A community gathering organized by the Paycoin Foundation revealed an unexpected development: Cryptsy, a digital currency exchange, now holds one Prime Controller. The announcement spread through the
A community gathering organized by the Paycoin Foundation revealed an unexpected development: Cryptsy, a digital currency exchange, now holds one Prime Controller. The announcement spread through the Paycointalk forums, where observers speculated that Cryptsy had received the wallet to incentivize a new wallet software implementation.
Prime Controllers function as high-yield staking wallets in the Paycoin network. They generate interest at higher rates than standard wallets do. Originally, Prime Controllers were designed to earn 10% annually, while regular wallets would earn 5%. Instead, some Prime Controllers began staking at 350% per year, compounded. This situation has created a crisis for both the Foundation and the community: how to bring Prime Controller yields back under control. Both groups want all Prime Controllers earning 10% or below. Members of the community's Slack forum described the effort as "technologically and politically" challenging. What exactly is preventing the change has not been disclosed.
The Foundation has been working to create distance between itself and Josh Garza. Fifteen Prime Controllers have vanished from public accounting. The community suspects that GAW, which originally sold the Prime Controllers, knows who owns them but has refused to make that information public. GAW should have those records, having run the original sale. The community cannot govern the network without knowing who controls which wallets. The Paycoin Foundation itself declines to say who holds what Prime Controller.
The Foundation announced it had gifted one Prime Controller to Cryptsy. Two more might move to the exchange. Market observers quickly suggested Cryptsy had been compensated in Prime Controllers to approve the wallet upgrade. A post on Paycointalk supported that theory. It stated: "Last week, members of the Cryptsy organization met with the current Prime Node managers to review the status of the new wallet release. During this meeting, the Paycoin Core Development team determined it would benefit the health and decentralization of the coin to transfer one of the Prime Nodes to Cryptsy."
The statement fueled speculation about potential bribes. An exchange owning a Prime Controller controls 1/45th of the network, or 1/15th if those additional transfers happen. Cryptsy can earn Paycoin through staking at rates no other non Prime Controller holder can access. It can also convert Paycoin to Bitcoin inside its own systems, bypassing the open market. The conflicts accumulate. When an exchange trades a coin while owning a major stake in it, the incentive structure becomes distorted. Cryptsy did not respond to a request for comment.
The Foundation framed the Prime Controller gift as a move to "increase decentralization." Foundation representatives had been discussing with Cryptsy about updating the Paycoin wallet. Those conversations produced the agreement to transfer a Prime Controller. The community and Foundation remain divided on how to solve the Prime Controller problem. The relevant section of the community video begins at 38:45.
