Offshift is the native cryptocurrency of the DeFi (Decentralized Finance) protocol, Offshift. It is a cryptographically private offshore storage protocol created on Ethereum, and claims to be first dual-sided public/private protocol to be built entirely on a public blockchain.^[1][2][3]

Developers

Offshift is developed by a private team of blockchain developers. It seems, they want to keep identities private although they mentioned (in an AMA) that team currently consists of total six members, including Johnny (project lead), Paul (tech lead), Imhotep (community manager), two core developers (in addition to Paul) and a web and graphic designer.

In one of the AMA Session, this is what team member answered to the' Why is the team anonymous? question from one of the participants.

To kind of paraphrase Ed Snowden, “who we are” doesn’t really matter. We feel like if that’s what people are focused on, they’re missing the point. The Offshift project isn’t about Johnny, Paul, or anyone else who works on it. It’s about empowering people to take their financial privacy into their own hands if they choose to. Frankly, it’s something much larger than any of us.

That being said, we realise our anonymity puts the burden on us to remove the need for trust wherever and whenever possible. We’ll continue to do that through things like the liquidity lock and team token lock (which we’ll deploy soon) whenever the community asks us to, and whenever we’re able.

Overview

Offshift is a decentralized protocol that enables cryptographically private, asset-pegged stable value “offshore” storage with staking interest on Ethereum. It uses a dual token model to drive the adoption of cryptocurrency and particularly DeFi by providing stable value without altering its speculative aspect.^[1]

Cryptocurrencies have observed great volatility, but these are still not accepted as a 'consumer currency' in current retail systems. Volatility is important as it provides incentives, but to become consumer currency, its value need to be stable. To solve this dilemma, Offshift is designed to adequately incentivize both speculation and use as a currency. To achieve that it uses the dual token model. XFT token, incentivizes investing and trading, while private Stablecoin zkUSD, zkETH and zkBTC promotes use as currency for storage and spending.^[4]

Technology

As mentioned above, Offshift uses dual token model to fulfill speculative and stability aspects at the same time. XFT is represents public chain and volatile cryptocurrency like Bitcoin, Litecoin, EOS and others and zkassets provide the private, stable-valued side of the Offshift ecosystem. Offshift uses two way bridge architecture to connect public and private side of the ecosystem, allowing value to flow between them using mint and burn mechanism.

XFT token

The XFT token is the utility token of Offishift ecosystem that enables use of the Offshift protocol, and the potentially volatile side of the ecosystem. Its value is determined by the market. Like every other ERC20 token, price will likely be driven by perceived utility and speculation. As it is included in DeFi ecosystem, liquidity is paramount XFT is easily listed on DEXs, centralized exchanges, and easily integrated into any Ethereum token supported wallet apps. XFT is convertible into zkUSD using a 'mint-and-burn' mechanism. This is made possible by deploying Ethereum smart contract.^[5]

zkAssets

Offshift’s zkAssets (zk stands for Zero-knowledge ) are the private, stable-valued side of the ecosystem. These are the first cryptographically private stablecoins on any protocol. The value of assets like zkUSD, zkETH, and zkBTC are pegged to the USD, ETH and BTC, respectively. These have advantages like privacy, value stability and interest over XFT and also provides staking incentives which attracts the conversion of XFT to zkAssets.

zkAssets are an implementation of EIP #1724, “zkERC20: Confidential Token Standard.” 17 Offshift uses Zero-knowledge proofs to keep ownership values and the values of transfers encrypted and confidential.

Mint and Burn

Offshift users are able to shift back and forth between XFT tokens and zkAssets using Mint and Burn mechanism. This is created with the use of two Ethereum smart contracts, a mint contract and a burn contract. These contracts communicate and interact in a way that results in an equivalent value in one token being minted when another token is burned.

Through a mint-and-burn mechanism, zkAssets can only be created when XFT are burned. For every 1 USD in XFT sent to the burn address, 1 zkUSD is minted and sent to an output address provided by the sender. XFT per zkUSD, zkETH and zkBTC conversion rate is determined via decentralized price oracle. The pegged zkAsset are supported by their ability and at any time, can be redeemed for their equivalent value in XFT through mint-and-burn. Additionally, the pegs are supported by the existence of a liquid XFT market in each pair, so that converting from (e.g zkETH to XFT, then selling XFT to ETH is practically easier.

To discourage the misuse of mint-and-burn as a tool for switching coins with the intent of obtaining more of either coin (and thus increasing supply), a dynamic bridge fee is imposed on zkAsset-to-XFT conversion. The bridge fee diminishes to zero over a period of about seven days, after which zkUSD can be staked.

