Yellow Network
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Design
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FAQ

Company

About Yellow Companies Group​​

Yellow is an umbrella brand, representing a conglomerate of fintech and blockchain product companies.
Contributors to this project within the Yellow ecosystem are Openware (technology—OpenDAX™), Assetum (market-making), Yellow Capital (incubates and leads), Attirer (crypto marketing services).
We merge the multi-year crypto software development experience of Openware and Yellow’s success running a crypto exchange. This multi-structural practice allowed us to inspect numerous potential bottlenecks on both sides.
Yellow Network is powered by Openware’s software; OpenDAX™. While OpenDAX™ brokerage software is free, connecting the node to liquidity streams (channels) requires staking the $YELLOW token—starting from 250,000 for 4 channels.
We offer optional enterprise-grade support for node runners which is $240,000 per year.
Moreover, the Openware partner network will ensure the adoption and integration of new and operating CEXs and DEXs to the Yellow Network.
Assetum is a market-making company that would contribute to the project’s liquidity via the widespread network of partnerships. Yellow Connect brings new exciting Blockchain solutions and crypto projects through the Yellow Incubator to ensure their native integration into the ecosystem.

About Openware, Inc.

Cloud Software Engineering company with experience of over ten years of servicing European retail banks, shifting their focus entirely to the blockchain industry with the release of open-source modular platform OpenDAX™ for building digital asset trading systems. Over the past years, Openware has shipped over 150 trading platforms to their clients.

About Yellow.com, Inc.

Crypto Market Maker that provides startup seed funding, mentorship, advisory, data analytics, and fintech software solutions. Yellow is also a lifestyle with a vibrant blockchain community through its co-working hub in Chiang Mai (Thailand), conferences, meet-ups, and entertainment for digital nomads.
❓ How many people are 100% dedicated to working on Yellow Network?
All of the team members are dedicated to the Yellow Network. We have been running a 12-week Blockchain Hackademy for four years where students master their knowledge and specialize in blockchain & software development. Today we can grow at a pace of 5 dev/month.
❓ Could you tell us about Yellow Incubator, what do they mainly work on?
Yellow Incubator is a vastly experienced team that advises, develops, and funds blockchain, crypto, DeFi, and NFT projects, providing seed investment, VC, and market making solutions. We finance solid projects that use OpenDAX™, reducing license costs for startups and getting equity. The company also counts Legal and Marketing teams. And we are always busy at our blockchain incubator premises in Chiang Mai, Thailand, known for its welcoming network of blockchain experts, entrepreneurs, and enthusiasts.

Business Model

❓ What is the expected gross revenue ratio from HFT trading activities vs. retail trading?
​
Year
2022
2023
2024
2025
Active nodes
185
385
585
845
Number of active brokers
37
77
117
164
Est. HFT Gross revenue
$51M
$230M
$552M
$1,064M
Est. Total Gross revenue
$63M
$254M
$600M
$1,157M
❓ How do you plan to increase the number of brokers during the following years?
We currently have a number of brokers in the alpha testing of the network.
Every month, we receive 160 new customer inquiries for creating their brokerage.
Also, we have about 20 partner distributors who have their stream of customers. They can install the appliance that is activated when they stake enough $YELLOW tokens.
❓ How do you plan to share revenues with Yellow network users? Where do the fees go?
To collect fees, you must run a Yellow node and mine trades. You can create liquidity channels and charge for the usage (traffic using it). Your collateral on this state channel is used to connect the network to reach more liquidity, thus, collecting a fee from a volume in it.
❓ What is your way of calculating the Projected Market Cap?
Using the NASDAQ algorithm, we calculated it at 20x annual revenues of all connected brokers, it is usual for crypto startups to reach 100x annual revenues.
❓ How is the network Combined Revenue calculated? What are the hypothetical values for trading fees?
The Network Combined Revenue is calculated based on the revenue of all brokers of the network. The trading fees will range from 0.1 to 0.15%.

