- XNET is a carrier-grade DeWi network designed for native interoperability with incumbent network operators. By striving for native compatibility with the legacy telecom ecosystem from day one, we believe XNET is best positioned to achieve meaningful data transfer revenues from carrier offload as soon as 2023-2024.
- XNET is co-founded by Richard Devaul, Tom Beirith, and Donal O’Brien. Rich is a former technology executive at Google X who led R&D for Project Loon, Google’s effort to provide internet coverage via a network of stratospheric balloons. Tom and Donal are long-time telco executives and entrepreneurs who most recently built Point Dume, a converged roaming business based in Hong Kong. Their insights and relationships from careers building, operating, and selling networks – combined with inspiration from the rapid growth of Helium’s LoRa network – led to the launch of the XNET project in early 2022.
- XNETMNO, the first participant on the XNET network, will influence validation, rewards, governance, and economics during the bootstrapping phase of the network, until key functions can be decentralized while maintaining carrier-grade quality. Long-term, XNET’s vision is to become the first community-owned neutral host offload network.
What Makes XNET Special (and Different!)
1. Potent combination of killer engineering talent and domain expertise.
Rich started his career off as a PhD grad at MIT, started a fitness wearables company, joined Apple’s engineering team, and then joined Google X in 2011 (Director of Rapid Evaluation and Mad Science). Rich is cited as an inventor in over 70 patents from his time at Google and eventually became one of the leading technology execs at the company, reporting to Larry/Sergey and the board of directors, as well as co-founding and leading technical efforts for Project Loon – Google’s attempt to provide internet coverage via stratospheric balloons.
At Loon, Rich led teams of dozens of engineers and helped allocated hundreds of millions of dollars of cumulative funding over 5+ years, and built relationships across the global telecom industry. He is complemented by Tom and Donal’s experience and relationships in the telco industry, including with network operators, software vendors, and service providers. They are bringing on A+ talent across all disciplines – for example, with Alex Luebke leading hardware – and are actively hiring to help build the future of DeWi. (reach out to email@example.com)
2. Technical architecture conducive to tier-1 offload partnerships.
Beyond the choice of mobile core, XNET is deliberately taking a more iterative approach to network design, empowering XNETMNO to operate key functions of the network during the bootstrapping phase. First, in governance rights: XNETMNO will convert native tokens ($XNET) into data credits ($XNETD). Second, in economic rights: XNETMNO earns a fixed fee per epoch out of mining rewards in perpetuity (a different structure, albeit similar economic reality, to Helium’s HST). Third, in network operations: XNETMNO is setting the initial criteria, in terms of hardware / location / backhaul, for deployments to join the XNET network and earn rewards.
XNET’s philosophical approach is closer to Solana than Ethereum. By sacrificing on decentralization in the formative years of the network, XNET can iterate faster and manage MNO partner demands more nimbly than networks further along the path of decentralized governance. Any DeWi network with offload aspirations has to simultaneously build trust with three notoriously stubborn partners – the FCC, incumbent MNOs, and token-governed DAOs – and while XNET’s design choices may take time for DAO participants to digest, we believe they’re DeWi’s best shot at building networks that are undeniably useful and valuable.
3. Relentless focus on unit economics and long-term sustainability.
XNET’s incentive structure carefully balances the critical near-term and long-term objectives of its network (i.e., neutral host). Rewards must be sufficiently attractive to early miners, who incur significant actual costs (e.g., hardware, labor, insurance, backhaul, financing) as well as opportunity costs (e.g., mining other DeWi networks) to build out the network. Reward mechanisms must be clear enough to provide certainty to the mining community, while retaining flexibility to manage evolving technical, regulatory, and commercial issues without jeopardizing the core monetary policy of the ecosystem.
There are three ways DeWi miners evaluate deploying capital into new networks:
- On a $ basis (spend $X to mine $Y). The method is simplest, and does not require miners to be opinionated towards the network. However, it lacks robustness, since market pricing is generally based on extremely thin liquidity. For example, PCN is currently “trading” at $0.06 but a $20K buy order would 3x the price.
- On an ownership basis (spend $X to mine Y% of max supply). This method requires miners to have a point of view on the terminal value of the network, thereby eliminating the reliance on market data. However, this way of thinking structurally incentivizes miners towards networks with high early token issuance, where larger percentages of max supply are up for grabs, rather than networks that more thoughtfully balance token supply/demand over time.
