Echelon - A Fully Decentralized Sidechain for Steem

📌 Summary

Since SteemEngine left the ecosystem, the Steem blockchain currently lacks a native layer for managing tokens and NFTs, which are essential for many modern decentralized applications. We propose the creation of Echelon (name is not definitive), a sidechain built to integrate seamlessly with Steem. This sidechain will focus on enabling token creation, trading, and management, with functionalities that empower users to create, swap, buy, and sell tokens (including NFTs) using custom_json operations on the Steem blockchain.

Echelon will facilitate community-driven token economies by allowing anyone to create custom tokens on the sidechain. These tokens can be used for a variety of purposes, such as rewards, governance, or NFTs, while maintaining security, scalability, and decentralization.

🎯 Objectives

The Echelon sidechain development will follow an agile and iterative approach, with features being developed and tested simultaneously. The primary objectives include:

• Stable Consensus: Achieving a stable and decentralized consensus mechanism for the sidechain to ensure network reliability and security as it scales. It will include features like witness rewards and validator nodes, ensuring that all participants are incentivized to maintain network integrity. This feature is currently being tested.

• Replay Mode: Implementing a replay mode for the sidechain, which will allow users to replay transactions from Steem in a secure and consistent manner, ensuring the integrity of the blockchain and providing auditable history for all token-related transactions. This feature is currently being tested.

• Custom JSON Operations: Echelon will leverage Steem’s custom_json operations for interactions with the blockchain, allowing users to easily interact with Steem-based decentralized applications (dApps) through secure and fast operations. This feature is currently being tested.

• Token Creation & Management: Users will have the ability to easily create custom tokens. This feature will be one of the first functionalities available, allowing for a simple and secure way for developers and users to create and manage their own tokens on the sidechain using Steem custom_json operations. This feature is currently being tested.

• Token Trading & Swapping: A decentralized exchange (DEX) will support token trading and swaps, enabling users to interact with the tokens they create. Tokens will be tradable, and liquidity will be provided through pools.

• Liquidity Pools: Liquidity pools will be introduced to allow users to add liquidity and earn rewards. This will be integrated early on and expanded with additional features like staking and reward distribution.

• Witness Rewards & Security: A reward system for witnesses will ensure network security and decentralization. This will incentivize witnesses to participate in maintaining the consensus of the network and provide reliability for the entire ecosystem.

• Public Beta Testing: We will begin public testing as soon as core features are ready. User feedback will help refine features like the token exchange UI, liquidity pools, and wallet interactions. This will ensure that we address issues early and make adjustments based on real-world usage.

💡 Sidechain Features

The Echelon sidechain will provide a robust and scalable solution for creating, managing, and interacting with custom tokens. Here are the core features:

• Token Creation: Echelon will allow anyone to create their own tokens using a simple and secure interface. These tokens can be customized to fit various use cases, including rewards, governance, and utility within the ecosystem.

• Token Trading: Echelon will have a decentralized exchange (DEX) where users can buy, sell, and trade tokens. The exchange will feature basic order book management, allowing limit and market orders for a smooth trading experience.

• Token Swapping: A token swap functionality will be built, allowing users to quickly exchange one token for another within the Echelon ecosystem.

• Liquidity Pools: Users will be able to add liquidity to various token pairs, contributing to the health of the exchange and earning rewards from trading fees.

• API Endpoints: Each Echelon node will provide a complete API endpoint to facilitate data retrieval. This will allow developers to easily integrate with Steem-based decentralized applications (dApps) using the sidechain. Any observer node will also provide an endpoint (similar to Steem RPC) with custom filters.

• Governance/DAO: Users will be able to vote on proposals and changes to the sidechain.

• Documentation: A complete documentation about the sidechain, its features and how to use them.

💻 UI: Simple Exchange for the Sidechain

To facilitate the use of the Echelon sidechain and ensure that users can easily interact with tokens, we will build a simple decentralized exchange (DEX) as part of this proposal. The UI will be designed to resemble features found in larger DEXs, providing a familiar and seamless experience for users.

Key Features of the Exchange UI:

• Wallet Integration: Integration with Steem wallets (Steem Keychain) and third-party services like Steemlogin will be prioritized to ensure users can seamlessly interact with the sidechain using their Steem account. This will include the ability to send, receive, and store Echelon tokens (with a delay of 3-6 seconds).
• Token Management: Users will be able to create and manage and transfer tokens directly on the exchange.
• Token Trading: Users will be able to buy and sell tokens directly on the exchange with simple order book management (limit and market orders).
• Token Swap: A swap interface will allow users to exchange tokens for others within the sidechain ecosystem.
• Liquidity Pools: Users can add liquidity to pools or create their own for tokens and earn rewards from trading fees, similar to decentralized exchanges.
• Simple User Interface: A clean, intuitive design with basic charts, order history, and a smooth trading experience, inspired by major platforms.

