events at our Contract Event listener.



  • **How to Participate ICO of HONG**

    Here we give a tutorial of how to participate ICO of HONG, using the Ethereum Wallet or Mist for Mac as a demonstration.

    The official HONG contract address is ready:


    **HONG JSON interface can be found here:**:http://www.hongcoin.org/download/hong.json

    1. Send Ether through the Ethereum Wallet or Mist to HONG contract to get HONG tokens

    We use 2 Ether as an example here (assuming you have an account available in Ethereum Wallet or Mist and have Ether balance in there).

    **On the same page, scroll down to bottom, choose “SEND”**

    In the pop up window, enter the password for your account. The password was the one you set when you created your account.

    Once the transaction is confirmed by Ethereum blockchain, you will receive HONG tokens in your account.

    2. Check HONG token number in your account

    There are two ways of checking your balance of HONG tokens in the Ethereum Wallet of Mist.

    Option 1: add HONG token to your watch list

    Type in HONG token information in the pop up window.

    After HONG token is successfully added to your watch list, its information will be displayed in the CUSTOM TOKENS session under CONTRACTS tab.

    Option 2: watch HONG contract in the Ethereum Wallet of Mist and check HONG token number from the contract.

    3. Withdraw your investment before HONG ICO ends

    If you have sent Ether to HONG contract and possess HONG tokens, before HONG ICO ends, you have the option to withdraw your investment using the Ethereum Wallet or Mist.

    In order to do so, you will need to follow the steps in option 2 above to watch the HONG contract first, and open the HONG contract.

    In the pop up window, enter the password for your account and select “SEND TRANSACTION”. After the transaction is confirmed by Ethereum blockchain, your investment will be returned to your account.

  • How to get refund from HONG

    In HONG, as an investor you would be able to withdraw all your investment before HONG runs into fiscal year 1. Here we give a tutorial as to how to do it with very simple steps.

    Step 1.

    Watch HONG contract in Ethereum Wallet or Mist (you will need to have the Ether account that you used to participate in HONG ICO in the Ethereum Wallet or Mist). If you have already done this before, please skip to step 2.

    step 2.

    In the pop up window, enter the password for your account and select “SEND TRANSACTION”. After the transaction is confirmed by Ethereum blockchain, your investment will be returned to your account.

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