The OWL token will be the backbone of any and all StealthSwap products. It strengthens security of users’ privacy, creates demand for privacy on other Ethereum dapps, and aligns the incentives between users, builders, and market participants.
The starting fee for using the StealthSwap Protocol will be 0.1 OWL and 0.0025 ETH for ERC20 token transfers (in addition to the regular gas fee for Ethereum transactions); these fees are only paid by the sending party and not the receiving party. The 0.0025 ETH is sent to the newly created Stealth addresses in order for users to not have to supply their own ETH to move their ERC20 tokens, which would break their anonymity if this fee wasn’t included.
In the future, users will need to be active in the governance of OWL. Holding OWL tokens will allow users to decide important matters regarding its infrastructure and StealthSwap’s interactions with it. As an example, say 0.1 OWL is too high for everyday transacting or maintaining privacy with DeFi related services. If users believe its needs to be lowered, then OWL holders can vote on deciding the new fee amount. Later in this article, it will be shown what the first issue that demands active governance will be.
Without OWL being used as a fee, malicious actors can spam the protocol with bad transactions that intend to taint the privacy of stealth addresses or congest the broadcasting of encrypted notes. An example of such attacks would be utilizing dust payments where an attacker sends small amounts of Ether to a user’s stealth address, therefore establishing a link to their account and track where their withdrawals go.
OWL was built with the idea of least action in mind. It doesn’t require an affinity for financial engineering, but it fulfills the need of establishing a long-term security basis for the protocol.
In the configuration space of incentives, there are several paths you can take, but the most efficient one has to be able to align the incentives of users, builders, and market participants on a longer timescale.
OWL thus fulfills what it sets out to do: it establishes protocol security by rewarding token holders to acquire more OWL (similarly to mining rewards) for their interactions with StealthSwap’s protocol without going trough third party providers.