- On a token basis (i.e., spend $X to mine Y tokens, which I think will be worth $Z). This method is the most complex, because it requires miners to not only have a point of view of the terminal value of the network, but also on token supply/demand over time. While it requires the most assumptions, we believe it is the first-order correct method for making capital allocation decisions. The question for sophisticated miners becomes: 1) when do I want to sell my tokens? (and how flexible am I on this timing); 2) how much demand for the token will there be at that point in time? (and with what price sensitivity); and 3) how much liquid supply of the token will there be at that point in time? (and with what price sensitivity).
With respect to #1 (time horizon), XNET is best suited for miners with multi-year horizons who want to participate in building and owning a neutral-host mobile offload network; miners with time preferences measured in months should look elsewhere. On #2 (token demand), we’ve already discussed the potential to achieve meaningful mobile offload data transfer revenues in ‘23-’24. On #3 (token supply), the whitepaper details the following token allocations for a total of 24B tokens:
- Operator Pool: 9.4B tokens issued to incentivize network buildout. This pool is set to be disbursed slowly to miners and validators over the next decades, with a line of sight to funding 5G and 6G buildouts. Once disbursed, these tokens have a 10-15 day lockup.
- Foundation Pool: 4.3B tokens issued to support charitable works and incentivize coverage in underserved areas. This pool is set to be disbursed over a decade, with low issuance during the initial buildout phase.
- Ecosystem Pool: 3.1B tokens issued to incentivize key strategic suppliers and partners. This pool is set to be disbursed over the next 2-4 years to support the initial buildout, followed by an 12-18 month lockup.
- Investor & Insider Pool: 7.2B tokens, with a lockup of 36-48 months (through Q4’25). For context, these lockups are much longer than both Pollen (insiders unlock at 12/24/36 months) and Helium (insiders earned 35% of HNT rewards with no lockup via HST).
Beyond the supply/demand fundamentals and path towards on-chain data transfer, there are a number of reasons we’re excited about XNET’s protocol design:
- XNET is the first DeWi network where early miners will have the opportunity to sell their tokens years ahead of the team and investors. Because the team and investors are locked up for 3-4 years, there is no ability to take profits during the build-out phase of the network.
- XNET will be the first DeWi network to implement fee markets for data transfer. They will do this by making the $XNETD<>$XNET exchange rate a function of the priority / quality / location of data transfer, rather than a fixed price like Helium and Pollen. The exchange rate will be set by XNETMNO in the near-term, but there are ongoing efforts to implement decentralized fee markets natively within the XNET protocol.
- While certain parts of XNET’s network operations will be centralized at XNETMNO, the buyback mechanism ensures that all network participants are aligned towards the same goal: maximizing data transfer revenue. For every dollar of offload revenues transferred over the network, XNETMNO (or, in the future, other DAO-approved parties) will need to acquire $XNET tokens and burn them into expiring $XNETD data credits. XNETMNO will acquire these tokens either from the open market, creating liquidity for miners to sell into, or – if miners are unwilling to sell their tokens – from the XNET foundation.
- XNET is the first DeWi network to allocate a portion of its token supply to charitable works and organizations, primarily for incentivizing coverage in underserved areas of the country. The 4.3B $XNET tokens in the Foundation pool will be allocated over a decade or longer, with little impact to circulating supply in the next 1-2 years. However, it underscores the XNET community’s long-term commitment to providing cheap global connectivity.
We are not in the business of projecting near-term token prices. However, for an illustrative sense of range of outcomes, miners can use the following rule of thumb: at a monthly issuance rate of 500 tokens per miner, every $1M of monthly on-chain data transfer demand supports a $0.20 token price for 10K+ miners (conservatively assuming miners sell 100% of rewards). Taking a few more assumptions ($0.50/GB network revenue; 25GB/mo per-capita mobile usage; 33% roaming rate), provides a second rule of thumb: every $1M of on-chain data transfer revenue requires covering 250K end-users. In short: 10K nodes → covers 250K end-users → generates $1M monthly on-chain revenue → offsets miner selling pressure to support $0.20 token price. We believe the long-term opportunity for neutral host offload in the US is $2-5B of annual revenues.
Note: results are based on the stated assumptions that can be trivially replicated – not investment advice nor a prediction/projection of future events.
XNET is building the first carrier-grade DeWi network. The founding team – Rich, Tom, Donal, and Alex – have world-class engineering chops, a decade’s worth of learnings and relationships in the telecom industry, and the audacity to try and empower a community of miners, manufacturers, and property owners to deploy the first neutral-host network at scale.
If you’re interested to join the community, or if have questions on our analysis, read the XNET whitepaper, join the Discord, or reach out on telegram (@moneromahesh or @salgala).