Your Questions Answered — June 2025

Hi everyone, Shahaf here.

I’d like to start by saying thank you for the warm words and caring for the team during these times. Like many teams in this space, COTI is a global project with employees and contributors across different regions, including Israel. We’re no strangers to challenging times, and for now, those of us in Israel will work remotely and hope for calmer days ahead. Meanwhile, the work on COTI continues, focused and steady!

The market is unpredictable and in the last 2 years, we have made some big changes, all of which create natural uncertainty. I understand this, but I’m 100% certain that we have made the right choices for the future of COTI, and it will all pay off. The only way to predict the future is to create it!

My goal now is to tackle the tough questions and concerns you have and to make sure you are comfortable ‘staying COTI’. More than 100 questions have come in since we announced a Q&A. Given the size of the task, I have batched similar questions together. If you feel your question is still unanswered, we plan follow-up AMA’s to cover any further questions that arise.

1. Can you explain the tokenomics including the inflation rate and what is being done to ensure sustainability and transparency?
2. How are gCOTI rewards distributed, and how does the gCOTI boost affect the Treasury APY?
3. Why did the V2 Airdrop feel unfair to many users, are there plans to improve incentive design in the future?
4. Why are there issues with the Treasury, and when will US gain access?
5. What progress has COTI made towards real-world adoption and how is activity linked to long-term growth?
6. What is happening with the grants program and funding for ecosystem and builders?
7. How is COTI’s operational runway, given bear market conditions?
8. How does COTI create value for $COTI holders?
9. What is the marketing and communication strategy to make COTI’s advanced technology understandable and demonstrate its real-world value?
10. How will COTI’s new node ecosystem work in practice, including incentives and participation?

Let’s dive in.

1: Can you explain the tokenomics including the inflation rate and what is being done to ensure sustainability and transparency?

Many of the questions we received revolved around COTI’s tokenomics, included mention of the inflation rate, clarification around the V2 tokens, and more transparency in general.

For context, when we decided to build COTI V2 as a completely new infrastructure, we needed to make a critical decision: are we building COTI V2 on top of COTI V1 and letting our community and holders take part, or are we building a separate project like some other teams in the space did? It would have been much easier for us to build a different project but I believe in doing what’s right, not what’s easy.

It meant that we needed to build a tokenomics that could fit a new project on top of an existing one which is like fixing a plane mid-flight at 30,000 feet. On balance, I believe we made the right choice, announcing our plans in December 2023, a year before actual changes took place, giving everyone ample time to decide if they will join us on this new journey or not. The tokenomics were revised through community feedback until the final version was presented in the whitepaper we published.

Now on to tokenomics. We completely understand why 30% year-one inflation and ~250% total emissions raise questions, especially for long-term holders. It’s important to look beyond the raw percentages and understand how these tokens are being used, and why they’re essential to the growth of COTI V2:

• 58% of tokens are rewards for validators, liquidity providers, ecosystem participants etc.
• 18% are for developers building on COTI
• 24% are for ecosystem grants and other incentive schemes.

What I want to say is this: Not all inflation is bad! If the inflation is purpose driven and used for growth, it is good. You invest 1 COTI to receive an impact of 10 COTI down the road, as you grow the network. It’s strategic. Let me be very clear: the team is not granted any new tokens, nor any VCs or advisors. This inflation is fuel to the fire that will grow COTI. It’s a catalyst.

58% of the initial emissions go directly to the community. These tokens are allocated as rewards for node operators, liquidity providers, ecosystem participants, and developers, all of which are critical to bootstrapping the new COTI V2 and ensuring growth.

Compared to other L1 and L2 launches, COTI V2’s inflation is actually on the lower end, especially considering the scope of what we’re building. It’s common to see early-stage chains use aggressive incentive programs to kickstart activity, and ours is structured in a way that ties rewards to real engagement.

Importantly, COTI V2 has a built-in mechanism to become deflationary over time: all gas fees on the network are collected into the ecosystem treasury and controlled by the community. As network usage grows, these gas fees can offset or even exceed emissions, creating net deflation and reducing circulating supply.

As explained in our transparency article, we’ll be publishing an annual report with a breakdown of token distribution, use of funds, reward mechanisms, and long-term emission curves.

