CityCoins describes itself as an avenue for citizens to generate crypto-based revenue for themselves and the cities where they live. Think of it as a win-win system that allows users to contribute crypto funds to their home city, or support other cities, in exchange for rewards.
Users of the CityCoins platform have already begun to issue tokens for a handful of major cities, designed to help improve the lives of people living in them. Interestingly, the project has opted to base its operation on a bitcoin-powered ecosystem such that users and cities can potentially earn bitcoin.
Miami and New York have emerged as the first two cities where CityCoins have been launched. There is also the opportunity for citizens to introduce CityCoins for their cities inside and beyond the borders of the United States of America.
How do CityCoins work?
How to create a CityCoin
At a glance, it might seem like the creation and management of CityCoins is carried out by the project’s team. However, the process is actually completely in the hands of individual users. The project simply provides the infrastructure to support each CityCoin’s deployment.
So how do you go about creating a CityCoin for your own City? It’s a four-part process. First off, the crypto community can vote on which city they’d like to launch a CityCoin for next by completing a survey on the website. Once a particular city is narrowed down, it’s important that the chosen city’s mayor supports the proposal and agrees to claim the city wallet (see below).
We’re glad to welcome you to the global home of Web3! We’re counting on tech and innovation to help drive our city forward. https://t.co/SY9pv1Ebct
— Eric Adams (@ericadamsfornyc) November 8, 2021
Then, anyone can initiate the deployment of a new CityCoin by launching a smart contract (a software program running on a blockchain that takes certain actions when predetermined conditions are met) on the Stacks mainnet, or live version.
To do this, you’ll need to:
Download the Stacks Web WalletFund the wallet with STX tokens, available on leading centralized exchanges such as Binance, KuCoin, Crypto.com and OKExHead to the MineCityCoins website and connect your Stacks Web Wallet by clicking the top right-hand corner buttonAccording to the official website documents, you’ll then need to “Submit the “register-user” transaction via the user interface, which records your Stacks address and optional memo on chain to signal activation of the CityCoin
Finally, a minimum of 20 individuals are then required to send an amount of STX – the native cryptocurrency of Stacks – to the newly created smart contract to activate the mining process. It’s worth noting, however, once a CityCoin smart contract is activated miners must wait 24 hours before being able to mine the newly created CityCoins.
What is Stacks?
Simply put, CityCoins uses a decentralized protocol powered by smart contracts to generate value for participants and their respective cities. The goal is to enable a system that will reward users’ efforts to keep the system afloat and, in the process, generate funds for developing selected cities. Unlike most crypto projects, CityCoins has opted for multiple token systems. This framework allows it to create a unique token for each supported city.
Note that smart contracts are programmable agreements deployed on the blockchain to eliminate counterparty risk. In other words, they will only finalize transactions or implement sets of commands when all the parties involved meet the conditions written into the smart contracts.
At this juncture, you may be wondering, how does CityCoins utilize smart contracts-enabled transactions on a bitcoin-based infrastructure, considering that the Bitcoin network does not support smart contracts? This is where a technology called “Stacks” enters the fray.
All of City Coins’ bitcoin-powered implementations exist thanks to Stacks, a blockchain infrastructure built on top of the Bitcoin network to enable smart contract applications. CityCoins can capitalize on smart contract technology and still utilize Bitcoin’s security fabric because it operates on Stacks blockchain, which is technically an extension of the Bitcoin blockchain that provides smart contract functionalities.
Notably, the entire CityCoin ecosystem relies on two core processes. The first is called mining, while the other is stacking.
How CityCoins mining works
CityCoins miners deposit STX into the CityCoins smart contract for a chance of earning CityCoins tokens – such as MiamiCoin or NYCCoin, for example. This process, known as bidding, takes place on the Stacks blockchain and involves a winning miner being selected and rewarded with CityCoins tokens each time a new block is discovered (approximately every 10 minutes, similar to Bitcoin’s block discovery time).
Note that the probability of emerging as a successful miner depends on the number of STX each miner bids (deposits into the smart contract) relative to the total amount deposited by competing miners.