Dynamic Bridge Fee

A one-way dynamic bridge fee is imposed on newly minted zkAssets crossing back to the public side (re-minting XFT from a zkAsset) to eliminate the potential for the bridge to be gamed for profit. The bridge fee diminishes to zero over a period of 40,320 blocks, or about seven days, after which zkAssets can be staked. Bridge fees are entirely distributed to incentivize the stakers.^[6]

How Stability of zkAssets achieved?

Offshift uses a semi-decentralized network of oracles to maintain stability of zkassets. A distributed network of oracles is constructed to provide a continuous stream of price data, aggregate the data, and determine the current price of assets to be pegged. These oracles are run on distributed nodes placed across the globe and collect data from various sources like CoinMarketCap and exchanges, and submit that into fast key-value database. Offshift mint and-burn contracts only accept an asset value if, at the time of the mint-and-burn contract execution, all nodes agree on the data that’s been collected. In the event the nodes can’t agree, the contract uses a moving average of the most recent agreed and accepted data to get fair value.

Flow Chart showing Data Movement to and from Oracle
The price data used in the Offshift oracle nodes is also subject to public scrutiny. Each node is assigned an InterPlanetary File System (IPFS)-based address. Price data collected by each node is automatically updated once in every 24 hours and made available for download and so for the independent verification. This cannot be subject to manipulation as files containing the same contents will always have the same IPFS hash.

Development

Whitepaper & Roadmap

The Offshift released a whitepaper in early in July, 2020, and rodmap was released in August 2020. XFT Token contract deployment and DEX listing is completed in Q3,2020 as scheduled. Oracles integration is currently in progress. The Roadmap suggests mainnet contracts starting from zkBTC & zkXAU and also the first shifts, XFT to zkAsset and zkAsset to XFT to be launched on Ethereum in Q1, 2021 and then other zkAssets will follow it. Mobile wallet and staking is expected to release in Q3,2020.

Token Sale & Liquidity locking

The team conducted token sale in early August 2020. To fund DEX liquidity and project development, team conducted a XFT token sale. It was started on August 1st, 2020 and was completed when the sale capital was met before scheduled closing time on August 2, 2020. A total of $200,000 was raised over two rounds, including seed and presale. 500,000 XFT (5% of initial total supply) were sold at a rate of $0.10 per token and The equivalent of $50,000 USD was raised in the seed round from the early supporters of the project. 1,000,000 XFT (10% of initial total supply) were sold at a rate of $0.15 USD per token. Both sales were subject to the individual 5,000 USDT/15 ETH limit and Interest from investment funds and venture capitals was politely declined by the team.

It was listed on Uniswap DEX after token sale competition. Team locked around $100,000 in ETH and XFT liquidity on Uniswap for 90 days, and it will re-lock liquidity every quarter going forward.

Testnet

How to perform Offshift Testnet using Metamask
Public Testnet will be conducted in three phases including

<strong>Phase 1</strong>: Simple 1:1 shifts between two ERC20 assets .

<strong>Phase 2</strong>: Price-pegged shifts between two ERC20 assets using an oracle .

<strong>Phase 3</strong>: Price-pegged shifts between an ERC20 asset and a zkERC20 asset using an oracle.

Phase one with Bug Bounty program completed in September, 2020 and phase two started in early October and is still going on. In this phase, team has integrated ChainLink’s market-leading decentralized oracle network to get reliable price and data feed.

Anyone can participate in testnet by creating wallet using Metamask and using Ethereum’s Proof-of-authority blockchain, Rinkeby Testnet network and then following the below steps. (See Image).

Reserve Token Locking

As promised in AMA, The team deployed 'timeLock smart contracts' on Sep 2, 2020 and deposited the XFT tokens reserved for marketing and ecosystem, development, team, and staking to their new addresses. These contracts hold the tokens in numbered lockBoxes, which unlock according to the vesting schedule in the Offshift whitepaper and pitch deck. Anyone can review the contract on the Etherscan and the lock boxes can be queried under the “Read Contract” tab to return their balance and the timestamp of their release.

Tokenomics

Offshift's volatile native token is denoted by XFT. It is an ERC-20 Token created by deploying smart contracts on Ethereum. It has a total supply of 10,000,000 XFT. It registered all time high of $5.55 USD on Aug 21, 2020 and all time low of $0.341911 USD on Aug 07, 2020. It is currently traded on the Decentralized Exchange (DEX) Uniswap and Bamboo Relay. Token distribution is done as follows.^[7]

XFT Token Release Schedule