This thread is for the discussion and deliberation of the Safe Network Token Distribution White Paper (RFC 0061), found over on GitHub, but reproduced in full below:
- Status: Proposed
- Type: White Paper
- Related to: Safe Network Tokens, DBCs, Governance, Nodes and Farming, MaidSafeCoin
- Start Date: 23 June 2022
- Discussion: https://safenetforum.org/t/rfc-0061-safe-network-token-distribution/
- Supersedes: This proposal supersedes, in part, the original Project Safe White Paper
This RFC sets out how the Network’s utility tokens will be distributed at the inception of the Network, and how they are made available to contributors over time.
- The key words “MUST”, “MUST NOT”, “REQUIRED”, “SHALL”, “SHALL NOT”, “SHOULD”, “SHOULD NOT”, “RECOMMENDED”, “MAY”, and “OPTIONAL” in this document are to be interpreted as described in RFC 2119.
The Safe Network has a utility token which allows for the exchange of storage, bandwidth and compute resource between node operators and users wishing to store data on the Network. These are Safe Network Tokens (SNT).
They also act as a means to fund and reward other contributions that provide utility and value to people who use the Network, and wider society, such as open source software development, sites, services, and publicly accessible data.
This paper sets out how these tokens will be distributed, and how they are made available to contributors.
At the inception of the Network a Total Supply of 4,525,524,120 whole SNT will be issued.
Each whole SNT can be subdivided 109 times, thus creating a total of 4,525,524,120,000,000,000 available subunits.
Users wishing to store data on the Network, or edit existing data, pay the Network to do so in Safe Network Tokens. A Data Payment is made upfront and there are no ongoing costs to maintain data on the Network after this payment—content is made perpetually available after this one-time fee.
These Data Payment fees are immediately redistributed by the Network as follows:
- 85% is paid to qualifying node operators as a Resource Supply Reward
- 15% is remitted as Network Royalties
Nodes provide data storage, bandwidth, and compute resources to the Network.
If a Node reliably and verifiably stores the data they are entrusted over an extended period, and serves it a timely manner when requested, they qualify to receive Resource Supply Rewards through virtue of meeting the required Node Age.
Resource Supply Rewards are automatically distributed by the Network to the operators of these nodes when a Data Payment is received by the Section in which they reside.
Network Royalties are a mechanism through which software development, services, and data which provide value to people that use Network, benefit wider society, and meet the objectives of the project, can be can be meaningfully rewarded and sustainably funded.
Network Royalties are paid in support of the following areas.
Individuals, teams, and businesses that support, research, design, develop, and maintain the open source software protocol of the Network and enable its ongoing operation, enhancement and security can become eligible for Network Royalties via the Foundation’s Developer Program.
Operators and developers of software applications, platforms, sites, and services, that run on, provide utility to, and are freely available to users of the Network can become eligible for Network Royalties via the Foundation’s Developer Program.
Creators, publishers, and curators of data that is made publicly and freely available for the common good, can become eligible for Network Royalties via the Foundation’s Data Commons Program.
In order to provide adequate, sustainable and transparent governance to the Network and provide the required administration of the Developer and Data Commons programs, Network Royalties will also be used to cover the costs associated with the operation and work of the Foundation, and the distribution of Royalties.
In accordance with the needs of the Network, and its ability to meet its objectives, the Foundation will oversee the distribution of Royalties via the Developer and Data Commons Programs, through the following methods:
Royalties may be paid in the form of grants to fund new areas of research, prospective development of software, services, or other activities.
Participants in the Developer and Data Commons Programs may also be rewarded inline with the utility and value of their contributions, endeavours, services, to the users of the Network and the project’s objectives in a given period. This may be in the form of one-off payments or regularised on-going funding such as a Service Level Agreements (SLA).
The Foundation may also make ad hoc payments to fulfil its objectives and remit, its governance and regulatory obligations, and in order to cover the costs of administering and distributing Network Royalties.
Grants, Rewards, and ad hoc payments will be made from the Network Royalties Pool, with any unspent or unclaimed funds in a given period returned to the pool for further distribution.
