Questions About The New Direction and Timeline

Hey @aaron,

I was thinking about what questions I had before the monthly call, and then realized it just might be easier to ask you or possibly @andrey now. Below are the questions I have off the top of my head. They are mainly about the exact timeline for these big transitions. I see a lot of potential problems with all of them happening at once.

  1. I see 2775 Validators online currently. How many of those are currently run by the incognito team?

  2. When is the slated date to end provide?

  3. Are the rates going to remain the same in add, but you will just have to pair your liquidity investment like before?

  4. With Provide going away, aren’t the nodes being run by those investing in provide going to go offline overnight? What does that do for the stability of the network?

  5. What is the plan to incentivize those who have their PRV funds in provide to keep it?

For those without p-nodes already, they now have no way of earning. Thus, potentially no reason to keep it in their portfolios. Or, it would force them into buying another crypto and investing it 50/50. There is no guarantee that will happen.

  1. Similarly for the remaining validators, what does that do for their incentive to stay on? So far, I’ve noticed a diminishing return month over month. But the increase price in PRV still makes it cost effective. With the end of production of pnodes, and the end of provide, I see a potential huge selloff of PRV. With an ETA of dynamic committee size starting in June of 2021 (assuming there isn’t another delay), I’m concerned about validator earnings between then and when provide goes away. We still don’t have a roadmap of exactly when the other slots are going to be released and how many at at a time. Essentially that would drive down the price and earnings enough to no longer make the investment cost effective. Creating a potential even further mass exodus and destabilization.

  2. Lastly, What is the marketing strategy to onboard new investors to stabilize liquidity? I feel like ending the allure of running a p-node and the interest of provide without pairing is almost is cutting both legs out from beneath you simultaneously. Especially without having a large presence in the cryptosphere. Simply offering those rates for pairing seems pretty on par with other exchanges people are already invested in.

It might be a lot, but I feel like these are important questions to get answered. I have a few guys running validators asking the same questions, so I thought I’d try and get some clarity. Thanks.

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  1. Is this referring to Provide, the fixed nodes, or nodes run personally by core team members? I’ll break each one down:

A. Currently, there’s roughly 1 million PRV from Provide staked in vNodes. Divide that by 1750, and it translates to about 572.4 virtual Nodes, but we’ll be liberal and say 600.

B. 22/32 of the nodes in each shard are fixed nodes used to secure the network, so that’s 176 nodes.

C. The “core team” sounds like a monolithic organization, but it’s really just some people that believe in privacy who got lucky enough to get a job working toward a cause they feel is important. So, the number of nodes run by team members personally is both hard to quantify and mostly irrelevant since we all have minds and lives of our own. Andrey doesn’t know if I run nodes, and if so, how many, nor do I know about him. But, based on conversations I’ve had and the amounts of PRV earned by team members and such, it’s clear that 200 nodes would be a liberal estimate.

So, we can add those numbers, round up our estimate again and say the total number of nodes related to the core team in some way is about 1000 out of roughly 2775, with about 600 of those being from Provide.

