Incentive Structures
2.4.0. Incentive Structures for Validators and Storage Providers
One of the most critical aspects of maintaining a decentralized network is creating the right incentive structure for all participants, particularly validators and storage providers. In the Candao network, validators and storage providers are rewarded for their essential roles in ensuring data availability, integrity, and network security.
The Ecosystem Rewards Pool is the financial backbone of the Candao network. It collects fees from various network activities and redistributes them to participants, including validators and storage providers, as compensation for their work for the protocol. Validators provide high quality services and as the system receives more usage, their stake tokens generate more revenue. The pool is designed to create a sustainable economic model that incentivizes all network participants to maintain high levels of performance and reliability.
Sources of Fees:
Fees in the Candao ecosystem are generated from various internal and external streams, ensuring a robust, self-sustaining economy. These fees are always processed in CDO tokens, reinforcing the token’s utility across the platform.
Targeted Advertising Fees:
Projects like Quests, Matchify, Swipe2Earn, and Circles allow advertisers to reach targeted audiences, generating ad-related transaction fees.
Subscription Fees:
Subscription-based services such as AI-Models, Matchify, dStorage, Circles, and Zones provide continuous revenue through regular payments in CDO tokens.
Transaction Fees:
Projects like PayLess, Business Links, SWAPs, and Social Pump generate transaction-based fees, ensuring a steady flow of CDO token transactions.
External Apps Fees (AppStore Model):
External decentralized applications that integrate with the Candao ecosystem use CDO tokens as the “gas” for transaction processing. This model allows developers to create their own apps on Candao’s infrastructure, charging fees similar to an AppStore, further expanding CDO token utility across external services.
2.4.1 Reward Distribution Mechanism
To ensure fair reward distribution within the Candao network, both validators and storage providers are required to stake CDO tokens as collateral. However, the calculation for their Annual Percentage Yield (APY) will be based on factors beyond the staked CDO. The APY formula needs to take into account the specific roles, contributions, and performance of each participant, ensuring the protocol’s rewards are tied directly to the value added by these participants.
CDO tokens serve purely as collateral and not the source of the APY rewards. The rewards are generated through the Ecosystem Rewards Pool, which is replenished through the various fees collected across the network’s services.
Key Factors Influencing APY:
Staking Pools: Separate staking pools will be established for validators and storage providers. The APY for each group will depend on the amount of tokens staked in their respective pools.
Ecosystem Reward Pool Size: APY is influenced by the size of the available rewards pool. The larger the reward pool, the higher the potential APY for both validators and storage providers.
Demand for Validators/Storage Providers: A dynamic APY model will adjust rewards based on network needs. For example, if there are not enough storage providers in a certain geographic location (e.g., Europe or North America), storage providers in that area could receive higher APY as an incentive. Similarly, if there is a shortage of validators, their APY may increase compared to storage providers.
Global vs. Individual Scoring: APY is calculated based on global network requirements, but individual performance can increase or decrease a participant’s specific APY rate. Factors such as data volume, uptime, proof complexity, and the number of successful validations play a critical role.
Proposed Reward Distribution Formula:
To distribute rewards in a fair and transparent manner, separate formulas will be applied to both storage providers and validators:
Example:
Storage Providers:
Provider Share = (Data Volume × Uptime % × Staked Amount) / Total Network Data
Validators:
Validator Share = (Number of Successful Validations × Proof Complexity × Staked Amount) / Total Network Validations
Increasing Staking Difficulty: As the network grows and more participants (both storage providers and validators) join the ecosystem, the competition for rewards intensifies. This creates a deflationary pressure on the CDO token, as more tokens are locked up as collateral for staking. This reduction in circulating supply, coupled with increasing demand for staking rewards, raises the difficulty of earning CDO tokens, naturally pushing up the token’s value over time.
