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Economics of Incognito Network

#47

These are good thoughts, and @Gold has a great response . But a few more things to remember:

The funded staking option may not always be available. Nor will the percentage necessarily remain static. I don’t know of any plans to change it at the moment but it’s an option should it become necessary.

Additionally, the 65% isn’t just going to line someone’s wallet. It’s a tool for the DAO to further remain autonomous. It requires funds, and this is one way of generating them. There is room for discussion and change, but it’s not an apocalyptic scenario. The price of prv fluctuating has been a certainty from the start, and the staking mechanism was designed to account for it. That’s why it’s good to be a validator now, it will get harder in the future. Yet if it gets harder since prv increases in price, the rewards are balanced. There’s much more to address but someone from the team will be more able than I, so I’ll leave it to them! But all in all, these are important questions, so good eye @sato.

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#48

Hey nice post, good conversation to have.

Maybe there’s something I don’t understand about this point above. pnodes run off of a person’s wifi in their house. The fact of the stake being provided by Incog shouldn’t have any effect on decentralization. Or do you mean it would throw off the balance PRV because ppl arent buying into their own PRV.

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#49

Hey Sato, yep, there are quite a lot of assumptions here, and i’m not sure if the proposed model will work better - but let’s take a look.

Regarding control of the network, the goal is to release it to the community. It’s the way we go.

Regarding economics, could you kindly share your math so we can play with numbers and find out the weaknesses of our model, and benefits of yours?

That would definitely make the discussion more constructive.

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#52

@andrey Sure it contains some assumptions, which we have to make because the community does not have all information about the way the funds are used. Thus would be great, if you could give us here the numbers I requested. Afterward, it would be simple to give you the exact math to explain the scenario with real numbers. This would help to clear all up I guess. Thanks.

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#53

Woah, what a conversation! I’ll need some time to read through each response but overall, I agree that there are quite a few assumptions made in here, and not all of them may be accurate. For starters, while it is true that the average vnode earnings per week may appear to have gone down in the last couple of weeks, that doesn’t constitute to a conclusion that it will stay around that number forever. For the part of decentralization, I’ll review the entire thread and respond. Great to see so many people jumping on this topic, though! :slight_smile:

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#54

This is what the whole discussion is about - No one was complaining about low earnings. Excited to see your opinion according real* decentralization.

*with real I mean a proof of stake blockchain network is not really decentralized just because a lot of nodes running around the world. In a proof of stake system the entity who has control over a critical stake of tokens finally can or will control the whole chain as tokens are needed in order to get permission to validate with your node.

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#55

Andrey said he could properly give answers to this closer to the weekend. :slight_smile:

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#58

Might be a stupid question. Where does the PRC come from that helps fund the pnodes? And who controls that?

#59

To the best of my understanding, it seems the devteam A) runs their own staked nodes and B) controls the “randomness” of the selection of the nodes to ensure one of their nodes gets selected a majority (65%?) of the time. This ensures the team has sufficient PRV to fund pnodes, pay pool rewards via PROVIDE, and other development activities.

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#61

This is true since the team already said this.

This is probably not true. I have to examine the source code but I do not think they will do it. If this is noticed by someone, the reputation will be ruined.

Ok, there is one more possibility: if they have a bad-intent, they may publish a code different from the code that they use in the selection and staking process. This requires much more time to be found out. However, I do not believe that they will do it.

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#62

The randomness is defined in the code. There is no control other than that the devs set the algorithm that performs the selection.

The team does hold 2/3 of the shard spots, for stability and security of the chain. The Roadmap post shows an ETA for releasing these spots.

Earnings from those nodes are used for staking pNodes, builder rewards, badge rewards, paying bills and so on.

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#63

I may be off base here, but isn’t “provide” funded by the team and the community? In that case the “team” isnt the only one taking a chunk of that 65%…if I understood correctly you can partially fund your own node with earnings correct? That would change the percentage I’m sure. Although I am guessing it will take me awhile (years maybe) that is the route I will be going. Decentralization will happen when more of the shard spots are random selection among everyone and Andrey has said openly that it is planned to happen.

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#64

Hey @krazykrista Provide is funded by anyone willing to provide liquidity to the Pdex. The 65% is tied to validators. You see, when a user runs a node they are required to have 1750 PRV staked into the node in order to run it. Some are not able to stake 1750 PRV so they go with the route of buying a pNode, when you get a pNode it comes with the 1750 PRV prebuilt into your node(called “funded stake”), no need for you to stake 1750 PRV. With that said, since the stake is funded, you dont receive a full 100% reward from that node, you only get 35%.

You can also unstake the “funded stake” and fund it with your own 1750 PRV and your pNode woud earn the total 100% reward, and to answer your question, no, you cant partially fund your own node, it is 1750 PRV no more, no less.

-Hope that helps :slight_smile:

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#65

Understood, so you can “provide” to the pool with any amount, but not partially fund your own node, but that “providing” is a way to earn as well…either way I hope to fund my own node at some point :grinning: thanks for correcting my assumptions

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#68

I like seeing such heated discussion, it means that people care. Bullish :slight_smile:

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#69

Heated discussions are not new to Incognito. The dev’s handle it the best they can. When there was a bunch of backlash on the rates decreasing with the Add Liquidity tab, the Incognito Dev team worked hard to come out with the Provide Tab really quickly. Everybody here wants the project to succeed, the only way for that to happen is to see things from multiple perspectives. I really love the community here, and the fact that I have influence on the project, means that this is by far the safest place for me to put my money. Very long term bullish, especially if PRV is a utility coin and isn’t heavy on the speculative trading. I know that might change in the future, but thats when the big boi profits come :money_mouth_face: Better get in now!

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#70

Hey guys, very intensive week. I still remember about the thread, will try to get back with a proper answer asap.

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#71

Just a reminder @andrey :wink:

#72

Hey guys! Just went through the thread and found that most of the discussion is going on around three things: earnings (1), control of the network (2), and some confusion about Provide and Nodes (3).

  1. Regarding the earnings part. I think everyone should decide for themself if it is interesting for him/her to run a node, provide liquidity, be custodians, donate to the builders, or be a builder. Hopefully, beside the earning part, you’ll also consider the needs of the network.

  2. Topics about control of the network discussed quite a lot. Just want to highlight that we are on the way to decentralization, as it was announced on the beginning. Please find more about where we go and how we plan to achieve it at Incognito's pragmatic approach to decentralization, and the Incognito Core Dev 2020 Live Roadmap.

  3. The third part is a confusion of what’s going on around provide and nodes. Will try to answer pointed concerns from @sato

  • The Incognito Core doesn’t run nodes beside fixed slots
  • Coins for funded staking are locked from the fixed slots (once it’s possible, the funded staking will be powered by community too). Reward split funds new podes.
  • Regarding the Provide. Monthly rewards must be paid back to users ≈ 60k - 70k PRV (verify liquidity on incscan). Half of which comes from Provide’s vnodes ( ≈ 400) and another half from fixed slots.

Provide is not the final product it’s a transition from ADD + Pool to - Liquidity v.2

Next Friday, we are going to host PRV Holders Call. I am inviting all you guys to join the call and don’t miss a chance to talk about all these and other questions directly to the team.

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#73

Very insightful. Thank you for taking the time for a detailed response!