It is an aspiration that the Network have the ability to automatically distribute Royalties, reducing both the time for recipients to be paid and the costs associated with administration. Autonomous distribution is subject to ongoing research for protocol development.
It is assumed that automatically distributed Network Royalties would be paid by the Network from Data payments directly at source, without entering the Network Royalty Pool.
The genesis supply of SNT will be distributed as follows:
MaidSafeCoin is a proxy token, issued as part of a crowd-sale in April of 2014, that supported the development of the Network and also allowed buyers to pre-purchase Safe Network Tokens, ahead of the Network launch.
Holders of MaidSafeCoin will collectively be allocated 452,552,412 SNT.
This represents 10% of the total supply.
Tokens will be distributed to MaidSafeCoin holders in the form of an airdrop, with each MaidSafeCoin entitling the bearer to one SNT.
Each company share of Maidsafe.net Limited will entitle the bearer to 111.5 SNT, resulting in shareholders being allocated 226,276,206 SNT.
This represents 5% of the total supply.
Tokens will be paid out to shareholders in three instalments over the period of a year following the launch of the Network. Any unclaimed shareholder funds will be held by the Foundation indefinitely.
Out of the Genesis Supply, 678,828,618 SNT will be allocated to a Network Royalty Pool and distributed as Network Royalties.
This represents 15% of the total supply.
The remaining 3,167,866,884 SNT from the Genesis Supply will be distributed by the Network to contributors—such as those uploading data or Resource Suppliers—in an automated way, over an extended period, corresponding to the rate of Network growth as measured by the volume of data stored by its nodes.
This represents the remaining 70% of the total supply.
It is assumed that this process, which is subject to further research and development, will be in place for the inception of the Network. If it is not, the Foundation will hold these funds until such time as it is complete.
Should the Foundation board subsequently deem that this proposal is not a technically feasible and adequately secure way to distribute the Remaining Tokens, then they shall be distributed to MaidSafeCoin Holders, MaidSafe Shareholders and to the Network Royalties pool in the same proportion as the initial distribution, over an extended period.
There are drawbacks to a foundation overseeing and handling any size of fund, namely:
- Security implications of holding tokens
- Costs associated with administration
- The centralising effects of doing so
While these deserve to be highlighted and discussed, they can also be mitigated through due consideration to appropriate governance and through the development of automated distribution processes as noted in this paper.
An alternative that was considered, which combined the two as yet unresolved aims, involved 30% of the Total Supply being issued as the Genesis Supply, and then the remaining 70% being issued and distributed by the Network over time, at a rate proportional to the growth of data on the Network.
While it would allow for both the gradual and controlled issuance of the remaining tokens without the need for the Foundation as a custodian, it does have increased complexity, and more significant security challenges associated with sections being tasked with issuing new tokens.
Note that the term Resource Supply Rewards is an alternative name for what was previously called Farming Rewards. This reflects advice to use more precise terminology to describe the economic mechanism.
As we are currently finalising the design of the Digital Bearer Certificates (DBC) system, the exact number of sub-units may be increased to provide further divisibility. This is subject to the results performance testing and security analysis.
- We are yet to define precisely what event constitutes the “launch” of the Network, thus triggering the process of Shareholder Payouts.
- We are yet to determine if there is a requirement for the Foundation to hold any unclaimed shareholder funds indefinitely, or if it can be time limited.
Under the proposal described, it is still a matter of research and development to combine the two aims of A. gradual release of the Remaining Tokens, while at the same time B. having the tokens be in the custody of the Network. This is a challenge due to the limitations of doing a one time issuance of Total Supply.
The Foundation is a Swiss non-profit organisation incorporated to support the security, privacy, and sovereignty of personal data and communications, the resilience and global accessibility of public data, the pursuit of a free and open Internet for the public good, and the ability of individuals and businesses to trade goods and services online without the need for middlemen, through the promotion and stewardship of the Safe Network protocol, it’s ecosystem, and related distributed ledger and computing technology
The Foundation’s governance structure, Developer Program, and Data Commons Program will be addressed in forthcoming papers via the RFC process, along with those detailing the specifics of the technical design of Safe Network Token and DBC system.