Tokenomics/Finance

❓ Have you worked with any Tokenomics advisor? If yes, which one?
Besides our in-house experts, we are delighted to have various reputable Tokenomics Advisors such as Juergen Hoebarth or Juan Otero supporting our project.
❓ Total supply of 10 Billion tokens = hard cap, correct?
Yes, correct.
❓ What benefits do YELLOW token holders get?
  • Ability to stake $YELLOW token to run a node;
  • Ability to stake token for liquidity mining (collecting fees going through the channel);
  • DAO is possible depending on US regulations (DAO risks qualifying the token to security, which we don’t mind, but security token can’t be listed on most CEX, so it's really a gray area these days);
  • Social activity such as influencing articles and projects on yellow.com launchpad;
  • Paying fees for liquidity, and reducing these fees by the number of $YELLOW tokens in the hold.
❓ Do you have plans to move to the DAO model (as a community-driven model)?
Yes. Community funds and 55% of the tokens are DAO-driven.
❓ How does your company treasury work?
The company treasury is created to expand any group-related company, but it will most likely be inter-company loans, as those tokens are on the Seychelles balance sheet.
❓ Trade mining rewards: what happens when the 10% have been distributed? Is it just to boost acquisition and liquidity at the beginning?
Similar to bitcoin rewards, trading mining only brings the fees, but no additional rewards.
❓ What entity will sell the tokens?

Product / Architecture

❓ Why did you choose a state channel technology among other scaling solutions? Why not side-chains or rollups?
State channels are faster, not limited to single side-chains; they also enable cross-chain trading. Mostly for scaling to billions, think of 100 DyDx scale with high-frequency trading on 2,000 trading pairs spot and futures.
❓ “Liquidity providers take a share of profits from trading fees.”—Is everything happening on-chain? How do you manage that with state channels?
Funding, opening state channels is on-chain. Trading is performed off-chain (both local trades on Broker’s node and P2P trades). Brokers deposit collateral and $YELLOW tokens, so they can exchange the liquidity then, and the provider collects the fees.
❓ What Layer-1s are you connected to and planning to connect to?
We plan to connect to every Layer-1,2 bridges, wallets, bank, exchange. Partners are in queue for the software development where our engineer builds the connectors, then we make a joint press release.
❓ How do Finex nodes sync prices? Will there be a price difference between nodes? Do all Finex nodes share the same liquidity depth? Can the Finex node run as a standalone mode?
P2P broadcast using a PubSub; a market is a Topic. There can be price differences between nodes. Depending on how many peers this node has, it has a more or less complete Orderbook. (Think torrent discovery of node).
All Finex nodes can show the same depth; how deep they go depends on their state channel collateral.
Finex nodes can run stand-alone with non-network orderbooks.
❓ Is the Finex network based on blockchain architecture or other distributed architecture?
Using LibP2P (think ipfs) it is a new network with gateways being state channels Smart-Contracts on each Layer-1,2
❓ If the Finex network crashes, how to ensure the security of users’ assets based on this architecture?
Users’ assets are in the smart contract custody, a crash would not affect them, they could withdraw their funds even if the broker never comes back.
❓ OpenFinance uses Custody to host user assets. If users deposit assets into this contract if the L3 state channel crashes, how can users withdraw their assets?
They can withdraw by calling the method from MetaMask.
❓ Can you elaborate on cross-chain settlements?
An “Adjudicator” is a smart contract that collects and releases funds for a state channel; it is possible to design Adjudicators with two or more smart contracts for custody, which means it can open a channel between brokers from different networks.
❓ Can you elaborate on Dispute Resolution?
A dispute occurs when brokers do not agree on the final balance, this is most often due to network issues or malicious broker cases. In our case, we have KYB, registered, and sometimes regulated businesses, so we sort those issues through arbitration in the initial phase.
We plan to introduce the concept of "Watch Tower," a neutral party software that audits the channels and allows automatic-dispute resolution.
❓ How is the challenge/judge mechanism of Yellow Network's state channel designed?
Watch Tower is auditing transactions between brokers and managing disputes automatically.

Traction / Development Stage

❓ Is Yellow.com currently running as a CEX, or has L3(Yellow Network) been implemented?
​Yellow.com is running OpenDAX™ V3; it uses our liquidity network v1 called XLN. The V4 update is expected in June-July of 2022.
❓ When I use Yellow.com to deposit ETH, an ETH address is generated on the deposit page. If I deposit ETH to this address, what will happen later? When will the deposit amount appear on the assets page?
We advise you to test it yourself at alpha.yellow.org.
❓ Peatio is a previous generation of CEX software that has not been maintained for 6 years. During your developing process, which features did you keep, which were removed, which were added?
We are the core maintainers of Peatio, which we have updated for the last 4 years (v1,2,3.) Currently, we still maintain v3.1—the architecture has completely changed since the old Peatio from 2015.

References

[1] T. Close, "Nitro Protocol" https://eprint.iacr.org/2019/219.pdf, 2019.
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