2. How are gCOTI rewards distributed and how does the gCOTI boost affect the Treasury APY?

gCOTI was a topic that many of you were keen to get clarity on. Looking at the figures, there are some misunderstandings over the APY, how much of the total supply would be distributed, and the 1600% gCOTI boost.

As shown on the Treasury website, the current maximum APY for $COTI is around 57%, and approximately half of that (28%) comes directly from gCOTI boosts, assuming a 1:1 staking ratio with a 120-day lock and full multiplier. I can confirm that 100% of the community allocation defined in the gCOTI tokenomics, which accounts for 52% of the total gCOTI supply, will be distributed to the community over the intended 5-year period.

The “1600%” boost refers to the relative weighting multiplier used to calculate rewards distribution, not an actual APY, and not a literal 1600% return. In practice, the total maximum APY shown on the Treasury is around 57%, even with full gCOTI boost, which includes both base and boosted components. I hope this clears up any confusion.

Please bear in mind that the boost ratio was increased by the community. We are actively monitoring feedback and Treasury participation trends, and we’re always open to refining parameters to ensure fairness and sustainability. In fact, we intend to bring this to a community vote again in the future. The goal is to reward commitment, and we’re committed to finding the right balance with the community.

3. Why did the V2 Airdrop feel unfair to many users and are there plans to improve incentive design in the future?

The V2 Airdrop has been a hotly debated topic, and we had many questions relating to this, including whether we regretted the design of the scheme. Many users told us they were unhappy with the outcome of the V2 campaign, and there was a mismatch in perception of what users thought was a rewarding strategy and what was actually rewarded.

Planning an Airdrop is never easy! You need to ask yourself what sort of behaviours and activities you want to encourage, and then budget accordingly. You then need to publish the rules and commit to this structure, as it wouldn’t be fair to change it mid-way. Some people will then figure out a strategy to maximize their return and diligently execute on that strategy. However, it may leave some other people, including loyal members of the COTI community, feel hurt as they didn’t make such plans. That, in a nutshell, is the issue with Airdrops. They are not perfect and don’t always benefit the people you feel should benefit most, but it’s still overall a good mechanism to bootstrap new activities.

Point being, the V2 airdrop was NOT perfect, and we weren’t delusional about it being perfect.

Now, to be more specific about the V2 airdrop: upon rewards distribution it was apparent that a small number of Treasury users who took bigger risks on fee-generating activity, received much higher rewards. Meanwhile, the majority of users (80%), who favoured low-risk, long-term strategies, received lower rewards. This is because they shared an equal size reward pool but the rewards were spread thinner.

Did we get the program wrong? The program design was sound for our needs. We wanted to incentivise a range of activities, and the program did that. However, there was a commonly held perception that a strategy based on depositing and staking would be the most rewarding. In hindsight, we missed an opportunity to push back on that assumption, which could have had a positive effect on the program by increasing the range of activity taking place.

To see the program in a fair light, the liquidations and losses from the high-risk group must be taken into consideration, as well as the fees they generated, which benefitted the entirety of Treasury users throughout time.

Now that the airdrop is behind us, we’re looking to the future and creating new ways to earn from COTI. We have big plans for a comprehensive rewards system launching in the coming months, in addition to other incentives such as those from Node operations, a new Treasury system, Stay COTI grants and more!

4. Why are there issues with the Treasury and when will the US gain access?

I’d like to start by saying that I’m very disappointed by the amount of issues we have experienced in our current Treasury. It’s super frustrating to not get your deposit come through, to have failed transactions, or not to have your rewards distributed in a predicted time interval. There are a lot of reasons why this is happening but i’m not going to hide behind excuses. We need to do better, and we will do better.

First of all, there will be a complete treasury overhaul. We’ll build it from scratch in a much better way than we did initially a few years ago. The timeline for that will be when we let node operators run their own Treasury. Until then, we’re updating what we can: Treasury for mobile was delivered two weeks ago, automatic reward distribution is planned for the end of June, and we will prioritize fixing bugs before the launch of new products. It’s important to note that NONE of the issues was caused by the COTI V2 network, all of it is rooted from the applications built on top of the network. That said, you deserve better, and you will get better.