  1. There is no exact date to end Provide, but I recently edited a post @andrey is working on that will be published soon. It states that ending Provide is one of the last steps in a 3-part plan to create a decentralized liquidity incentive structure called Add v.2. Once we’ve created Add v.2, the way rates are calculated in Provide will change (as a transitional step), and then it will be phased out. The current estimate for the process to be complete is less than 6 months. That post, which details all of the specifics (and percentages) will be published in a few days most likely.
  2. There is 99.9% certainty that Add rates will not be the same as Provide. The incentive structure is still in discussion, but once that post is published, you’ll see we’re suggesting adding a trading fee to the DEX, among other things. Once that post is up, it will be a good place to share any suggestions you have.
  3. No, just like how Provide will be phased out, so will the nodes that are staked using Provided funds. Even if they all disappeared overnight, however, that would only be a difference of about 600 nodes, which wouldn’t do anything to network stability or security. Plus, remember that we still hold fixed node slots for exactly this reason. Once all decentralized structures are in place, we can finally release those slots and the network.
  4. Add v.2 will be ample incentive. It’s entirely possible people will still pull out, but that’s not an issue in the long run. People value privacy, and with Add v.2 they’ll get rewarded for powering private trades. If some people let the past rates distort the value of the new situation, that’s ok. I personally don’t foresee a big withdrawal, but either way any hiccups that occur with the transition will be temporary. Those without pNodes are not out of options. They can stake virtual nodes, they can use Add v.2, or the community can create their own node pools similar to Provide. The core team wants to decentralize, but if the community wants to build their own centralized services, that’s totally fine.
  5. This is good for validators. Removing Provide means removing the vNodes staked with Provide, which means less competition. Plus, when the network is released and DCS is implemented, the spaces for validators to earn more than triples. On top of that, slashing may cut more of the competition. This is why it’s best to become a validator as soon as one can, because it gets more expensive to become one, and more validators join. We’re still so early in project adoption, all these changes do is reward the early adopters and refine the project. Also, these steps will not happen all at once. Everything will be transitional, so nobody will just be helplessly suspended. There are features in place to support people through the transition and keep them earning.
  6. You can’t market a product that isn’t ready yet. The marketer in me is biased to always marketing, and I debated (in the productive, professional sense of the word) with the team about it. But with the new direction of the project, I’ve come to realize that we need to take a few months to get everything in order, then we can open the floodgates. I’m working on getting us ready to market once I get the green light, but for now, it would be a bad idea to get new users. Funneling them to the forum would just drown them in ambiguity and scattered information about a project still in progress. It would be bad for the reputation of the project, ultimately. Before any real growth strategy, we need:

A. A website that can guide new users
B. A network and base tools that are finished and decentralized
C. Resources and easily-navigable information on the project
D. An intuitive UI

Among other things. These are what we’re working on over the next few months, after which a marketing strategy will actually be effective. You are correct in that we do need liquidity for the pDEX to be functional, which is why we’re building these new structures.

Remember, too, that the pDEX isn’t just another DEX. It’s a DEX that offers privacy, which is incentive on top of rewards to provide liquidity. There’s no shortage of believers that want to power privacy, especially if they’re rewarded. Many are already here, after all. So our current focus when it comes to growth is to take care of the members we already have that are dedicated, and find more of them through word of mouth, cross-community engagement, and building a project that does what it’s supposed to very well.

Thanks for asking these questions, they’re really thoughtful. If I haven’t given you everything you’re looking for, don’t hesitate to ask more questions or push back!

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Wow, so much valuable information, need to digest this later tonight! Great questions @Thriftinkid and great responses @aaron!

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Hi @aaron…thank you for the lengthy and informative response to @Thriftinkid’s post and thank you to Thriftinkid for his having asked all the questions he did in his opening post in this thread…my question is about the quotes below made by you and does it mean then that at some point the Pnodes, not the Vnodes, will no longer be staked as they are now and therefore the owners of said Pnodes will have to start self funding those Pnodes themselves?..If you could clarify that I would appreciate… :sunglasses:

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Aaron is describing what will happen with the Provide vNodes. These are the Nodes the team spins up using the PRV created by the Provide liquidity mechanism. When the Provide liquidity mechanism is retired soon, these Nodes will be retired from the pool of available validators in phases.

Nothing he is describing changes existing pNodes.

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Just confirming what @Mike_Wagner said, that for now, pNodes using funded stake will not have to self-stake and can still earn the 35% of block rewards. That may be a possibility in the future, but frankly I’m not sure and I don’t think a change like that is in the works, I just don’t want to say it can’t happen.

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Thank you gentlemen, @Mike_Wagner and @aaron, for the response to my question…much appreciated… :sunglasses:

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PHEW! I was really worried about that! I have 15 pNodes up and running, and 10 on the way. I’m trying to imagine aquiring the funds necessary to buy 1,750 PRV for 25 pNodes…shudder. This is a bit of a wake-up call though. I’ll start saving up to get them self-staked ASAP, just in case.

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The phrase “staked with Provide (funds)” makes it pretty clear it is not about pNodes owned by community members.

Nothing will change for the pNodes owned by community members.

@SynthiaNominae I hope you are among the lucky ones who will receive their ordered pNode(s). More than a few ordes have been canceled.

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Oh yeah, I double checked. I actually HAD 13 on order total, but 3 are getting refunded.

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Hey @SynthiaNominae, after the existing stock runs out, you may sell them via NFT :joy: I think it would be so wise in the current trends.

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I couldn’t agree more.