For instance, if your share of the STX forwarded to CityCoins smart contract is 50%, you have a 50% chance of emerging as the miner eligible to claim the CityCoin token-denominated rewards allocated for that specific block. Miners can choose whether to bid for a single block, or up to 30 blocks at a time.
It’s important to note that depositing STX into a particular CityCoins smart contract is a one-way process. In other words, you permanently lose access to the STX tokens forwarded to the protocol’s smart contract, even if you emerge as a winning miner or not. Seventy percent of all STX tokens deposited into the smart contract is distributed among stackers, while the remaining 30% is sent to the city’s wallet.
It’s also worth noting, when mining is first activated for a new CityCoin 100% of STX tokens deposited into the mining smart contract are sent to the city’s wallet during the first reward cycle phase. Each cycle lasts 2,100 Stack blocks (approximately two weeks.)
In the event there aren’t any users stacking, all STX tokens are sent to the corresponding city’s wallet.
CityCoin mining rewards operate in a similar fashion to Bitcoin’s issuance schedule, where rewards are halved systematically every four years. During the first 10,000 blocks, winning miners receive 250,000 CityCoins per block. Rewards are then reduced to 100,000 coins per block for the next 200,000 Stacks blocks (approximately four years.) From there, rewards are halved every 210,000 blocks until Stack block 1,050,000 is reached, upon which a fixed amount of 3,125 CityCoins will be released per block in perpetuity.
How CityCoins stacking works
Stacking is very similar to Ethereum staking and requires participants to lock up digital assets in a smart contract for a voluntary period to earn rewards. The only difference is that the earnings are denominated in a different cryptocurrency. When you stake ether – the native cryptocurrency of Ethereum – you earn more ether as a reward. In contrast, CityCoin holders stack their CityCoins tokens to earn STX. The STX they earn comes from the portion of STX tokens deposited by miners, as previously described.
At this early stage, you can only receive CityCoins like MiamiCoin through mining. However, there are plans to list these tokens on exchanges in the near future.
In addition to earning STX tokens, people who stack their CityCoins can also generate bitcoin – providing a dual yield on their assets.
Like the mining process defined above, stacking occurs via the Stacks blockchain protocol.
What is a city wallet?
Each city where CityCoins has been launched has a special wallet called a City Wallet. This effectively acts as the city’s crypto treasury and is where 30% of all miners’ STX bids are sent.
The mayors of these cities can claim the funds in the City Wallet at any time and use the capital generated by cashing out of the tokens to improve the lives of their constituents. Better still, they can further stack the STX tokens accrued in the City Wallet to earn bitcoin.
What is MiamiCoin and NYCCoin?
Already, two cities in the United States of America have started accruing STX in their respective city wallets. These cities are Miami and New York City. CityCoins users have issued native tokens for each city:
MiamiCoin ($MIA): MiamiCoin was launched in August 2021 as the first CityCoins token designed to reward miners and generate STX and bitcoin for holders. As its name implies, MiamiCoin provides an avenue for Miami citizens to support the development of their city and, in turn, receive rewards for their contributions. Hence, when a miner deposits STX to the MiamiCoin smart contract, the miner stand the chance of receiving MiamiCoins as rewards. More importantly, a portion of the deposit goes to Miami’s city wallet.
In just under three months since MiamiCoinCoin went live, the protocol’s contribution to the city has grown to $20 million worth of STX tokens. It is worth mentioning that the city’s leadership has since gained control over this wallet.
NewYorkCityCoin (NYCCoin): NYCCoin is another variant of the CityCoins tokens specially designed to promote an enabling crypto community in New York. On Nov. 10, 2021, the NYCCoin smart contract was deployed and citizens have already started mining and stacking the token for a chance to earn rewards. Like MiamiCoin, NYCCoin creates an avenue for users to contribute to the economic growth of the city of New York. Already, the mayor-elect of New York City, Eric Adams, has expressed his support for NYCCoin.
Austin, Texas has been touted as the next frontier for CityCoins, with plans to launch AustinCoin ATX seemingly in its final stages. However, unlike MiamiCoin and NewYorkCoin, the mayor of Austin, Steve Adler, has yet to endorse the ATX token launch.