With regards to geofencing, we plan to open up the Treasury for US users. We will do that as soon as the node ecosystem is up and running and everyone can run a Treasury. Why not now? The reality is that the US regulatory landscape is indeed progressing in the right direction, but nothing concrete has happened yet. This is why a lot of systems still block the US. As soon as that changes, or as soon as Treasuries are run by node operators, we will lift the IP blocking. It won’t be long now either way.

5. What progress has COTI made towards real-world adoption and how is activity linked to long-term growth?

Naturally, we have received many questions around our partnerships, particularly the high-profile work we are doing on the ECB’s Digital Euro and the Saudi Arabia activity, amongst many other things. I will go through each to clarify what the current status is. It’s worth mentioning that all our partnerships are long-term, strategic moves designed to open doors, drive real-world use, and strengthen the foundation for COTI’s continued growth.

Specifically, we have identified 3 major use-cases for privacy with market potential in the trillions of dollars: DeFi, RWA and AI. All of these require privacy to unlock their full potential. We are approaching the opportunity in two ways. First, we are pursuing major plays like national infrastructure providers, for example, institutions and CBDC projects. Secondly, we are building a solid grassroots approach for no-code developers to build these use-cases on top of COTI. This is stay.coti.io.

I’m happy with our business development to date. For RWA, we have secured partnerships with Plume (the layer 1 RWA-native chain), the ECB’s Digital Euro design project, and the Bank of Israel’s Digital Shekel design. We have integrated stablecoins on COTI, including USDC.e, and have many growing RWA opportunities through our MENA and Africa networks (SAAIBC and Africa Tokenization Council), as well as a growing relationship with the New York City mayor’s office that is looking at RWAs for civil infrastructure.

For DeFi and AI, I am very excited by the PriveX launch on COTI, the first private intent-based perp-DEX, where users can benefit from private trades for the first time, with AI Agents soon to launch. We’re also partnered with Bancor’s Carbon DeFi platform and Hyperlane’s Nexus bridge for cross-chain capabilities, including access to ETH and BTC on COTI.

In terms of AI, our Stay COTI builders program has attracted many great partnerships with no-code and low-code platforms such as CodeX, Crafter, Arbus, and ChainsAtlas, to name a few, and more recently, Crossmint, which has supported some of the biggest global brands like Mastercard, Microsoft, and Diageo.

ECB’s Digital Euro: As you all know, COTI was selected as a pioneer partner in the ECB’s Digital Euro project. The latest update is that we’ve provided a proof of concept and continue to work closely with the ECB’s technical requirements. It’s still early in the project, and while it may not bring immediate results, it positions us for long-term impact. This partnership gives us direct exposure to key decision-makers and a real opportunity to showcase how our privacy tech can fit into large-scale, compliant financial systems. If all goes well, it will clearly bring meaningful value to COTI in the future. It’s a long game, but a very strategic one.

MENA Activity: We’ve made some great inroads in this respect through our involvement in the Africa Tokenization Council, SAAIBC, and as co-hosts of the RWA Summit Roundtable. Through this activity, we’re developing our network of individuals who have the authority, means, or responsibility to advance sandboxes, projects, or investments in MENA and broader Africa. This includes policymakers, central bankers, royal family members, and investors overseeing over $1 trillion AUM.

This does not mean that it suddenly turns into projects. We’re dealing with nation state and financial sector timelines, not Web3, and progress is typically slower. That said, we have since been back to Dubai following a royal invitation to visit His Highness ⁠Sheikh Awad bin Mohammed bin Sheikh Mujren for talks, and will continue to build relationships with key stakeholders in the area.

The time is right for COTI. There is a wave of RWA and Tokenization adoption occurring across the major arbitration centers of the world: MENA, New York, London, and Singapore. It’s crucial to be involved in the conversations and networks that decide on that future, and we are now a part of that conversation.

USDC: We’ve integrated USDC.e into the COTI ecosystem. Introducing stablecoin infrastructure is needed to support real utility and drive on-chain activity, which directly translates to adoption and use of the network. We plan to increase the number of stablecoins on COTI network.