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Nah. They are mine, ALL MINE! Evil cackle.

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Thanks @aaron. This is a lot of great info! So if I’m reading this correctly, our rough timeline is something like this?

  1. Add V.2 will be implemented first. The new percentages will be released shortly (Updated- See Below), but it’s safe to say that add V2 rates will be higher than provide to incentivize people to move off provide. The V2 rates look a little lower, but with the added benefit of collecting part of the trading fees correct?
  2. Once that happens, Provide starts a 6-month transition to fully going away. We will start seeing v-nodes go offline (those 600) over the course of that time as people move their funds out of there.
  3. In the middle of that around June, dynamic slashing will be implemented.
  4. Once we see the number of nodes that consistently stay online after slashing starts, we will know how many healthy nodes we really have available.
  5. As that number starts to stabilize, the remaining 176 slots will start being released slowly.

Assuming that is all correct, is it safe to say in the next 6 months we are looking at 600 v-nodes going offline and at least half those locked slots being released with the intention of all of them being released by EOY if everything is working as it should?

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Thanks @Thriftinkid, the community is fortunate to have you.

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New Rates:

This should bring some clarity to the way Provide will work during the next couple of months:

  • The incentive pool for Provide will contain a fixed amount of PRV that will be equally split between the top 5 PRV pairs: BTC, ETH, DAI, USDT, and XMR.
  • The initial pool size will be ≈ 10% of the block reward.

Example:

Pair Current liquidity Non-PRV value in the pool Reward pool in PRV (annual) Approximate APY
PRV-pBTC $20,005,412 $10,002,706 78,448 2.4%
PRV-pETH $8,940,222 $4,470,111 78,448 5.3%
PRV-pDAI $5,982,858 $2,991,429 78,448 7.9%
PRV-pUSDT $4,267,084 $2,133,542 78,448 11.0%
PRV-pXMR $4,075,567 $2,037,783 78,448 11.5%
PRV value in top 5 pools $21,635,572 392,242 10.9%

In addition to this, around ≈ 1M PRV from Provide is locked in vNodes, which generates additional fuds to keep the APY for PRV at ≈ 21%

In accordance with this setup, we will initiate new rates for Provide beginning March 31:

Coin Current March 31
PRV 21% 21%
BTC 10% 3%
ETH 10% 5.50%
DAI 13% 8%
USDT 10% 11%
XMR 13% 11.50%

In April we will give an estimation on when the rebalancing process can be automated.

As for the coins that are not whitelisted above:

The APY for LTC, ZEC, and DASH will remain the same until the minimum trading fee is implemented. After that, those coins will be removed from Provide.

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Trading Fees:

Currently, there is a 0% trading fee for all pairs in the pDEX. Economically, it does not incentivize liquidity providers to lock funds in pools, so the pDEX fully depends on additional network incentives like the Provide APY.

To solve this dependency, we’d like to implement a minimum trading fee that rewards anyone that uses the Add feature to trustlessly provide liquidity. This way, we can end the current trusted setup created by Provide.

Uniswap and other Ethereum-based DEXes use a standard fee of 0.3%. We believe that privacy is a unique feature offered by the Incognito pDEX, so the fee for anonymous trades should cost ≈ 0.25% for direct trade and 0.5% for cross-pair trade.

Do you agree? Should the fee be different? Let us know below this post.

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Follow up @aaron about the trading fees. It says V2 liquidity investors will collect 10% of the block rewards. Does that mean the other 90% of the trading fees go to the validators?

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He means block rewards. Andrey floated the idea last fall:

The DAO and Beacon Chain already take a cut of the current block rewards.

It’s unclear where v2 Liquidity will be taking its cut – before the DAO? Before the Beacon chain? After the Beacon chain?

The above post is for year one of mainnet. Block rewards have been reduced by 9%. So the current math is:

((1.261866*350)*0.9)*0.8/32 = 9.9372 PRV per epoch

For example, if the v2 Liquidity is taken after the Beacon chain cut:

(((1.261866*350)*0.9)*0.8)*0.9/32 = 8.9435 PRV per epoch

That would result in a ~1 PRV reduction per validator in block rewards, per epoch, to fund v2 Liquidity rewards. This would create ~254 PRV per epoch; 1,525 PRV per day; ~557,119 per year in v2 Liquidity rewards.

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