When launching ourIncentivized Testnet(IT) in May 2022, we had three core objectives: incentivize the publication of educational content and community contributions to help spread the word about KYVE, support the overall decentralization of KYVE’s network, and, most importantly, test the core infrastructure.
In order to motivate our community to take part, we announced that the following 2% of the genesis token supply would be allocated to our successful IT participants:
In this article, we will further detail this 1% allocation (Pool C).
First, it’s important to note that for KYVE’s IT, this exclusive 1% allocation is for both chain and protocol node operators; however, on mainnet, only people who will run a protocol node will receive the delegation.
We are currently in the process of creating a genesis validator program (concerning only chain nodes on mainnet). If an IT node runner is admitted to the genesis validator program, its allocation will be reallocated to the next node runner in line.
IT Rewards Distribution Pools
Token Distribution for Pool A & BThe IT rewards are broken up into two main pools: Pool A (concerning the top 5k participants) and Pool B (concerning the top 10k participants).
After verifying each submitted task and the leaderboard as a whole, we found that those who participated the most in the Engineering tasks (generally meaning they ran a protocol or chain node) were in the top 1,000 of the leaderboard (see Figure 1).
The distribution in Table 1 below only includes the rewards for Pool A rewards. It’s important to note that those in Pool A will also get rewards from Pool B (a set reward of 500). Therefore, if you’re in Pool A, you must add +500 to each line to account for the added Pool B rewards. For example, Pool A, 1–500 users, will receive 2,500 $KYVE in total (2,000 from Pool A + 500 from Pool B).
IT Node DataThe data collected below is on both protocol and chain nodes run during Phase 1 and 2 of our IT, and proves the previously stated findings.
It is also important to note that some storage pools had stability issues during the IT (see Figure 3), especially in regard to slashing, endpoints, etc.
This resulted in some users not getting all of the points they deserved for running a node, which is entirely not their fault. Therefore, those involved in these inconsistencies have already been compensated accordingly.
IT Node Rewards Delegation Breakdown
Delegation RisksBefore delving into the delegation details for protocol nodes, it’s important we go over the risks involved in doing so.
Since we cannot know for sure the level of professionalism and experience of the users running protocol nodes on KYVE’s testnet, no matter if they behaved well during IT, we cannot be fully sure if they will continue to maintain their nodes correctly. If, later on, they behave incorrectly, they will get slashed, meaning the amount we delegate to that node will get slashed as well, resulting in a loss on our side.
On the other hand, delegating to these node runners could also bring on a positive effect, encouraging those involved on the tech side to keep their protocol nodes up and running, supporting the decentralization of KYVE. Hence why it is very important to keep the positive and negative factors in mind in order to have the fairest approach possible when delegating to protocol nodes.
Solution for DelegationAlthough we cannot fully eliminate the risk of slashing, it can be significantly reduced by carefully selecting the nodes to which we delegate.
To do so, our goal is to select the top node runners on the IT leaderboard to continue running their node on our testnet. From there, nodes with an uptime of 99.9% and no slashing history after one month will gain the rights to delegation rewards on mainnet, starting with a small number of tokens.
However, if a user fails to meet these conditions, we will allow the next user on the leaderboard ranking list (i.e., #51) to participate with the same requirements. Users who do not meet the conditions will not be disqualified but will have to keep their node in testnet for at least one more month to prove that they have solved their stability issues.
Then, the distribution will go as follows:
Measuring PerformanceIn order to properly evaluate each user’s motivation for participating in KYVE testnet, there are requirements that they will need to follow, especially during the delegation period. For example, they must:
Rewards Insurance FundSeeing that the delegated rewards are those that will get slashed if a node misbehaves, we need to ensure all eligible participants are rewarded properly depending on their node stability to maintain a secure and healthy rewards fund for the other participants.
To ensure this, our team has decided to keep 50% of this 1% delegation as an insurance fund. Therefore, if, for example, a user gets slashed, those who join in later won’t also get penalized. The percentage put toward this insurance fund can be increased or decreased by KYVE’s Foundation.
Evolution of the DelegationOn top of weighing the rewards depending on each node’s performance, the delegation will also depend on how many nodes are in the network. As seen in the two charts below, if there are 50 nodes in the network, they will each be rewarded a maximum amount of 100,000 $KYVE. However, if 50 new nodes come into the network, this reward amount will be readjusted to a maximum amount of 50,000 $KYVE per node.
Building Toward a Decentralized Network
Our mission is to provide streamlined, trustless access to decentralized, valid data, ensuring a scalable and secure data infrastructure for Web3. In order to bring this forward, KYVE needs a healthy, motivated, and fully decentralized network. By putting in place all of the above-mentioned measures, we can envision such a network for KYVE’s mainnet.
We’d like to, once again, thank all who participated in our IT and showed their love and support during this development time! We look forward to seeing your further progress as the testnet period goes on.
About KYVE
KYVE, the Web3 data lake solution, is a protocol that enables data providers to standardize, validate, and permanently store blockchain data streams. By leveraging permanent data storage solutions like Arweave, KYVE’s Cosmos SDK chain creates permanent backups and ensures the scalability, immutability, and availability of these resources over time.
KYVE’s network is powered by decentralized uploaders and validators funded by $KYVE tokens and aims to operate as a DAO in the near future. This past year KYVE has gained major support, currently backed by top VCs, including Hypersphere Ventures, Coinbase Ventures, Distributed Global, Mechanism Capital, CMS Holdings, IOSG Ventures, and blockchains such as Arweave, Avalanche, Solana, Interchain, and NEAR.
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*Table 2 only applies to active nodes in the network, meaning they first need a decent amount of stake to join the pool and then can be eligible for an additional KYVE delegation. If the node becomes inactive, its delegation is awarded to the next user on the leaderboard.
Please note that the IT is at all times subject to the incentivized testnetterms and conditionsand thegeneral disclaimeron our website, as well as theprivacy policyon our website.
Written by Margaux Stancil, Head of Marketing at KYVE.