Djed: As for Djed, we’re working closely with IOG to make it even more decentralized. We plan to release the code soon, enabling other developers to build Djed-like platforms that can support the broader Cardano ecosystem.

Yes, we do have plans to enable Djed as a stablecoin within the COTI ecosystem. Djed is one of the most resilient stablecoins out there. Its reserve-backed, algorithmic design is overcollateralized with ADA at a 400–800% ratio, which has meant it kept its peg through some of the most volatile periods in the market., for example, the stablecoin depegging that happened during the Silicon Valley Bank crash in March 2023. Djed held its peg through the panic, while many centralized and semi-algorithmic stables dropped in value, proving the resilience of its design.

6. What is happening with the grants program and funding for ecosystem and builders?

We received some requests for more info on how grants are progressing for projects developing on V2. Most of the grant updates are announced via medium and the COTI Connect sessions, so you can keep up to date there. Vlad, our lead ambassador, and Brad, our BD manager, have been brought into the process to ensure that we have more support as we scale. We have published addresses related to the different pools of funding, for full transparency, so you can monitor progress.

In terms of our ambassador program, we received hundreds of applications, and as you can imagine, it’s a big job to process all applicants. Meanwhile, we have been coordinating on training of our first cohort, with first-round reporting that’s starting to come in. We’re taking our time at this stage to ensure we build a solid foundation for a world-class ambassador program that spans the globe. This will make it easier to scale the program.

7. How is COTI’s operational runway, given bear market conditions?

Some questions came in around the operational health of COTI, given the current market conditions. I can share some insight:

• We have a strong runway, even in this bear market conditions. We don’t rely on token sales, and market conditions don’t scare us. COTI has made it through quite a few cycles, as you know!
• How is it possible? The capital we raised in the initial token sale we’ve managed responsibly, and were fortunate enough (or smart…) to hedge. We did really well in that sense.
• We keep a tight budget and a lean team.

To summarize, COTI is in a good and healthy shape. We have years of runway and the ability to execute on our shared vision. We don’t rely on VCs, token sales, or other 3rd parties. This is very bullish for COTI and why we prevailed throughout multiple cycles.

8. How does COTI create value for $COTI holders?

Several people have asked questions around the value of COTI as a project and the $COTI token, for example, how does the growth of $COTI affect token holders? How will it change my life? What drives value within COTI?

I’m sure you all understand, the price of any token is affected by very many external factors. Price action in crypto markets is not rational, it’s driven by a mix of market conditions, trading sentiment, liquidity cycles, and speculative behavior. That’s why project teams tend to focus on building adoption, technology, and utility, which ultimately drive sustainable value.

We have a very big opportunity right now as early adopters of blockchain, a technology that is fast becoming the foundations of global value exchange. Timing is everything for startups, and in this moment, we have a seat at the table in the unfolding blockchain revolution. At the moment, only 1% of people understand how critical privacy is for global adoption of blockchain. But this 1% is the brightest and most influential people in the space, and they are already moving on the opportunity.

COTI is here to meet the growing demand for privacy, which is essential for moving value privately across the blockchain economy. Our flywheel is to respond to emerging demand, be the fastest, most flexible, and best fit solution. This will lead to rising activity on COTI, driving demand for tokens, staking, and node participation. Our value proposition is then strengthened by increasing activity and integrations, which creates even more momentum.

Where are we in this journey? It’s early for COTI. At the moment, we are like farmers that plant the right seeds, nurture the fields, and wait for the rain to come so everyone will prosper. Have we planted the right seeds? I know we did. The 1% know. When the remaining 99% get it, remember that you were here first!

9. What is the marketing and communication strategy to make COTI’s advanced technology understandable and demonstrate its real-world value?

We have been asked several similar marketing-related questions about how COTI plans to grow its visibility and explain its technology to the world. It’s a good question because privacy, especially when built on advanced cryptography like Garbled Circuits, can feel abstract at first. Let’s talk about our plan for growth, how we explain what we do and increase visibility for COTI.

As mentioned before, we are not interested in short term hype cycles. Our approach to marketing aims for sustainable growth over the longer term and will tackle three ‘pillars’ of communication to create momentum. These are Vision, Adoption, and Participation.