Dynamic Rewards: The reward system is dynamic, meaning that rewards may fluctuate based on network conditions. For example, if the demand for storage increases, the value of rewards may rise accordingly, incentivizing more storage providers to join the network. Different data types might require different levels of availability or access times. These will be rewarded accordingly.
2.5.0: dCloud (Decentralized Cloud)
The dCloud within the Candao ecosystem introduces a revolutionary way of managing data, empowering users with full ownership, control, and security over their digital assets. Unlike centralized storage services, which rely on third-party entities to handle data, dCloud operates on a fully decentralized peer-to-peer (P2P) cloud network. Here, users have complete autonomy, accessing and controlling their encrypted data via private keys while ensuring their data is replicated across the network, mitigating risks of loss or compromise.
Candao’s dCloud functions much like popular centralized cloud services (such as Google Drive or Dropbox) but with critical enhancements in decentralization, security, and user ownership. Instead of storing data in a centralized server, the files are distributed across several nodes within Candao’s decentralized cloud.
Full Data Ownership: Users maintain full control and ownership of their data, stored across decentralized nodes rather than company-controlled data centers. This ensures no third party can access or control the user’s files. Storage providers give guarantees to service through their collaterals.
Access Control via Private Keys: Only the user who possesses the private key can access or modify the data stored in dCloud. This guarantees that no external entity, including Candao or storage providers, can read, copy or control the data without explicit permission from the user.
Resilient and Redundant Storage: Data is fragmented and distributed across multiple nodes, ensuring redundancy and fault tolerance. This means that if one or more nodes go offline, the user’s data remains intact and accessible.
2.5.1: Private Key Management and Secure Access
The foundation of dCloud’s security lies in its reliance on cryptographic private keys. These keys act as a personal gateway to access and control stored data, ensuring that users are the only parties with access privileges.
Private Keys: Each user’s data is encrypted and accessible only with their private key, which is managed through the Candao wallet. This ensures that no third party can access the user’s data without their explicit permission. If users want to share information they create session keys that have limited access.
Smart Contract-Based Permission Management: Smart contracts govern who has access to the data and for how long. For example, users can grant time-limited access to files or specific resources to others in exchange for CDO tokens.
Wallet Integration: The private keys are tied to the user’s Candao wallet, which serves as the control hub for all storage-related transactions and data access permissions. Whether granting access or selling data, all transactions flow through the wallet. By storing private keys, the wallet allows for an easy UX to access all services offered by the platform.
2.5.2: Subscription and Monetization Models
The dCloud system operates on a decentralized subscription model where users can pay for the storage they need using CDO tokens, while enabling monetization opportunities for creators and businesses.
Flexible Subscription Plans: Users can select different subscription tiers depending on their storage needs.
Monetization of Data: In addition to personal storage, creators of valuable data (such as AI models or intellectual property) can monetize their assets by using smart contracts. These contracts enable time-limited or usage-based access to data in exchange for CDO tokens. CDO tokens are used both for payment and gas.
Pay-As-You-Go Option: For users with dynamic storage needs, a pay-as-you-go option is available, allowing them to pay only for the exact storage used during a specific period.
2.5.3: Use Cases for dCloud
dCloud enables a range of use cases, especially for those who need secure, decentralized cloud with programmable access controls.
Personal Data Storage: Individuals can store personal documents, photos, and videos on dCloud, with the reassurance that only they (or those they grant access to) can view or modify their data and only as long as they allow them to
Business Data Security: Companies can leverage dCloud to store sensitive data like customer records or proprietary business information, with enhanced privacy controls via multi-signature options. Managers can implement hierarchical key schemes to retain and delegate access.
Monetization of Intellectual Properties and other values: Innovators and creators can tokenize and monetize their values, whether it’s digital art, proprietary software, or patented AI models, using smart contracts to manage data access.
Collaborative Projects: For joint ventures, dCloud allows multiple users to securely collaborate on shared files, using multi-signature contracts to grant or revoke access to files and data.
Last updated