🪙 Tokenomics

The Echelon sidechain will launch with an initial supply of 200,000,000 tokens. The distribution will be as follows:

• 80% (160,000,000 tokens): Distributed to proposal voters based on their SP holdings across multiple snapshots before launch.
• 10% (20,000,000 tokens): Allocated to liquidity to ensure proper market creation and initial liquidity on decentralized exchanges and other platforms.
• 5% (10,000,000 tokens): Reserved for development incentives for ongoing work and future development of the Echelon ecosystem.
• 5% (10,000,000 tokens): Reserved for development team incentives to reward the team for ongoing work and future development of the Echelon ecosystem.

The native Echelon token will not be mintable after launch. Inflation of the token supply will occur through specific mechanisms, including staking rewards and witness rewards, ensuring token value stability and scarcity as the ecosystem grows.

An example for witness rewards:

• Year 1: Witness rewards = 10.5 million (5.25% inflation rate of total supply)
• Year 2: Witness rewards = 10.5 million (5.25% inflation rate, same as Year 1)
• Year 3: 10.5 million will represent a smaller percentage (about 3.5% of total supply if most tokens are distributed by this point)
• Year 5: By Year 5, witness rewards will represent less than 2% of total supply.

Obviously, this might change if all witnesses decide and reach consensus to increase the rewards per block.

Development Team and Budget Justification

The development team will retain the 5% (10,000,000 tokens) initially allocated to them. This is because the development cost of Echelon is considerably lower than what external companies would charge for a similar project. We believe this allocation is necessary to ensure continued innovation and sustainability for the long-term success of the project.

This structure ensures that the development team is adequately incentivized while maintaining a sustainable and fair economy for the Echelon ecosystem.

💰 Funding Breakdown

Category	Cost per Month (EUR)
Team (dev + testers)	5,000

Salary Calculation

• Monthly salary: 5,000 EUR = 5188,75USD ≈ 6250 SBD
• Daily salary: 250 EUR = 259,44USD ≈ 312 SBD
• Total for 8 months: 40,000EUR × 1.04USD/EUR = 41,600USD ≈ 50,182 SBD

As the-gorilla detailed in his last proposal the current SBD price is lower than 1USD and we need to be cautious about the budget. So we use the same conversion price which is 1SBD = 0.83$. At any time if the amount of SBD sold everyweek is exceding the weekly USD payment amount, the rest will be transfered back to the DAO.

🔗 Cross-Chain Asset Integration (Later Development)

The Echelon sidechain is designed to support wrapped assets (BTC, ETH, etc.), but the integration of cross-chain transactions will be offered as a separate service which is not part of this proposal.

FutureShock will propose an integration service on its DEX using HTX Exchange, allowing seamless asset transfers between Echelon and external blockchains. However, this is not exclusive—other companies can also provide similar services on their DEX, ensuring a competitive and decentralized ecosystem.

🧩 SMT-Like Functionality (Later Development)

While the primary focus of Echelon will be on creating, trading, and managing tokens, we will aim to introduce features similar to Smart Media Tokens (SMTs) as a later enhancement. These features would enable:

• Staking: Echelon will eventually support token staking for additional rewards and governance participation.
• Rewards Distribution: Tokens could be distributed based on community engagement and other metrics.

This will give Steem the flexibility to evolve into a more advanced platform, allowing for broader ecosystem growth and utility.

💡 EVM Multisig Wallet Relay (Later Development)

A key feature will be the integration of a multisig wallet bridge/system to interact with EVM-compatible chains (like Ethereum). This will allow users to deploy and interact with contracts on EVM-based blockchains while leveraging Echelon's consensus. This integration will make it possible to connect Steem to any EVM chain, facilitating cross-chain functionality and increasing the interoperability of the Steem ecosystem.

🏁 Conclusion

The Echelon sidechain is designed to empower the Steem blockchain by adding support for token creation, management, and trading. Echelon will foster a thriving ecosystem for the Steem chain where users can participate in community-driven economies, create and trade tokens, and engage with decentralized applications in a scalable and secure environment.

By introducing these capabilities, Echelon will expand Steem’s functionality and bring new opportunities for developers, users, and creators alike, enabling the blockchain to better compete in the evolving decentralized economy.

We are excited to build and test this project in close collaboration with the Steem community. Together, we can make Echelon a valuable addition to the blockchain landscape.

Lead developer :
Steemit - https://steemit.com/@hightouch / Linkedin - https://www.linkedin.com/in/ayta%C3%A7-ozden-cetinkaya-3686a311a/
Repository: https://github.com/futureShockco/echelon

This proposal has been created with the help of AI, leveraging the current code from the Echelon GitHub repository to ensure accuracy and a thorough understanding of the project.

Vote for the proposal "Bringing Steem Back to the Future with a Decentralized Sidechain"

On Steemit
https://steemitwallet.com/proposals
With Steemlogin
https://steemlogin.com/sign/update_proposal_votes?proposal_ids=%5B90%5D&approve=true