1. The first pillar, Vision, is about our purpose at COTI, something we have considered deeply over the past months. This tackles why privacy is important to Web3 and is something we can show with storytelling to help understanding.
2. The second pillar, Adoption, involves activity that grows our network and reach, like partnerships, ambassador outreach, community involvement, livestreams etc.
3. The final pillar, Participation, is related to Stay COTI and the ways to earn from the COTI ecosystem. Our builder and creator community and their output, the Stay COTI livestream events, as well as incentive programs such as staking, trading, or providing liquidity, which can be run by third party dApps built on COTI.

As we introduce new products and updates over the coming weeks, we have planned to hit all these pillars for maximum impact.

It’s worth mentioning that our marketing team lean towards showing users what we do, rather than telling. It’s a more direct approach. Showing also becomes easier as we start to see more use-cases going live. For example, PriveX, which launched just two weeks ago, allows its users to trade confidentially on COTI. That’s a major milestone, not just for us, but for on-chain privacy in general. We shared their tutorial last week, and it’s the kind of hands-on example that helps make things click for people.

We’re also working on demos of Privacy-on-Demand to help show how our privacy layer works in action. Alongside that, we’re producing walkthroughs and explainers for crypto-native and non-technical audiences, to make COTI accessible, which is key to adoption. And of course, Stay COTI continues to run regular sessions for new users to help them get started building apps on COTI V2.

So yes, our tech is powerful, but we know showing is more effective than telling. That’s where our marketing and education efforts are headed: real use, real people, and clear value.

There is no fast-track to success, only incremental, stubborn growth. Look across Web3 and you’ll see the same. We’ve had a lot of wins with COTI, but they are steady, progressive, continuous wins that add to COTI’s visibility and credibility over time. If you’re expecting silver bullets, then you may be disappointed. If you’re expecting clear, sustainable, continuous growth, then we’ve been delivering on that, and will continue to expand the pace and approach on delivering that growth.

In terms of the story, our message is simple; we’re becoming the de facto privacy layer for Web3. We have taken time to position ourselves within the wider discussions of decentralized confidential computing (DeCC), for example via Messari report. Going forward, we have clear communication and marketing strategies in place for a more promotional approach, and you will see these kinds of activity ramp-up in the coming weeks.

Regarding requests for faster and clearer communications: I hear you. This post is part of renewed efforts to show that our community remains a top priority at COTI. I will be joining the TG group for more AMA’s, to stay on top of your questions, and we’ll look for more ways to support you and improve our outreach.

10. How will COTI’s new node ecosystem work in practice, including incentives and participation?

Nodes will be a great opportunity for the COTI community to earn COTI.

To be clear, everyone will have the opportunity to participate in the New Node Ecosystem, whether by obtaining a license or running a node as outlined in the Node Litepaper. There is no ‘selection’ process. We have tried to make it as easy, accessible, and innovative as possible.

Each node operator will be able to set their own terms, including the % rewards, which will come from their own node earnings. As a reminder, Nodes earn from three sources:

• Validation Rewards: what you receive for running a node
• Assignment Fees: earned when license holders assign licenses to a node
• Staking Reward Fees: earned by managing Treasury pools and can be shared with assignees

Therefore, the % rewards you set is a decision you make as a node operator to attract delegation, and is designed to create open competition between nodes. Choosing multipliers for deposits will also be optional, just like in the current Treasury.

We are excited to bring you the new node ecosystem in the coming months.

That’s all for this round of Q&A.
It’s been 3 months since Mainnet launch, and when you step back from the day-to-day, it’s clear we are making strong progress. What we’re building together has the potential to accelerate our industry, and your energy and enthusiasm for COTI are every bit as important as our developers or marketing team. Let’s stay focused, stay building and pushing forward. Most of all, Stay COTI!

Shahaf.

For all of our updates and to join the conversation, be sure to check out our channels:

Website: https://coti.io/

X: https://twitter.com/COTInetwork

YouTube: https://www.youtube.com/channel/UCl-2YzhaPnouvBtotKuM4DA

Telegram: https://t.me/COTInetwork

Discord: https://discord.gg/9tq6CP6XrT

GitHub: https://github.com/coti-io