There has been some confusion regarding COTI’s supply due to its unique multi-chain structure and how the COTI bridge manages it. The following article addresses these confusions and answers questions recently raised by the community.
COTI’s max supply is 2B native tokens. All of these tokens were minted back in June 2019 and no additional native COTIs can ever be created now or in the future. In 2019 COTI became “multi-chain”, issuing COTI tokens on ERC20, BEP2, BEP20 and possibly other chains in the future. This becomes possible by allowing some of the original 2B native tokens to be locked in COTI’s bridge, while “wrapped” tokens are created on a corresponding chain, instead.
The way COTI’s bridge works is as follows:
- In case of a token swap from native to ERC20, the bridge generates and dispatches an equivalent quantity of COTI ERC20 tokens to the designated user address. The native tokens will be kept on bridge addresses and will only be moved when a reverse transaction takes place.
- In case of token swap from ERC20 to native, the tokens are directed towards a specific bridge address. Currently, there’s no automated process of the ERC20 token.
As we’ve explained in the past, the smart contract behind COTI bridge is currently not able to burn tokens, therefore once a native token is sent to the bridge, new ERC20 tokens are created, for example: 100 native COTI, that are locked in the bridge, immediately mint 100 new ERC20 tokens. If these tokens are ever sent back to the bridge, releasing the original 100 native tokens, and then sent again by someone else, additional 100 new ERC20 tokens will be created, while the previous 100 ERC20 tokens will remain locked in the dedicated address. As a result, the “Max/Total Supply” in Etherscan, which is the total amount of ERC20 COTI tokens created, represents the volume of the bridge rather than the actual supply or circulation.
The best indication of the circulating supply is the one presented in CMC and CoinGecko. As these databases are currently being updated every 6 months, there could be some fluctuations between each update, therefore we announced we intend to increase the frequency of this update going forward.
While the current bridge structure is very secure, it is not ideal. Moving forward, the bridge will operate with a fixed reserve amount and any tokens exceeding the reserve amount will be burnt.
As part of this process, on March 22nd, the COTI team conducted a live test of a new procedure flow for the bridge address, which involves the automatic burning of minted tokens. Unfortunately, due to a misconfiguration, this process was executed on three bridge addresses with an incorrect token amount scale. We have immediately realized and rectified this mistake and have burned these excess tokens. It is important to note that no funds have been moved out of the bridge and this did not create any security issue.
With this in mind, and as part of a new security process deployed on the bridge, some of the bridge funds are transferred daily to a cold wallet and to 3rd party custody (Binance Custody) as can be seen on Etherscan. As each user has his own ethereum address on the bridge, the bridge has a very large number of addresses with small amounts of COTI ERC20. Funding these addresses with ETH and performing each transaction individually is very expensive and inefficient. Given the current stage and implementation of the ERC20 contract, performing a comprehensive coin burn across all addresses would incur substantial costs due to the current inability to burn coins without transferring them to the deployer. However, we plan to introduce modifications to the contract that will enable the coins to be transferred to a small set of main addresses responsible for managing the bridge reserve, rather than to individual native addresses. Moreover, we intend to implement a stricter limit on the bridge’s reserve to ensure that it does not surpass a smaller, predefined threshold. It is important to emphasize that such tokens are sent to safe keeping to custody and are not traded nor circulated.
COTI holds its own tokens with several custodians and market makers, dozens of exchange accounts and hundreds of cold and hot wallets addresses. In addition, uncirculated tokens are securely kept with custodians and cold wallets, while some are held by exchanges and third parties as security deposits. We have internal systems that monitor all of these inventories and balances and those are regularly audited by top auditing firms.
We hope this article has shed light on COTI’s supply structure and helped clarify any questions or confusions. As always, we are happy to provide answers for any inquiries you may have in the future.
Stay COTI!
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Website: https://coti.io
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Telegram: https://t.me/COTInetwork
GitHub: https://github.com/coti-io
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Binance Feed: https://www.binance.com/en/feed/profile/485349084
CoinMarketCap Feed: https://coinmarketcap.com/community/profile/COTI
Technical whitepaper: https://coti.io/files/COTI-technical-whitepaper.pdf
